What do you think is the greatest difference between investing today and say 10-15 years ago?

Hi There,

There are 2 main differences

Increased number of investors and traders. Thus, we see larger volume movements in the markets. If you compare movements in prices now as compared to years ago, rises may seem "parabolic" or rising "exponentially". Howvever, this is not the first time it appears this way. If you compare a decade ago to 2-3 decades ago, you see the same patterns. As more people get into the market as different nations develop and get more financially savy, there are more investing, both active and passive.
Information today is so widely accessible, in the past the "hardworking" investors who research and study a lot tend to do better. However, there is so much misinformation out there now that the skill now is not getting more information BUT filtering out the RIGHT information.

Hi Anonymous,

Thanks for your question. Around 12 years ago, we suffered the Global Financial Crisis. The GFC brought to light some inherent structural problems in the whole investing ecosystem and debunked many assumptions. One of these is really the whole value-add of active management. Since then, the “alpha” (outperformance) that was associated with being better, smarter and faster, for example, with the hedge funds (arguably the most active of active management), seems to have disappeared. As Prof Bob Merton, Resident Scientist of Dimensional Fund Advisors and Nobel Laureate shared with MoneyOwl during a visit to Singapore about a year ago, his reading was that some of this alpha was more “financial services alpha”: to do with the ability to obtain cheap leverage, not really because of manager skill.

Perhaps it was the disillusionment with “professionals” mixed with the timing of technological advancement, that was saw the advent of roboadvisers first in the US just after the GFC. Roboadvisers have brought fees down and increased accessibility. Singapore started to see a mushrooming of roboadvisers in the last few years, too. What we need to take note of, however, is that roboadvisers worldwide are not tested in a severe crisis. This is where having the institutional knowledge of how to advise clients through a crisis, how to risk-coach them, how advisers can and should be in the lead for individual clients rather than fund managers, is so valuable. MoneyOwl is privileged to inherit this through our parent, Providend, which has advised clients through various crises, including the GFC, over the last 10-15 yars.
For Singapore investors, there are also many more options not just on the access side but also on the product side. 10-15 years ago, low-cost, market-based funds like those of Dimensional’s did not exist. In fact, they only started being available to retail clients about 2 years ago. This is a tremendous improvement. But we should not only look at commercial investment products. Solutions for wealth building include national schemes which have been strengthened greatly during this period. The development of CPF LIFE, in particular, is an excellent annuity scheme for Singaporeans that should form the Safe Retirement Income Floor and be the starting point for all retirement planning. For many people, perhaps even just maximising CPF, would already go a long way towards retirement adequacy, with or without buying commercial investment products: and by this we do not mean using CPF as a source of investing funds! That is why, counter-intuitive as it might be for a business to say so, but not at all out of sync with our social enterprise and professional ethos, MoneyOwl always advocates a comprehensive planning approach that properly integrates CPF when it comes to investing towards our life goals.