I often write on Quora.com, where I am the most viewed writer on financial matters, with over 338.1 million views in recent years.
In the answers below I focused on the following topics and issues:
- Which stock exchange, or index, is the best to invest in? The S&P500, MSCI World or another one?
- What skills, attributes and personality traits pay off long-term? I split the answer into two sections – anything which helps you make money and those things which help you manage that money.
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Source for all answers – Adam Fayed’s Quora page.
Which stock exchange is the best to invest in?
The issue we have here is recency bias. Most people assume the US stock markets are the best to invest in.
In many ways they are, because they are in many ways international and diversified in nature.
Starbucks, Apple and the rest sell around the world, in so many currencies, so you are buying the world.
That isn’t to mention that many foreign firms IPO in the US, which is one reason Chinese and Indian growth have helped the New York Stock Exchange.
If some up-and-coming regions, such as South East Asia and Africa, produce more world-class firms, some will no doubt list in the US.
Added to that, the US stock markets are tried and tested, having gone up for over 150 years.
However, many people have been influenced by how well the US stock markets have performed in the last 12–13 years.
They have outperformed international stocks by far. Let’s look at longer-term though.
You will see that since 1972, the US has only just beaten some other stock markets:
What is more, it has regularly lagged other stock markets during certain time periods.
Somebody who started investing in the US stock market in 1972, would have needed to wait until about 2015 or 2016 to see their investment outperform all the other indexes.
Few people thought the US stock markets were such a great bet after the lost decade of 2000–2010, despite the great long-term performance.
Likewise, the small caps and especially Nasdaq have outperformed in the last few decades.
Yet, the Nasdaq was stagnant for 14 years between 2000 and 2014, during which few people wanted to buy technology, despite the good long-term growth trajectory.
We saw a similar thing with emerging markets. They outperformed in the early and mid-2000s, so everybody wanted to pile in.
The best thing to do is, therefore:
- Be diversified. Don’t put all your eggs in one stock market. If you want to do this, the US is probably better as it is more international, or try MSCI World.
- Stay long-term and don’t panic during the bad times. That investor who invested in the Nasdaq during “the bubble” of 1999–2000 won’t be losing any sleep in 2021. His/her investment has done very well. They just needed to be patient though.
In the coming years, we might once again see some “unfashionable” stock markets do well – those markets which haven’t done well recently.
What skills have the biggest long-term pay off?
In no particular order, I would say
1. Any skill which helps you make money
Ideally, these should be skills that will always make you money, and not just as a one-off.
- Hard skills such as being a very specialized engineer, doctor, dentist etc. The issue is “future proofing” these skills as automation will change things.
- Soft skills like the ability to communicate, deal with others, and so on. This can’t be automated as much as hard skills, so is very useful indeed.
- Marketing, especially in the digital age.
- Business strategy. The ability to spot gaps in the market
- Any implementation skills. Not ideas, but implementing good strategies and ideas.
Some skills, such as foreign languages, work best when it is combined with other skills.
For instance, a salesperson who can sell in both languages, or a engineer who understands cross-border communication.
If languages is used alone, it tends to only be used for very limited purposes like translation, , and this could be automated over time.
2. Any skills which help you manage money
There is no point in making loads of money as an individual if more goes out than in.
There are countless broke celebrities, sports players, and lottery winners. This isn’t just normal – it is the norm in some industries.
Studies show that 78% of former professional athletes go broke within five years of retirement, once the money dries up.
Likewise, plenty of business owners also make the mistake of only focusing on revenue, and not costs/profit.
So, the following skills are useful:
- Budgeting and planning
- The ability to invest money or outsource it to somebody who knows how to do it properly. Long-term, returns from assets will beat returns from salary alone.
- Cashflow management.
- Other forms of financial planning.
- Risk management. Even if you managed cashflow correctly, you might have a bank account revoked as a business owner, or any other number of unexpected events
Then there are the personality attributes that can add fuel to the fire. For example, the ability to be adaptable pays off, because some of these skills might change over time.
A good engineer in 2005 might not have the skills needed in 2021 without adaptation.
The same is no doubt true for digital marketers and a whole range of other professionals.
What is more, personality attributes can’t be copied as easily as skills.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 492.3 million answers views on Quora.com and a widely sold book on Amazon
In the answers below, taken from my online Quora answers, I spoke about the following issues and questions:
- If you currently have over 150k in your bank account, what is the best way to invest it, given 0% interest rates across much of the globe?
- Many people retire poor. How can this be avoided?
To read more, click on the link below: