Friday, June 27, 2014

Some thoughts after today's talk...

I felt that the talk that was given today in Block 71 was great because of the audience who was very interactive and kept me on my toes. Money can sometimes be an emotional subject, so interaction can be very engaging and lively for everyone involved. 

Here are some random points which I thought would be interesting for the regulars here who could not attend my talk at Block 71 just now :

a) Projection of 8% yield can be controversial idea for most audiences.

I think the biggest elephant in the room for my presentation is the idea that it is possible to create a portfolio of stocks which yield 8%. Because I am about to matriculate into Law School, I took some pains to ensure that my talk did not violate the Securities and Futures Act, so I can only claim that this is possible, and I did not actually list out any stocks which I have in my portfolio.

As we speak, only one REIT exceeds 8% in yield. This is risky as it also comes with some income support so may not be sustainable. There are several business trusts which yield more than 8%, all of them have idiosyncrasies of their own. Your best bet is to look for equities in the markets - some manufacturing firms do give 8% yields but they are small cap or mid cap stocks which most Singaporeans have never heard of.

My portfolio consists of 26 stocks which yield between 6.5% to about 13.5%. Average yield is about 8.1%. It is fairly risky and I think it's better for the public that this list is not shared with everyone as some stocks need to be actively monitored.

On hindsight, it may be more conservative to target 6% for ordinary investors, this widens the universe to cover more stocks, many which have fairly good potential for growth. 

b) Channeling the "Field Marshal" with the MBTI personality test.

This was the first time I'm sharing the idea of using personality tests for career success. 

The basic idea is to consider the MBTI personality result of "ENTJ" as the highest financially rewarding personality trait and encouraging other people to temporarily take on the "Field Marshal" personality trait to obtain more success in their day jobs.

This means taking on a new persona which is more outgoing, more visionary, more logical/ruthless with a greater sense of urgency in the workplace. 

I expected this idea to be controversial, there are really no self-help precedence but strangely enough the audience did not resist this suggestion.

c) Non-linearity in income characteristics

This is one of the reasons why I like addressing hackers. They bring a lot of value to the table. One attendee spoke of what I felt about the idea that a person's income is non-linear. 

I told the attendee that the most conservative way to look at an engineer's pay is to consider the inverse parabola.

Another words, most of your salary increments will occur in the first 10-15 years of your career. Beyond that time-frame, paradigm shifts in programming and engineering will render your experience worthless and you will spend your 40s being retrenched multiple times, experiencing long period of unemployment and you should expect a decrease in your remuneration. 

The .NET guys in the 1990s will never dream of languages like Ruby on Rails, Platform as a Service and Scala taking the start-up world by storm. They will need to retain themselves, provided that HR departments do not practice ageism. 

d) Never take up a career that is too eagerly pushed by policy makers.

The discussion touched on emerging fields like Data Science. I recommended that the hackers consider the difference between a cluster which has truly emerged from the Singapore private-sector economy like law and finance versus careers which result from Government intervention like Biotech and Data Science. 

Industrial demand for lawyers and investment bankers arose out of the true needs of the private sector. The government did not need to start a campaign to push for more lawyers and investment bankers from NUS. The money was good, and the better students responded to industrial demand. As a consequence, the financial rewards of these professions are very much sustainable, sometimes by economic moats and entry barriers imposed on new entrants.

If a career depends on government support or intervention, you will depend very much on the government sustaining that interest within the economy. Case in point, it may be instructive to look at semiconductor engineers to see how are they really faring these days. In the 1990s, there were many attempts to encourage engineers to join the semiconductor firms. 

Never take up a career that is too eagerly pushed by policy makers. 

I can go on and on, over the  next few days I will talk about each interesting point in further detail. 

In conclusion, talking to Hackers is fun. When I do this I am engaging my own "kind". 

Hackers are certainly not shy people, some asked very mathematically probing questions on my graphs. ( Did you apply a logarithm to your numbers ? )

I will be looking for more speaking engagements over the medium term before entering Law School. This has been a very fruitful engaging of minds. 












 

4 comments:

Passive Income Builder said...

I have some thoughts too after attending your talk today. :p

See link: http://passiveincomebuilder.blogspot.sg/2014/06/comments-after-attending-free-talk.html

Alvin said...

Thanks for the talk! I have great interest in MBTI too. I think it is quite an accurate measure of personality, although it is not permanent. Loved your explanations!

Christopher Ng Wai Chung said...

Agree. MBTI is not persistent and very incomplete.

One way around it is to do the Big-5 or OCEAN personality test. Most academics use this model.

Gerald said...

Generally I feel that the maximum number of stocks in our portfolio should be at most ten. You probably cannot be able to monitor the performances of the companies beyond this figure. Diversification of risk is important, but focus investing can yield better returns.

Regards,
SG Wealth Builder
www.sgwealthbuilder.com