Wednesday, October 22, 2014

Taste and Aesthetics. Being Basic and Normcore.

I think get along fairly well with my JD classmates despite a glaringly large generation gap. I actually said to a classmate that if I had a shotgun wedding when I was in JC, my kid would be her age, Maybe they treat me like a insane cousin or uncle that they can't seem to avoid on a family gathering. I like to ask questions in class like what if two people in a contract hypothetical case are lovers or whether consent can be withdrawn halfway during sexual intercourse just prior to male orgasm.

The generation gap becomes really magnified when I attend a lecture with the LLB kids. In those classes, I feel like a Singaporean Bill Crosby. Subconsciously,  like many older men, I really want to brow-beat the See-Gee-Nahs for the incoherent way they speak and their strange appearance. In the end I restrain myself because some of these kids are my seniors in Law School and may even end up coaching me for Moots. And of course, I should not pass judgment across generations, our struggles are quite different.

I actually feel ashamed to admit that the one thing which cheeses me off is the "SMU Smile". What happened to the angst, anomie and the general lack of confidence of an undergraduate ? Kids in my days have a lot of anxieties, how to get a job, how to get laid in a hostel and how to pay off the study loan, SMU undergraduates have this uncanny ability to project an inner sense of self confidence that I think has become the hallmark of the SMU brand which everyone else would either love or hate.

Today's article is about class anxiety. Buzzfeed has a really awesome article which talks about labelling someone as "basic" as a way to demonstrate their superiority in taste and class. In one lecture with the LLB folks, the lecturer picked on this kid because he wore an Abercrombie T-shirt. This is one brand I would never associate myself with. ( Unless it's to be a sole distributor )

After reading this article, I actually felt funny because I consider myself as having a taste beneath what would be considered basic in Singapore. After analyzing my personal taste and aesthetic, a friend concluded that I actually belong to a category called Normcore. It is a conscious striving to bland in taste and dress.

Being basic in Singapore is as follows :

  1. You shop at NTUC Fairprice.
  2. Eat in a foodcourt.
  3. Buy clothes from Forever 21 or Mango if you are woman. For a guy, maybe G2000 or Giordano.
  4. Drive a Toyota.
  5. One pair of decent does like Rockport maybe.

I propose that investors should try to live a live below that level of "Basic" to reach financial goals.

  1. Shop at Value$ or Sheng Siong.
  2. Eat at Kopitiam or hawker centre whenever possible. 
  3. I wear and love Goldlion shirts although I am slowing wearing some Uniqlo to keep up with the times. A Gen-X uncle brand. Boomers wear CYC or 3 Rifles. ( No SPG will talk to you and no one will ask you whether you are gay if you wear these brands )
  4. A weekend Hyundai which I don't drive because I take public transport.
  5. Bata shoes.

Of course, perhaps at the end of the day, in class anxious Singapore we can easily afford to find other areas to be complete snobs at. Done properly, it will not make you a jerk and can protect your self esteem from the consumerist types around you.

My weapon of choice is in the books I read. An expression of superiority coming from appearance is quite shallow and with available credit, anyone can look good. I am delighted by conversation on the works of Lawrence Freedman,  Steven Pinker, Thomas Piketty or perhaps Martin Seligman.

Of course, snobbery being snobbery, some books must be excluded from the club.  I am openly contemptuous of folks who read and wax lyrical about the works by Dr. Phil, Paul Coelho, John Gray or Rhonda Byrnes.

This is stupidity of the highest order.

( In case you are wondering, I did read most of their works to figure out how to make books sell. )

Sunday, October 19, 2014

"Till All Are One !" - The Mechanics of Synergy.

It was a perfect storm for my personal finances this week.

First SMU decides to bring forward payment for my next semester of fees. The the markets had a series of sudden bearish moves while I lacked the funds the exploit this weakness. Then two things happened: My condominium TOP-ed and I have to write a couple of checks and  my weekend car battery failed and we have to get AA to help us out next week.

Still, I spend so little money as a student these days, I've yet to touch my capital yet. Hope this can be sustained for 1 more year, after which all my fees would be settled.

Anyway, my class just had a mid-term exam. The value of the exam was not high but I think almost all of us put in more effort than what the score meant to our final results. I think this mid-term is a true test of our capabilities because it forces a student to consider trade-offs: Already on FB many classmates are complaining that focusing on a subject meant sacrificing others. This is a greater dilemma faced by all citizens : You have one life, do you study or play, start a family or work, invest or travel ?

Which leads me to consider the almost overused concept of synergy.

Synergy is the 6th Habit in Stephen Covey's 7 habits of Highly successful people. It is exemplified in the concept that the whole is greater than the sum of the parts. It has a darker purpose in the business world, after an M&A exercise, to synergize operations between two entities, it is quite normal to make a many employees redundant through a restructuring exercise,

I have two insights I picked up from Law School on the idea of Synergy.

The first insight is that if we see four subjects as four separate subjects, we are likely to be stretched. I think unlike engineering and finance school, legal subjects are a lot more similar to each other and concepts drawn from a topic can be used to reinforce another subject. Somehow I noticed that many contract cases can also be sued in tort.  Our analytic and writing module probably applies to all other content driven modules like Contract and Criminal law. If we can actively apply and re-use some concepts across subjects, we can, in effect, study for multiple subjects while explicitly preparing for one. This can be one possible way out of our predicament.

The second insight concerns my active strategy which I think is working well so far in school.

Synergy requires very active and strategic time allocation. I noticed that students today have not changed for the past 15 years during my NUS days. The main method to cope with a stressful work-load is to live one day at a time. We're eminently human and will use out our time-slot for something which brings pleasure instead of pain. We also do not have a strategic use of our time to actively meet multiple objectives with one action.

My strategy so far might fly in the face of common sense. When an assignment "spawns", I rush it within 48 hours once I am sufficiently confident that all the material has been taught. No excuses, and it applies on individual and group assignments. Between leisure and work, I always choose work.

I realized that there are a couple of benefits, as I'm done with assignments 48 hours after they spawn, sometimes I can lift material from a previous assignment and cut and paste case references into my later assignments, returned assignments are used to remove mistakes from my submitted drafts to ensure that mistakes do note repeat itself, More interestingly, as the assignments cover the same material as the classes, doing the assignments early also prepare me for mid-term, throughout the term break I integrated assignment writing into test preparation. I can safely say that my rote learning load was halved since I was made intimately familiar with cases which I wrote about before.

So in summary, this is an exercise to cut into the root of what Synergy really means. It has confused the heck out of me since I read Steven Covey in the early 90s.

One possible idea is that all subjects are one. Investing is Life and Money is Happiness. Compounding your wealth can bring confidence and can help in school or at work because confidence always makes you a more magnetic personality.

The other approach is that time is the fuel which drives synergy and allows synthesis to take place. I think a person who learns about dividend investing at age 20 is better off than someone who picks up this skill at age 40.

Could it be possible that Time, managed well, also compounds itself like other asset classes ?

Wednesday, October 08, 2014

The Shallow Search for Happiness.

I'm in the middle of my term 'break' in which I had to do even more work than a normal week at school. Test preparations and written papers took up almost half of it.

Now I'm taking a short break to update this blog as I think I've done enough preparation work and will let fate decide what happens in tomorrow's online test. This is the first time I'm getting a test where I have no idea what is to be tested. I was probably more prepared for my blood test this month which actually went really well. Turns out law school deprives one of unhealthy food such that I actually have a better cholesterol reading than a normal person and managed to control my blood below 8 for my HBA1C.

I'm writing today's article as a response to someone who intimated to me that he is disturbed by all the happy pictures his friends put up on Facebook, this makes him question the meaning of his own life. I consider this person very successful by Singaporean terms, so I was puzzled by his sharing. And if someone who is successful find a struggle in this, this is a problem which might be worthy of some thought.

Like in almost all recent postings, I will take a multi-model approach to this problem to decode this issue.

My first point is that most folks will simply say that they want to be happy. All life decisions are driven from the perspective of happiness. When a boomer or Gen-X say that they just want to be happy to justify a life decision, in my opinion, they are just as naive and shallow as Millenials who will justify any act by their YOLO philosophy, which I actually think is a more refined philosophy than what my generation has.

So first off, happiness on FB is a shallow idea which people use as a Swiss Army Knife to justify any life decision.

I will first refine this theory based on Martin Seligman's idea that Happiness is based on five components :

a) Pleasure - Classic meaning of happiness. Eating a lobster roll gives you pleasure.
b) Engagement - Mihaly's concept of Flow. You get this by doing interesting work.
c) Relationships - Have a great family and friends.
d) Meaning - You can put your work within a context of your existence.
e) Accomplishment - Meeting goals.

Voila ! Once we break happiness down into it's factor variables, the problem is not daunting anymore. Facebook pictures show people eating rich foods and visiting strange places. On the surface of it, people are not demonstrating happiness, they are only showing off one aspect of it, likely pleasure.

So my first solution to my friend's philosophical problem is that he needs to determine if these folks are really happy. Is one variable sufficient to do that ?

Ok, let's go further than Martin Seligman by introducing the concept of an objective or subjective test I learnt in Law School.

Something is subjective if they person claims to be the case. Pleasure, Engagement and Meaning should be held to the subjective test. Whatever makes you happy that makes you wanna post it on FB !

An objective test is independent of your internal state. Legally, judges create an imaginary creature known as a reasonable man to determine if the test passes or fails. Accomplishments and Relationships are judged externally. This is a public victory which does not depend on your subjective evaluation.

Some folks may in their course of lives focus on an internal scale which measures happiness. That may be wiser, but from the point of view of an outsider, this is internal and he cannot judge whether you are really happy or actually a nervous wreck ( Only the person can judge if he derived pleasure from the experience).

Of course, focusing on external/objective measures of happiness can backfire if it it is not accompanied by a private sense of victory.

In any case, we get choose what we want to do with our lives.

Suffering is a choice.

Studying like crazy during a term break is certainly not pleasurable, BUT :

a) The work is engaging.
b) We are struggling together as classmates and slowly building professional relationships.
c) We are rebuilding ourselves to be better.
d) We are getting a pretty prestigious credential.

Yup, for most of us, we don't have nice pictures to put up on Facebook, but look at what was gained when we decided to forego pleasure.

I think that's the consideration we need to make in light of the grander scheme of things.


Tuesday, September 30, 2014

What tools in the Arts and Law can be used by an investor ?

After Hell week, my class started getting bombarded by essays and more written work so I am unable to put up more postings for quite a while but today is a good day, I just finished a 2,500 draft of an essay I was supposed to submit in November so it puts me ahead, to, well... do more advanced work for my classes.

One of the ideas I was obsessed with that ideas are "weaponizeable". Ideas from disparate fields can be integrated together to solve tough problems within a domain and even provide insight to practical problems in daily living.

It started during my engineering days when I was doing some object oriented programming. I was sort of into Philosophy then and became acquainted with Plato's Theory of Forms. I always felt that the way software engineers disrupted structured programming by coming with OOP in those days were really inspired by Plato. You need to define what an abstract idea of an object is, and then subsequently you need to write code to instantiate the object to be used in the real world.

Of course, it went on in my finance writings, I felt that frugality always had roots in Calvinism and Stoicism. Breaking away from the hedonic treadmill is very similar to the Buddhist concept of Nirvana. If you really want to delay gratification and save money, you are probably better served by reading Marcus Aurelius and Seneca than Robert Kiyosaki. If you want passive income, reading Jane Austen can help retool you into becoming a Mr. Darcy.

In Law School, I try to push the envelope in my presentations, recently taking a risk assessment model known in IT audit ( Risk = Probability of Loss x Loss amount ) I picked up when I did the CISA exams  and rigorous applying it to resolving some problems with sentencing in crimes of negligence in Singapore.

I am trying to share this new approach of finding gems in the Liberal Arts and Law into looking at investment ideas.

Sociological Imagination

Sociological Imagination was taught to all final year Engineering students in NUS. The idea is simple - You take a simple social observation in your daily life and ask yourself, what are it's implications in the grader scheme of things. Sounds airy fairy enough ?

Not quite. Beyond the financial statements that you read, applying a helicopter view to your finances, can help assess the outcome of a investment scheme.

Say you like SPH as a stock, it's a great yielding instrument and you get to own a publications monopoly. Apply sociological imagination you know that SPH is closely tied to how far the government will go when it comes to freedom of speech. Most of the income is in Singapore dollars and you can expand your scope to include your projection of the Singapore economy.

I think most practitioners of the sociological imagination tool commit a lot of logical fallacies. You run the risk of reading too much into a incident. If one moron heckles a bunch of students with special needs, does it reflect upon the stupidity of society as whole, the failures of our education system, or it's simply a stupid moron with a very dubious personal agenda ?

Which leads to my second tool.

Ratio Decidendi

Lawyers have a way of confounding everyone with Latin terms. When we figure out the ratio of a case, we are just asking ourselves to summarise the judgement into one line which would be the same decision that will be made in future cases.

I think something magical happens when a divergent tool like the sociological imagination encounters a reductionist tool like ratio decidendi.

You get the best of both worlds.

SPH is a stock. It may be grounded by how the government views freedom of press and tied to the Singapore economy. But we are now required to ask ourselves what drives SPH stock, in particular, what drives its dividends for someone like me.

IMHO, my one sentence after all the considerations is that the dividends are driven by property rentals like Paragon Shopping Mall. Absent property in its current portfolio, I would not really like to own a publishing business which is rapidly being disrupted by e-books. If you arrive at the same conclusion as me - you might be better off looking at the cash flows from SPH REIT instead.

I have close to 30 stocks in my portfolio, having a key driver or ratio decidendi for the stocks in my portfolio allows me to balance my school and my finance activities and fine tunes my sixth sense when I read about the current affairs in the newspapers.

In conclusion, I think at this phase in my midlife, I am really trying to approach everything as a fox. Law school is quite foxy in nature as opposed to the hedgehog approach of engineering school.

A typical LLB student can at best approach a legal problem as an LLB student. I like to see myself as a little different, I will not hesitate to attack a legal from an engineer, programmer, project manager, auditor or a finance perspective.

The more models, the merrier.

Sunday, September 21, 2014

Going through hell week !

I'm going through hell week and have nothing much to share with the readers.

Apparently due to fate or some may even argue, good luck, SMU has decided to slam me with three subject presentations over 7 days and a graded legal memo, making this the most intense week in the entire semester. Things got so bad, I had to cancel my Dungeon's and Dragons game and I did not even bother monitoring my portfolio even with the talks of Scottish Independence and the actions of the Fed.

Here are some random thoughts until I can come up with something more interesting :

a) Becoming a student again can save money.

I noticed that my expenses have reached the three digit level this month. There were so many cases to crunch and books to read that it's impossible to spend on other pursuits, I can't even hang out with my friends after school.

b) Scottish Independence referendum turned out to be a non-invent.

I was following this pretty intensely and actually hoping that the Scots will decide to leave the United Kingdom. Singapore left almost 50 years ago and we're doing ok, But I acknowledge that economically it's better to stay together. Damn, I was hoping for a cheaper pound so that I can go shopping for RPG books at the Orcs Nest at Charrings Cross Street.

On the whole, people are rational and voting for the wallet sure beats some nationalistic sentiment.

c) Philip Holden's Critique on University rankings.
If it is'nt for my punishing schedule, I would be railing at this article full time.

In Singapore, English Literature majors do pretty well and get fairly decent jobs. This needs to be sustained by local universities keeping their good reputations which means that we can't really negotiate with KPIs which rank universities. I rely on the good name of NUS and SMU when I look for jobs in the future, we're in a tough market where many US graduates might settle to work as Baristas in Starbucks.

I think the tirade is too similar with William Deresiewicz's appeal to bohemian authenticity over getting a solid job in the industry.

Hey we can't live on ideals. I say we keep the KPI. That might prevent more academics from holing up in their ivory towers.

Anyway, hope that I can write a better article next week !

Saturday, September 13, 2014

What would I do if a start-up exit made me a multi-millionaire ?

Of recent interest is that we are starting to hear about successful start-up exits in Singapore. I really enjoyed reading about the interviews with these successful entrepreneurs so I am writing this speculative piece. I think Tech is very much on the rise here and with more talent becoming engineers, we could be hearing about a lot more success stories in the future.

Of course, being a small-time finance author and university student, I don't expect a real start-up multi-millionaire to consult me, I'm merely speculating as to what would I do if I struck such a large jackpot, please please allow me to indulge in this speculative exercise.

Here's what I will do with my multi-million jackpot :

a) Buy a house without a loan.

Maybe these founders already have a home. But I think that the first priority is to clear all housing loans on your primary property. As much as some loans are classified as 'good debt'. Having no loans provide a peaceful state of mind.

We need to distinguish the ability, willingness and need to take risk. As a successful business who already exited, you have the ability and willingness to take on more debt. But in my view, you don't need to do it.

b) Ensure that you have a reasonably risk-free source of passive income.

Once the home is secure, the next step is to ensure that all your basic needs can be provided by passive income. The source of such income can vary, you can buy rental property but I prefer REITs, business trusts and high yielding stocks. A portfolio which yields 5-7% is a reasonable number and can even provide a reasonable amount of growth. You need to determine how much of monthly expenses you have and invest a sizeable portfolio to cover your needs. $1,000,000 at 6% is a pretty solid $60,000 or $5,000 a month.

If you are unsure about how to start, begin with a selection of the largest blue chip companies in Singapore or an index ETF.

c) Get yourself educated financially.

I think this is where my advice is the most unconventional. I think start-up successes are very confident individuals and many of them want to jump into becoming a venture capitalist. I think that is not a good decision. Start-up founders should be aware of how risky tech investing is and they need to account for the fact that their success may make them over-confident in their assessment of these tech businesses.

Once your basic needs are met, the next step is a solid and rigorous financial education. You need the knowledge to cope when your private banker or financial advisor throw you a curve ball. As such, an 18 month investment for a Masters in Applied Finance in SMU is a really cheap buy if you can rack up a high GMAT score. Private bankers won't teach you about option greeks, free-cash flow,  bond duration and convexity, but the good folks in SMU would.

I think that we should trust the bankers and financial advisors who try to give us advice. Bankers want you to keep your money with them, so they would prefer that you keep your risk low rather than you getting your high returns. I noticed that many HNW guys have a really conventional and low yielding blue chip portfolio - bankers just want to keep their businesses, they won't risk their capital. Financial advisers are worse - they only care about commissions.

If you want to take more risk, the only way is to educate yourself and eat your own dog-food.  

So this is all I have for now. In many of these articles on the successful exits, I think there is too much emphasis on jumping back into the tech world with guns blazing and venture capital funding. Perhaps it might be better to take steps to secure your victory and ensure that your family is looked after for life, then take steps to cope with the complexities of finance.

I'm fairly sure that the financial models you learn can be used to value your future investment into that start-up that will change the world.

Saturday, September 06, 2014

September 2014 Update : From Retiree to Law Student.

I've just survived three weeks of law school, just sharing a personal update to keep in touch with readers.

a) Drowning in legal cases.

Right now, the largest part of my my life is tackling legal cases. In SMU, merely reading up on cases and getting a general gist of it is not enough. As we can be called upon to introduce the cases on the fly, we will need to be able to demonstrate that we understand the cases well, so reading off text is not a good idea. A large part of my current life is figuring out what is the minimum reading I will need to convince myself that I know enough. If I get too obsessed with the details, I will not have time to cover all the cases. If I am too light on my reading and skim too much, it may affect class participation grades. As in all things, being absolute noobs, we are trying strike the perfect balance.

Although I can say that I'm actually happier spending all my time reading about cases which are really relevant to that investor part of me, this aspect of my return to University life has not met my personal expectations.

I was joking to my classmates that I see a law degree almost as a last bastion of liberal arts in pragmatic Singapore and want to pick up skills in rhetoric - career be damned - but the intensity and rigour of the course along the pressure to seek a training contract, internship and then a career is starting to weigh heavily in my mind.

b) Read Excellent Sheep by William Deresiewicz

I am glad that before bed and in the trains, I was able to read this piece of work which my cousin introduced to me. Perhaps in a later post I will contextualise this piece of work for Singaporeans.

The author paints Ivy League students as sheep who get shoehorned into society's definition of success and lack the courage to explore the world on their own terms. I think the law and medical students are the closest things to Ivy Leaguers in Singapore so it strikes a chord: I had a good read but I remain unconvinced by the author on many major points.

Success and accomplishment are as important as developing a philosophy of life. The author's insistence that students develop that bohemian outlook on life is laughable, Singaporeans do not live in a welfare state ( Unless you have dividends ) and neither do many Americans. Reading the Great Books is useful, but thinking deeply in a vacuum is worthless. Austen and Eliot would be much more useful if the reader can already write code, draft laws or create investment portfolios.

The same problem infects all the English Literature types who recently took up so much limelight in the Singapore news.

Taken to the extreme, English Literature is a religion, it has it holy books by Eliot, Austen and Shakespeare. Literature has it's own fundamentalists, fanatics and zealots. Science and engineering, at least, is falsifiability to keep scientists humble which distinguishes it from the literary arts.

Of course, on the other hand, legal education in SMU is the opposite extreme compared to the bohemian authenticity espoused by the author. The case load I get occupies so much of my time that I wish to have more time to reflect upon my views on humanity and philosophy towards life. So reading this book was done at the right time: It looks like me and my classmates are heading in the direction of becoming Excellent Sheep just as Deresiewicz had theorised.
c) Personal finances

September is a good paying month for dividends, I have already socked aside some cash to pay for next semester of fees. I have stopped tracking my net worth for now and will make minor changes to my portfolio to increase my diversification further. I think the newer REITs and Business trusts launched in 2014 may come under some selling pressure so I expect to do some bargain hunting before the month is over.

My aim so far is to retain or grow my net-worth throughout my stay in law school. This way I can reduce some of that pressure to get a training contract and really focus on thinking like a legal professional, which I think is the real holy grail of getting back to school in mid-life.

d) Other areas of my life

Of particular concern is that I have not been looking after my diet and exercise lately. Mooncake festival always gives me a sugar high and I've been neglecting my running to clear all my cases and consolidate my understanding of the law.

Looks like I need to buck up on my health next week.

Hopefully I can do up another blog article early next week.