Wednesday, November 30, 2016


Ok, my exams are finally over and I am moving into my final semester beginning next year.
Starting tomorrow, I begin a short unpaid internship stint with a startup. I hope I would be able to learn something significant this year end holidays with some programming high on my list of priorities. It has been a largely relaxed semester so there's no need for any break this time round so off I go...

Of late, there has been much talk on the PSLE exams and how demotivating it is for the majority of the primary six students who had to take it. I have been ranting for the past year about the anti-PSLE movement where people share their low scores to console the students who did badly, but they are just taking this opportunity to get some old fashioned humble-bragging into Facebook.  Instead I just want to spend some time sharing with readers two things about the PSLE.

a) PSLE's biggest problem is that it summarises a 12 year old's entire worth as a human being into one T-score metric. But therein lies its genius.

I think the most onerous part of PSLE lies in its ability to summarise the value of a 12-year-old into one simple t-score number. It sucks to do badly but making matters worse, parents invest so much money and time into this game doing badly is also a reflection of how bad the parents are.

But the PSLE's genius is the T-score itself. With one metric, the education system can be bound  to one national agenda and future changes to adapt to the new economy can occur with a simple adjustment to the subject syllabus. This is how Singapore's education system can achieve such ratings with PISA and yet incur so little overheads and explains why we spend so little of our tax payer's money on educating our children.

Imagine administering hundreds of primary schools and  you are not just required to educated these students, you also need to use the system as a sorting machine to ensure that the best secondary school places go to the most deserving kids (and every parent thinks that their kids are the most deserving.) As even the most highly paid management consultants will be hawking a Balanced Scorecard to MNCs, implementing one metric is genius.

Adults, of course, are extremely unhappy with such an arrangement, but society itself is more like the PSLE than we would care to admit. Closer to home in SMU, if a law student scores a GPA less than 3.0, we cannot practice. Another example are dating apps like Tinder and OkCupid. The way men look at female profiles employ one simple metric as well : Men only go for women with good looks. Some of my friends complain that they only get matched with "Pork chops" when the "Pork Chops" at least would be more willing to look at other traits beyond a guy's appearance.

b) The folks who do badly talk about how demotivating the PSLE is but it's become politically incorrect to talk about how much it boosts the self-esteem of students who do well. 

We have a different problem with western liberals in Singapore. Singapore is caught up with it's own form of political correctness which is bordering on Fascism this year. Instead of Black Lives Matter, in Singapore, it is (PSLE T-Score < 220) Lives matter.

I don't disagree with the idea that poor grades should be played down to preserve a kid's mental health, but not a single posting on FB talks about positive effects of doing well in the PSLE.

I am going to provide two alternative perspectives.

One of my ex-colleague's son scored 266 for his PSLE and I sensed a lot of pride in his kid's result. He was quite mischievous, first baiting us into asking by pretending that his kid did badly. I think he earned it because unlike the other parents in his batch of engineers, my friend and his wife focused on coaching his son instead of blazing ahead in his own career. His son's results goes beyond that guaranteed seat in Hwa Chong Institution, it is also an important source of self-esteem for the my colleague who made the career trade-off. It gives a source of self-esteem whenever he encounters his peers who are directors in their respective companies.

My niece has also done remarkably well at 258. My wife's side is Malaysian and my niece is on the way to getting into a IP program. If you think about it, at least the PSLE makes the T-Score a criteria for entering into the best schools. Malaysian Chinese who stay in Malaysia have to do an extra year in secondary school purely for racial/linguistic reasons (This is known as the one year removed penalty mostly imposed on ethnic Chinese). My niece is quiet and shy, and now at least, she has done something significant to give her an anchor to say that she can make it if she puts enough effort to get something done.

Ok, that's all for ranting about PSLE for now as my own exams were over just this morning.


Friday, November 25, 2016

Financial Bloggers meet-up with SGX.

On Wednesday evening, financial bloggers were invited to meet up with SGX over and informal dinner session. This event was coordinated by Timothy Ho of Dollars and Sense, so I am grateful to him for giving me the opportunity to meet up with SGX.

As this is an informal session, I was speaking to the SGX representative as to what she intends to achieve with this session and came away with the impression that they really just want to get to know financial bloggers better and have no desire to really find out where we stand on key issues.

I thought, perhaps collectively, it would be beneficial for SGX to know the following things about us :

a) Financial bloggers are diverse and seldom have achieve consensus on many key issues.

I thought the most important view is that we seldom agree, but we get along really well with each other in spite of that.

Investment Moats have views on which dramatically differ from mine when it comes to transferring CPF-OS to CPF-SA. I think what's more important is to figure out why we have a different points of view and let the public be the judge of that. At the expert level, personal finance is highly contextual and a financial plan is generally bespoke and tailor made for the individual.

I expect a lot of healthy disagreement with my friends in the future.

b) Financial bloggers are often wrong individually, but collectively we can be really smart.

The mark of a great investor to me is how great his investment mistakes are. I scoff at some folks I meet in law school who make bold claims that they would not rookie investment mistakes. A real investor will punch himself quite hard and turn his mistakes into war stories to be shared with others. I certainly still make rookie mistakes.

Individually we can be quite stupid with our investments, but collectively I think we are smarter than any individual CFA-endowed hedge fund managers. Opposing views are shared and the better argument can often win the day.

And I do happily change my mind if some blogger writes a convincing counter argument to my investment idea. The trick is to read as far as possible the volume of articles we product everyday to get an idea of what we are thinking about as a collective hive-mind.

c) Financial bloggers have the ability to say that the Emperor is not wearing any clothes

As more of us gain financial independence, we will become bolder. And,  If I ever get a practicing certificate, I will start helping my bloggers stay out of trouble from lawsuits, that's something I want to do as they made me so much money in the past.

We've always been very candid with the insurance industry, clashing with them with ideas like "Buy term and invest the rest", pointing out the folly of buying Integrated Health Shields and warning buyers away from picking up ILPs.

Over time, this boldness will find itself in our ability to point out the faults in a particular investment without fear or favour. Fund managers and journalists face a lot of career risk when they say negative things about an investment product.  We do face much lower risks when we write our articles.

d) We have no idea on how to help with poor trading volumes.

Unfortunately, due to my exam preparations, I did not think too deeply as to how we can carry this relationship further beyond dinner. But I doubt anyone of us can help SGX with their big elephant in the room which is their problem of low volumes in the stock-market.

To a great extent, financial bloggers love dividends investing is one of the  major reasons why volume was so low in the first place. When I showed my dad how to just invest passively and collect rent every three months with his portfolio, he just stopped listening to his broker and trades no more than 2-3 times every month.

In the dinner session, I have tried to propose that the government increase the amount of leeway some of us can use our CPF to invest in the markets, or loosen up with policing the markets but that is not ultimately within SGX's control.

Readers are encouraged to share their views on how to improve trade volumes in SGX here. I will find a way to consolidate it and share it with SGX.

Looking towards the future, my personal wish is that some of us get to be invited to sessions such as those sessions which discuss dual classed shares, we might be able to contribute positively to the discussion.

Friday, November 18, 2016

How a visit from an old ex-colleague made me $100,000 richer !

On Tuesday, an old friend decided to come all the way to my home for a visit. My friend is transitioning quite well into real estate sales and was kind enough to share some really basic tips with me on managing my own property.

As you guys might know, while I have quite a decent amount of REITs in my portfolio, I am not too familiar with actual real estate. I live in an Executive Condominium which I service with the money I have left in my CPF-OA. Personally, I don't really think very much about my primary residence because I expect to live in it up to the medium term because my kids would have to go to school nearby. Furthermore, five years is not even up so I would not have been able to have a decent sale even if I wanted to.

So my friend introduced me to SRX, which allows me to input my home address and it would spit out an estimate of the value of my home along with the mount it would fetch if I rented it out. And, lo and behold, it gave me a valuation which is almost $100,000 higher than the price I paid for.

I have always been quite conservative in counting my net worth. For my EC, I simply took its value as the amount which I paid for when computing my net worth. Because my friend showed me the possibly of a different way to calculate the value of my home, I was made instantly richer.

You might ask why is this important at all ? It's all psychological right ?

Not exactly so.

Section 4A of the Securities and Futures Act defines an accredited investor as as someone whose personal assets exceed $2,000,000 or whose income in the last 12 months exceeds $300,000. My friend's "revaluation" of my property puts me very close into striking distance of accredited investor territory even though I had been unemployed for the past 3 years !

I think this is one area of the law which deserves some degree of reform in the future.

I'm not too sure accredited status should factor in a person's primary residence. A lot of Singaporean Baby Boomers qualified for AI status because they sat on their landed property for decades but have no real access to liquid assets or the knowledge to deal with sophisticated instruments.

Right now I have yet to reach AI status so I still cannot confirm whether this is a good or a bad thing. But based on what I know, some of the good things I qualify for are the more prominent value based funds ( like Aggregate ) and not to mention BFP's new flagship Angel investing course.

But with the good comes the bad.

The general approach is that accredited investors can look after themselves and regulation is quite lax for businesses which only deal with AIs. Land banking can no longer harm retail investors but it can still attract business from accredited investors. There is also a problem with diversification. If I need $250,000 to buy one structured note position, I would not be diversified even if I have $2,000,000 in my portfolio.

All in all, try not to lose the protection given to retail investors even if suddenly find yourself an accredited investor, the government puts it there for a good reason.

Anyway, if I ever volunteer to give up this protection and charge into accredited investor territory, I would probably have to be also very willing to put my legal training into good use.

So, what did my friend get for making me $100,000 richer ?

I bought him kopi and Thosai.


Sunday, November 13, 2016

Personal Update

As exam season is upon us, this blog would be facing erratic updates over the next 3 weeks :

a) Financial outlook

One of the most important result of the Trump victory is that it's become impossible to read what will happen to the markets next. Analysis found on Friday's issue of the Economist is already incorrect in many ways as Trump is already working to back track on many of his campaign promises. The most promising news for investors is the question of whether the Fed to proceed to raise interest rates on December ( They might not ). The most negative news is on TPP but Singapore already has a mesh of trade deals in place so I'm not too sure whether the negatives will outweigh the positives.

But the most interesting thing is this. From what I'm seeing, the purported experts who are saying "I told you this would happen" are not backing it up with real market action.

I continue to invested in high yielding counters and there is another avalanche of payouts over the next few weeks which would need me to spread my portfolio further. While I have no data backing me up, everything seems more positive than negative to me over the next 12 months as some readers know that the killing I made was mostly done during the Great Recession of 2009.

When no one really knows anything and can't figure out what will happen next, I think the solution is to stay invested, spread your dividends over a wider number of counters and bargain hunt over time.
b) Alternative investment

One thing I started in 2016 and not done too well are the forays I made into the alternative investment world. I continue to pay my tuition fees in this area.

In the crowdfunding space, we are still trying to sue the guarantor of Rupini to see if we can recover the amount of money loaned to them. As a law student, this development is fascinating as a lawsuit like this can make or break the entire crowdfunding space. It's interesting to see professional lawyers get schooled by the courts on the finer details of making statutory demands as the case unfolds. This also cuts too closely to my law school adventures with one professor  asking me in class whether I expect to get my money back in my campaigns. ( I guess in life, its either you win or you learn. )

My losses in crowdfunding in total is around $500 since 2 out of 4 campaigns failed.

In cryptocurrencies, I have paid about $60 in tuition expenses but learning quite a bit about Ethereum. It would have been in the thousands had I built my own mining rig a few months ago. The currency has been beaten down due to the continuous hacking by some unknown parties.

I'm very optimistic about Ethereum because every hack creates a bargain opportunity and every hard fork make the currency more robust to future attacks.

c) Miscellaneous Readings

Out of the blue, I've been reading too many books on the new jobless economy so I wanted to cheer up so I picked up a book called Hygge by Charlotte Abraham.

Hygge is probably the most un-Singaporean concept you would ever encounter. The folks in the west are currently obsessed with this Danish concept which is some sort of Danish conception of happiness but contains within itself a few aesthetic components which reflects cosiness in product design and hanging out and talking to a bunch of friends ( who never seem to be jerks ).

I have no idea what kind of drugs I ate to even bother about this book ( And I'm on several ). The author spends an inordinate amount of time whining about her personal life and the rest of the time, the book features a large amount of Ikea furniture.

As it turns out Hygge works if you have long winters and constantly need to snuggle up to something. It also functions if you have a homogenous culture with generous welfare benefits so no kwai-lan friend can afford to inflict some micro-aggression at you with their latest Rolex watch purchase.

Well that's for this Sunday. If there are updates over the next few weeks, it's likely to involve IPOs and some SGX Listing Manual rules because I have to mug them for the exams.

Wednesday, November 09, 2016

Triumph of the Trump !

What an amazing year ! We've got the election of Duterte, Brexit and now Trump.

Let's talk about what investors should consider next.

Unlike the liberals who will spend the rest of the day depressed over the US elections, I don't think that Trump is crazy. He carefully crafted a message for white voters and thrashed Clinton at the polls. And I doubt any family man wants to be remembered as a Hitler-like personality given that his kids will have to live with that in the future.

This means that while there will be bargaining opportunity in the markets but the bargain hunt may be short-lived.

Value and yield investors should act quickly to buy up stocks which have been beaten down today. If it is anything like Brexit, some capital will move to Singapore which is already a fairly cheap market by international standards and we may even see a rebound over the next few days.

Of course, none of us have a crystal ball to conclude what would happen to the markets over the longer term in a world of Trump, Xi and Putin. I am confident that most intellectuals have underestimated Trump, the US has enough checks and balances to keep things running smoothly, in fact, the US will experience a lot of fiscal stimulus to upgrade its infrastructure in rural areas.

Singapore can take comfort because we've always adapted to whoever is in charge of the superpowers. We have the social capital and the educational investment to make the smartest choices.

This can come in the form of a greater pivot towards China or negotiating more trade deals since TPP is likely dead in the water.  

Saturday, November 05, 2016

Is Singapore entering a lost decade ?

First, a personal update.

Sick and tired of sending resumes to law firms and getting roundly ignored, I did something unusual and spent the week chatting up legal startups to see if I can get an unpaid internship for December. I managed to get a positive reply within a matter of hours with my resume and within 24 hours managed to gain some access to a couple of startup founders.

In a short 2-3 years out of the IT industry, the hiring process for IT guys have almost completely changed. The hirers are more interested in my account than my resume. Fortunately, I actually have a portfolio of projects from the last time I did my Data Science specialization and I could even showcase the Portfolio Simulator I wrote in R to these companies.

In the face of difficult employment conditions, the question I want to pose to readers is whether Singapore is entering its own lost decade. A pal who returned from Taiwan came back with conspiracy theories hatched in the Taiwanese media about how China intends to plot Singapore's destruction with the Kra Canal and the One Belt One Road initiative.

One of the things Singapore is doing right is the Smart Cities project.

Regardless of how it pans out, we will be able to benefit immensely from the project but not from the jobs it would create. We should see Smart Cities not as a vehicle for job creation but as a vehicle to make income inequality tolerable. What smart cities should ideally eliminate is consumption inequality. In a Smart City, a blue-collar non-degree male Singaporean can gain access to cheap sources of games and media download and can entertain himself in a virtual reality space for at least 30 hours a week and experience high life satisfaction. A combination of Steam, Netflix and Amazon can make this a reality. Smart Cities allows Singapore to tolerate (but not avoid) a decade of structural unemployment and deflation.

So here's a nub of my thesis for this article. We are entering our Lost Decade because Smart Cities will net-net destroy jobs.

Governments face this thing called an employment trilemma according to The Wealth of Humans by Ryan Avent.

Singapore can have an economy with jobs which meets 2 out of 3 following conditions :

a) Jobs with high productivity and wages
b) Jobs that are resistance to automation from robots or AI.
c) Jobs that employ a lot of people and can scale across the economy.

If you follow government propaganda, the emphasis is on (a) and possibly (b) in the light of driverless cars and the emphasis on Block 71. This automatically means that such jobs being promoted are not scaleable across the economy. Not even IT professionals in my generation has the statistics foundation to cope with the rise of AI and Deep Learning.

Think about it, driverless cars will make all taxi drivers obsolete. Tray return systems will reduce the need for F&B staff. The initial job losses will be absorbed by foreign immigrants we took in in the past but locals will not be spared from these technological advancements. The Uber drivers are not going to be repurposed as Natural Language Processing experts or Deep Learning gurus overnight.

If you actually want to useful in a Smart City :

a) You should immediately look into the concept of micro-credentials such as a nanodegree from Udacity. Quickie degrees which take about 3 months tops that arms you with the tools to create the systems which can disrupt the economy.
b) Achieve a clean break with your current skills and learn something which will be relevant in the future.

Unfortunately for everyone these are hard skills which go beyond what most ITE and non-university bound Poly diploma  students can attain. I say this with some authority as I have seen their performances in various hackathons in my previous life.

[ It would have been reason for Lawyers to be a little cocky in light of these developments until I realised that legal work can hardly be made more productive, can't scale in Singapore, and there are serious efforts in the technology space to at least reduce the dependence on lawyers in the finance industry. ]

Thursday, November 03, 2016

Why Sex Matters in Personal Finance.

I've just concluded reading a book by Jon Birger called Dateonomics and it has quite a lot of insights on the effects of gender ratios of personal finance.

The book tries to examine the effects of a lack of a eligible males in US cities like Manhattan which I think can be translated into the situation in Singapore.

Almost all substantial societal progress was backed by population demographic which assumes that the number of men exceeds the number of women. In countries where there is a serious lack of women, men are forced to work hard to accumulate wealth so as to be able to score themselves a spouse. This is part of the reason why China is experiencing such a high GDP growth. Chinese men need to signal to their women that they are the alpha worth settling down with.

Where the demographics are skewed in the opposite direction, men often tune out from the marriage market as they get plenty of sexual access without any accompanying social responsibilities. This creates an interesting phenomenon in city states where single women are good-looking, highly-educated, but lonely whereas single men are generally sexually-satisfied slobs with low standards in life.

Here are some interesting statistics from the book :

a) Shift from a man-deficit to a woman-deficit will lead to an increase in consumer credit. Where men feel the scarcity of women, they take on more credit card loans.
b) Men who are primed with newspapers articles to think that there is a scarcity of women save 42 percent less and take on 84 percent more loans.
c) Men in societies with a scarcity of women earned 10% more than those who who lived in societies with less men.
d) In societies with a scarcity of women, low-earning men are 2.3 times less likely to find a wife.

If you observe the financial blogosphere, you may notice a large number of serious personal financial bloggers ( including myself )  are engineers. My theory is that more than anything else, engineers spent their days in University steeped in this idea that women are scarce in this world and developed a defensive mindset towards money as a result of that.

In fact, I have some interesting statistics on NUS:

The gender balance in NUS is about 1:1 which is great from a policy perspective.

However :

There are no men studying environmental biology.
There are 2 women for 1 man in the Faculty of Arts and Social Sciences.
There are 10 women for 8 men in the Business Faculty.
There are 1 women to 2.4 men in the Faculty of Computing.
There are 1 women to 5.2 men in Mechanical Engineering.

If I am really bothered about my daughter's odds of getting a good boyfriend, I should skew her towards engineering.

If I want my son to settle down, I would actually get him to avoid the Arts Faculty as he would be too busy being the "Golden Penis" of the Arts Faculty than to take settling down really seriously.