Does nobody really owe you a living ?

Mr. Chan Chun Sing, in my humble opinion, may well be the best Secretary General in NTUC we would ever have. He gave a talk in NTUC while I was still an IT Assistant Director there and to get the ball rolling, I tried to corner him with a tough question on social mobility. I felt he handled the question well and from a rhetorical perspective, balanced logos with pathos. He had to bridge the elite-union gap which was not easily done. On the whole,  he was logical but also connected with the union leaders and explained assortative mating in simple terms which I felt was very impressive.

It was no accident that he soon become the Sec Gen of the organisation because he, too, came from humble beginnings.

I would like to welcome Mr. Chan into the blogosphere. You can find his first article here.

Now, that being said, I do not wholly agree with his first article.

The idea that "No one owes Singapore a Living" has been with us for 50 years. We have been using it to exhort our workers to work harder and smarter. Economies have been changing and we continue to use the same battle-cry over and over again.

I think after 50 years, Singaporeans know damn well that as a non-welfare society no one owes us a living. Advancements in the modern economy actually demonstrates that in the case of investors like us, quite a lot of folks owe us a living.

If you own a bond, the debtor is contractually required to pay you interest. A REIT holder is entitled to 90% of dividends paid to the trust to maintain tax benefits. While dividends are not assured for equity holders, minority shareholder have the legal recourse to fight shareholder oppression and in some cases, may even sue on behalf of the companies against the directors.

Play the game of finance well, and you might even be able to set up a trust for your loved ones in the future. Beneficiaries of a trust can take legal action against a trustees. There are the ultimate guys who are owed a living from their trustees.

Another words, quite a few parties owe capitalists a decent living.

The problem of course is that few workers are capitalists and in such a case, nobody owes workers a living.

I doubt NTUC has a plan to help us survive the Second Machine Age where society gets run by algorithms, my personal defense is to used these algorithms in industries which do not expect to be disrupted by them,

Now that being said, NTUC needs to confront the narrative which has led to Singapore's state today :

Religion is not the opiate of the masses.

The opiate of the Singapore masses are jobs !!!

Maybe authorities need to consider some ideas I have shared in this blog :

a) Push financial education into a Life Skills module for secondary school students and more flexibility for CPF investors.

Modules need to cover some basic financial planning and office automation skills. If Singaporeans retire early via investment income, it frees up jobs to be taken by others. Understanding financial independence starts at a young age. We should also allow Singaporeans more access to our CPF savings. nothing manifestly unfair if CPF account holders be allowed to invest 100% of their OA beyond $50,000 and be entitled to excess dividends beyond the 2.5%.

b) As a society we need to inflict a moral burden on the top 5% that they need to start businesses and create jobs for the rest of the 95%.

The rich can survive business failure and owning a successful enterprise can be a  badge of honor. This means retooling the scholarship system to recognize rich students without bonding them or subsidizing their studies. Put them in a special programs to grant them access to venture capital and business networks.

c) More government jobs of last resort which provide some shock therapy to older workers. 

No matter how you look at the problem, there will always be worker in their 40s and 50s who cannot develop new skills and no longer have taxis to drive because cars would be driverless soon. And the hard truth is that your mind closes at middle age and you no longer as fast as your younger colleagues - olders workers can be stubborn, dogmatic, and very annoying.

To plug the gap, a drastic solution involving an employer of last resort needs to arise from our uniformed services. Of course defence is rapidly modernising and becoming knowledge driven by the state needs to consider 6 hour a day jobs at small wages for middle agers. We are too slow in creating School administrator and low level health care workers within the system. Some of these jobs may be transitionary jobs which allow older workers to rejoin the private sector.

Sometimes, as a middle-ager myself who directly competes with Millenials for class-room distinctions, the government and some companies may need to seriously slap some of us around. A life spent making money in 20s till our 30s and raising kids gives some of us a mindset of entitlement. If we did not train our mental muscle to save money and pick up new skills when we were younger, a system of employment needs to be built to initiate that shock therapy to get olders to wake up their ideas. Behavioural economists are best placed to generate these transitionary shock therapy jobs to zap older workers to become productive for the economy.

All in all, I am very glad that the Sec Gen of NTUC finally has s blog. I consider myself a dissenting ally who can look into each blog posting and find ways to build on his ideas.

The idea that "Nobody owes us a living" has had a good run. Singapore has accumulated reserves over 50 years and own many bonds. The bond issues do owe us a living.

When thousands of workers and unionists start learning and earning  to become capitalists and shareholders, we can move beyond this slogan !

Net Present Value of Suffering.

This post is inspired by the large number of articles in response to the release of the O level results. Well meaning educators start to assist readers in choosing between a Polytechnic and a JC. One of the ideas which has been around since I was 16 years old is the idea that if a person is academically inclined, he should go JC and if he is practically oriented, he should go to a Polytechnic. Throughout the 90s, the same argument was used to help A level students choose between NUS and NTU.

Before I begin, I'd like to say that even if you are an elite super-scholar married to a medical professor, policies concerning Polytechnics are important to you. Reversion to the mean in IQ means that while IQ is heritable, children of elites will be on average only slightly smarter than the median population. The median Singapore is unlikely to have a degree given that about only 25% of the population are entitled to get degrees. This means that even elites benefit from government policies which reinforce Polytechnic education and apprenticeship programs.

Back to the usual advice to O level kids, I don't think this advice is helpful at all.

70% of JC students get to go to a local University and get a ticket to the middle class. A local university graduate starts at $3300 - $3600 a month. In contrast, 20% of Poly students get into a local University but they get to develop useful industrial skills which net them $2100 starting pay if they start work after getting a diploma.  The argument about academic or pragmatic inclination melts in the face of national income data. Everything boils down to whether you are confident as to whether your child can be top 70% in a JC or top 20% in a Poly. If not, a Poly should be chosen regardless of your child's inclination because it guarantees a set of industrial skills.

I will propose a different question :

Instead ask yourself, can your child suffer ?

Unlike Polytechnic educators, JC educators have KPIs tied to A level results. JCs whie being cheerful on the outside can be quite cruel to their weaker students. Weak students are "counselled" to drop subjects so that the numbers of the JC looks good. Strong students who take H3 or S paper get to enjoy a more collegiate relationship with their lecturers. Worse, the workload of a JC student is 40 hours a week compared to 25 hours a week for polytechnic students. JC students need to hit the ground running. I suspect a lot of humanity is lost in those 2 years and I suspect makes JC students more Machiavellian and narcissistic.

This question reflects a broader truth about Singapore as hinted by the Buddha eons ago.

Life is suffering.

Suffering is spread over the lifetime of an individual but suffering can brought forward similar to a discounting mechanism.

The choice of the JC brings suffering forward but slightly discounted. If you fall into the 70% you stand to get a quick ticket to the middle class and enjoy a salary 50% above diploma holders.

The choice of a Poly is not an inferior choice. You can get into the top 20%, you maintain your momentum. But if you fail to get into a local University, your route would be more circuitous. You can still make a lot of money becoming  a top salesman or an entrepreneur but each option has its own hardship and requisite amount of suffering.

Where government policy comes into the picture, tweaks need to be made to Polytechnic programs to balance the option against JC's ease into the middle class. This means creating apprenticeship programs which also allow skilled workers to have a good life. This is in effect, increasing the discount rate of suffering when students pick the Poly route.

So in balance, if you have just received your O level results and contemplating JC or Polytechnic, the proper question to ask yourself is :

Can you suffer ?

Singaporeans want an Australian Singapore, not a Singaporean Singapore.

G'Day readers !

If you really think about it, these days Singaporeans want an Australian Singapore, not a Singaporean Singapore. The story in the public is that these days is that Singaporeans are clamouring for more work life balance - what is thought to be abundant in Australia. New workers joining the work force are starting to engage the HR departments differently than the Gen-X workers in the past. Gen-X workers like myself want rapid progress and pay escalation, they just want to claw their way up the ladder. The Millenials tend to be more balanced and want to have leisurely pursuits.

Things got into a spin when NMP Chia Yong Yong replied to a query from a polytechnic student on whether the Employment Act should be amended to give workers more work-life balance.

While I personally do not agree that amendments need to be made to an act to limit working hours of Singaporeans, I actually found Chia Yong Yong's tone quite patronising. While her short reply was logical, it lacked pathos and ethos. Personally, I found her speech distasteful not just because it showed a flagrant lack of understanding of why Singaporeans now want more work-life balance, it is particularly disturbing when a lawyer can go up to a polytechnic graduate and and position his request into that of a trade-off. Chia's message was that if a polytechnic graduate works less, they will lose their competitiveness and cites her clients comments to back her reasoning.

Lawyers work punishing hours. Casualties in top law-firms are real - terminal illnesses and broken families and relationships are aplenty. My seniors who doing their training contracts are working up till 5am in the morning and have to return to the office at 9am the next day. But the legal industry is also one with huge barriers to entry. To get admitted to the bar, you must have a law degree from a limited list which is approved by the Ministry of Law. My seniors who are on-track for equity partnerships know that there is a heavy personal price to pay for success, but there is a genuine possibility of success. More importantly, in my opinion, lawyers are very much insulated from foreign competition compared to polytechnic graduates.

On the other hand, polytechnic graduates expect different life outcomes. Statistically their salaries have only increased recently after being stagnant for two years. Starting salaries are about 40% that of the starting salaries of a lawyer. More importantly, most polytechnic graduates along with other university graduates face a market with very aggressive competition. He can be working alongside Malaysians, Chinese and Indian counterparts - many with Masters degrees willing to do the same work for lower pay.  There is no guild in Singapore restricting workers to a list of just a few polytechnics. In the same way, we Engineers have the same problem. Does IES ever tell the government that engineers must graduate from a list of 15 universities to work in Singapore ? No, we've always had to deal with foreign competition that keeps us drawing lower salaries.

My second argument which I think Chia Yong Yong really needs to think about is that while Singapore workers are competing with foreign workers, Singapore must also compete to keep it's own people from leaving for places like Australia and New Zealand which may levy more taxes but provide more work-life balance.

I had a deep meaningful chat with a classmate weeks ago. I was actually in admiration of his personal success. He married earlier than me and had secondary school-going kids. He has a decent 6-figured annual salary which is government backed and his children are doing one to two standard deviations higher than the median in school. But he feels that he does not have adequate reserves to retire and is contemplating emigration. His figures out that if he contributes a decade to the Australian economy, he might be able to get welfare for the rest of his life.

Chia Yong Yong needs to understand that it is the folks who are doing statistically well are thinking of bailing out.

My third argument is that the nature of work-life balance is that we need it as we get older and reach major milestone in our lives. Yes, the polytechnic fresh graduates wants to consider more work life balance but so does the married person who just had kids. Older folks can't pull in 16 hour days. Based on what I have googled so far, I can't seem to find evidence that Chia Yong Yong has a family of her own.  Is Chia Yong Yong implying that, for the same reasons, a female lawyer who just had a baby would also make Singapore less competitive if she wants more work-life balance ?

So what is the solution ?

I hope readers appreciate that legislation is not the best way to solve problems. Given that I do not work and chose to spend 12 hours a day reading legal textbooks and cases, I might know a thing or two about cutting time spent in the workplace.

The solutions actually lie with ourselves.

As it turns out, the Stock Market can give your your Australian Singapore.

The Australian welfare system provides about $1,000 SGD a month. A portfolio of $150,000 yielding 8% can provide this payment. A Singapore worker can calculate what his taxes would be in Australia and start building a portfolio with the difference in amounts as our taxes are much lower. If you are a fresh polytechnic graduate, you might wish to consider spending your 20s struggling a bit to build a career and establish this portfolio, get some overtime down your belt before you become encumbered by a family and mortgages. All you have is energy and youth.

A young person can forego your work life balance short term and achieve your Australian Singapore goals over the long term.

Ultimately, work-life balance does not occur at one point in time.

There is a time to work like a mad man, and there is a time not to work at all. If you look at your lifetime in totality, you will probably achieve the work-life balance you deserve.

My seniors suffering at the office pulling in 20 hour days may one day just spend 3 hours golf in the future when they hit my age. But that would depend on whether they can resist the lure of conspicuous consumption which we would talk more about one day.

The $5 latte solution is not as radical as it sounds ! [ Yayy ! Got featured on the Business Times. ]

Today is a great day !

My classmate came up to me and told me that I am featured in the Business Times today. Naturally, I bought a copy and as it turns out, I was mentioned in one paragraph on page 12 of the Business Times in the BT-Citibank Young Investor's Forum in an article titled The $5-latte problem and a radically conservative solution by Cai Haoxiang.

The context of the article is to talk about the feasibility of a salaried worker becoming financially independent if one starts saving at a younger age. I thought perhaps I put in my own thoughts to build on Mr. Cai's article.

So, yes, it is true, I eschewed Starbuck latte most of the time in my 20s and 30s, but I bought latte whenever there was a Christmas special - I particularly missed the Egg Nog Latte which was discontinued many years ago by Starbucks. I even ordered a Pumpkin Spice Latte last year when I started to wonder what all that fuss was about.

I think the $5-Latte problem has a lot of traction because it is  quite easy to understand. But in truth, if you do the math of saving $4 of drinks everyday or sock away an additional $120 a month,  it would be hardly enough to really get you into the financial independence zone in your 40s.

For intermediate readers, we demand a more rigorous approach to classifying our wants so that we can meet our early retirement goals with higher probability. If you are a regular on this blog, it would inevitably require becoming more philosophical about your personal finances.

Let's take this to next level and think about three kinds of products that we tend to encounter. My inspiration came from a book entitled How Much is Enough : Money and the Good Life by Robert Sidelsky.

The first products are band-wagoner goods. You buy bandwagoner goods when everybody else buys them too. An iPhone is a bandwagoner good. If your kids come back from school and want you to buy something because all their other classmates has it, you can tell it's a bandwagoner good. An example of bandwagoner good which is more subtle is a watch like a Rolex or IWC, peers egg each other on to buy these watches even though I tell the time using my handphone. For the folks who play RPGs, if you buy something to prevent psychic damage being done to you because everybody else has it, it is a band-wagoner good.

The second kind of goods are oligarchic goods. Oligarchic goods are priced based on your relative position in society rather than on absolute cost basis. If too many people own an oligarchic good, it loses its value. A yacht is oligarchic because it is highly expensive and you have for a labour or services component which increases with time. This keeps yachts highly exclusive and meant for an elite few. Too many yacht owners dilute its prestige.

In my opinion, a subtle example of an oligarchic good is a mid-career law degree. The primary cost component of my JD is fours years of earnings which is quadruple that of an INSEAD MBA. If too many lawyers get admitted to the bar, the prestige and pay drops and a lot of very argumentative people then kick up a big fuss and the government gets into action. Needless to say, when I discovered that I had actually tried to buy an oligarchic good a few days ago, I had a mental orgasm which lasted days.

For RPGers, if you finally do manage to own an oligarchic good, you inflict psychic damage on everyone else.

The third kind of goods are just utility goods. You buy something because you really need to use it. My Economist subscription falls into this category. It does not deal or resist psychic damage.

[ This is a not a collectively exhaustive list of goods. Your economic texts mentioned other like Giffen Goods etc....  My D&D books do not fall into any category although I would say that they are useful for me to relieve stress and maintain my friendship with awesome geeks. ]

The solution to the $5 latte problem is as follows :

a) First you should develop an obsession for utility goods and avoid band-wagoner goods. 

Focusing on useful purchases which add value in your life and takes up some of your time so that you will not be distracted by conspicuous consumption. I play D&D and read a lot of books. In my IT days, I have a hobby of collective certification exams, which developed my willpower to overcome all three CFA exams in one attempt. It is cheap and freakishly useful for my career and personal finances considering the cost of an MBA in 2000s.

b) Second, you need to have the ability to meditate on the ultimate oligarchic good -  Financial Independence. 

Financial independence gets harder when inflation and lifestyle expenses go up. Stock selection based on fundamentals is a discipline requiring hours of intense study and then access to a Bloomberg terminal. Only a select number of salaried workers will obtain it within a small window of employability before ageism in the workplace kicks in.

I spent 15 years on this one oligarchic good and may spend more years maintaining it because I wish to secure my wife's financial future after I pass on !

( When too many people become financially independent, there will be no workforce to support the companies giving out the dividends so it is not exactly universalizable. )

c) Do not mistake a band-wagoner good for an oligarchic good.

The job of a marketer is to promote a band-wagoner good and create the impression that it is an oligarchic good. The marketer will try to tell you that if you own an iPhone, you must be more amazing and intelligent than anybody else. Wow, an Rolex or IWC on your wrist, you must really know a thing or two about luxurious living !

If you can recognize something as a bandwagoner good, I think it loses its exclusive value and people are buying it because everyone else is buying it.

Anyway,  I think this blog has come a long way.

In the past, after writing a book, I had to seek out a journalist to tell my story and sell the idea of working and saving hard for an early retirement which would have been a really boring and conventional idea is you think about it given that forex trading gurus are promising their trainees that can leave the rat-race yesterday.

Now, thanks to the support of the folks who support us financial bloggers with eyeballs, journalists are taking the initiative to write about us financial bloggers.

If any reader knows Mr. Cai Haoxiang, please let him know that I am grateful for being featured in his article, and I hope to buy him a nice big Venti Latte if he is willing to meet me for coffee.

New free E-Book from all of us financial bloggers !

The folks at BigFatPurse took on the Herculean task to organise us financial bloggers to write a book on investing your first $20,000.

I don't wish to take too much credit for this as I have only contributed one article, so please download this from BigFatPurse website here. I am grateful that in spite of a busy year juggling law school and my family life, I am able to at least contribute to a new publication in 2015.

The article I wrote targets intermediate investors and mentions five steps to the setting up a personal portfolio which is as follows :

a) Deciding on a theme.
b) Determining your asset classes.
c) The need for diversification
d) Backtesting your results.
e) Rebalancing the portfolio

The ultimate aim of investing $20,000 this way is to achieve about $1,400 to $1,600 dividends every year so you will be encouraged to push your savings to $100,000 or even $1,000,000 in the future. It's a powerful morale booster.

Anyway, I leave it to all of you readers to download this free piece of work.

I would say that for most of us who worked on this project, we were quite energised by the process and may consider working on larger projects with specific themes in the future. While I cannot guarantee that such products would be free, I expect that, given our own financial status, to be very cheap compared to similar offerings elsewhere.

So please stay tuned in this part of the blogosphere, 2016 would be an interesting year.

What is the risk of NOT doing something ?

Leong Chan Teik was a great benefactor of mine.

Close to a decade ago, Leong helped me promote my first book Growing Your Tree of Prosperity by featuring me in the Sunday Times "Me and My Money" section. Thanks to that interview I had with him, I was able to just make it into the Straits Times non-fiction bestseller lists at tenth position for just one week  - not bad for a rookie who never published a book in his life !

So Chan Teik found that he update I wrote during my birthday was interesting enough to be featured on his website NextInsight. This had the effect of doubling my traffic over the past week. Naturally some questions were raised in the NextInsight article so I thought to generate more traffic, I would attempt to address those question on this blog.

The original allure of the article is probably the mention of the two "first world problems" financial independent people experience. It is quite novel that a person who lives on dividends would need to overcome more bureaucratic obstacles when sponsoring his spouse for citizenship. It is also unexpected that investment income would to be of much use to apply for a domestic helper. I think that I would face more problems of  nature if a procedure required income tax records or records of my CPF contributions so it might just be good that I move on in my life and become a rookie lawyer after  I graduate from my JD program.

More interestingly, the question in NextInsight focused on whether it is rational for someone of my advanced age in trying to become a lawyer. Lawyering is lucrative but it is mainly a game for the younger and more energetic dudes. Because of the lack of work-life balance, many lawyers eventually burn out and end up running cafes. It is too early to say that I would not end up like that, but I will do my utmost to get called to the bar at least before finding some other kind of vocation if legal work does not suit my personality.

The maneuver to qualify and get into law school is not a trivial one. My opportunity cost is around $550,000 if you factor in my lost income and fees. Expecting to recover those losses is not reasonable unless I can spend 15 years in the legal industry. A large part of deciding to become an SMU student came from the realization that I have reached financial independence and can choose not to work for anyone if I choose not to. This effectively makes the opportunity cost bearable because it is also a short 4 year break to consider my (or lack of ) career options.

So the pull factor of law is trivial. I just get a kick knowing that I can code, manage a finance portfolio and litigate a case. As yet, no one in Singapore has experimented with the kinds of business models can arise from a synergy of all three fields. But training in law is valuable on its own, I know what kinds of trusts I can establish for my kids and can advise my family over property ownership. The knowledge is really practical and legal training makes a person's mind sharper when dealing with other areas of our lives.

But enough about me...

Readers need to ask themselves what is the risk of NOT doing something ?

Put your money in safe banking accounts and you get eaten by inflation. The downside of money market accounts are just as bad as equity portfolios once you lengthen the time horizon.

Similarly, older engineers in theirs 40s are obsolete. The world is now driven by big data and hard core statistics, programming is less so about structures and records and more about  random forests and principal component analysis. Servers have moved into the cloud allowing one administrator to maintain thousands of virtual machines. Do you still program in .NET and not moved into R, Ruby or Python ? Even taxi drivers are disrupted by Uber who will in turn face driverless cars.  

If you want to see your future, just look at your bosses in the tech firms who were stars when they were much younger.

Watch them get escalated at 2am along with you when servers fail.

Watch them get a pay-cut when revenues are down.

See them get retrenched when the company decides to kill off their most expensive staff.

Watch them retreat (or fail to retreat)  into a government agency or statutory board.

Your bosses got kids doing the PSLE and some have aged parents.

Do you want that life ?

In your youthful arrogance. you think about why the company would hire such lethargic managers with no corporate vision. But the truth is that your bosses' life is likely to be your future if you maintain the status quo.

( Actually they are better than you because they needed to be stars in their 20-30s to become managers in their 40s. )

So I don't like to stay still. When people are thinking or partying, I like to take action and I want to disrupt myself before someone comes along and do me in.

Because I can't be like my boss. He was a superstar.

I have to invest my money and ensure that in my 40s, it provides my family an alternative to an engineer's pay-check.

Now I have an investor's paycheck which replicated most of previous salary, its time to let go of my engineering paycheck and replace it with a smaller lawyer's paycheck but the possibility of a good upside if I can just think of a way resolve a law firm's productivity woes with some software that I either write or resell.

So that's my current game plan for law school.

It has some risks but I think over the long term, I get a better sense of control over my life.

Survived a tough year !

It's my 41st birthday today and it's been a rough year, unlike many of the other bloggers, I will not be talking so much about my achievements but more about how taxing this year has been for me. At the end of the holiday season, I will look to 2016 and see what we can possibly look forward to.

I joked that I am going through what possibly is the most expensive mid-life crisis compared to most of my peers. If you look at a low-end Maserati Grand Turismo, it costs about $492,000 in Singapore. Law school costs only $70,000 but after considering the lost income from my day job, the opportunity cost goes somewhat to around $550,000. This is why I never went beyond KL for travels this year.

The year started well for me with folks born in the year of the Tiger expecting a good year ahead. Unfortunately the tides turned and soon enough, 2016 became a year I would rather forget.

At age 41, I am reminded of my own mortality and limitations and managing one set of number and expectations does not mean that events would turn the year into some sort of mid-life nightmare.

a) Finance - 2015 is a challenging year for investors. 

Most of us had a bad financial year with our investments down. I think the viciousness of the bear has been greatly exaggerated. While it is true that we're 15% down, most of the dividends investors had cashflow to offset the losses. What is important is that yields are up and bargain hunting can definitely take place this holiday season.

Of course I was also hit by increasing interest rates, my mortgage swelled from $1300 to about $2100 this year. My CPF can last about 3-4 more years under this arrangement but in two years time, I will start topping up my CPF with my dividends so this can still be managed better.

My personal take is that 2016 would not be as bad as 2015. Japan and EU continue their QE program and China is trying to grow its services industry to offset their poor economic growth. I hope that next year might be surprising on the upside.

b) Scored A+ for money management but lost the war to retire early !

On this money management front, I was able to clock 24 months of unemployment without eating into my capital and fully paying up my school fees of $70K. While my finances are expected to improve over the next year, two specific events caused me to realise that my retirement plans may not be sustainable over the long term.

First incident is that when my wife applied for Singapore citizenship, I had trouble convincing authorities that I was not a burden to the tax-payer in spite of being an unemployed law student. Our government is still not equipped with the procedures to cover income investors. I had to compile a report on dividend cash flows and had to deal with an ICA officer who was just puzzled that "stock market sends me money on regular basis". In a more unsophisticated country, I would have been accused of practicing witchcraft.

The second incident which may have  killed my retirement plan is when I tried to hire a maid to look after my dad. Without an earned income in my IRAS filings, I was not allowed to be the sponsor. My dad had to put in his spare cash of $50,000 into a fixed deposit to sponsor his own maid as all my money is tied up in my CDP. This convinced me that Singapore society, as affluent as it is, it does not have the infrastructure in place to recognise dividends cash flow as a valid substitute for earned income. A CDP statement, no matter how large, is no substitute for a FD account which puts us in a bind because of the cash drag.

c) Law School become exponentially harder at year 2.

I struggled academically this year with substandard grades even though I had experienced my strongest year of intellectual growth throughout my entire life.

Having done Engineering as an undergraduate, I had been hiding math equations and physics problems all my life having found my comfort zone during my JC days. Even when I did Finance, they were just some CFA maths problems with a slightly business bent. There's always come computer tool or app to solve a technical problem.  Studying Law is the first time in my entire life I could go through a semester without aceing a single subject.

It took me three semesters to realise that Law school is not a joke. First two semesters did not even count because I did Contract Law as an engineering student and had some exposure to managing outsourcing contracts at work. as a consequence, I have always been casual with my cases and did not put a lot of emphasis on the actual written judgment preferring to build on top of the case note. This cost me dearly this semester.

Nevertheless, there is value in struggle when learning something new. The alien concepts I learnt this semester cannot really be googled off the internet and consultation on these concepts can take a lot of time and cost a lot of money.

In summary, it's comforting to know that I qualify for a difficult subject in a world class institution. I will never be as brilliant as some of my classmates and but I can rely on my experience and technical know-how to make it in a new industry.

And next semester will be an even more challenging one because...

d) Tough six months ahead in the personal front.

Balancing the toughest semester with family would be the hardest challenge I ever faced next year. My mum has been ill and has an operation last week. She is recovering but further checks will confirm whether she needs a round of chemo-therapy. We may made the decision to avoid it as far as we can but it's all in the hand of the medical specialists. This was also the year when I've been shuttling in and out of hospitals.

On  a brighter note, I will be also be a new dad again to my son who will be arriving just before Chinese New Year.

2016 is all about juggling multiple balls in the air : ensuring that my mum gets better, financing the birth of my new son, covering three of the nastiest subjects in the JD program and hunting for a training contract with hopefully a decent law firm.

I hope and pray that I would have more positive message same time next year.

Philosophy as the Operation System of an Investor's Mind.

One of the better reads I had this holiday season is Mindware : Tools for Smart thinking by Richard Nisbett. This book  shows folks how to think and draws from various academic disciplines like Economics, Psychology, Statistics and Philosophy. It is a powerful toolbox for a problem solver and contains the keys to resolving many practical issues.

The chapter on dialectic reasoning itself should be worth the book's weight in gold.

It summarizes Western Logic into three propositions :

1. Identity : A = A. A is itself and not some other thing.
2. Non-contradiction. A and not A cannot be true at the same time.
3. Excluded middle. A or not-A can be true but not something in-between.

Eastern logic is very different :

1. Principle of Change. Reality is a process of change. What is true will shortly be false.
2. Principle of Contradiction. As change is constant. Contradiction is constant.
3. Principle of Relationships. The whole is more than the sum of the parts.

A successful investor cannot ignore Western or Eastern Logic. Both needs to be installed within the OS of an investor's mind.

An investor with only Western Logic is like a CFA level III candidate who has just invested his first $10,000 into the financial markets. He has the statistical tools to find the stocks which theoretically can result in strong performance but have yet to experience the psychological effect of market cycles. Often these investors would stick to the basic knitting and rely on the older studies of  Fama and French or Modigliani and Miller. The best students would stick to small companies with low P/B value and ignoring the effect of dividends. The strategy works until the investor gets a nasty black swan market event which affects his emotions and breaks his morale.

An investor with Eastern Logic might fare even more badly and not have a central theme or strategy when it comes to investments. Many technical analysis investors rides on the market waves without any understanding of the fundamentals. Theories will be proven false in time so why bother with statistics ? Just rely on reading tea leaves and profound wisdom of the trading mentors that they pay thousands of dollars to. At any point of time, a dotted line on a chart can be a resistance level or a level where a break occurs. Foresight is 10/20, hindsight is 20/20. Just make sure that you only present the answers in hindsight.

The sweet with investments is accepting both Western and Eastern Logic.

Statistics are moderated by R scores and some results are bounded by confidence intervals. But statistics can take an investor only so far. A statistically perfect stock may not have ample liquidity and a good business can be disrupted by a paradigm shift within the industry.

Perhaps this blend of Eastern and Western logic may be useful to assess a counter like Sabana Reits. Statistically it is one of the highest yielding REITs in the industrial REIT space but the yields were not sustainable in light of recent expiration of master leases. As investors start to realise that yields are dropping, they abandoned the counter making the yields irresistible again, but now there is a new development with this counter. Sabana is now showing a willingness to sell off under-performing assets. Played well, this may be a key for investors recoup their investments in the form of yields and returned capital.

Would this strategy work ? I have a small residue position to find out how this plays out.

Why Han Solo will be never be able to provide financial security to Singapore women. [SPOILER ALERT]

Let's face it, if you have daughter, you will never allow her to date Han Solo. This guy has an unstable job as a smuggler and can be a little too trigger happy for your taste.

The Force Awakens clearly paints the horrible consequences of dating a an unconscientious male. Han Solo turns out be a worse dad than a husband, so much so that his son Ben Solo turns to dark side and eventually kills him.

The charming and flaky male is irresistible to women. TFA's lesson is that women will go far to mate with Han Solo, even forgoing the title of Princess and taking on the mantle of General just to make the relationship work. In Singapore, I see so many Han Solos showing up in family court looking quite like the above picture when pressed to provide spousal maintenance.

The Economist would back my thesis that Han Solo is bad news for Singapore women.

In an article on good fathers, last week's issue of The Economist looked at different male archetypes based on how much men produced testosterone when aroused by watching pornography. The article proposes two mating strategies. The Han Solo archetypical male produced more testosterone when aroused tended to preferred having multiple sex partners in the hopes of fathering more children with different women. They put negligible effort in parenting. The alternative kind of men who produced lower levels of testosterone and preferred to mate with one spouse and focused on raising fewer children in a higher quality environment.  The former are cads, and the latter are dad.

Like now, society is fair to both kinds of men, rewarding each archetype equally which explains why men fall into the Han Solo category and those who don't.

Which begs the key question - what kind of men fall into the latter category and make the ideal spouse for the Singapore woman  ? What man would most father-in-laws prefer ?

The Force Awakens also contains the answer....

The ideal husband for a Singaporean woman in my humble opinion is General Hux, the Architect of the Starkiller Base. General Hux has its flaws but he is deliberate and conscientious, an ideal counter-weight to the religious fanaticism of Kylo Ren.

The ideal Singapore husband will never join a bunch of terrorists, he will work hard and bring his family honour by joining the Imperial Academy and graduate with flying colours and then climb to the rank of general for the First Order.

Can you imagine the kind of project management skills that would be required to build a planet-sized base that could tap into the power of Sun ? My estimate is that General Hux would need to lead thousands of portfolio managers to get the job done, not to mention the headaches required in project finance.

My impression of Episode 7 is that the MVP of the First Order is General Hux, not the emo piece of shit called Kylo Ren.

Interest Rates Awaken ! [SPOILER ALERT]

The big news in the investing world is that the US has finally raised interest rates. As the markets have already priced in the rate rise, interest rate sensitive investments began to rally and REITs in particular had a great session in spite of an overall down market just now.

The overall direction of interest rates in the US is going to be up but I expect the pace to be slower than most folks would expect because the low interest regime is good for growth and there is no risk of inflation as of this moment.

The situation in China may make things worse for global growth. It seems that the downturn was largely caused by corrupt civil servants curtailing their spending in the midst of a crackdown as it may be engineered by the Communist government. Moving forward, if China can clean up their act and allow their working class population to participate in their economic prosperity, growth would return with more above-board consumption, but this may take many years to happen. One possible bright spark is if the US under President Trump would have some sort of a reconciliation with Putin which I think may create some upward pressure in oil prices and bring some salvation to the oil and gas sector.

So right now, I have no useful insight for everyone because local interest rates have already gone ahead and gone up and I'm not too sure whether SIBOR will resume it's meteoric rise. This will impact many local households who will less disposable income for discretionary spending and I expect the government to follow this closely. The only possible thing a reader can do is to ask themselves what happens if interest rates hit 3% for their mortgages. For me, my worse case scenario is to prepay the mortgage entirely and get ready to return to the workforce after graduation - I have lasted close to 24 months without drawing upon my investment capital and even paid off $70,000 school fees.

A rising interest rate environment is actually quite new for many new entrants to the workforce. Many of us are so used to cheap borrowing and many households are surviving under leverage. This new economy is going to painful for folks encumbered with loans.

And talking about change and progress....

... Let's talk about the Force Awakens.

I caught TFA as soon as I could on the day it opened because I know that there will be spoilers everywhere. Star Wars is a religious experience and no amount of practical criticism is going to decide whether fans love or hate the movie so I doubt any discussion on tropes, plot and pacing would have a bearing on box office revenues.

So far, based on my shallow observations,  what divides the folks who love it ( like me ) and the folks who hate it is that the folks who hate it tend to be very emotionally attached to the Expanded Universe which had to be sacrificed to give Disney a clean slate to decide on the storyline.

The insight for me is that sometimes it helps to be unsophisticated if you are one of those readers who are more concerned about personal finances. I never developed a palate for good food or wine. I never felt any desire for watches or fast cars although I like the science behind them. This allows me to get high on simple food like thosai or satay bee-hoon.

While I remain very snotty when it comes to self-help and finance books, I remain quite unsophisticated with fantasy and sci-fi fiction. I seldom read fictional works but enjoy almost all my fiction reads ( but the Force Awakens bridging novels by Chuck Wendig sucks ). I also have a thing for B grade movies and count The Last Witch-hunter as one of my favourite movies of 2015.

The essence is this : Be discerning where it matters to you.

A finance reader should be able to spend 5 minutes and decide whether a investment book should be categorised as a classic like The Intelligent Investor or a complete waste of time like something from Robert Kiyosaki or Harv Eker.

A detailed analysis is definitely overkill when it comes to Star Wars movies.

Yes, the Empire never learned anything about single points of failure and fault tolerance, but I guess taking 5 planets down with one shot from the Starkiller base allowed the First Order to break-even. And the twist was very much expected if you followed Harrison Ford through his convention appearances and knew how much he hated playing Han Solo. That dude is Indiana Jones but everyone still wants him to be Han Solo.

Anyway, if you have a highly refine taste for wine, you will overspend on wine. Similarly if you have a highly refined taste for art, you would overspend on art. If you have a highly refined taste for Star Wars, no movie can satisfy you, definitely not one by JJ Abrams and George Lucas would do even worse.

I have a highly refined taste for academic and industrial credentials.

I think that's quite enough of me.

What can we learn from the changes to the Accounting profession ?

This is my first blog post using my iPad Pro with Apple Keyboard. I am currently blogging from Yishun Library.

One of the more interesting developments in Singapore is the initiative to allow Polytechnic graduates to obtain an advanced diploma while working as an accounting technician to qualify as a chartered accountant without getting a degree. I believe that this news is probably making waves in NTU and NUS where an accounting degree was meant to be an assured ticket to the middle class. Accountants may have some concerns as to how this may impact their earnings capabilities in the future.

The accounting profession is going through some changes which has always affected engineers in the past. In Singapore, a polytechnic diploma holder can always call himself an engineer without getting into trouble with the law ( Try doing that in Germany. ) I remember that when I was in P&G we outsourced our IT operations to Atos Origin and stipulated that our operators must be diploma holders. I remember P&G management being upset that the diploma holders were NCC diploma holders and internally felt that the vendors upheld the word and not the spirit of our agreeement. To our local poly diploma holder's credit, P&G enjoyed greater customer satisfaction when the work was insourced when we hired local diploma holders to support our global IT services. Many of these operators eventually took on hardcore technical roles meant for graduates after a year doing operations support. Those days were the Golden Age, it did not matter whether you were a diploma holder or a degree holder once you joined an MNC, you advanced based on your capabiliities and we had department heads who had neither a diploma nor degree.

[ Sadly this arrangement was not sustainable as after getting outsourced managers without degrees  were rapidly culled when we transitioned into HP. Outsourcing is a lot about showing off to the customer the qualification of the folks that you are deploying into their environment. ]

Interestingly, after going to Hewlett Packard I found that one of these ex-Atos Origin  NCC diploma operators were rebranded "Senior IT Engineers" when they were sent to support the government agencies.

Here's are some of my point for someone's consideration if he is an accountant.

a) For a start, accountants without degrees will still start at a lower base.

By and large, we are still driven by paper qualifications. A degree holder would still start at higher salaries. This measure would benefit SMEs who need accounting bookeepers who will work and study to better their life circumstances. MNCs and Government would still be aggressively sought after by university graduates and would have their choice picks.

Interestingly, some smarter MNCs might build a body of cheap accouting technicians and be willing to upgrade them once they have accumulated a good work track record. I think this is what the government wants to achieve to make the diploma track more attractive. Expect only the top diploma holders to qualify for these seats because studying part-time has no opportunity cost.

b) Redistribution of talent would not change a person's life outcome if he does not academically excel. Don't expect Singapore to be less elitist.

The effect of this measure would likely induce smart students who are assured of his ambition to consider a polytechnic diploma. This means that students with better O level results will consider a diploma if he is sure that he want to be a chartered accountant.

The JC and Polytechnic cohorts will redistribute itself. I doubt elitism would be reduced greatly - More elites will join diploma programs and make those courses as competitive as degree courses.

The number of chartered accountants will remain the same as it is based on industry demand and only small part of the diploma cohort would complete the journey.

c) Overall these measures are good for  everyone but don't expect a Utopian society to arise out of these reforms.

These measures are great because one of the problems is that if every elite go through an expensive and brutally competitive process to get certified to do something, the beneficiaries are MNC and government organisations because no one will push themselves so brutally hard to join a small local company and be paid a pittance with no opportunity for advancement. Even if they like SMEs, they have to justify these decision to future employers. With this program, SMEs can tap into some accounting talent and get support while these book-keepers study part time to get better qualifications.

d) The non-accounting modules you pick up in University will become more important.

One long term consequence of developments like this is that all graduate professionals would need to pay attention to modules which cover non-accounting subjects. Yes, the so called "superflous" modules which teach a graduate how to read, write and think better as opposed to actual accounting work. These modules are critical to differentiating yourself from the non-degree CAs in the future.

Which brings me to this important point. It's easy to reduce a profession into a list of skills. But with the industry evolving at such a rapid clip, some foundation skills in reading, writing and speaking will become more important as these newly minted "apprentices" may not have had the time to really think about a new issue and develop the ability to perform public speaking. Upon getting their charters they would still need to navigate through massive changes to the accouting profession which I predict would involve turning combining datasets of financial figures with economic data to create charts to facilitate management decision making.

e) Academic qualifications becomes a performance art.

In a nutshell, with multiple streams coming in each profession from JC, diploma and ITE programs. The only competitive advantage left if that you need the ability to relearn and reinvent yourself - and show employers that you can do that. Accountants can learn from computer scientists and engineers that in the face of competition, engineers don't really fight fair. Engineers know how to look after themselves and will compete in fields as diverse as banking, management consulting and would happily leave traditional sectors to die if they cannot give them the pay they deserve.

What matters is that the graduate continue to signal to the top employers that they make potentially great executives who can bring value to the shareholder and make their bosses look good. This is a performance art as prestigious degrees continue to have this strong signalling effect along with years in great brand name companies.

This article may end in a cynical note for some.  

Making the chartered accouting qualification to both degree and non-degree holders will not create a society which emphasises skills. Instead, brands and qualification-signalling will matter much more than skill once everyone fights in the same arena and have access to the same qualifications, the Singapore government can try to create a mindset change but this would take decades of social engineering to work.

Lessons for Investors from my last Karaoke session !

Yesterday was the highlight of my school holidays as a very generous classmate took the initiative to organise a karaoke for us. The location was at K Suites at Orchard Parade hotel, as we are all SMU students, we pay $18 per head which was relatively cheap as it is a short walk from Orchard MRT station.

As you guys might be aware, there is a significant age gap between my classmates and me. My classmates are mostly over a decade younger than me. Some of them who did not go to a karaoke with me before, and snarkily asked me whether I was going to sing Theresa Teng songs. I think they were somewhat amused when I showed them that I was actually quite a Miley Cyrus fan and did Wrecking Ball to keep them entertained.

( On hindsight, I should have twerked ! This generation of youths love twerking !)

Which is about today's topic which is Openness to New Experiences and what it can do for the investor.

I hang out with folks a generation younger and I am quite grateful for the experience. When I go karaoke with folks my generation, the songs are really different. We sang Bohemian Rhapsody and some of the dudes in my generation still sing Abba or Eagles songs. Actually you can assess a person's openness to new experiences just by observing their song choices in a karaoke, if they are stuck in a time loop within their generation, it shows a lack of openness to new experiences. I actually take notes on my iPad to note down what my classmates sing and I was able to keep in touch with the later songs - I picked up One Republic's Counting Stars that way.

I think this new economy is not so much for the young and old but there is a significant advantage of openness to new experiences.

We are witnessing yet again a new form of downturn which affects commodity stocks and the knock on effects is that the great industries of the past may no longer be attractive investments. In particular, my view is that retail is seeing what I would think a permanent downturn as more Singaporeans turn to shop at Q0010 - Funan Centre is the first of such casualties. Stocks like Comfort Delgro would also face disruption from Uber. Even fossil or bio-fuel related industries look bad as governments are now trying to massively adopt solar energy.

Investors need to be cautious but open to new ideas. Crowdfunding remains risky but can draw 8-12% annual returns but I recently got burnt by a default from a small local beauty company.

At a personal level, I'm not too sure that 2% growth in the Singapore economy would not affect corporate legal practice ( Disputes arise from disagreements about money, so less business, nothing to disagree about ) so I am also becoming more open-minded towards community work.

When we talk about openness to new experiences, we need to distinguish between two forms of open mindedness. We should avoid one and cultivate the other.

The first form which is reflexive open-mindedness makes a person unconditionally accept everything. Low IQ people tend to accept bullshit from Deepak Chopra like his now-famous  "Attention and intention are the mechanics of manifestation". A reflexively open-minded karaoke sings everything without curation and understanding the audience. That is why I sang Taylor Swift and Miley Cyrus with my classmates yesterday and did not do any Abba or Dennis DeYoung numbers.

The form of open mindedness which investors should cultivate is reflective open-mindedness which is to push new ideas through existing mental models before accepting it with open arms. For example, I stopped funding lending campaigns with a default rate rate above 16% because they were irrational based on projected expected returns estimates.  I would always stick to fundamental measures like dividend yields even when dealing with new economy stocks.

Similarly, a good karaoke kaki needs to have a filter with what constitutes bad taste.

For me bad taste in music would always include anything by Eric Clapton, Depeche Mode, Phil Collins or Timmy Thomas. ( I like Justin Bieber ! )

What Satay Bee-hoon can tell you about your financial future.

As I am still in a holiday mood, I'm just going to write an article about my life in general. 

The past couple of days have been unusually stressful. As I have only 3 weeks of holidays, I decided to rush through my computer gaming and ended up solving Legacy of the Void in 4 sittings at Casual mode. Playing games at the same intensity in law school is not particularly fun but I think that game wrapped up the entire Starcraft storyline quite well and I'm not too sure whether a Starcraft III would even be possible after this. 

Today, I finally completed the game but I am too too mentally tapped out to play anything else so I decided to get into some really serious instant gratification in the form of retail therapy - I went ahead and bought an Apple Pencil and Apple Keyboard from a friend who was willing to give it up at the same price as the Apple store. I guess this was a win-win deal, as I really don't want to pay a ridiculous amount on Carousell but really want to start doing some early semester 4 preparation this week with my ipad instead of my usual Macbook Air. 

After reeling the psychic damage of seeing my young and fabulous classmates leave the country to travel to places like Japan has forced my hand into erecting a psychological defence of my own. I, too, have to go to my happy place after my exams.The main event for me after my papers is taking my family to Beauty World which led to the idea for this article. Beauty world has strong nostalgic appeal for us kids who studied along Bukit Timah road in the 80s and 90s. 

Beauty World is going to see a resurgence of traffic due to the new Downtown Line but currently exists in a time capsule. Most of the stores I visited when I was a secondary school student are still there. I bought a Fallout 2 game for $5 from Beauty World Bookstore and found every excuse to buy some cheap toys from Grassland Book Store. 

One of things I ate there was Satay Bee-Hoon and I was very glad that it was able to capture the old taste of what Satay Bee Hoon should be. The modern interpretation of Satay Bee Hoon is too vile for me. It generally tastes like boiled rice noodles suspended in peanut sauce. At the Beauty World Food Centre, you can still find really good Satay Bee Hoon and herbal Mutton Soup for decent prices.

But what do we really mean by decent prices ? 

A satay bee hoon costs about $4 these days and the mutton soup with mixed organs costs about $8. ( Do note that this is still a hawker centre and not a food court. )

As a REIT investor, I can imagine what landlords who own the strata title units have been thinking these few years. With the downtown line bringing in more customers in the future, rents should have been on the upward climb of late, we can't even blame the hawkers for charging these prices. Instead, I believe that our food culture should be preserved and I see that in the future the labor costs of preparing the food will take centerstage with food like Satay Bee-Hoon seeing a price escalation beyond the rate of inflation in Singapore. 

Perhaps in the future, I speculate that the food landscape would be like this :

The low-end economy will continue to be serviced by economic rice, beehoon, Indian prata and thosai. Hawkers from China would be required to provide a valuable service for lower income groups so we can expect to continue to get Sze Chuan food at affordable prices. Its necessary to have this tier for every worker in the country. The new normal for food is going to be bleak and largely based on what foreign migrants bring to the table.

However, I expect food like Laksa, Satay Bee Hoon, Char Kway Teow, Oyster Omelette, and Sambal Fish to gradually push upwards in pricing to be on par with 'Melbourne' hipster food ( Which in my opinion is hilariously bland and uncreative ). Local food of this category are "kung fu" based, quite "leh-cheh" to prepare and genuine talent is required to cook up a good dish. On balance, as we Singaporeans are patriots when it comes to food, we have to be prepared to pay more so that these masters can aspire to a better lifestyle. Let's stop expecting hawkers to subsidise us and we should be willing to let them become millionaires too.

What this means is that our financial future would be different from our present even after accounting for inflation, if we wish to maintain a consistent allocation of our finances to food, we should expect a drop in quality. Otherwise, we could be looking at spending more.  

There are staples which we can order on a regular basis like economic rice and prata which would more or less continue to be affordable but a real treat like Satay Bee Hoon or Herbal Mutton Soup would be priced out of reach of a regular meal-goer as we expect to eat food like this as often as we visit the hipster cafes. I also expect a future where more people find it cheaper to prepare meals at home. 

As of now, I will be spending more time at the Bukit Timah shopping belt this holidays. It would only be a matter of time before the big developers will find a way to buy up the strata titled properties and the Beauty World of today would one day become yet another heartland mall with the standard Uniqlo, G2000,Cold Storage and Challenger outlets found in all the Heartland shopping centres. 

And that is what we call progress.

On PSLE, self-worth and net worth.

One of the interesting things I've notice is that for quite a number of years since the 2011 elections, the reports on PSLE result have changed dramatically. There is no longer an emphasis on raw PSLE t-scores in mainstream media. Instead, newspapers prefer to celebrate students who overcome many obstacles in life to do well in the exams. This is good social engineering.

However, starting this year, there is a new kind of phenomenon.

Singaporeans are coming out in social media to talk about their so-called poor PSLE results and, in an attempt to make the kids feels good, remind them that it has not prevented them from succeeding in their lives. In some cases, theses stories are, indeed, a welcome change to the PSLE narrative in Singapore - Josephus Tan, a great criminal lawyer and an idol truly worthy of worship by law students in NUS and SMU (myself included and he's younger than me), put up a very inspirational update and shared with everyone his 183 PSLE score telling kids in Singapore not to lose hope.

While these updates are great, I think that there is a darker side to these messages of inspiration.

In other quarters of the Internet, perhaps among friends, I am detecting a whole new level of humble-bragging. That's right, there are folks who have no intention of using their PSLE grades to inspire kids who did not do so well, they want to use their poor PSLE grades to bludgeon the so-called winners in the PSLE game in the past. These messages are horrifying simplistic social media fare, done often with allusions to the scholar caste lacking EQ.

Today I will use statistics to show you guys how to defuse these demotivating messages which are clearly aimed at cutting down adults and not really done with the intention to inspire kids who did badly in an exam. Readers need to armed with the cognitive tools when they see an Emporer with no clothes.

The first approach is to look at the PSLE bell-curve. In this link to the Kiasu parent's website, we can find in a typical year, how does an average PSLE student perform. And the answer is simple :

The mean score is about 200. The standard deviation is about 25 points.

So if you score 250 for PSLE that's about 2 standard deviations from the mean so you are about top 2.5%. Josephus Tan with his 183 PSLE score stand in the lower quartile, so his claim of being below average is genuine. In a very exam oriented society like Singapore, I can believe that society probably wrote Josephus off when he was 12 and if he has a chip on his shoulder, it's fair.

But let's move on...

Now let's turn to the more sensitive topic on national income and wages. In report on salaries in the MOM website,  the median salary before taxes and CPF is $3,770. I made very rough calculations on standard deviation and found it to be around $2,115.

So suppose Josephus Tan's social standing remained the same since PSLE and he has an income in the 25th percentile. Based on my back of the envelope calculation, his salary would be $3770 - 0.68 * 2115 = $2,331. Now as you can imagine, I really don't wish to guess his real income, it would definitely be many times what it would have been if he was not socially mobile. That's not even counting the amount of pro-bono contribution he has made to the nation at large.

As such, stories that shared by Josephus Tan have real aspirational value to all Singaporeans. They not only demonstrate that PSLE does not matter, they are a testament of how socially mobile Singaporeans are.

Now let us turn to kind of de-motivational messages created by adults to bludgeon each other in the rat race.Typically the kind of low scores people claim to have are not really low scores at all.Imagine a person who humblebrags about his low score of 220 which is one standard deviation above average. His score might be low in the office full of Class S superheroes, but it's actually quite good at the national level.

The next issue is that his salary would really need to spectacular if he wants to humblebrag. If he is not socially mobile, his expected earnings should be about $6,000 a month. I do expect bragging rights to be barely earned if a person can earn one standard deviation or $2115 more than his PSLE percentile score.  So for this guy who scored 220, he would need to show a salary of $8,115 to be able to get into pissing competition with any of his peers.

So, as a self-defence mechanism for adults who have going through mid-life and finding that your life outcomes are not as successful as your old glory PSLE days, maybe you can try this self-defence technique:

Maybe the problem is not that Mr. Humblebrag is not doing well enough in life to rub you in the face, but his PSLE score is simply not fucked-up enough to claim that's he's such a dramatic turnaround.

What is the moral of the story ?

Socially engineering an outcome to dethrone and muffle the acheivements of a few PSLE 270+ Class A Rafflesians superheroes will just create a caste of turnaround warriors eager to sit on the Singapore Iron Throne of one-upmanship.

Question is, are you prepared for your new overlords ?  Kiasu parents obviously don't, they are collecting data which has been censored in the press.

With my own score of 255, I was constantly reminded when I was a kid that I was not in the big leagues even though it was a decent score. It's funny on hindsight but it took me several years to recover from my failure of not being able to get into RI. Like may readers who also are fans of One Punch Man, I feel like a Mumen Rider kind of hero, Class C at the edge of Class B but certainly not at the level of  Genos, Amai Mask or Puri-puri Prisoner.

Now as law student, I now have a income of zero ! Singapore has great social mobility for my 97% percentile PSLE to become an unemployed 0th percentile peon !

So the irony of writing this article is not lost on me.

Thankfully, no one came up to me to to say that I'm not even fit to intern for Josephus Tan yet.

Exams are over ! Quick update on my life.

My last paper was today. I'm going to take it slow and slowly get back into blogging.

First, a quick update.

With 3 semesters of law school down, it has just dawned upon us that Law School is not easy at all when you compact it into three short years. Even the elite RJC types who made it into a LLB program needs 4 years to graduate, most of us ordinary mortals of the JD program who used to working Joes should have seen the suffering and pain coming a mile away. I can only say that my CFA preparations I made a decade ago actually helped me trace a convertible bond and figure how issuing it to the wrong party can amount to unlawful financial assistance.

( Incidentily, here's wishing good luck to the CFA candidates this weekend ! )

But through all that suffering, this third semester has been intellectually very satisfying. We picked up information about property and corporate law which would have been inaccessible even to conscientious folks with a good search engine.  But the price to pay was high, some of us were not prepared for just how difficult this semester was compared to the chump change which was year 1.

But apparently exams were the least of my problems.

During exam preparations, I discovered that my mum was ill and now needed to have an operation just before Christmas. We were fortunate as the problem was detected early but, I have spent some of my exam prep time reading my notes in the hospital. Needless to say, for the rest of this short holiday, I am worried sick and my focus would be on reading some books and my family.

[ Initially i wanted the readers to join me in my quick journey to become a full-stack internet marketer and produce a few e-books for sale but this plan is in the back-burner now as I am going to start my reading up for semester 4 as early as next week. ]

a) No change to the situation in world markets.

The market remains in  a bearish mode. China is still facing a downturn and we are still bracing for the Feds upping their interest rates. The upshot form all this is that REITs may actually look better than other stock investments because they are the least bad in terms of prospect.

I have no idea what would happen next but I think we'll be better served being defensive about the markets. If the STI PE ratio hits about 11, it might be a good time to start bargain hunting.

b) Bought myself an iPad Pro.

During exam season I did put up some of my money to buy a high-end iPad Pro so that my cases would look larger when projected on a 12 inch screen. As of now I an still waiting for the Apple Pencil and Keyboard to arrive in stores so that I can see if I can start creating my notes on a tablet.

I do look forward to getting an Apple Pencil as it might give me some opportunity to release some stress when I can start sketching some fantasy monsters on my iPad.

c) Readings   

My first act when I completed my exams was to finish reading Empire of Imagination by Michael Witwer which is a biography on Gary Gygax, the creator of Dungeons & Dragons. My exam preparations really taught me how to read quickly and I could project it in large font on a 12 inch screen.

More updates will come as I try to finish up the books I have accumulated on my kindle since the past 3 months. This seems to be the only activity that I achieve some flow in these days.

d) Hobbies

I did try to pick up some games today but I guess I was to shell-shocked to focus on computer gaming ( Imagine that ! ) Sword Coast Legends was a huge disappointment as no attempt was even made to make the game look remotely like Dungeons & Dragons.

Disappointed with SCL, I bought Legacy of the Void to see whether I could just relax with a RTS game and it turns out that Protoss units are so elaborate that I no longer have the willpower to micromanage my zealots to even complete the first campaign.

Failing which, I do have a final option. My awesome Millenial classmates informed me of a new 4x Fantasy game called Sorceror Kings by Stardock which looks like the kind of addictive strategy game I loved decades ago.

That's all I have for now.

Catch you guys again over the weekend.

Short exam break.

It's exam time in SMU again and this time the mugging is much more intense than the first two semesters of law school so this blog will go offline for about 2-3 weeks.

Hopefully by then I would have some interesting ideas to share with everyone as right now my mind is occupied by my studies.

So I'll catch you in all in early December !!!

How to be a financial troll ?

Some financial bloggers met yesterday and we discussed how a financial blogger can theoretically turn troll and earn Ad sense revenue by engaging with pissed off readers.

I am trying to distill the discussion into something more concise for the benefit of other financial bloggers. While most are not trolls by my standards, a bit of trolling can make the blog livelier and expand the audience to include people who tune in just to find out what you are going to say next.

So here are some ideas :

a) Be young and 'inexperienced'

Some bloggers who might be creating a persona may wish to consider youth and inexperience as fairly effective flame-bait on the internet. I realised that some bloggers who sound reasonable get flamed for being young and inexperienced but it builds traffic for them anyway. I think this is a good strategy as it taps into the insecurity of Gen-X who is facing their 40s and job losses.

I think Jeraldine Phneah managed to strike gold lately with this strategy. Love her or hate her, I bet she has respectable traffic.

b) Be Female

I was talking to Budget Babe about the flame mails she gets from male fans and realises that she gets a large share of brick-bats simple because of her gender. I think her analysis of the economy is not better or worse than any one of us because no one has a firm grip on the future anyway.

Looking my demographics, financial blogger readership is typically 75% male and I can sort of imagine the effect Budget Babe has on the insecure 20-something male who has yet gotten any sexual access. The affront is very fundamental to a young male's sexual identity because Budget Babe is exactly what she is - a smart, self-assured female who can look after herself financially.

Anyway, I think she should just say what she thinks is a good investment and let the markets be the judge.

c) Eschew Frugality

If you are neither young nor female, one guaranteed approach to turn the entire financial blogosphere against you, get angry readers to scold you everyday but read all your articles is to publicly eschew frugality completely.

Robert Kiyosaki started this maneuver and wrote a best-seller by elevating this into an art-form. To Kiyosaki, saving money is so middle class - this is a very attractive message to the masses.  There will always be a majority who wants to know how to make it rich without being frugal and openly eschewing frugality gives a blogger magical powers and it makes wealth creation effortless.

The psychological power of eschewing frugality comes from 'sprezzatura' or studied carelessness which is documented heavily in Robert Greene's 48 Laws of Power.

[ If you think about it, Singapore university students are masters of this technique, pretending to drink and party while studying hard for the exams to shift the curve. ]

One way of reading a financial blogger or new entrant in Me and My Money when someone eschews frugality is to investigate the person's source of wealth :

a) Did the person come from a rich family ?
b) Did the person marry into money ?
c) Did the person have credentials which gave them above average earning power.
d) Common in Singapore : Person employed leverage on property markets in Singapore during the era of massive immigration.

The investigation can lead to interesting insights if done in the right spirit.

But unless you are really special, it helps your case to remain frugal regardless of circumstances.

When it rains, it pours !

Unlike the other financial bloggers who active talk about their investments, I do not usually share my portfolio positions on this blog.

The reason is that if I do so, I was concerned that some readers might latch onto the idea of dividends investing so fanatically that they might suffer serious losses or miss out on something more tried and tested being offered by, in my view, better informed financial bloggers out there like Investment Moats or the mighty AK71.

But I think sharing my investment bloopers is quite fine because it is educational and demonstrates to readers that high yield investors do experience the occasional failures. 8% dividends is great while the money goes into your pockets but moments like this would give the neurotics some cause for concern before they jump into this investment style.

So this week has been a really bad week for me :

a) Rickmers Maritime has suspended their dividends.

A detailed technical discussion on Rickmer's fundamentals are already highlighted in Investment Moats here. I shall not go into the details here but the shipping trust has suspended their dividends although it remains profitable.

Rickmers is a classic yield trap which I have a tendency to fall into in spite of all my experience. It was very seductive as it offered 15% a year in yields. I knew that owning this counter would burn me one day but I could not predict when that day would be, so I kept my exposure to about 2% of my portfolio and intended to bail out when dividend starts running out.

Lo and behold, I had to get out really quickly yesterday and managed to escape at a price of 17.4cts. It is currently trading about 15+cts.

As I was an investor in Macarthurcook properties securities fund, First Shipping Trust and Babcock and Brown, I knew that in such a situation, the best thing to do is to just run. As exposure is small, I normally could get out with small scratch wounds.

b) Neratel's nasty Q3 results.

I did not see this one coming at all so I was blind-sided by these results, the details can be found in AK71's blog here.

Neratel is an important part of my portfolio because I wanted REIT-like yields but I also wanted equity holdings to give me ample diversification away from real estate. Finding consistent yielding stocks above 8% is very hard and my strategy is to buy many such counters and hope that in any year I can get about 6.5% from companies which do well in that particular year.  Neratel also has nice NETS terminals being installed in many retail outlets. I always thought that this was a stock with very steady earnings which made many investors rich in the past.

Neratel had a nasty 6.25% fall today but I am hesitant to let it go. I am still in the process of hunting for a portfolio of high-yielding equity stocks, so I am still not willing to let go of a counter which still pays out a dividend this year.

How long Neratel would be in a funk is something none of us can answer although AK71's analysis seems quite comforting. I am reeling from quite an amount of pain as Neratel is about 5% of my portfolio.

Generally speaking equities need to be held with more patience than business trusts. Equities generate high returns because they are subject to the vagaries of economic cycles but their behaviour is very different from REITs ! The best way to cope with volatility is to buy many such stocks and keep your exposure low.

c) Things might get worse from here.

I think China's GDP growth is dipping below 7%  and the Fed will raise interest rates soon.

This will not be great for the markets but we did have quite a long era of growth in the stock markets.

I don't see myself dipping into my capital soon but the odds of emerging from Law School with a lower portfolio size from market movements is now a realistic possibility because after all, I paid $70k in school fees. If that happens, I have to suspend my retirement and really buckle down to get some real work done.

In the meantime, I will be farming my excess dividends back into the markets to increase my income moving forward.

Are you a One Punch Investor ?

If you are a fan of Japanese Anime, you might have watched a few episodes of One Punch Man.



In spite of the fact that Saitama can kill any Kaiju Monster with just one punch, this is an eminently human story of how a person can cope with ennui and boredom when he finally attains god-like powers. I can definitely relate to that, being somewhat having no income for the past 22 months but being  able to hold out as a SMU student.

As  a student, my expenses have become really small and most of my time is spent reading my cases and managing this blog that I really don't have the time to really get into expensive hobbies. Consequently, with the exception of wanting more time, I have little wants and so have a life which would be boring compared to my friends who are always sharing a pic on their travels on Facebook. I have not even listened to some music I bought from iTunes.

But I digress.

The notion of the One Punch Investor is an interesting one.

When I was growing up, my dad always told me a story of his friend who was not a professional and did not know anything about investing. All he knew was that SIA was a company with a great future, so he bought lots and lots of SIA with his salary and inheritance starting in the 1960s. He also ate his dividends and reinvested it into SIA.

According to my dad, when his friend retired in the 1990s, he had about 500,000 shares of SIA. Currently worth over $5 million dollars today.

Naturally, I did not confirm this with my dad's friend who regularly visited my home when I was a JC student. And in spite of the story, I took a lot of steps to diversify my dad's portfolio and took the opposite approach - I diversified aggressively and focused on yields from multiple sources.

Here is what I think about this notion of the One Punch Investor

a) Highly dangerous to invest in only one stock.

Investing in one stock also makes the investor lose out on the benefits of diversification.

I can accept that there are many One Punch Investors in Singapore. At least one prominent financial blogger is almost single-mindedly invested in Keppel Corp which I do respect.

If Wharton professor Jeremy Siegel could invest in one stock, I would be that the counter would be Philip Morris although I would doubt that Prof Siegel would own only one counter his entire life. But investing is a marathon and stocks fall in and out of favour. Sometimes, a conglomerate with a sustainable competitive advantage can be run by managers who destroy value. Phillip Morris is constantly worried about lawsuits.

It might be better to look for about 8 growth stocks if you wish to emulate the investing greats like Warren Buffett.

b) You might be a One Punch Investor without knowing it.

While its fun to make fun of One Stock Investors. Many of us might be one without knowing it.

Some of us invest in Employee Stock Ownership programs which is practically investing in one stock. Worse, since you also work for the same company, you are also investing your entire human capital on that one company. May be wise to consider diversification if you fall into this category.

You will get a nasty double whammy if the stock tumbles and you get retrenched at the same time.

c) What would I do if I can only invest in one counter in SGX ?

If I have no choice but to invest in only one counter from SGX, only an ETF investing in global markets would make the cut. I would place all my eggs in the Lyxor World ETF that is currently being traded in SGX. This gives me the benefit of buying different exposure to stocks around the world.

Of course, if I had made such a choice I would have to pay for the ETF manager's expenses and expect a lower return from the index itself.

d) 100 sit ups, 100 push ups. 

Of course, the anime has some nuggets of wisdom. Whether you are a One Punch Investor or a highly diversified yield pig like me, we should never avoid the constant and never-ending improvement that all investors would need to subject themselves.

I do this by maintaining this blog, reading what my fellow bloggers have to say about investing and going through the Edge and the Economist every week - All that on top of my case load.

Of course, it would be very interesting if readers would share what stock they would buy if they were limited to one counter throughout their entire lives....

Almost 22 months since I left the workforce !

Time really flies...

Thought a quick update is in order.

a) Financial update

It's quite scary to think that I've not had a pay check from a company for 22 months. Even more interesting is that I've yet to draw on my investment portfolio capital since the last day I left the workforce.

Some sales did take place to reposition my stocks and some monies were returned when MIIF was taken off SGX. But all on all, I was able to farm part of my dividends back into the markets and a couple of P2P lending campaigns.

But overall, my portfolio was still down due to the slowdown in the Chinese economy, I expect my overall dividend flow in 2015 to be lower than 2014 but the year is not over yet and I normally assess my annual income in January when the summary statements arrive.

This month is particularly important because I finally paid up for Law school ( Yayyy! ). Accelerated payments by SMU was financially quite stressful for me and I had to hold back on investing in the stock markets when the bear market was making everything seem so attractive to dividend investors. Hopefully the November batch of dividends will see me playing more actively in the markets to boost my income further before I graduate.

2016 is going to be financially challenging year for all of us. I am likely to face dwindling dividends from lower rents but I  have to maintain a mortgage loan with higher loan payments. My CPF can probably last me another 4 years of mortgage payments, but there's no way of predicting what would happen in China over the next few years - one slip in my asset allocation, and I will have to get a job as lawyer in 2017 because I have to, not because I want to.

I find myself combing the China section on the Economist carefully for any investment insight, but so far it's anyone's guess as to what will happen next.

b) Studies update

For this semester, I had a lucky streak of being able to finish all my presentations early which meant more time for my exams. I was so happy last Friday after my last presentation that I spent 24 hours not touching my books and case readings.

More importantly, it feels good to be let out of my cage.

I concluded my pro-bono and community service requirements for my program and have more time in my hands to possibly read some non-law school writings.

This semester I am starting to really stretch the envelope of what it truly means to be JD student. I have started coming up with more innovative ways to render the legal knowledge taught in school. This means really leveraging on my 15 years as an IT guy in class.

This semester, I was able to hack a prototype on Google Forms to advise lawyers on Non-Exclusive Jurisdictional clauses without declaring a single variable.

The class is also warming up to the idea of employing computer flowcharts to elucidate certain areas of the law. The following is a computer flowchart I hacked for a Corporate Law presentation. I learnt flowcharting when I was a JC student doing Computer Science, it's getting a fair amount of attention in class these days because it is simple and useful.

Maybe the folks in Singapore Academy of Law will create some diagramming standards because expressing everything in prose is so 19th Century. ( For that to happen lawyers must believe that they can learn something from IT guys. )

c) Reading list and hobbies

To preserve my sanity I play a Dungeons & Dragons 5th Edition game every week. Every Saturday, I play a polearm wielding schizophrenic human paladin whose is a real beast in combat. At 3rd level, I took out an elite boss with a 42 damage smite attack.

Otherwise I am reading some newer RPG products like the Sword Coast Adventurer's Guide and Primeval Thule.

For financial books, top on my list to read next are all of Teh Hooi Ling's Show me the Money Books and this highly recommended work called Asian Financial Statement Analysis by Tan Chin Hwee.

I've been really deprived when it comes to movies lately, I had to miss out on really good ones like The Martian but I was really grateful to be able to catch the Last Witch Hunter which stars Vin Diesel who is another D&D player.

Next week, I hope to catch James Bond : Spectre.