Becoming.a Main Street Millionaire

 

I’m blogging from Woodland’s Health, a hospital in the North where my mum is recovering from a bleeding in the brain after a nasty fall last Friday. At the moment she is out of ICU and the acute ward and recovering from the general ward. Consequently, I was distraught for the past 4 days, but I’ve slowly incorporated this to my daily routine in hospital, helping out as much as I can and trying my best to see whether I can squeeze some productivity out of this. 

One of the side effects of being in hospital for the greater part of the day is that I can read peacefully, so I am actually faster at preparing my course materials and I can now wholeheartedly recommend a good book for readers of my blog.

One of the arguments going on in the FIRE movement are the latest salvo of brickbats thrown at us. Somer folks think that retirement should be postponed to preserve social capital, others claim that working may also mean that there is no genuine security that comes from the investment portfolio. In both cases, I wanted to jump into the fray, but I don’t think there will ever be an end to these skirmishes. FIRE’s ability to attract detractors is a testament to its strength.

Instead, I want to invite readers to consider the alternative to FIRE in the form of a business acquisition. In this book, author Codie Sanchez suggests that a good life can come from taking over a business from a retiree and then finding ways to automate and digitize the operations. While I do not have experience doing this, my brother in law is an excellent example of doing extremely well in life following this play book and he owns factories all over the ASEAN region.

There are two extremely valuable gems on this method of wealth generation.

The first point is to look for businesses that are immune to market cycles and easy to operate, then offer to pay about 2-5 PE ratio for such businesses, finding ways to achieve vendor financing along the way. This is not easy to do in Singapore as you will then be limited to businesses like laundromats and Gachapon machines. I find this section an absolute gem then because I can then use a stock screening software to find stocks trading below 5 PE and ample free cash flow and seeing whether I can buy cheap businesses from SGX. I’m going to keep mum on my screen and the results, but I have at least one investment idea from this book.

The second point is the idea of the technology stock for SMEs. Modern small businesses need not be powered by employees but active automation can be done with an array of software as a service solutions. For example, for employee commmunications, SMEs can use Slack. For documentation and SOP, can use Notion. For recording of screens training, can use Loom. This section alone justifies paying for the full cost of the book, but I needed to consult my mastermind group of young influencers to translate into software we actually use in Singapore. I have to admit that I’m actually very enthused to bring this technology stacks into Polytechnic training as this is the kind industry streetwise diploma holders need to compete in this world. 

For one thing, I don’t believe that a person’s ambition dies just because he has completed the FIRE movement. I’ve been checking out business franchises, and readers and folks who listen to my podcasts have been directed to looks at entrepreneurship to complement the FIRE journey. Buying a consistent business is a very different skill set from investing. If you find the right business, you often do not pay more than 4-5 PE for it and if you pick well, it can pay for an operator and leave plenty of “almost-passive” income for you. However, if you backtest a SGX strategy that has a PE below 5 and dividends above 3%, you would have lost money of the past 10 years. 

I hope readers will find a way to read this book and even find a way to give its ideas a spin.

Do keep me in the loop.