Some insights from Psychology - More loose ends from the previous talk.

There is one loose-end from the last talk.

Apparently, my presentation slides were not the latest version which I sent to the company admin. This turned out to be a good thing because, this way, my talk ended on time and it might turn out out to be more draggy otherwise.

Just thought I'd share information about the missing slides and in the meantime showcase to the more intermediate readers the depth of research we go to prepare our slides. This is not something you can read about even if you combed all the Wiley Finance books or read all the self-help improvement books on Amazon.

The material is from KB Chan's "Work Stress among six professional groups : the Singapore Experience" written in 2000 in the journal Social Science & Medicine.

• The most stressful profession is Teacher followed by Lawyer followed by Engineer. Maybe after a couple of years you will find me getting a diploma in NIE. ( Just kidding !)
• Generally speaking,  folks hate a workplace where the boss does not support your work and you have horribly political colleagues. 
• The year 2000 was 17 years ago and, therefore, ancient by social science research standards. In those days, the general trend faced by working professionals is the de-professionalisation of knowledge. We respect professionals less now because we can google answers prior to consulting them. I've constantly switched doctors for my diabetics treatment until I have an awesome Associate Professor who advises me knowing that I show up prepared for my appointments. ( I think he will have concerns over the Montgomery test for negligent medical advice in our next meeting, haha ! )
• Doctors and insurance agents remains the happiest professions in Singapore. Yeah, yeah, you guys know how I feel about the latter. 
• Both professions are happy due to the high locus of control experienced. So if you can't switch professions, find a corporate culture which gives you the highest level of personal autonomy if you want to reduce stress. This may rule out the public sector and some uniformed services.

Ok, that's it !

We're back to regular programming next week and look out for out next talk in July.

JD Aftermath #6 : LLBs

Interactions with LLBs are the fundamental difference between SMU and NUS's approach towards legal education for mid-career professionals. SMU prefers that mid-career professionals interact with themselves first with limited exposure to LLBs to come later. NUS would thrown their JD-equivalent to swim with the sharks from day one.

JDs will generally begin to have encounters with LLBs when they start picking up elective modules in SMU. Its generally  a great experience.

On the surface, LLBs are the ideal children of Singapore Tiger Moms. Perfect in every way. Straight As for their A levels. Future lawyers and bright shining lights of the legal industry.

The Elite of the Elite.

That's until you get to them better.

The cynical will say that SMU has a dual-track system for LLBs. You know which 'caste' an LLB belongs to after just talking to them for a short while.

a) Tee Kong Kias 

Hokkien for Heaven's Child, the Tee Kong Kia are the true beneficiaries from SMU's brutal legal education system. These guys are excellent in class and also have plenty of options to represent SMU in Moot competitions. They are mature, articulate and intelligent.

Half of the time I think their lives will be wasted in the Law because I imagine how many jobs they can create if they go the way of the Razer's CEO who was also a law undergrad.

Nevertheless I expect their impact on the legal system to be large in the future.

b) Tai Ko Kias

Hokkien for a Leper Child, I was so glad to have buddy LLBs who are  Tai Ko Kias.  ( I use this term in an affectionate manner which shows my appreciation of them. )

They are still brilliant because its still Law School, but they are chill and prefer to use their high general intelligence for things other than beating the shit out of other Universities unfortunate enough to face SMU in competition. ( Recently, we beat the crap out of Oxford. )

It is the Tai Ko Kias who remind of my days in Raffles Hall 20 over years ago and my Toastmasters days when somehow most of my friends were Law Students. The lecture tutorial system in NUS gives more room for slackers who typically pick up tempo only a couple of weeks before the exams.

LLBs are simply better than JDs because, unfortunately, the JD program accepts graduates with no working experience allowing others to cast the JD programme as a 'second chance' for those who do not qualify for the LLB the first time round. This is why in previous posts, I propose provisionally alloting a seat for JDs but insisting that they use their first degree for two years in the work force before admission.

Advice for JDs is to avoid classes with many Tee Kong Kias when you choose an elective.The shift in the grading curve is brutal and two of my modules International Moots and Civil Procedure took a nasty hit because my classmates were too brilliant and can survive on 4 hours of sleep a day.

[ Tip : Tee Kong Kias take the more substantive and litigation driven modules because they are damn zhai and want to kick everyone's ass. You should avoid International Moots, Civil Procedure and super-hard modules like Insolvency.

Tai Ko Kias take the modules which my friends claim are more relaxed and gentle like anything related to Mediation and Arbitration. Subjects with low legal content like Project Finance also attract Tai Ko Kias. ]

Do enjoy working with your Tai Ko Kia buddies because they are possibly the only students who don't mind giving JDs a chance to work with them as they are friendlier and less grade optimised. Take into account that they have just completed JC or NS so may not be as conscientious as full working adults.

Due to the generation gap, you can really benefit from trying to understand how they interact and use their apps. It's not what we 40s do, even if we are tech savvy.

That being said, I really benefitted from studying alongside young people : Yesterday in my office, I schooled the 20-something associate on the latest album by Harry Styles.

Personal thoughts after last night's talk on Stress-free investing

Ok, I've finally recovered from last night's talk. Let's talk about what happened last night from my perspective.

Last night, Lionel gave passionate speech about automating one's investments using ETFs and Alvin Chow spoke about implementing the permanent portfolio.

As for me, I was barely sticking to the original intent of the company directors when they set out the topic for the event. I really wanted every single talk I give to feature unique material that cannot be found in financial blogs and popular books on personal finance so I tried to craft a talk which attempts to link a person's financial capabilities to psychological well-being, fortunately there was a study made in the UK which allowed me to conclude that raising one's financial capabilities will also improve a person's psychological health.

The second component of my talk was about insurance. I reminded the audience that risk is almost synonymous with stress and can be active managed by either tolerating, avoiding or transferring it to someone else. Then I shared my minimalist framework on how I manage my personal insurance.

The third component is about dividends investing.

What was really amusing during the talk for me was Alvin asking the audience whether they thought my approach to investing was stressful and about 80% of the audience raised their hands.

I don't really have a defence if someone thinks that my approach to money management is complicated. If you are a regular reader of my blog, my approach to Life is complicated. The important thing, however, is that the audience acknowledges that dividends investing is the reason why I can be financially independent today. I have been feeding my family without a day job for almost 4 years while paying a full home mortgage and my net worth has even gone up since the day I entered law school.

The only thing I might add is that life sometimes demands that a certain amount of attention need to be paid to managing money. This is a cerebral exercise and can be very stressful.  If you do this earlier, it can give you a much more comfortable life in your 40s. If you choose an alternative which is less stressful during your 20s, you might have to pay more attention to money when you get older. The problem is that for Gen X, by the time they really start to think about managing their money, their main income stream becomes threatened by economic disruption. It gets even worse when you are sandwiched between two generations and have to support your parents and kids at the same time.

One final point.

I think we did not address a good question last night.

The question is whether are there are simple ratios that can be used for bond valuation that resemble the P/E and P/B ratios. The short answer is no.

This is a complex technical question which we could not answer last night.

To get an idea of how this is done at the professional level. You may click on this link here.

Bonds are valued relative to each other by looking at different spread values relative to a fixed benchmark.

I would be surprised if any financial blogger were to employ one of these approaches to determine whether a particular bond is over or under-valued.

Personal Update - Turned down monthly 5-figure job to pursue my legal ambitions.

If you google the word "decision" and you will know that the roots came from an old Latin word which literally means "to cut off". This is the central theme of my personal update today.

a) Just crossed the Rubicon - a legal career it is !

Two days after my final exams, a headhunter contacted me to look at some fairly attractive IT roles in a large MNC. I was willing to look into it because I have yet to begin work on my internship. I thought it may be interesting because I have been out of touch for 3 years and do not expect an attractive offer. I tried to prepare for the interview and just for fun, tried to enrich my previous IT audit experience with some of the stuff I learnt in school about MAS regulatory practices. From a compliance perspective, I walked the interviewee through areas of a MAS compliance which would benefit from legal analysis.

I did not expect the interview to turn out so well. The job which was originally being put on offer was set aside for a larger regional role with a full team to manage.

At the same time, things started out rather well in the law firm I interned in. I troubleshot financial spreadsheets to assess a divorcee's assets, resolved IT problems and researched on fairly cutting edge areas of a law and was actually listened to when strategising litigation with my boss ( All within 2 weeks ! ). It was hugely positive experience and the opposite from the horror stories from many of my peers.  

So I have a dilemma in my hands. I can take on a 5-figure job and would be able to hold out for 3-4 years to resolve my condo mortgage decades ahead of time. Or I might be able to build a legal career and be able to solve complex multi-disciplinary problems every day but at a fraction of my IT salary.

So I crossed the Rubicon and submitted my application for Part B. Having consulted a few friends, I realised that no matter how things turned out, there will be regret either way but my family's wisdom makes sense. An MNC can let me go anytime, but a legal practising certificate belongs to me and follows me wherever I go.

I credit my financial independence for allowing me to make this decision. Every single financial blogger I consulted would have taken the job rather than stay on with legal work.

b) Inflicted with buyer's remorse.

Talking about decisions, I was hit with buyer's remorse lately.

The Onyx Boox Magna Carta reader is a large 13.3" e-reader that is loaded with an Android 4.4 operating system. When a ready set was available on Carousell, I plonked two months of internship salary to buy the device up and was almost immediately disappointed by its performance.

Moral of the story - You can't really graft an Android OS onto an e-reader becare e-ink screens have a lower refresh rate. The system feels very slow and key android apps like Adobe reader and Dropbox are not compatible with the system.

Still I am in the process of getting it to work better. I managed to put Kindle on the system and can now read my Feedly RSS news on it.

c) Prepping for the talk this Thursday 

I'm really hyped up for the talk this Thursday.

We have novel material that just can't be found even if you pay $5k plus to other financial gurus. I bet you cant even find a book on the information I will share on Thursday because they came from social science research papers.

Hint : Once and for all, I will tie up all the scientific evidence which shows that improving your financial capabilities will reduce the psychological strain in your life.

Of course, I also will be talking about getting more dividends.

JD Aftermath #5 : On Foreign Students

And I am not done ! 

Today I will do an article on foreign students and tomorrow I will talk about LLBs.

My JD experience would not have been such a positive experience without foreign students. Older candidates tend to be minority and tends to get sidelined due to the generation gap. This makes them excellent partners with foreign students who can also be marginalised but for different reasons.

a) Group work grading makes it hard for a foreign JD student to fit in.

The problems faced by foreign students are institutionalised into the SMU education system. Singapore students who get into law school are straight-A students (in both Universities) who have high expectations on themselves and others. 

Coming from a different culture and university, foreign students are unlikely to be used to the dedication and fervour that locals are used to so over the years have developed a reputation for being slackers. Foreigners from particular countries might also be prejudiced for not having English as their first language.

It does not help if some seniors advise juniors in any program to stick to locals because the locals still have a better reputation for getting shit done. The Russian hacking scandal in SMU which affected my exam scripts does not help because locals might just lump all foreign students into the same 'slacker' category.

b) Foreign JD students do buck up after a semester or two. 

The problem is that locals are too quick to condemn and a bad reputation sticks for foreign students. It's actually quite hard for a foreign student to qualify for the JD and every batch has only around 4-5 of them. 

They do catch up after a while and do so in fairly remarkable ways because they are quite smart and streetwise to begin with. 

Most group collaborations I have with foreign students are successful because we are able to come up with novel solutions to unconventional problems. The dividends paid by having group diversity will pay off if someone is patient enough to tap them.

c) Fortunately, the foreign JD students will get the last laugh in the legal industry

Life is unfair and will continue to be so regardless of the wishes of the rigid, neurotic Generation Y local. 

The economic downturn for lawyers does not affect foreign students. They are prized for their language skills, rarity and possibly the ability to attract more business for their companies. Many are able to join the more prestigious law firms with moderate grades. 

Before I end, I'd like to give out some not-so-nice comments on Foreign Exchange students which can be a nightmare for our LLBs to deal with. Not all of these students come from reputable universities and many are here to party in Bali and Phuket. I have never heard of a happy or successful collaboration from my LLB friends and University administration really needs to look into the academic disadvantages of being paired with a foreign exchange student in campus. Perhaps those who who only need to pass a module should be segregated for marking purposes so that local students would not be so terrified of them.

NUS was the same 20 years ago. A bunch of foreign students were unable to take their final exams because they lost their passports in Thailand, got a failing grade and were sent home in disgrace.

 

Equity Management #12 : Enhanced Active Equity Strategies 130-30 Portfolio.

If you can imagine a long-short market neutral portfolio, it would be quite easy to imagine a 130-30 portfolio.

The first step is to find some sort of a prime broker.

[ Some helpful folks pointed me to foreign brokers Ameritrade to see if it is possible to construct such portfolios which facilitate the shorting of stocks. Based on I have been told,  prime brokerage services are not available to local retail investors but coming with something similar might be possible with some leverage and using CFDs. ]

1. The first step is to put in say $100 with the prime broker.
2. You then sell $30 of stocks short, creating $30 from the proceeds of the short sale.
3. You can then buy $130 of stocks.

You have net exposure to the market and will tend to do well when the market does well but some extra earnings can come from selecting the right stocks to buy and sell.

This form of enhanced active equity strategies relies heavily on the ability to pick stocks and value can come from ignoring, underweighting or even shorting stocks which are expected to do badly over the medium term.

Prime brokers generally do not provide stock lending services for free, but in the US, there are tax and regulatory  advantage to this arrangement.

Personally, I think it would be nice if Singapore can find ways to facilitate such trades in the local stock markets. Professional investors should have the ability to find new sources of outperformance given that we retail investors are really leveraging on what we read of the blogosphere to make our own investment decisions. It's also a great way for the better retail investors to start pushing their portfolio management to new levels.

Over the next decade or so, I'm not even sure if fund managers would have a place in the investment ecosystem once robo-advisors start to be adopted by a new generation of investors.

First investment knowledge has become de-professionalised of late.Second, retail investors might soon be armed with pseudo-Bloomberg like capabilities to build up their wealth their own way.

If you are an investment expert who found a way to establish a 130-30, do share your wisdom here. I am thinking of ways to up my game as well.

JD Aftermath #4 : Generation Y Lower Division ( 20-something year olds )

A lot of what I'm going to say about 20-something year olds might be coloured because of the ridiculous generation gap between myself and them.

And this often leads to hilarious interactions when I work with them in a team :

In one instance, when a classmate's boyfriend showed up to pick her up, I told her that her "BAE" is here. She told me to stop using that term because it's very mushy and she feels like vomiting when hearing that term. In response to that, much to her irritation, the other Gen-Ys in the team started using the term Bae to describe her boyfriend.

[ Much later, I found out that BAE is not a Korean term but an acronym "Before Anyone Else" ]

a) Gen-Y lower division are the best performers in the cohort.

Academically the Gen-Y lower division folks gets the best academic results because they did not lose any momentum from completing their previous degrees. Those from SMU are also very seasoned with SMU's class participation scoring system.

b) Gen-Y lower division are, unfortunately,  the most unnecessary part of the JD Program

I am not saying this because I want to show disrespect for my classmates - Many of them deserve to be in the course more than I do.

I say this because I feel very strongly that JDs are not meant to compete against LLBs but to complement the legal industry with a separate set of skills. Having working experience prior to the JD programme should have been made compulsory for the good of the industry.

While I certainly admire and respect my younger classmates, I would have derived so much more from the program if the administration were to require two years into the corporate world before letting them start the course. Alternatively, those without working experience should be allowed to pay lower fees and take up a legal education as LLBs.

c) Gen-Y lower division is an uptight,  neurotic and anxious mess.

I really blame the Singapore education system for making our youths so uptight. These poor guys gotta survive PSLE and the A level system before getting their first degree. If they mess up any of paper qualifications, the work place can be very unforgiving and they can lose access to the best jobs in the market. ( That being said, I also blame myself for occasionally being swept into this fervour, but those were not my proudest moments in SMU. )

The lack of experience in the real world creates the most neurotic and uptight bunch of classmates you can possibly have. For example, it is ok to start building a study group early but to do it the previous semester prior to the exams is clearly insane. Some working experience might  be able to teach some students the value of "chill" and remove that piece of mahogany wood which is shoved up their asses.

This generation is also very quick to condemn others with foreign students being generally at the receiving end largely because of cultural differences which on hindsight, should have been celebrated rather than something which polarised and plagued my entire class.

d) Gen Y lower division will regret not changing their ways.

I sound like a really bitter uncle when I say this but I have backing in the form of the book The Complacent Class by Tyler Cowen.

If you think about it, my generation was the one which started out creating this mess. We were ultra-competitive and we knew that examination results have an implication on our career and life outcomes.

Youngsters today are different.

The proliferation of search tools and web apps now allow the younger folks a chance for more curation and customisation which unlocks different and more varied lifestyle choices. So a 20-something year old is not constrained by societal expectations as much as Gen X.

For example, in my generation,  as an alpha-male, you want bag hottest chick in campus because that is what winners do. Most capable guy gets hottest chick. Today, you don't aim to bag the hottest chick, you use Tinder or any dating app to get something which suits your fancies. If want a chick that digs Overwatch and cosplays Zarya ( if you have actually a weird thing for Zarya *wink* *wink* ), there is an app to find chicks that look like Zarya.

The ability to live your life as a niche is a feature and not a bug of Gen-Y living. A customised career can be found with the right search portal.

One conclusion from Tyler Cowen is that a lifestyle of competing to be the best would eventually be supplanted by finding an ideal niche that suits your personal inclinations.

This is my final beef with my youngest classmates.

If my generation can be out of touch, it can be forgiven because we are in our 40s.

If folks in their 20s were to still act like the old fogies of my generation and be competitive as shit over getting the "best" jobs in a sunset industry where they might end up using their 3.7+ GPA to do electronic discovery, audio translation or end up photocopying documents.

The final joke is on them.

JD Aftermath #3 : Generation Y - Upper Division ( 30-somethings )

My post for today is about who the JD course should really be intended for - 30-something folks who have a wealth of experience who want some legal training either to supplement their professional careers or wish to bring their professional expertise into the legal industry.

This is a very wide demographic so my comments are going to be fairly general. The good candidates are highly sought after in team projects and the bad ones are avoided like the plague because it's such a large population the variance in quality of 30-somethings is rather high.

a) They are super-vested in their studies

If you are in your 30s, there is no business or portfolio to back up your standard of living, so this category is moderately enthusiastic about the course. Getting a good grade may still net them a decent increment if they can get a training contract with a top law firm. Even if they return to their old jobs, their companies will welcome them back as their last drawn salary is not particularly high.

These guys have a reason to excel in school.

b) Good ones are "chill"

The biggest lesson I learnt in law school is the concept of "chill". It is somewhat like "ease", either you have it or you don't. A chill classmate, unlike academic out-performers, are a lot more well-loved by the rest of the class and a lot of effort is made to maintain friendships with them.

When you are chill, you exude confidence and have less of a need to prove yourself. In a team you excel because you do enough to get the job done without stressing our your fellow team workers.

The problem is that we are in Singapore and Singaporeans are not very chill when it comes to their studies.

c) Bad ones are bad in their own way

Like a Tolstoy epic, bad 30-somethings are often bad in a unique way. Some do really shoddy work and forces you to question the selection process of the course. Others focus on individual work and leave the project group to do the heavy listing for them. Some have really bad communications skills. Some think they own your notes, resources and time and even expect you to double up as their tutor.

After two semesters of study, a class will generate a personal "black-list" of sorts. Everyone has a list of condemned classmates they'd rather die than work with. Some, like me, will speak to other cohorts to trade information on the black-list to avoid working with such folks.

On hindsight, perhaps a black-list would not be truly necessary. Every group project team can survive with one social loafer, but often a group can often be destroyed if it contains two. If a class can agree to share these hopeless team workers,  everyone will do fine. Problem is coordination and classmates are forced into some sort of a prisoner's dilemma situation to monopolise the good workers every year.

d) Things don't look good for 30-somethings in the JD Programme

It is unfortunate for my batch that things do not look so good for the 30-something year olds.

They are on the wrong side of a bet, sacrificing three of the highest earnings period of their lives to get a degree to qualify for an industry that is facing an unprecedented downturn. If it takes 3-4 years for fresh curbs to clear the over-supply of lawyers, my classmates would have written off 7 years of the best earnings years of their lives.

If they can't get a training contract, the joke is that SMU would have been merely a "Kidzania for Adults" moment for them. They would have spent 3 years pretending to be lawyers without an opportunity to carry on with their career aspirations.

Nevertheless, it has been a great honour to study beside them.

JD Aftermath #2 : Folks you will meet at the course - Generation X.

By the time I can write this, I feel a lot better. My grades are finalised and I managed to just squeeze north of the equivalent of an honours classification.

This closes another chapter of my life.

To discuss the folks who you will get to meet in Law School, perhaps it is better to break it down into three separate articles. 

First before I start my fairly candid write-up, I'd just like to say that overall the people in this program are great folks to be associated with. I am honoured to be part of the cohort of 2014 because only a select group of 40 students are chosen to join the JD program. A lot of unhappiness between all of us stems from the fact that people from different age groups are forced to work together to achieve a common grade and we find ourselves under the mercy of someone who may not have the same work ethic as we do. 

Ok, I will start with my own cohort which is Generation X. 

a) Gen X has no rational reason to be signing up for the JD.

The first fact which screams at you is that folks in my generation have no reason to be in law school given the disruption the legal sector is facing. The opportunity cost is ridiculously high at around half a million dollars and training contracts is much harder to come by. We are also saddled with many personal responsibilities at home making it a fairly difficult undertaking. If you interact with folks in their 40s, perhaps it would good to figure out what's their motivation because it is often interesting and even contradictory to common sense.

It is probably easier to imagine folks in their 40s taking an executive MBA because it's just a very expensive networking session with a requisite amount of intellectual masturbation. 

[ If you are mid-career and need some legal knowledge just to carry on at work, seriously consider a part-time LLM instead. ]

b) Gen X may be the hardest folks to work with in teams because of the generation gap.

Because of family commitments and a general lack of a credible reason to be in law school, we may not make good team-mates. This can be very frustrating for folks who really need a degree to get ahead in life. Some of us have different priorities and can't put grades above everything else in our lives. We have kids, spouses and parents. Some of us even continue to have careers throughout law school.

There is also a jaded sense of entitlement amongst us older candidates. One junior was talking about being scolded for not sharing his notes on FB. I replied that it is as if some people have a constructive trust over your hard work ( inside joke ).

Of course, I receive a lot of candid feedback about folks my age across all cohorts.  We 40-something years olds really need to listen more and direct team-mates less. 

c)  But working with Gen-X is fairly rewarding when it comes to grades. 

Older candidates may be harder to work with because of the generation gap but I have yet to actually experience bad grades working with my own kind.

One possibility is that being older allows us to project more gravitas when we make a presentation. Another possibility is that we bring a wealth of experience into the team. Another possibility is that we simply have been reading newspapers for a much longer time and can surprise the professor with our insights.

While it might piss some people off to say this. At least I am proud to be part of the group that does not defer to someone because of their GPAs. We can be outvoted by our peers but, similar to a work situation, respect has to be earned when working in a team. 

[ One of the problem in law school is that it's very hard not to become an asshole if your GPA is high because a lot of folks engage in hero worship. It's part of being a society that is meritocratic and hierarchical. The environment then shapes these people into the guys who were so arrogant, engineers like myself eventually enter law school so that we can provide our own legal support.  ]

Equity Management #11 : Alpha Transport with Derivatives

First, a short personal update, I am still acclimatising myself to a 9 to 6 routine and struggling with a 6.5 hour daily sleep cycle so I am still tired after work. Given time, I should be able to return to my old blogging momentum.

So far, I am enjoying my internship. At least I can spend my time on public transport reading investing books and not some legal case or textbook. I don't miss reading legal cases because that's what I do in the office all day !

Anyway, today I only have a short insight to share which is the idea of an Alpha transport with Derivatives.

a) Defining Alpha Transport

This is basically the idea that you can combine long positions in equities with short positions to generate alpha which is superior performance arising from better stock picking skills. This alpha can then be transported to another portfolio which is an optimised based on different asset classes.

b) Derivatives

There is this opposing idea that most portfolio returns do not come from stock picking but from asset allocation. For example, you can have a decent enough portfolio when you construct your portfolio using ETFs in a 60/40 proportion in equity/bonds and you will not really make very much more by cherry picking your stocks.

One effective way of constructing a portfolio which gives average index returns is to buy futures or options. For example, a future on DJIA derives it value from how much the index is currently doing.

There is even a way of replicating an index using swaps.

c) Alpha Transport + Derivatives

The book proposes that a long-short portfolio be combined with a series of derivatives which are created to simulated index returns.

This way you can get the best of both worlds. An optimal asset allocation between stocks and bonds as well as the opportunity to select stocks for superior performance.

d) Shortcomings of long-only fund managers

This might be useful for regular readers of financial blogs. Alpha Transport with Derivatives is an alternative to the traditional active fund manager.

The first shortcoming of fund managers and quite a few super-serious financial bloggers is that the work put in to think about just one stock counter is quite labor intensive. Some analysts start with SWOT analysis and look at the industry the stock is in and then they drill into various accounting ratios to determine whether a stock should be bought. The labor intensiveness of this form of fundamental analysis hurt these fund managers because it limits them to a small pool of investible counters. The consequences may also include under diversification. This makes FA quite unwieldy for retail investors.

The second shortcoming is that traditional active management is super-subjective. How do you know that management is great ? What makes you think that the industry is going to survive technological disruption ?

To a certain extent, I deal with this problem by reading second hand research I can find from the web and polling the thoughts of other bloggers. I can possibly comb through 5-6 reports a day. The other way I deal with the problem is to simply ignore reports on stocks which do not provide at east 6% dividend yields.

In my next talk, I will show you guys a quick and dirty way to create a system that generates stock picking suggestions so that you will always have more investment ideas than the money you have for making investments.

Quick Personal Update : Leisure Phail !

I don't really have anything substantial to share today and some readers from SMU Law School may be eagerly awaiting for my "kiss and tell" article on this blog.

Right now, I am not in the right frame of mind to complete that article because our professors are slowly releasing the results of the final semester, as I am teetering on the brink of losing a decent degree classification, my state of mind in a huge mess. For the past two nights, I have been getting nightmares about getting shitty grades but there has been a small measure of good news. Just now, I checked the SMU website and I cleared my hardest subject last semester and I now have only 0.5 modular units of grades to report and I currently have a decent probability of scrapping through.

Still, it's not over until its over and Law School release of results have always been a nasty episode of Game of Thrones for me.

But onto happier things...

Unfortunately I did not succeed in meeting all my leisurely KPIs during the past 2 weeks.

I was supposed to finish two fictional novels which does not have anything to do with law, engineering or finance. I was partially successful and completed Thrawn by Timothy Zahn about who is possibly the coolest villain in the Star Wars Universe. But yesterday I was only able to finish half of Death's End by Liu Cixin. I strongly recommend the Liu's award winning Three Body Problem series of science fiction novels which came from China. It was truly epic in scope and its brilliance is only matched by the TV Drama Serial Fires in Nirvana.

Interestingly, when I face a constraint and have to make a trade-off during a period of leisure, the first thing I drop are computer games, so I did not download and install the enhanced version of Planescape Torment. I also did not manage to start on any anime series even though Gundam Iron Blooded Orphans Season 2 is number one of my list right now. One reason is that I am an extrovert and prefer to hang out and talk to people rather than indulge in manufactured flow. The other reason is probably due to the amount of literature I consumed on how computer games have become the number one drug for unemployed non-degree males around the world.

One of the biggest conundrums of my life is that my best gaming ideas and insights only pop up when I was academically stressed. In more peaceful times of my life when there are no cases to read or exams to pass, I actually am actually quite lethargic when it comes to doing things I enjoy, I only started doing up logistics for my Bangkok trip about 5 days before we flew.

Anyway, sorry for the pointless ranting. Over next week, I will fleshing out the details of my next talk which is shaping out to be quite cool and you'll be bale to read the next instalment of Equity Management.

Tomorrow I begin another round of internship but with a REAL law-firm.

Next Talk : Investing with Less Stress. ( 18th May 2017 )

Ok, it's time to start promoting our next talk again and this time round, we're happy to say that we're back to talking about investing in the stock markets. You can get more information on how to book your seat by following this link here. This time, you should act quickly because we've consistently sold out for all our talks but we've actually got a smaller venue.

The topic of our next seminar is "Investing with Less Stress".

The slides are still a work in progress so my outline is still a little messy but I will be talking about the following things :

• What are key sources of stress in our lives.
• Computer Science's case against overthinking.
• How risk management as a professional discipline can be applied to your daily lives.
• Insurance as a form of risk transfer - You can't really talk about stress and risk without talking about insurance. Also, I can't talk about insurance without being candid and disagreeable. ( So this should be entertaining if you are sick and tired of commissioned salespeople from the insurance industry. )
• How investing can fit into your risk management framework and complement a minimalist insurance lifestyle.
• Dividends investing as a means to eliminating stress. I will walk you through the steps on how to obtain information to build up a dividends portfolio so that you can attain a stress-free life of financial independence. This is a simple approach designed for novices without a Bloomberg terminal.
• How is investing in dividends backed by academic research.  
• Currently, I'm still working on psychological effects of financial independence so, once again, you may expect new and interesting stuff which I hope would even entertain my fellow speakers. 

This is probably one of the most valuable talks that we'll be giving so far with all three speakers presenting extensively on investing with the stock-market. 

In spite of this, we're still trying to lower the price of our talks.

Let's hope that we can sell out after this notice.

Equity Management #10 : Example on how a market neutral portfolio is constructed.

This is for the benefit of some readers who want more information on market neutral portfolios.

Right now, I still have no idea how a retail investor can get started on this form of investing and would be really grateful if intermediate investors can give me some tips on which brokers can provide this service. My only guess is that if you are high net worth, you might be able to talk to your private banker to start doing this.

The book mentioned that the portfolio manager hires the services of a prime broker who can also act as a custodian of the stock ( No CDP involvement in such a case ).

Procedure

In this example, the investor begins with $10 Million. He sets aside $1 million as a liquidity buffer in case his short positions turn against him, so he gets to trade $9 million of stocks.

1. Investor buys or goes long on  $9 million of stocks. These stocks are held with the prime broker that also acts as a custodian (CDP).

2. Investor shorts or sells $9 million of stocks at the same time. These are stocks which are not owned by the investor so needs to be borrowed by securities lenders.

3. When the stocks are being sold short, the broker needs to put up $9 million in proceeds to securities lenders as collateral for shares borrowed. If the shorted counters increase in value, the manager is expected to top up to allow the broker to maintain the collateral, which explains why he holds a $1 million in reserve.

How to make (or lose) money

If you have this arrangement, there are 4 ways to make (or lose) money :

1. Stocks you buy increase in value and pays out dividends.

2. Stocks you sell decrease in value. But you have to pay out dividends of stocks you short.

3. The $9 million of collateral posted to securities lenders generates interest which goes to the security lenders, broker and the investor. Unfortunately, the book mentions that this is subject to negotiation between the different parties so we get no clear idea as to how much money is earned here.

4. The interest rate from the $1 million spare buffer.

Arrangement your investments in this manner gives you the opportunity to earn or lose money in an a rising or falling market and everything boils down to your stock picking skills. In this example, I have not employed any derivatives or CFDs to create the long-short portfolio.

Hope that a kind Samaritan can share with us what needs to be done to have such an arrangement with a local broker as well as their personal experience combining longs and shorts in their investment strategy.

Random musings about Bangkok.

This is not a lifestyle blog but I spent the last 3 days in Bangkok in a fairly intense but fun trip.

Here are some random thoughts from my trip.

a) Singapore is losing on many fronts to Bangkok in retail and entertainment

The retail situation in Bangkok is really so much larger in terms of scale and variety. The first thing you notice is that there is no "Capital Mall" effect and each mega-mall is able to develop its own character. We shopped at the Siam Paragon which is like a larger version of Takashimaya but had an exhibition which was running a Comics Convention at the same time. Terminal 21 which was located near our hotel had a different national theme on each different floor. One floor is modelled after Shibuya Tokyo and another was modelled after London.

However it is the Night markets that really shine in Bangkok, we went to Rod Fai 2 which feels as if its 20x the size of Bugis Street but had terrific rock bands which played our favourite english songs from the 90s. You can listen to rock music, eat seafood, and have a beer at the same time. At least for me, I would probably not bother with hipster markets in Singapore for quite awhile after this experience.

I don't know what this means for us given that we've been reporting on the impending demise of our retail sector in Singapore for a while. If you've been to Bangkok, I think the death of Orchard Road was well-deserved because retailers and landlord inflicted quite a lot upon ourselves.

b) There are two price-tiers in Bangkok so do spend with proper planning.

[ It was a 3 day 2 night trip and even though there was no "night firing", I managed my finances rather badly spending the equivalent of 70% of my budget buying role-playing games in the first night and then relying on my friend's excess cash for the rest of the trip as they did not want me to use my credit card and rack up miscellaneous fees. I paid them back in SGD when I reached Changi. 

Don't be like me.  ]

Another observation is that there are two clearly distinct pricing tiers in Bangkok. If you stick with what foreigners eat, expect to pay closer to Singapore prices. We've has a fantastic steak meal at El Gaucho Argentinian Steakhouse but it cost us $120SGD each. I also paid around $8 SGD for a simple croissant and coffee breakfast next to the hotel.

On hindsight this is silly because Bangkok street food is so cheap and so good. A teriyaki chicken stick can be bought for 40cts and a bowl of noodles, around $1.80 SGD.

A smart tourist would be wise to mix and match the street food with the high-end restaurant to get a great experience for the trip.

c) Is Bangkok is becoming a cooler place than KL for Singaporeans ?

My last trip to Bangkok was not as good because there was alway folks on the streets harrassing me and asking me to go to some lucky temple or offering "free rides". As such, I always felt that the Bangkok experience has always been inferior  to that of KL.

But after this trip,  I seem to get the impression that the situation has turned around. Public transport over Sky Train and MRT is really cheap and convenient so we can avoid the rude private drivers. Thais are also a lot more orderly and well-behaved when taking their public transport.

The convenience, mega-malls, night markets and cheap eats may push more Singaporeans to choose Bangkok over KL instead. And this includes better security as Bangkok malls now feature security gantries at all their entrances.

Anyway, these are my observations, feel free to comment if your experience differs from mine.

[ Our most hilarious encounter was a taxi driver who refused to switch on his meter, tried pimping some services to us and failing to do so, tried entertaining us with racist jokes about his Indian Passengers and demonstrating how much he knows about Singaporean stereotypes while making an illegal turning.

If you get offended easily, Bangkok is not the right place to be. ] 

My JD aftermath #1 : Was it worth it ?

Ok, I've got sometime to blog before I head to Bangkok over the weekend for some serious shopping and eating.

A couple of days after my last paper, some headhunters have started talking to me and I had a serious chance to ask myself what would be my desired price tag to postpone my legal ambitions. I have since calculated a number and have gotten back to them and they still seem interested.

So drastic changes might be afoot.

It might be a good time to reflect upon the past 3 years.

a) General message for aspiring JDs - Don't do it.

First of all, most professionals looking for legal conversion are probably doing it out of pragmatism so I don't expect most JD aspirants to be financially independent and studying for a degree out of sheer vanity like myself.

Anyway, I caught up with some class-mates last night and we all agreed that our decision to take the SMU JD was not rational in hindsight. None of us would recommend this course to others for now.

I will elaborate further...

b) The headwinds in the legal sector may become persistent.

The largest negative is actually out of SMU's control.

We have no idea how long the legal industry would face this situation of oversupply as families send their kids overseas to get a law degree from an English university. Local graduates have a reason to be angry and disgruntled because these foreign graduates are mostly not from the Oxbridge elite universities and probably never had to do community service to graduate. Also a First Class in a UK University is 70%. In SMU, this nets you a B grade.

Even if the government has tightened the overseas universities that can be accepted into the Bar, the legal industry is also facing a lot of disruption from better search tools and use of AI to reduce the workload of associate lawyers. I think companies are also wizening up and will be looking at cheaper forms of dispute resolution like mediation and arbitration in the future. Collectively, this will hurt law firm revenues over time.

This will be the primary reason why many of classmates regret making this life decision.

If they do not get retained after their training contracts, what would have been the point of the past three years ?

Speaking of which...

c) Three years is a long time.

Three years is simply too long for a postgraduate qualification because the opportunity costs is too high. More importantly,  it is harder to foresee industrial trends beyond a year or two. Had an engineer in my similar situation were to decide to spend 1 1/2 years to become a data scientist, there is sufficient reason to believe that the tide would not turn against data science so soon when he graduates.

Ditto for MBAs because the INSEAD MBA is so short, you can target an industry and move in after graduation with a much lower risk.

Perhaps the JD should be retooled into a 7 year part-time program. This would make more sense to me. Prior to transitioning into legal work, we can remain gainfully employed be roped into working with legal departments to resolve sticky corporate law issues.

d) Some facets of JD life are completely unnecessary.

Overall, the course was, for me, a positive experience. But there are persistent negatives faced by generations of JD students.

I cannot think of another postgraduate qualification which has a pro-bono requirements which has been enforced in such a stringent manner. Me and my classmates have expended a lot of energy to get this aspect of our course done right.

Finally, group projects which should have been designed to get people to work together and build camaraderie has been turned into a process to make people from the same teams really hate each other. As it stands I'm not even sure if we will ever have a full class outing again as we've factionalised so badly over the past three years.

Of course, my personal experience for the past 3 year may be a result of changing trends in adult education in Singapore. This has stopped becoming a joke and anyone who wants to maintain a decent career trajectory would have to keep finding ways to pick up more skills. Skills upgrading, similarly, would need to become more modularised so that students would not enter an industry which has been disrupted too drastically after investing years in a qualification.

In the future, a law degree has to stop being a licence to someone to work in a highly protected industry. Instead, some of us may have to find ways to monetise our legal thinking skills within other industries in Singapore.

Anyway, I am off to Bangkok.

Next week : I will talk about the people I met in SMU and it will be FUN! FUN! FUN!

Equity Management #9 : Long-short equity investing.

For the next few years, I will be stretching myself beyond the usual yield investing which has been instrumental in allowing me to reach this current of financial independence. One of the approach I am toying with is the use of leverage, I hope to start building a small portfolio which has a modest amount of leverage to magnify my dividend yields.

The longer plan is to look at long-short investing. There are three ways to do this :

a) Market-neutral strategy

This strategy balances your long and short positions. The dollar value of your long and short positions are equal to each other. When craft a portfolio like this, there is no net market risk and your returns will be your gains from stocks which appreciate in your long portfolio and depreciate from your short portfolio. This is pure double alpha.

b) Equitized Strategy

This takes a long-short portfolio and you overlay this with a stock indexed futures position. So overall, you can get back the 6-7% from the STI index and you also earn a kicker from your market neutral portfolio.

c)  Hedge Strategy

Hedge fund managers enhance the equitized strategy with by varying the risk to market by changing the number of futures held on the stock index.

At this moment, I am not really sure how shorting would work beyond clicking the Contra checkbox when making a sell order but I do know what readers can attempt if they want to explore this option further.

We have a lot of gurus and great investor education providers but they seem only focused on taking up long positions. Ask these experts what they would do if they were made to craft a short portfolio by reversing their stock picking methodology.

Can we backtest a portfolio of low earnings yield, high price to book value stock with negative free cash flow?

This can be a source of additional returns and be the first step towards starting a mini hedge fund operation on your own.

Personal update - Done with my JD programme ( Hopefully ! )

And just like that, I completed my final exam in SMU and I guess I would have met all the requirements to graduate with a Juris Doctor qualification.

While I would have preferred to end my SMU stint in a high, my last paper was brutal and I found myself lacking the time to craft a coherent response to the exam questions. Nevertheless I should be able to move onto the next stage where I start tackling the bar exams.

Perhaps in another post I would talk about my overall experience with SMU but right now, I have several priorities :

a) Internship 

I will go back to becoming an intern again on 2nd May, this time I hope to be able to attract a training contract with a law firm. This process is already fairly hard for a LLB with average grades, it is much harder for a person going through a mid-career switch. I will be following the latest developments on government grants and will be trying to leverage on this support so that I can at least qualify to the bar sometime next year. After all, I have been unemployed for the past 3 years and the government might have some goodies for any law firm that is willing to throw me a bone.

b) Giving one more talk in mid-May

The next talk conducted by financial bloggers will be about stress-free investing and I have once again been given a slot to speak on this event. Slide preparation will begin as early as tomorrow as I need to give an indication to the other speakers as to what areas I would cover.

I try to make all my talks unique and would independently research new material for paying customers. You should expect content which is different from  any other product offering in Singapore as I blend computer science, social science research and finance to talk about the relationship between stress and personal finance for the local retail investor.

c) Rest and relax from surviving one of the most challenging academic pursuits in my life

My immediate priority right now is to simply enjoy myself.

This Wednesday, I celebrate my daughter's 6th birthday after which I will be off to visit what is possibly the largest tabletop gaming hobby shop in South-East Asia this weekend.

I will also not be reading any non-fiction for the next two weeks, being focused on Liu Cixin's Death's End and the latest Star Wars canonical piece on Thrawn by Timothy Zahn.

Computer game-wise, I will be downloading and installing the enhanced edition of an old cult favourite Torment.

Anyway, I am still zoned out from one of the hardest exam papers I ever attempted.

More updates before the middle of this week.

Mystics Secrets of the Eunuch Sorcerer !

Before I go for my exams and take 10 days off my blogging, I'd just like to address the amazing traction of my Eunuch post by looking at ways for a fresh graduate public servant to rapidly create a portfolio that can facilitate an early exit from stifling bureaucratic environment.

The public service is a lot more forgiving for entry-level personnel and you will find that your early salary trajectories are quite steep to keep you interested in staying on as a public servant. Furthermore. a rookie public servant also experiences much gentler office politics making it easier to keep earning the pay-check.

This makes your earlier years the best time to start creating the early "exit" portfolio. Any delay and your organization will slap the golden handcuffs on you and emasculate you forever.

a) Some generous assumptions

My salary projection assumes a starting salary of $3,500 before CPF for a top flight local graduate with a first class Honours degree ( Salary taken from top end of MOE Education Officers ). He maintains a disciplined lifestyle and spends only $2,000 a month but gets a 2 months bonus every year. Salary increments are projected to be 5% every year.

[ Life is unfair but I have a fairly smart, capable and sophisticated readership who show up on time for almost all my seminars ! ]

b) Target

The target portfolio size is $300,000 which, when invested in high yielding instruments, would generate the $2,000 salary expenses and cover the basic expenses of a male herbivore who lives with parents and wants to play computer games all day.

c) Portfolio is a simple STI ETF

This assumes that the exit portfolio is a diversified local equity portfolio returning a modest 7% a year. This exit portfolio is designed for total returns and only converted to a high yielding portfolio after exit from the service.

d) Results 

If you follow this example, based on my spreadsheet, you are expected to complete your exit portfolio in around 10 years.

( Do try it out yourself on a spreadsheet ! )

e) Eunuch Sorcery : Tapping on the power of leverage through margin financing

I was thinking about whether are there ways to speed up the creation of the exit portfolio and then had this idea of looking at margin financing.

You can check out this link  The Maybank website allows you to enter the name of the stock and it will return the interest rate they will charge you if you borrow from them to buy a stock.

Some of the data points were very interesting for yield investors :

• Aims AMP Reit (yielding around 8%) is considered investment grade and financing can be obtained at merely 2.88%. 
• So is Cache Logistics Trust which yields around 8.4%.
• The STI ETF is considered Grade 2 and financing is expensive at 5%. I can imagine how interesting things can get if this can be upgraded to Grade 1.

So you can leverage a portfolio of yield counters at a low financing cost of 2.88%.

e) What if the public servant leverages 50% of a diversified equity portfolio which returns 7% at a cost of financing of 3% ?

Because the timeline is particularly tight, at least on my spreadsheet, there is insufficient time to compound the additional returns from leverage, this tactic will at best shave off 4-5 months from the time needed to generate $300,000.

Conclusion

A disciplined top-flight local graduate will be able to safely generate a portfolio to leave the public sector and get his modest expenses completely replaced within a period of 10 years. The fastest way to speed this up is by either performing better at work so that increments can exceed 5% or cutting your spending below $2,000 a month ( Spending $1500 can cut the time down to 8 years or 7 years if you are targeting a passive income of $1500 ).

The bureaucrat can attempt Eunuch Sorcery by leveraging his portfolio but the time horizon is too short for compounding to take place and it will at best allow him to exit the public service 4-5 months early. There is also a risk of magnifying losses when introducing leverage into a portfolio .

A  smart, capable and lucky public servant can possibly exit within 8 or 9 years if he attempts to employ all these techniques at once. If he is a male who has done NS and had a 4 year degree, he would be 34 years old - not too late for another career in banking or management consulting, perhaps ?

Equity Management #8 : Front-running and factor crowding.

If you follow this series on my blog, one of things you will realise is that it is increasingly harder and harder to come up with actionable ideas for readers as the equity management textbook becomes even more abstract. I was wading through 3 chapters on smart beta investing before I could compose this article. Nevertheless, this column is probably meant more for my own investment education than for the hapless reader.

Ok, back to equity management.

To assist in comprehending this short write-up, you can refer to Dr Wealth's excellent article on factor investing which I will share here. In summary : Factor investing basically means that you are very likely to outperform markets if you focus on low P/B, small companies, high momentum, high gross profitability and low volatility stocks.

Factor investing is ok for most intermediate investors, but something can go wrong if the finance industry gets into the same game and start pumping millions of dollars to the same stocks as intermediate retail investors. In the near future, we might be seeing the launch of smart beta ETFs which will allow investing novices to do factor investing by just buying a few counters on SGX.

This can result in factor crowding. If everyone dog piles into low P/B stocks, there are less profits for everyone else as prices of these stocks rise.

Another problem is front running which occurs when hedge funds become aware of the specific times when these smart beta ETFs rebalance their portfolios. They can drive up the low P/B stock counters just before these ETFs begin to accumulate those stocks which has the effect of lowering the return to these funds and anyone who is also trading those stocks at the same time.

So while it's great to do factor investing right now when the ETFs traded on the SGX are relatively primitive by US standards, things might start to change rapidly once our local finance companies start playing catch up by introducing newer products.

I also can't help noticing that my income portfolio is doing rather well lately as more Dividends and REITs based ETFs are being launched in SGX.

If you're a eunuch, here's how to grow a pair !

When I left the private sector, I was already financially independent. But I wanted to see if I could get into a career which would stretch longer and give me work life balance. Unfortunately, my tenure out of the private sector was very short and I never managed to get used to the culture of the public sector.

It's actually sad what public servants had to endure in the past few months. One senior civil servant implied that they were paper-pushing eunuchs and then Parliament took turns to take pot-shots at them. Having some experience with bureaucracies, I realise that a lot of civil servants are stuck in their roles and had nothing to do with the red tape they are subject to every day.

When I was a eunuch, financially, I was at my peak. I had great pay, a superb 7-digit portfolio and fairly decent work life balance.

My day job however, meant be treated like an asexual bureaucrat when I engaged the folks in Blk 71. One founder of an up and coming startup I met then was drunk and started going on a tirade about the Singapore government. Another prominent boss, treated me like lesser being and only wanted to engage me through his secretary intermediary when I was 3 metres away from him. Some of those companies which the government eventually tried to support happily made verbal arrangements with my team and then casually broke it off. One guy even wanted to teach us a lesson about making money and capitalism ( when my personal dividends probably exceeded his net profits that year ).

But the work of eunuch meant that we have to grit our teeth and do what's best for the country. I actually take "servant" in public servant seriously. If I am a servant, I serve.

This was what eventually what broke me - SME bosses are polite and deferent when they come begging for the money we collect from the tax payers, but in their eyes we are lesser beings because we eunuchs live in the comfort zones but get the privilege of doling out financial support.

They are the ones begging for tax payer handouts but we are considered a lower caste than they are !

Anyway, eunuchs also want their freedom one day, here's how I think you can break free :

a) Exploit your higher pay by setting it aside

For at least the first 7-8 years of your career, your salary will be higher than your private sector counterparts. The trick is not to be smug  about it and set aside as much as you can to maintain your higher salary glide path. There is nothing stupider than seeing a newly signed on regular SAF officer blow his first lump sum sign-on payment to buy a car just to look cool.

I see a lot of middle management in the government getting overly comfortable and driving big European cars to overcompensate for their lack of mojo and over investing in children's tuition. ( It's kinda funny driving a BMW to attend a 10 hour meeting with a senior director who treats everyone like shit and probably no longer have any employable skills. )

This is a golden handcuff designed to trap you into a the life of a eunuch forever.

b) Equities are the key to an early exit.

The salary of a  civil servant is not only high, it has a bond-like characteristic. This means that unlike the private sector equivalents who face retrenchment all the time, you can go for an equity portfolio with a higher risk.

For officers at a younger age, you may even want to read about leverage and see if you can craft a 130-30 long short portfolio to accelerate your gains further.

c) Go for total returns and downshift to a dividend portfolio later. 

For a person who starts a career with the government, the best portfolio is to optimise for total returns which means targeting various factors like smaller companies, low P/B and P/E values for 7-8 years and going for 2 economic cycles of returns ( a backtest may result in 20% p.a returns on a Bloomberg terminal ).

Once your portfolio hit exit velocity ( $300,000 for a single man yielding 8% and putting $2,000 every month ), you can start plotting your exit into the private sector.

d) You may need to invest in retraining.

Retraining needs to be a priority before you get into the private sector. At this point, good luck, maybe there is a way to use the Civil service college to pick up some useful skills instead of buying an expensive MBA which was the best method of exit in the past.

e) Entrepreneurship is really tempting but...

Some government servants do eventually succeed in business and they come with a better appreciation of the schemes available to build a startup. There is enough literature on the odds of success.

Make sure that you stick with tiny bets and don't touch that $300,000 pair of testicles you worked so hard to develop just to stop being an eunuch again.