In my last post which divides Singaporeans into A-graders, B-graders and C-graders, I might have done C-graders a disservice and came off sounding like a jerk when, actually, I mean no disrespect to 70% of the Singapore population. In this posting, I want to share some of my thoughts on how difficult it is to help C-graders (or everyone) succeed in Singapore.
A challenge readers threw at me in the past was to come out with a plan to help someone who makes $1,600 but has no tertiary qualifications. Now, if you asked me this question 8 years ago, I would respond like most newly, minted financial planners - I would parrot the need to start saving 10% of his income and dollar cost average into a Global Equity unit trust with the lowest possible expense ratio.
Now I'm not sure if this advice makes any sense.
For one thing, it takes a very special person to buy a personal finance book from a local author. This person is probably intelligent, motivated and possibly quite gritty to follow-through financial advice. I'm not even too sure whether I truly benefit my reader, as my reader would probably have also read The Richest Man in Babylon, The Intelligent Investor or A Random Walk Down Wall Street - all exceptional books which can give them the social mobility that they crave.
What I'm actually saying is that readers of my books and blogs are self-selected. Even if you have a C-grader self-image, I can almost guarantee that you will enjoy upward mobility in the years to come. Why ? Because you would rather read a boring finance blog than to catch-up on the latest antics of Jin Dafeng or Xu Laifa in the weekend Taiwanese drama !
The challenge, which no author or blogger can overcome, is to help the majority of folks who simply don't read.
Which brings me to the next part of this discussion.
The magic pill to help everyone succeed financially is the psychological trait known as conscientiousness.
Conscientiousness folks plan ahead, know how to delay gratification and have always plan for World Domination. Conscientious folks tend to be richer and enjoy better health. I dare to say that most financial blogs are run by people of above-average conscientiousness.
I will go on further to say that all class and social divisions will eventually settle into differences of conscientiousness instead of wealth or privilege. Another words, humanity will choose to structure itself to privilege people with long term planning and who can delay gratification regardless of starting wealth and education. Case in point, how does Chan Chun Sing become a minister ? Grit and conscientiousness such that a humble background can't stop him. If you don't like the PAP, how does Low Thia Khiang beat the odds to conquer Aljunied GRC ? Same thing - Persistence and never-say-die !
Now for the grand PHD-level insight :
Future class struggle is a weapon of those who are NOT conscientious, who need to band together to disrupt the social order. ( Mindgasm moment ! I am the new Karl Mark ! )
So, what can we do to increase our conscientiousness ?
Unfortunately, not much. There are many books that talk about Willpower. Most of these books dwell on the importance of conscientiousness, but not how to cultivate it,
If you see yourself as a C-grader, I have only one piece of useful advice for you :
Practice your willpower in one area of your life so that it will affect other areas of your life positively.
If you are the kind of student who can resist temptation to hang out when you can do your tutorials, you are exercising some that muscle to save more money and pass the CFA in the future. This willpower reserve will help you maintain a healthy diet and have a develop a happy marriage as you get older.
Monday, April 28, 2014
Saturday, April 26, 2014
Ambition never sleeps.
For the past year, I've been scheming and plotting my possible career moves beyond retirement.
It started about 3 years ago when a good friend asked me to perform some sort of "valuation" for a Doctor of Jurisprudence qualification from SMU. I had to compute his increments and current salary and make a projection for the future and compare it with the scenario whereby he gets a legal qualification and becomes a lawyer. The exercise was interesting and I told him that he had to work till about 51 years old to break even and if I were him, it'll be worth a try. I thought that for a single guy, becoming an A-grader might be useful in a singles bar situation which can't really be quantified by a financial model.
Result : He thought he'd be better off with his current career. ( And, on hindsight he did the right thing, he has been doing well today. )
Two years later, I was struggling with my day job which is mainly ordering food for activities in Block 71 and thinking about how pathetic my engineering career turned out to be while my investments were starting to able to replace my day job without me writing a single line of code, my friend, over coffee, returned the favor and asked me to pursue the advice I gave him some time ago.
I was quite surprised at how that idea took hold of me then. Becoming a lawyer at age 43, after 14 years of engineering work and managing my own portfolio - it was ridiculous, vain, impractical, audacious, suicidal and borderline insane...
...which was exactly what I wanted to do in life !
As I have already "retired" there was almost no opportunity cost. Most engineers at my age are looking at a bill of $500,000 to attend law school, mostly from lost income. They will never recover from this financial cost and most will end up being apprenticed to someone half their age upon graduation.
I don't need my financial models to know this is the right move for me. If anything, it may resurrect my career. Furthermore, SMU's Bloomberg terminals alone makes my fees a bargain.
I am a very old candidate, the preparations to be admitted were extensive. I started casually taking writing classes in Coursera and started reading books on Rhetoric. I started networking with current students of the course. Closer to the essay and interview round, I crammed the LSATs as if I was planning for a US University so that I can catch up with the younger and more energetic dudes. I still have doctor's handwriting.
So, two days ago, SMU said yes.
Therefore, if everything works out, I will become a lawyer in 4 years.
I may not choose a traditional career path and may rope-in my lawyer friends ( all super-smart and motivated individuals ) to see if the industry can be disrupted by legal prediction tools which perform natural language processing and statistical analysis. This could mean a start-up with both programmers and lawyers ( Think about the couples that will form in my company ! )
Starting August this blog will also become a study blog to talk about how we can keep learning as a student or a working professional. I will complete the Data Science Specialization track in Coursera to ease myself into my life as a full-time student. Moreover, since my Engineering and Finance student days, we're starting to learn a lot more about cramming for exams. Scott Young completed an MIT Computer Science course in one year.
Sunday, April 20, 2014
Do the Heather Chua test !
As a further elaboration of my last post, I think that once we go beyond our anger with the Foreign Talent policy, Singaporeans will need to deal with a very socially stratified nation over the next 100 years.
After Independence, Singaporeans collectively decided on meritocracy and pragmatism as our core philosophy, inadvertently but voluntarily, we have also started a very aggressive eugenics program which was made even worse when we account for the effects of globalization.
The effects on the ground is for everybody to observe. Increasingly, we are marrying within our class divisions :
Admin Service Scholar marry Admin Service Scholar
Goldman Sachs marry McKinsey
Lawyer marry Doctor
Engineer marry Accountant
Technician marry Clerk
Hawker marry Shop Assistant
This phenomenon is called Assortative Mating and is currently taking place in all developed countries.
Within generations, children will not only inherit the parent's wealth, they will also inherit their's parent's genetic potential. In 100 years, we will become a caste-based society. You might be categorized on the geo-location where you come from, District 10 being where the 160 IQ upper caste folks who live who will attend the best schools in Singapore.
In this post, I will not debate the morality of this phenomenon.
I want to offer a mental experiment or a sociological tool to detect class differences in society, I call this the Heather Chua test :
Imagine if a troll like Heather Chua were to make a statement sharing her distaste for marriage between two people of Class A and Class B.
a) If Heather Chua's action angers you, then there is certainly a class division which already exists, but society may not want to acknowledge it based on political correctness. The division already exists but is sub-consious.
eg. The original posts is a marriage between RGS and ITE. It angered everyone. There is a class division between RGS and ITE but Singaporeans don't want to acknowledge it due to political incorrectness.
b) If Heather Chua's action does not being anger but mild amusement, then, there is no class division.
eg. If the marriage is between someone from Swiss Cottage Secondary School and Bukit Panjang Government High, then the reaction will be mild amusement as there is no class division between alumni of more or less equal status.
The Heather Chua test is a useful tool because we can detect cracks in Singapore society. The political left will use it as a weapon to destroy meritocracy. The political right may use it to form lasting family unions. Trolls in the future will find new ways to enrage readers by applying the test on racial divides or even gender.
Once we understand which caste or division we belong to, we can get into the next phase, on how we cope with the caste based society.
This I will share with you in my next blog post.
Friday, April 18, 2014
How to thrive as as a B-Grade Singaporean.
One of the things meritocracy and pragmatism has done is to inadvertedly create class divisions within Singapore. We see evidence of trolls like Heather Chua and Wee Shu Min succeeding in making many people angry simply because they were consciously aware of such divides and used it to elicit an emotional reaction from everyone.
As a realist, I will not debate class divisions in this blog. I will try my best to define it and suggest the various actions to cope with our reality today.
First let's try to define our class divisions :
You are Grade A Singaporean if you come from RI, ACS or HCI. If you study in the Ivies or MIT, you also qualify as Grade A. You might also qualify if you are GEP, lawyer, doctor or a government scholar. Income-wise, you also qualify if your income belongs to the top 10% percentile of folks in your age. If every Chinese New Year, your aunts admonish their kids and ask them why can't they be more like you, you are possibly Grade A.
I am a Grade B Singaporean like most of you readers of my blog. I was mostly schooled in government schools coming to a decent JC only after my O levels and after working really hard ( Because I was certainly not smart or gifted ). I went to a local University and managed to get a decent engineering job upon graduation. Income-wise, we are are somewhere between 70-90% percentile of our cohort. Every Chinese New, your aunts nitpick on you whenever there is a chink in your armor. For singles, you are asked why you are not married. For married couples, you are asked why you don't have kids.
Grade C and below is everybody else. Competitively societies like Singapore consider 70% of the population to be everyone else and only important during the elections where one man gets one vote. Decent education, decent jobs, full stomach and a decent shelter, but Grade Cs do struggle very hard in this society which made an infernal pact with globalization to sacrifice the middle class. If during Chinese New Year, your mum defends you vigorously and says "My child is a good person, you leave him alone", you are probably Grade C.
I want to share what it feels like to be a Grade B Singaporean and what we can do about this. ( Hopefully a better blogger can advice the 70% of Singaporeans which truly need the most help. )
a) Grade B suffers from elitism too.
When I was under employment, I had to convince senior management of why engaging the Ruby on Rails community would be great to improve participation in competitions. I was impressed with how quick it was to scaffold a working website in 5 mins after I attended a boot-camp. Senior Management was incredulous, I was interrogated my senior management who simply could not accept that a language could be that awesome. I was repeatedly under assault until a scholar stepped in and said that I was right about the language and its rising popularity and then, suddenly without hesitation, I was then allowed to proceed with my engagement activities.
14 years IT experience matters not if you are Grade B. A one sentence from a Grade A scholar ( who's a great guy BTW ) saved my presentation from oblivion.
b) Grade B Singaporeans need to find a good niche in the industry.
This is important advice to Grade B Singaporeans. You need to choose an industry where you could get to the top on your own merits. An American MNC will always favor strong performance and not school grades. One of the reasons why ex-P&G folks like me will always respect the company was that some Senior Managers have only A levels and some staff who would never be promoted may have degrees from the Ivy league. This is the mark of a true meritocracy.
( P&G has it's own entrance exam. I believe that any good company would always have one )
c) Grade B Singaporeans cannot ignore financial markets.
Quitting the workforce and subjecting myself to the mercy of the financial markets has been good to me for the past 3 months. Even Sabana REIT would not cut my dividends because I did not come from the right University or was not gifted. Sabana REIT cut dividends for everyone this quarter , the ones from Cornell, MIT or GEP who owned Sabana all got 1.88 cts this quarter. A microcosm of fairness is hard to come by in this country. We must embrace it.
I can't emphasize how important it is to supplement your Grade B income with dividends which do not discriminate based on your position in society. This can put you within striking distance from Grade A if you work hard, save and invest your funds wisely.
d) Contrary to what the political left says, Grade B has very strong social mobility.
Last, I want to share a message of hope to most of my readers who are Grade B like myself.
Even though I was not in a top JC or secondary school, I was able to participate in S Papers, Olympiads and various competitions when I was younger. When competing against average Grade A folks , a diligent B-grader can win.
A good friend calls such a person the Goblin champion - Not a real Champion like a Champion from RI, ACS or HCI but a Goblin Champion who can use the right strategy to overcome a higher-caste opponent. Case in point, having earned income and a dividend flow from the markets which exceeded my pay can result in an annual remuneration similar to an MP's allowance ( but only for last year for me, now my income would be Grade B for quite a while until I rejoin the workforce ).
When you hit 40s and get retreched, a Grade B can easily slip to Grade C if you are not careful. But Grade B always had high social mobility in Singapore, you need to be conscientious and apply the right tactics to transcend your caste boundaries.
My blog is here to help you do that.
As a realist, I will not debate class divisions in this blog. I will try my best to define it and suggest the various actions to cope with our reality today.
First let's try to define our class divisions :
You are Grade A Singaporean if you come from RI, ACS or HCI. If you study in the Ivies or MIT, you also qualify as Grade A. You might also qualify if you are GEP, lawyer, doctor or a government scholar. Income-wise, you also qualify if your income belongs to the top 10% percentile of folks in your age. If every Chinese New Year, your aunts admonish their kids and ask them why can't they be more like you, you are possibly Grade A.
I am a Grade B Singaporean like most of you readers of my blog. I was mostly schooled in government schools coming to a decent JC only after my O levels and after working really hard ( Because I was certainly not smart or gifted ). I went to a local University and managed to get a decent engineering job upon graduation. Income-wise, we are are somewhere between 70-90% percentile of our cohort. Every Chinese New, your aunts nitpick on you whenever there is a chink in your armor. For singles, you are asked why you are not married. For married couples, you are asked why you don't have kids.
Grade C and below is everybody else. Competitively societies like Singapore consider 70% of the population to be everyone else and only important during the elections where one man gets one vote. Decent education, decent jobs, full stomach and a decent shelter, but Grade Cs do struggle very hard in this society which made an infernal pact with globalization to sacrifice the middle class. If during Chinese New Year, your mum defends you vigorously and says "My child is a good person, you leave him alone", you are probably Grade C.
I want to share what it feels like to be a Grade B Singaporean and what we can do about this. ( Hopefully a better blogger can advice the 70% of Singaporeans which truly need the most help. )
a) Grade B suffers from elitism too.
When I was under employment, I had to convince senior management of why engaging the Ruby on Rails community would be great to improve participation in competitions. I was impressed with how quick it was to scaffold a working website in 5 mins after I attended a boot-camp. Senior Management was incredulous, I was interrogated my senior management who simply could not accept that a language could be that awesome. I was repeatedly under assault until a scholar stepped in and said that I was right about the language and its rising popularity and then, suddenly without hesitation, I was then allowed to proceed with my engagement activities.
14 years IT experience matters not if you are Grade B. A one sentence from a Grade A scholar ( who's a great guy BTW ) saved my presentation from oblivion.
b) Grade B Singaporeans need to find a good niche in the industry.
This is important advice to Grade B Singaporeans. You need to choose an industry where you could get to the top on your own merits. An American MNC will always favor strong performance and not school grades. One of the reasons why ex-P&G folks like me will always respect the company was that some Senior Managers have only A levels and some staff who would never be promoted may have degrees from the Ivy league. This is the mark of a true meritocracy.
( P&G has it's own entrance exam. I believe that any good company would always have one )
c) Grade B Singaporeans cannot ignore financial markets.
Quitting the workforce and subjecting myself to the mercy of the financial markets has been good to me for the past 3 months. Even Sabana REIT would not cut my dividends because I did not come from the right University or was not gifted. Sabana REIT cut dividends for everyone this quarter , the ones from Cornell, MIT or GEP who owned Sabana all got 1.88 cts this quarter. A microcosm of fairness is hard to come by in this country. We must embrace it.
I can't emphasize how important it is to supplement your Grade B income with dividends which do not discriminate based on your position in society. This can put you within striking distance from Grade A if you work hard, save and invest your funds wisely.
d) Contrary to what the political left says, Grade B has very strong social mobility.
Last, I want to share a message of hope to most of my readers who are Grade B like myself.
Even though I was not in a top JC or secondary school, I was able to participate in S Papers, Olympiads and various competitions when I was younger. When competing against average Grade A folks , a diligent B-grader can win.
A good friend calls such a person the Goblin champion - Not a real Champion like a Champion from RI, ACS or HCI but a Goblin Champion who can use the right strategy to overcome a higher-caste opponent. Case in point, having earned income and a dividend flow from the markets which exceeded my pay can result in an annual remuneration similar to an MP's allowance ( but only for last year for me, now my income would be Grade B for quite a while until I rejoin the workforce ).
When you hit 40s and get retreched, a Grade B can easily slip to Grade C if you are not careful. But Grade B always had high social mobility in Singapore, you need to be conscientious and apply the right tactics to transcend your caste boundaries.
My blog is here to help you do that.
Sunday, April 13, 2014
Retirement after 3 months.
It's been more than 3 months since leaving the working world. It's time for another update :
a) Finances are holding up better than the working days.
Judging from the 3 months of performance, it's actually more profitable to make market calls at home than to work for someone else.
Finances have been holding up quite well thanks to the rise in REITs over the past 2 weeks. To be fair, I had been struggling to push my investments out of REITs for the past year due to the tapering but found only a handful of good stock opportunities that can maintain my current yield. Those positions are, therefore, unnaturally large and are starting to pay-off in a serious manner.
My net-worth rose by more than 11 times my last drawn monthly salary in this quarter ! Of course, all this can revert to the mean very quickly since I don't ever take profits. The next three months will see me trying to move my focused bets to other market opportunities to raise my passive income further.
b) Learning goals are aggressively met.
The Coursera Data Science specialization has started and I am currently doing 3 classes simultaneously. At my current pace, I completed one full month module in 3 days so I'm on the roll. Hopeful my training in R programming will allow to create some advanced tools for managing my portfolio. Currently, my engineering expertise and financial know-how are separated by quite a wide chasm and I'm still trying to get them to work together and Bloomberg is just too useful for serious investors to want to start coding.
There is a substantial chance that I will be pushing my learning goals in a radically new direction, I still can't share this with the readers as the institution that I am pursuing has not given me a positive answer yet. I should be quite game changing for this blog if that happens.
c) Started attending my first AGM.
I started attending AGMs last Friday with the Sabana REIT AGM. I got a nice phone charger as a door gift but lost out to the other uncles on the buffet table. Ended up only with one cup of coffee. AGM buffets are worse than morning rush hours on the MRT.
Please attend the AGM only if you have valid business questions.
d) Exercise and fitness is consistent but not going so well.
While I have been running since I stopped work, I just could not increase my distance. Instead, I have been compensating with sit-ups. Now I can do 60 sit-ups after a run. Advice from a fried is to add push-ups to my exercise but I can't even do a single one at the moment so I am doing some shitty push-ups inclined.
e) Weekdays and weekends have now swapped places.
After three months, it has finally started. Weekdays are spent watching $7 movies, playing the markets, meeting friends for lunch and shopping for books. Weekends are spent with family so my mobility is reduced. Friday starts to lose it's meaning. Sometimes, you look forward to the Mondays as the stock market is open.
To think that years ago, I hated Mondays so much as I managed the team which maintained the stock market systems.
f) What books I am reading
I am clearing the backlog of books I accumulated during my work days. Currently reading a book on actual work practices of Equity Analyst to professionalize my home-run operation and trying hard to make time for Michael Lewis' Flashboys.
The only thing interesting is that I strongly recommend Brandon Sanderson's Stormlight Archives. Epic Fantasy at it's best while we're waiting for George R R Martin's "Winds of Winter".
Sunday, April 06, 2014
Which is higher : Your Charisma or your Intelligence ?
You may need some gaming experience to appreciate this article.
I hypothesize that the modern workplace is a series of Intelligence or Charisma checks to climb up the corporate ladder.
Intelligence is required to solve complicated workplace problems. Workers with higher intelligence produce more work at a better quality. Take for instance, you are given a table of figures by your boss to figure out how your department is doing. If you know how to employ pivot tables or excel macros, you are very likely to solve the problem much quicker without going overtime. I have solved at least one Windows server issue where the solution was to run an executable from a French website. In such a case, my French came in handy to resolve a work related problem.
Charisma is required to persuade other people. Whether you are making a proposal to your boss or your client, high Charisma is required to meet a sales quota or to create the impression that you deserve a raise. Most of the time clients will want to do business with you based not so much on the product you are selling but whether they like you as a person. Charisma determines whether you can establish rapport with others Medical doctors are sued mostly based on their bedside manners rather than the accuracy of their diagnostics.
Here's how you can apply this insight :
a) Know whether you are stronger in Intelligence or Charisma.
No one is perfectly balanced in both. You should be able to figure out whether you are more Intelligent or Charismatic. If you can't figure it out, ask your closer friends.
b) Choose a career which employs more checks in the attribute that you are strong in.
Some IT guys who can talk know nuts about systems administration. They can be very dangerous when they become project managers because they tend to be overconfident and may be unable to deliver on SLAs. If your Charisma is stronger than your Intelligence, you should do much better in IT sales. Similar, if you are smart and very strong in product knowledge but can't close a sale because you can't talk your way to save your life, perhaps you should have been in the R&D department.
Sales is the best career path for folks who are high in Charisma - the higher your charisma, the lower the product sophistication required for your sale to be made. Investing works for folks who have a high intelligence because of the sheer amount of microeconomic and macroeconomic understanding to decide which stocks will outperform others.
Of course, some of you think that you are so awesome you have both high Charisma and Intelligence. In such a case, you should get into a field like management consulting or even politics.
c) Overcome your weak attribute
While I believe in focusing one's strengths and not wallowing on weaknesses, there are some limited ways to deal with an attribute deficit.
Charisma can be improved by spending time doing public speaking. You can also improve your Charisma by reading magazines like Psychology Today or reading textbooks on psychology or rhetoric.
Scientists are still working on a way to consistently improve working memory, so it's not easy to increase your Intelligence. You can read trade journals on your industry or the Economist. Formal study in Philosophy and Economics may also be useful in this regard.
At this stage, D&D players will start to ask me : What about Wisdom ?
I think Wisdom is an attribute which is important over the longer term even though it's not very much respected in the workplace. Intelligent people make mistakes all the time about how to balance work and family. Wise people may not even want to make a decision to optimize their careers, they can choose to walk away. That's just how things are going to be.
If after reading this article, if you continue to work based on your poorer attribute, Wisdom is probably your biggest deficit and unlike D&D, Wisdom comes only with experience.
I hypothesize that the modern workplace is a series of Intelligence or Charisma checks to climb up the corporate ladder.
Intelligence is required to solve complicated workplace problems. Workers with higher intelligence produce more work at a better quality. Take for instance, you are given a table of figures by your boss to figure out how your department is doing. If you know how to employ pivot tables or excel macros, you are very likely to solve the problem much quicker without going overtime. I have solved at least one Windows server issue where the solution was to run an executable from a French website. In such a case, my French came in handy to resolve a work related problem.
Charisma is required to persuade other people. Whether you are making a proposal to your boss or your client, high Charisma is required to meet a sales quota or to create the impression that you deserve a raise. Most of the time clients will want to do business with you based not so much on the product you are selling but whether they like you as a person. Charisma determines whether you can establish rapport with others Medical doctors are sued mostly based on their bedside manners rather than the accuracy of their diagnostics.
Here's how you can apply this insight :
a) Know whether you are stronger in Intelligence or Charisma.
No one is perfectly balanced in both. You should be able to figure out whether you are more Intelligent or Charismatic. If you can't figure it out, ask your closer friends.
b) Choose a career which employs more checks in the attribute that you are strong in.
Some IT guys who can talk know nuts about systems administration. They can be very dangerous when they become project managers because they tend to be overconfident and may be unable to deliver on SLAs. If your Charisma is stronger than your Intelligence, you should do much better in IT sales. Similar, if you are smart and very strong in product knowledge but can't close a sale because you can't talk your way to save your life, perhaps you should have been in the R&D department.
Sales is the best career path for folks who are high in Charisma - the higher your charisma, the lower the product sophistication required for your sale to be made. Investing works for folks who have a high intelligence because of the sheer amount of microeconomic and macroeconomic understanding to decide which stocks will outperform others.
Of course, some of you think that you are so awesome you have both high Charisma and Intelligence. In such a case, you should get into a field like management consulting or even politics.
c) Overcome your weak attribute
While I believe in focusing one's strengths and not wallowing on weaknesses, there are some limited ways to deal with an attribute deficit.
Charisma can be improved by spending time doing public speaking. You can also improve your Charisma by reading magazines like Psychology Today or reading textbooks on psychology or rhetoric.
Scientists are still working on a way to consistently improve working memory, so it's not easy to increase your Intelligence. You can read trade journals on your industry or the Economist. Formal study in Philosophy and Economics may also be useful in this regard.
At this stage, D&D players will start to ask me : What about Wisdom ?
I think Wisdom is an attribute which is important over the longer term even though it's not very much respected in the workplace. Intelligent people make mistakes all the time about how to balance work and family. Wise people may not even want to make a decision to optimize their careers, they can choose to walk away. That's just how things are going to be.
If after reading this article, if you continue to work based on your poorer attribute, Wisdom is probably your biggest deficit and unlike D&D, Wisdom comes only with experience.
Tuesday, April 01, 2014
April Fool's Stock Portfolio to watch.
There is no better day than April Fool's Day to launch a non-dividend portfolio for all you readers here.
This portfolio was the result of days experimenting with the Bloomberg machine in the Central library.
What I've done is look go through the universe of Singapore stocks to find which strategies can dramatically outperform the market.
Here is how the stocks were selected :
a) We search for stocks which have a Net current asset value per share which is is higher than the price. This filter searches for value stocks with assets in the balance sheet that exceed market capitalization after deducting for all liabilities. This is a powerful value-filter inspired by Benjamin Graham.
( Current Assets - Liabilities ) / Outstanding Shares > Market price
b) Within this universe, I then back-tested the portfolio based on cherry picking the best investment ratios which result in out-performance within this set of stocks. I tried many ratios which include P/B, P/E, P/S amd dividend yields in my back-test.
It was discovered that lowest PS ratios gave me the best results over the past 10 years. So the filter only takes the lowest 25% percentile in price to sales ratio.
The resulting portfolio was found to return 75% per year ( Yeah ! ) over the past 10 years. This intuitively makes sense as we are not just buying stocks with have a value in the balance sheet way above the market prices but we are also choosing the stocks with the highest business revenues within this set.
But now I have a problem, the filters gave me a lot of China stocks which have a very wide bid-ask rate. Imagine buying a stock with a 10-20% sales charge since these stocks are so disliked by the market and the fund managers would not touch them with a ten foot pole. ( eg. China Haida was selling at 0.22 but buying only at 0.17 )
So investing in this portfolio will cause me to lose money from day 1.
So I had to make a compromise. I ranked the resulting portfolio by market capitalization and buy only 5 of the largest companies in this list, sacrificing $5,000 of hard-earned blood money for the benefit of my beloved readers.
The result is as follows :
This portfolio is less than 0.5% of my net worth. This should be misconstrued as stock advice, please do not attempt to mirror this portfolio on your own unless you really have money to lose. I am just sharing my approach of filtering the right stocks based on the proper fundamentals.
I will be updating the results every month and may add a deeper later of analysis to these 5 ultra-value stocks.
This portfolio was the result of days experimenting with the Bloomberg machine in the Central library.
What I've done is look go through the universe of Singapore stocks to find which strategies can dramatically outperform the market.
Here is how the stocks were selected :
a) We search for stocks which have a Net current asset value per share which is is higher than the price. This filter searches for value stocks with assets in the balance sheet that exceed market capitalization after deducting for all liabilities. This is a powerful value-filter inspired by Benjamin Graham.
( Current Assets - Liabilities ) / Outstanding Shares > Market price
b) Within this universe, I then back-tested the portfolio based on cherry picking the best investment ratios which result in out-performance within this set of stocks. I tried many ratios which include P/B, P/E, P/S amd dividend yields in my back-test.
It was discovered that lowest PS ratios gave me the best results over the past 10 years. So the filter only takes the lowest 25% percentile in price to sales ratio.
The resulting portfolio was found to return 75% per year ( Yeah ! ) over the past 10 years. This intuitively makes sense as we are not just buying stocks with have a value in the balance sheet way above the market prices but we are also choosing the stocks with the highest business revenues within this set.
But now I have a problem, the filters gave me a lot of China stocks which have a very wide bid-ask rate. Imagine buying a stock with a 10-20% sales charge since these stocks are so disliked by the market and the fund managers would not touch them with a ten foot pole. ( eg. China Haida was selling at 0.22 but buying only at 0.17 )
So investing in this portfolio will cause me to lose money from day 1.
So I had to make a compromise. I ranked the resulting portfolio by market capitalization and buy only 5 of the largest companies in this list, sacrificing $5,000 of hard-earned blood money for the benefit of my beloved readers.
The result is as follows :
| ISIN CODE | NAME | PRICE | SHARES | Total Value | Price Paid | Original Value |
| E18 | ECS Holdings | 0.65 | 2000 | $1,300.00 | 0.65 | $1,300.00 |
| ON7 | Weiye | 0.07 | 14000 | $980.00 | 0.07 | $980.00 |
| H64 | HTL | 0.28 | 3000 | $840.00 | 0.29 | $870.00 |
| KI3 | Hu An Cable | 0.1 | 10000 | $1,000.00 | 0.102 | $1,020.00 |
| U01 | Unifoods | 0.07 | 13000 | $910.00 | 0.073 | $949.00 |
| Total | $5,030.00 | $5,119.00 |
This portfolio is less than 0.5% of my net worth. This should be misconstrued as stock advice, please do not attempt to mirror this portfolio on your own unless you really have money to lose. I am just sharing my approach of filtering the right stocks based on the proper fundamentals.
I will be updating the results every month and may add a deeper later of analysis to these 5 ultra-value stocks.
Monday, March 24, 2014
Retired or Unemployed ?
One of the issues which really bug me these days is when I meet some acquaintances from the past and they ask me what am I currently doing.
I am always stuck with these two choices :
a) I tell them that I am retired.
When I say that I am retired, most folks will view my answer with disbelief. Some ex-classmates might find it funny and that I am just trying to cover up the fact that I was retrenched or something. What happens is that I get cornered to explain what I really do and to avoid the pain of facing a drop in "status" ( which really bothers the shit outta me even though it should'nt ), I start to get defensive after that.
To overcompensate, I start talking about dividends investing and sometimes commit the sin of hubris by saying that my investment income exceeds my last drawn pay. That gives me a momentary sense of satisfaction but I feel bad after that because I did not act with sufficient humility. It eats me as I really don't think people should inflict psychic damage to working Singaporeans by talking about using wealth not to do any work like what I do. Working folks should be honored for their contribution to the economy.
I also learned that claiming that I am a private investor sounds just as bad. Some smart alec in response will ask me if I am an accredited investor which I am not. ( Nope, sorry, no second milion... yet... ) The other point is that I don't really commit to investment analysis the way some bloggers do. I use Bloomberg to get statistical data and act on research created by someone else so I don't really qualify as an analyst.
b) I tell them I am unemployed.
I am currently in the process of learning to just say that I am currently unemployed. The drop in status really hurts especially when I meet Engineering classmates from NUS, I was not the best student but I was someone to beat during those bad old days. But people will avoid asking more questions. After all, you are openly unemployed, how much more can they hurt you ?
At the end of the day, it all boils down to ego management. If I had the mental resolve to simply accept the drop in status, I would have been able to humbly just accept working in a government bureaucracy. At the end of the day, my ego just would not let me.
Anyway, right I'm trying to distinguish between retirement and unemployment.
Right now I am working on this one distinction :
a) You are retired if, without earned income, your net worth either stays the same or goes up at every time interval.
b) You are unemployed if without earned income, your net worth drops at every time interval.
Problem is that there are many retirees with diminishing net worth in their 70s or 80s which would simply be classified as elderly unemployed by this definition.
I am always stuck with these two choices :
a) I tell them that I am retired.
When I say that I am retired, most folks will view my answer with disbelief. Some ex-classmates might find it funny and that I am just trying to cover up the fact that I was retrenched or something. What happens is that I get cornered to explain what I really do and to avoid the pain of facing a drop in "status" ( which really bothers the shit outta me even though it should'nt ), I start to get defensive after that.
To overcompensate, I start talking about dividends investing and sometimes commit the sin of hubris by saying that my investment income exceeds my last drawn pay. That gives me a momentary sense of satisfaction but I feel bad after that because I did not act with sufficient humility. It eats me as I really don't think people should inflict psychic damage to working Singaporeans by talking about using wealth not to do any work like what I do. Working folks should be honored for their contribution to the economy.
I also learned that claiming that I am a private investor sounds just as bad. Some smart alec in response will ask me if I am an accredited investor which I am not. ( Nope, sorry, no second milion... yet... ) The other point is that I don't really commit to investment analysis the way some bloggers do. I use Bloomberg to get statistical data and act on research created by someone else so I don't really qualify as an analyst.
b) I tell them I am unemployed.
I am currently in the process of learning to just say that I am currently unemployed. The drop in status really hurts especially when I meet Engineering classmates from NUS, I was not the best student but I was someone to beat during those bad old days. But people will avoid asking more questions. After all, you are openly unemployed, how much more can they hurt you ?
At the end of the day, it all boils down to ego management. If I had the mental resolve to simply accept the drop in status, I would have been able to humbly just accept working in a government bureaucracy. At the end of the day, my ego just would not let me.
Anyway, right I'm trying to distinguish between retirement and unemployment.
Right now I am working on this one distinction :
a) You are retired if, without earned income, your net worth either stays the same or goes up at every time interval.
b) You are unemployed if without earned income, your net worth drops at every time interval.
Problem is that there are many retirees with diminishing net worth in their 70s or 80s which would simply be classified as elderly unemployed by this definition.
Monday, March 17, 2014
Why Gen-X chooses Cash over Compassion ?
A good friend had a conversation with me the other day.
The conversation was about Professor Chan Heng Chee. My friend said that he's a big fan of hers because of a kind gesture she made about 20 years ago. You see, my friend represented his junior college in the Pre-U seminar and got to the microphone to make a point. The person whom the question was directed to casually dismissed my friend's question but Prof Chan stopped him, and said that the point my friend made was a valid one and deserved more consideration.
That simple act was enough to make my friend a lifelong fan and ally.
I then asked my friend a pointed question.
I asked him if he felt discriminated because he did not come from a top JC. He said, yes, he definitely felt that way and, like myself, my friend spent most of his life trying to prove himself as a result of this.
I think my friend turned out rather well, he's currently doing rather well at work after being a continuous feature in the Dean's List throughout his NUS years.
Now recently, there's been some talk about Singaporeans lacking compassion.
I want to share my hypothesis on why this is do.
You see, the folks who form the backbone of the economy today belongs to Generation X.
When Generation X was in school :
a) We did'nt have Heng Swee Keat as our education minister.
b) Not every school is a good school. In fact some schools suck, and by association, authorities will consider their students to suck as well. It affects the way authorities engage students if there is an invisible L word floating on top of their heads.
c) You can't teach less to learn more. You teach more to learn more. GP is more about developing conservative points of view and not about innovation or critical thinking. And no, there is no Google.
d) Teachers don't tell you that your exams do not define you as a person. That is a very recent phenomenon. Teachers tell you that you are relegated to a lower status if you don't do well for exams and it's your damn fault because we are a meritocratic society.
Generation X who's like me know that if our grades are good, our fart will smell like truffles and people will happily eat our diarrhoea. But we keep a constant look-out over the horizon to see what can threaten our lofty positions. Other Gen-Xers are not that lucky. They get labelled "Average", "Loser" or worse "Normal" throughout their days in school.
Now, fast forward to the mid-90s when we enter the workplace and discover this thing called Money.
Money replaces grades, GPA and t-scores in the real world. If you have it, you can buy a car or a watch. You can cut someone down with psychic damage if you can demonstrate that live in District 10 or have a Lamborghini. People always get bothered when you have more money than them, this makes relative wealth way more important than absolute wealth.
It's the grading curve all over again !
So what happens...
The Gen-X guys with the qualifications will pimp it to get more money to reinforce their positions in real life. The folks with poorer qualifications know that control of Money means that they no longer to subject to tiny acts of discrimination in Singapore society.
The hunt for Money becomes an all important Round 2 with a different set of winners.
The final link that makes Money and Compassion a trade-off are psychological studies which show that people who are "primed" with thoughts about money generally behave in a ruder and more abrupt manner.
So in summary, it's not an accident that Singaporeans lack compassion, this is a deliberate act of design as part of the education system in the 1990s. Grades were a microcosm of the real world, where Gen-X was socially engineered to fight for the best grades in preparation for a similar ranking to take place in real life. Once Gen-X joined the economy, their report cards were replaced with personal balance sheets where the ranking of their net worth can affect important things like spouse selection for men.
How do we get out of this mess ( Assuming that you think this is a mess )
My take is that one day Gen-X will retire from the workforce. Maybe Gen-Y who have different values from Gen-X will make Singapore a better place.
The conversation was about Professor Chan Heng Chee. My friend said that he's a big fan of hers because of a kind gesture she made about 20 years ago. You see, my friend represented his junior college in the Pre-U seminar and got to the microphone to make a point. The person whom the question was directed to casually dismissed my friend's question but Prof Chan stopped him, and said that the point my friend made was a valid one and deserved more consideration.
That simple act was enough to make my friend a lifelong fan and ally.
I then asked my friend a pointed question.
I asked him if he felt discriminated because he did not come from a top JC. He said, yes, he definitely felt that way and, like myself, my friend spent most of his life trying to prove himself as a result of this.
I think my friend turned out rather well, he's currently doing rather well at work after being a continuous feature in the Dean's List throughout his NUS years.
Now recently, there's been some talk about Singaporeans lacking compassion.
I want to share my hypothesis on why this is do.
You see, the folks who form the backbone of the economy today belongs to Generation X.
When Generation X was in school :
a) We did'nt have Heng Swee Keat as our education minister.
b) Not every school is a good school. In fact some schools suck, and by association, authorities will consider their students to suck as well. It affects the way authorities engage students if there is an invisible L word floating on top of their heads.
c) You can't teach less to learn more. You teach more to learn more. GP is more about developing conservative points of view and not about innovation or critical thinking. And no, there is no Google.
d) Teachers don't tell you that your exams do not define you as a person. That is a very recent phenomenon. Teachers tell you that you are relegated to a lower status if you don't do well for exams and it's your damn fault because we are a meritocratic society.
Generation X who's like me know that if our grades are good, our fart will smell like truffles and people will happily eat our diarrhoea. But we keep a constant look-out over the horizon to see what can threaten our lofty positions. Other Gen-Xers are not that lucky. They get labelled "Average", "Loser" or worse "Normal" throughout their days in school.
Now, fast forward to the mid-90s when we enter the workplace and discover this thing called Money.
Money replaces grades, GPA and t-scores in the real world. If you have it, you can buy a car or a watch. You can cut someone down with psychic damage if you can demonstrate that live in District 10 or have a Lamborghini. People always get bothered when you have more money than them, this makes relative wealth way more important than absolute wealth.
It's the grading curve all over again !
So what happens...
The Gen-X guys with the qualifications will pimp it to get more money to reinforce their positions in real life. The folks with poorer qualifications know that control of Money means that they no longer to subject to tiny acts of discrimination in Singapore society.
The hunt for Money becomes an all important Round 2 with a different set of winners.
The final link that makes Money and Compassion a trade-off are psychological studies which show that people who are "primed" with thoughts about money generally behave in a ruder and more abrupt manner.
So in summary, it's not an accident that Singaporeans lack compassion, this is a deliberate act of design as part of the education system in the 1990s. Grades were a microcosm of the real world, where Gen-X was socially engineered to fight for the best grades in preparation for a similar ranking to take place in real life. Once Gen-X joined the economy, their report cards were replaced with personal balance sheets where the ranking of their net worth can affect important things like spouse selection for men.
How do we get out of this mess ( Assuming that you think this is a mess )
My take is that one day Gen-X will retire from the workforce. Maybe Gen-Y who have different values from Gen-X will make Singapore a better place.
Friday, March 14, 2014
Usefulness of investing in career management.
Just read The Hard Thing about Hard Things by Ben Horowitz.
It talks about two kinds of leaders - "1"s and "2"s.
"1"s are highly intuitive thinkers and visionaries ( typically ENTJ Field Marshal types ) who revel in playing a game of competitive multi-dimensional chess with other business in the space. Bill Gates, Jack Welch and Steve Jobs is a "1".
"2"s are operational managers who are process driven and excel at making consistent and incremental changes ( typically ESTJ Administrator types ). Tim Cook is a "2".
You will need a combination of "1"s and "2"s to run an organization.
When managing a Tech career, you will need to understand your primary mode of thinking.
Most engineers and computer scientists are "2"s. They think empirically and like to frame problems in concrete terms. They are not very much into ivory tower theories. I think this is the main reason why many engineers don't climb very far in the corporate world. You skills to get you into middle management willl not be enough for you to get into senior management. This is why many engineers join MBA programs. But MBAs are only half the story, just because you take some marketing classes does not make you a visionary, and many engineers will probably focus on operational management or quantitative finance classes in business school.
The converse problem is rarer. A "1" in the corporate world will suffer in the initial stages in their career as they lack the experience and authority to push their ideas through. Many become rebels and heretics and subsequently leave the organization they work for. In this case, a "1" can get some industrial certifications to get the basic work done to bide their time or look for a mentor and hitch a ride to a career track where they can make a difference.
This concept also gave me some thought into how investing fits into this picture.
One of the fears upon getting my Engineering degree was getting permanently fixed at the operational track. After all, I an a textbook ESTJ when I was tested at age 18. Fortunately, my vision in the early part of my career was to build my salary in two ways. During the day, I manage systems and projects and earn a daily wage. At night, I use my quantitative skills to see if there is a way to constantly extract returns in the markets.
Using the skills of a pure "2", I have an income stream which is expected to plateau in middle age but I can begin to exploit market returns beyond my retirement.
Then something funny happened....
To do decent investments, you need a whole slew of skills in the liberal arts. Political science to assess the political risk of your stock counters. Economics to understand the moves made by the Feds. Psychology to assess herd mentality. Philosophy to ensure that you are not fooling yourself and engaging in logical fallacies. These combination of liberal arts skills are always profitable to discover the next stock which outperform the markets.
While investors start out as "2"s, ownership and management of multiple businesses can increase the "1"-ness in them.
They are also getting paid to play multi-dimensional chess against other investors and their peers in the salary game.
In summary, no matter how you manage your career, investing basically means taking ownership of multiple businesses. If you take this hobby seriously, you will be able to develop the ability to think on a broader manner and rapidly find ways to exploit your knowledge no matter how trivial it is.
( From a psychological perspective, I hypothesize that a strongly typed "S" can possibly enhance their "N" component of the MBTI by engaging in fundamental analysis. )
It talks about two kinds of leaders - "1"s and "2"s.
"1"s are highly intuitive thinkers and visionaries ( typically ENTJ Field Marshal types ) who revel in playing a game of competitive multi-dimensional chess with other business in the space. Bill Gates, Jack Welch and Steve Jobs is a "1".
"2"s are operational managers who are process driven and excel at making consistent and incremental changes ( typically ESTJ Administrator types ). Tim Cook is a "2".
You will need a combination of "1"s and "2"s to run an organization.
When managing a Tech career, you will need to understand your primary mode of thinking.
Most engineers and computer scientists are "2"s. They think empirically and like to frame problems in concrete terms. They are not very much into ivory tower theories. I think this is the main reason why many engineers don't climb very far in the corporate world. You skills to get you into middle management willl not be enough for you to get into senior management. This is why many engineers join MBA programs. But MBAs are only half the story, just because you take some marketing classes does not make you a visionary, and many engineers will probably focus on operational management or quantitative finance classes in business school.
The converse problem is rarer. A "1" in the corporate world will suffer in the initial stages in their career as they lack the experience and authority to push their ideas through. Many become rebels and heretics and subsequently leave the organization they work for. In this case, a "1" can get some industrial certifications to get the basic work done to bide their time or look for a mentor and hitch a ride to a career track where they can make a difference.
This concept also gave me some thought into how investing fits into this picture.
One of the fears upon getting my Engineering degree was getting permanently fixed at the operational track. After all, I an a textbook ESTJ when I was tested at age 18. Fortunately, my vision in the early part of my career was to build my salary in two ways. During the day, I manage systems and projects and earn a daily wage. At night, I use my quantitative skills to see if there is a way to constantly extract returns in the markets.
Using the skills of a pure "2", I have an income stream which is expected to plateau in middle age but I can begin to exploit market returns beyond my retirement.
Then something funny happened....
To do decent investments, you need a whole slew of skills in the liberal arts. Political science to assess the political risk of your stock counters. Economics to understand the moves made by the Feds. Psychology to assess herd mentality. Philosophy to ensure that you are not fooling yourself and engaging in logical fallacies. These combination of liberal arts skills are always profitable to discover the next stock which outperform the markets.
While investors start out as "2"s, ownership and management of multiple businesses can increase the "1"-ness in them.
They are also getting paid to play multi-dimensional chess against other investors and their peers in the salary game.
In summary, no matter how you manage your career, investing basically means taking ownership of multiple businesses. If you take this hobby seriously, you will be able to develop the ability to think on a broader manner and rapidly find ways to exploit your knowledge no matter how trivial it is.
( From a psychological perspective, I hypothesize that a strongly typed "S" can possibly enhance their "N" component of the MBTI by engaging in fundamental analysis. )
Monday, March 10, 2014
The Generation X lament.
I had a taxi ride one day and the driver, who is baby boomer in his late 50s, asked me if I knew what YOLO stood for. I said," Of course it stands for You Only Live Once". I was then treated to a hilarious conversation about how his philosophy in life is YOLO, and why he kept Vietnamese students as mistresses and his various sexual adventures in Thailand.
Fast forward a few months down the road, the Government instituted a one time transfer of tax proceeds from the tax paying public in 2013 to a group of seniors. This package is popularly known as the Pioneer Generation Package.
This package has been very well-received by the public, but I belong to a small minority that has issues with transferring wealth involuntarily from one generation to another.
a) Baby Boomers already benefited immensely from Singapore's growth.
Baby boomers did not need a degree to be gainfully employed. They presided over a period of time where you can buy a semi-detached home for $100,000 and sell it today for $2 million dollars. Many baby boomers still play a role in the workforce today. Many cling onto senior management roles without being proficient in English or Computing.
b) Baby Boomers were also young and foolish once.
Many baby boomers worked hard to build Singapore into what it is today. But like all generations, they were young and foolish once. Not all baby boomers took advantage of the economy to become successful in life.
Many were like Gen X and Gen Y and wasted their youth drinking and womanizing. Some subscribe to YOLO as a life philosophy.
When we use the term Pioneer, we can mislead ourselves into thinking that all of them are economic martyrs, well-deserving when some, maybe even a minority, are clearly not.
Those who lived their lives wisely can expect to spend their twilight years with loving children who can provide support in terms of money and services. This was our social compact prior to the 2011 elections - families look after themselves to create a society with low taxation and plenty of prosperity. i.e. Parents raise children well. Children then support parents at their old age with their money which was not eroded by excessive taxation when they were younger.
c) No colonial government took Baby Boomer's earnings to support their parents.
The equivalent of the Pioneer Generation Package is some colonial government taking taxes from Malaya and ensuring health care and welfare benefits for their ancestors. If such a transfer took place then perhaps it would be more comforting to accept this one time wealth transfer.
Correct me if I am wrong, the British were to busy running away from the Japanese to administer the island this way.
------------------------------------------------------------------------------------------------------------
All in all, I'm not a big fan of the Pioneer Generation Package.
If it makes uncomfortable reading for you and I sound a little ungrateful, I apologise, I voted this government into Parliament but I was unpleasantly surprised by this sudden shift towards the political left.
But do understand that I'm not coming from an angle where I am disrespectful to my seniors, I do want to look after my parents in their old age and support them. But my parents are my own responsibility, they are not your responsibility and certainly not the responsibility of other tax payers of Singapore.
Generation X did not have it as easy with the economy as the boomers. To get decent jobs we need to be very highly trained and we certainly cannot afford a car or landed property even for the best amongst us. There was some increase in asset value, it pales in comparison with what the Boomers experienced.
We are sandwiched in the workplace between Baby Boomers and Generation Y. Baby boomers are not ready to give up the throne to us and globalization is rapidly destroying the middle class making it hard for us to make ends meet. Generation X also had to fight outsourcing and deal with the influx of foreign talent.
I shall leave the critique of Generation Y to the rest of the Internet. (YOLO !)
Generation X did not get it easy, we never even asked for work life balance when we were in our 20s. We want to look after our families. Please don't take money meant for our families to feed ALL families without qualification. Most of our seniors led productive lives, saved for their future, and had a low tax regime to support them while they are at it. No one took their money and forced them to support their seniors.
We really need to rethink the way we conduct the wealth transfers.
I am not asking that you give money to us Generation X.
I am asking that you trust us to look after our parents.
I am asking that you either let us keep our hard earned money or invest the money in infrastructure, defense or even educating the future generations.
We are Generation X.
Our time never came. It probably never will.
Fast forward a few months down the road, the Government instituted a one time transfer of tax proceeds from the tax paying public in 2013 to a group of seniors. This package is popularly known as the Pioneer Generation Package.
This package has been very well-received by the public, but I belong to a small minority that has issues with transferring wealth involuntarily from one generation to another.
a) Baby Boomers already benefited immensely from Singapore's growth.
Baby boomers did not need a degree to be gainfully employed. They presided over a period of time where you can buy a semi-detached home for $100,000 and sell it today for $2 million dollars. Many baby boomers still play a role in the workforce today. Many cling onto senior management roles without being proficient in English or Computing.
b) Baby Boomers were also young and foolish once.
Many baby boomers worked hard to build Singapore into what it is today. But like all generations, they were young and foolish once. Not all baby boomers took advantage of the economy to become successful in life.
Many were like Gen X and Gen Y and wasted their youth drinking and womanizing. Some subscribe to YOLO as a life philosophy.
When we use the term Pioneer, we can mislead ourselves into thinking that all of them are economic martyrs, well-deserving when some, maybe even a minority, are clearly not.
Those who lived their lives wisely can expect to spend their twilight years with loving children who can provide support in terms of money and services. This was our social compact prior to the 2011 elections - families look after themselves to create a society with low taxation and plenty of prosperity. i.e. Parents raise children well. Children then support parents at their old age with their money which was not eroded by excessive taxation when they were younger.
c) No colonial government took Baby Boomer's earnings to support their parents.
The equivalent of the Pioneer Generation Package is some colonial government taking taxes from Malaya and ensuring health care and welfare benefits for their ancestors. If such a transfer took place then perhaps it would be more comforting to accept this one time wealth transfer.
Correct me if I am wrong, the British were to busy running away from the Japanese to administer the island this way.
------------------------------------------------------------------------------------------------------------
All in all, I'm not a big fan of the Pioneer Generation Package.
If it makes uncomfortable reading for you and I sound a little ungrateful, I apologise, I voted this government into Parliament but I was unpleasantly surprised by this sudden shift towards the political left.
But do understand that I'm not coming from an angle where I am disrespectful to my seniors, I do want to look after my parents in their old age and support them. But my parents are my own responsibility, they are not your responsibility and certainly not the responsibility of other tax payers of Singapore.
Generation X did not have it as easy with the economy as the boomers. To get decent jobs we need to be very highly trained and we certainly cannot afford a car or landed property even for the best amongst us. There was some increase in asset value, it pales in comparison with what the Boomers experienced.
We are sandwiched in the workplace between Baby Boomers and Generation Y. Baby boomers are not ready to give up the throne to us and globalization is rapidly destroying the middle class making it hard for us to make ends meet. Generation X also had to fight outsourcing and deal with the influx of foreign talent.
I shall leave the critique of Generation Y to the rest of the Internet. (YOLO !)
Generation X did not get it easy, we never even asked for work life balance when we were in our 20s. We want to look after our families. Please don't take money meant for our families to feed ALL families without qualification. Most of our seniors led productive lives, saved for their future, and had a low tax regime to support them while they are at it. No one took their money and forced them to support their seniors.
We really need to rethink the way we conduct the wealth transfers.
I am not asking that you give money to us Generation X.
I am asking that you trust us to look after our parents.
I am asking that you either let us keep our hard earned money or invest the money in infrastructure, defense or even educating the future generations.
We are Generation X.
Our time never came. It probably never will.
Thursday, March 06, 2014
Thoughts on my retiree lifestyle after two months.
Just to tide over the time, here are some random thoughts on my retiree lifestyle before I write something more substantial this week. I've been out of the work-force for two months and living the life that resembles a cross between a fund manager and a hobo. After picking up a distinction grade in a Data Science module from Coursera, I was spending time at the Central library to test out investment models at the central library.
a) Finances are holding up.
With the fresh flow of dividends cash rolling in end-February, I find that my net worth is actually higher than my last day at work not counting home equity ( otherwise it's even higher ). I'm not sure if this momentum can be maintained as a large portion of my stocks are invested in counters which would not do too well when interest rates go up.
I'm crossing my fingers that I will be able to successfully back-test a non-dividends portfolio to make this blog more interesting. Expect 1% from my portfolio to be placed in it for everyone's amusement. Hope that I can get this going sometime mid-April. ( Hint for the investment experts : Graham and Ken Fisher are right about Singapore stocks )
b) For some strange reason your consumption needs get reduced.
Maybe it's the lack of suffering in the workplace from having someone to report to, my willpower is much stronger when I am not working in an office. I no longer obsess about branded stationary (Moleskine blows a big hole in your wallet) and have held out against buying a Gundam Model kit for two months already ( It's a FA-78 Thunderbolt if you are wondering what's caught my fancy ). However, I still can't resist a good read and still paying a lot of money on books, having just completed Kevin Roose's Young Money and going to start on Ben Horowitz's The Hard Thing about Hard Things soon.
c) The 8-hour sleep part is the best.
I'm still not a good sleeper but now I have the luxury of ensuring that I get 8 hours of sleep a day. I bet most Singaporeans don't get to enjoy this very often. If you don't pick anything out from this article, you really need to try this.
d) Premium for intelligent conversation goes up a lot.
Fighting against boredom is something I struggle with everyday. Fortunately, I exercise more everyday and will begin meditation this week. What I need more of is intelligent conversation and there is'nt a lot of retirees who can engage with that once you are out of the workforce. Working folks worry about condominium payments and the financially independent may not even care about current affairs. Finding smart, intelligent people to have a chat with is plain hard if you consider that now my weekends are dedicated to family time and people are not free when I am free. ( Hint for the flaming extroverts : don't do what I do, ease into a part-time arrangement before quitting your job. You'll miss the bitching at work. )
Another words, keeping busy is a struggle but you need to build a structure around your life when no one is there to do it for you.
Right now I'm still pretty satisfied with my current arrangement, it's still not sustainable mentally because that's a part of mind that keeps telling me that I can do better if I contribute more directly to the economy and there's some residual fear of missing out.
Let's see if March will work out.
Sunday, February 23, 2014
Alan Ramos, IDA and the problem with mid-career IT engineers.
I promised a more detailed treatment about the Alan Ramos incident. For further details and background, you may refer to the following article here :
http://therealsingapore.com/content/mexican-ida-officer-charged-having-sex-15-year-old
Basically, many netizens were upset with my previous employer for hiring a Mexican Harvard psychology graduate when it was perceived that many Singaporean mid-career engineers are in a dire need of a job. When confronted on FB, IDA was silent on why it made the decision to hire Alan Ramos.
I did not meet Alan during my stay in IDA. In fact, I met him at Barcamp prior to becoming a public officer. My impression of him was quite good, he seemed dynamic and could think quickly on his feet although I felt he was overselling his Harvard credentials at that time. I did spend some time wondering what happened to this Boy Wonder throughout my stay in IDA. That was until I read the news that he was involved with an underaged prostitute.
My aim for this posting is to not to represent IDA, but to share what I think could have been a better alternative than keeping silent on the decision to hire Alan Ramos. I also would need to do this in a way that is fair to my previous employer, where I still have many friends.
Right now, I doubt that any officer could have provided an answer the way I did because any message would have been heavily censored before it was placed on FB. This is just the way the government bureaucracy works. Career risk is very high for many senior public servants, there is simply too much incentive not to make mistakes rather than to do something which the public perceives as being the "right" thing to do.
Now to the gist of why agencies needs the likes of Alan Ramos :
To address the question of hiring psychology graduates, you need to really understand that IDA is not IBM, HP or even NCS - IDA is a government agency. Dollars and cents are not the most precious currency in a government organization. IMHO, the most precious currency is accountability - a chain of documents and paperwork which can demonstrate integrity of any officer and his superiors if subject to the scrutiny of any auditor.
Unless you work in GCIO which is the IT department that runs the government servers, you are a bureaucrat who will spend a lot of time writing approval papers and making power point presentations. As such, I think that a project manager who has spent 20 years on SDLC would make a horrible government servant, unless he likes doing documentation, I would bet that he would be surprised at the amount of paperwork which needs to be done just to keep the project running.
In such a situation, having a public officer who is trained in the liberal arts like Alan Ramos would make much more sense. His papers would be riddled with fewer grammatical errors and psychology majors have a knack for reading other people, which in my opinion, more important in an agency because a lot of presentations require a large amount of mind-reading so that it can pushed to another layer of approval. Liberal arts majors also do a little bit of science subjects so it may be possible that Alan may have taken a Computer Science module or two before getting hired.
The next item which I would like to address is the problem of mid-career engineers. Like me, you might think that you do have the skills that makes you entitled to an iron rice bowl in a government agency.
The hard and bitter truth about an engineering career is that it needs to be maintained to stay relevant. Most of us in our 40s have worthless degrees with a resume full of project victories which employ outmoded technologies or IT management frameworks.
If you are an operations PM who knows ITIL at the back of your hand, DevOps is the new killer management paradigm which threatens your livelihood by having developers manage their change processes over the cloud without operations staff.
What is the use of having SDLC experience when a lot of organizations are looking at AGILE methodology which is cheaper and results in software that better serves the needs to the companies.
Can a DBA set-up a Hadoop cluster ?
Are you a software engineer stuck in the C# .NET framework when the hottest programming languages are Python and Ruby ?
Can an old school TCP/IP stack engineer re-tool himself for the Internet of Things ?
Can an algorithms expert understand Naive Bayes or the working of the K Nearest Neighbour algorithm ?
In the short term, engineers have the hottest skills to get the best tech jobs. After 10 years, there will be enough technology disruption to render your skills worthless, that's even if you hold a tech job continuously because your company may not change as fast as the tech industry.
At least Alan Ramos still has his liberal arts background which is timeless and allows him to adapt to changes in any industry.
To many mid-career engineers, it looks like an iron rice-bowl is a great way to escape the great obsolescence that awaits all engineering careers, but from my personal experience, many of us are really not suited to government careers.
Instead I recommend the following :
a) Can you earn your income from investments ?
b) Do you have the skills and capital to start a small business ?
c) Why not obtain a taxi license ?
Alan Ramos will be fully dealt with by the law, but don't begrudge his skills and training, they may really be more suited to a government agency than you think.
http://therealsingapore.com/content/mexican-ida-officer-charged-having-sex-15-year-old
Basically, many netizens were upset with my previous employer for hiring a Mexican Harvard psychology graduate when it was perceived that many Singaporean mid-career engineers are in a dire need of a job. When confronted on FB, IDA was silent on why it made the decision to hire Alan Ramos.
I did not meet Alan during my stay in IDA. In fact, I met him at Barcamp prior to becoming a public officer. My impression of him was quite good, he seemed dynamic and could think quickly on his feet although I felt he was overselling his Harvard credentials at that time. I did spend some time wondering what happened to this Boy Wonder throughout my stay in IDA. That was until I read the news that he was involved with an underaged prostitute.
My aim for this posting is to not to represent IDA, but to share what I think could have been a better alternative than keeping silent on the decision to hire Alan Ramos. I also would need to do this in a way that is fair to my previous employer, where I still have many friends.
Right now, I doubt that any officer could have provided an answer the way I did because any message would have been heavily censored before it was placed on FB. This is just the way the government bureaucracy works. Career risk is very high for many senior public servants, there is simply too much incentive not to make mistakes rather than to do something which the public perceives as being the "right" thing to do.
Now to the gist of why agencies needs the likes of Alan Ramos :
To address the question of hiring psychology graduates, you need to really understand that IDA is not IBM, HP or even NCS - IDA is a government agency. Dollars and cents are not the most precious currency in a government organization. IMHO, the most precious currency is accountability - a chain of documents and paperwork which can demonstrate integrity of any officer and his superiors if subject to the scrutiny of any auditor.
Unless you work in GCIO which is the IT department that runs the government servers, you are a bureaucrat who will spend a lot of time writing approval papers and making power point presentations. As such, I think that a project manager who has spent 20 years on SDLC would make a horrible government servant, unless he likes doing documentation, I would bet that he would be surprised at the amount of paperwork which needs to be done just to keep the project running.
In such a situation, having a public officer who is trained in the liberal arts like Alan Ramos would make much more sense. His papers would be riddled with fewer grammatical errors and psychology majors have a knack for reading other people, which in my opinion, more important in an agency because a lot of presentations require a large amount of mind-reading so that it can pushed to another layer of approval. Liberal arts majors also do a little bit of science subjects so it may be possible that Alan may have taken a Computer Science module or two before getting hired.
The next item which I would like to address is the problem of mid-career engineers. Like me, you might think that you do have the skills that makes you entitled to an iron rice bowl in a government agency.
The hard and bitter truth about an engineering career is that it needs to be maintained to stay relevant. Most of us in our 40s have worthless degrees with a resume full of project victories which employ outmoded technologies or IT management frameworks.
If you are an operations PM who knows ITIL at the back of your hand, DevOps is the new killer management paradigm which threatens your livelihood by having developers manage their change processes over the cloud without operations staff.
What is the use of having SDLC experience when a lot of organizations are looking at AGILE methodology which is cheaper and results in software that better serves the needs to the companies.
Can a DBA set-up a Hadoop cluster ?
Are you a software engineer stuck in the C# .NET framework when the hottest programming languages are Python and Ruby ?
Can an old school TCP/IP stack engineer re-tool himself for the Internet of Things ?
Can an algorithms expert understand Naive Bayes or the working of the K Nearest Neighbour algorithm ?
In the short term, engineers have the hottest skills to get the best tech jobs. After 10 years, there will be enough technology disruption to render your skills worthless, that's even if you hold a tech job continuously because your company may not change as fast as the tech industry.
At least Alan Ramos still has his liberal arts background which is timeless and allows him to adapt to changes in any industry.
To many mid-career engineers, it looks like an iron rice-bowl is a great way to escape the great obsolescence that awaits all engineering careers, but from my personal experience, many of us are really not suited to government careers.
Instead I recommend the following :
a) Can you earn your income from investments ?
b) Do you have the skills and capital to start a small business ?
c) Why not obtain a taxi license ?
Alan Ramos will be fully dealt with by the law, but don't begrudge his skills and training, they may really be more suited to a government agency than you think.
Wednesday, February 19, 2014
What's wrong with getting financial advice from a billionaire like Li Ka-shing ?
Lately, a translated article from Li Ka-Shing was being circulated on the Internet. Compared to the usual advice that some of the gurus were to provide, it's actually not bad. Li Ka-Shing comes across as a pretty progressive and modern person who has some down-to-earth advice for everyone.
You may judge for yourself by reading the article here :
http://mirror.e27.co/li-ka-shing-teaches-buy-car-house-5-years/
I'm not going to be like the rest of the Internet and talk about what a great article this is.
If you are a florist struggling after the World War in HK, following this advice will likely make you a billionaire. Otherwise, advice is advice. It should be judged by how many millionaires you can make with it. And as a previous shareholder who owned HPH Trust, I will not take anything that a seasoned businessman say without applying my own critical thinking skills to his ideas.
Here's my take :
a) 25% as start-up capital
Li Ka-Shing advocates putting aside 25% of one's income as start-up capital. Strangely, he does not advocate savings. The aim of this fund is to ultimately do a business. This belongs to the class of advice which worked for Li Ka-Shing but may not work for most average Joes. As a savings component, 25% is too low ( At least start at a ridiculous 50% so that every month of work earns a month of rest ).
Most people suck at business which explains why the high failure rate. In our current economic situation, businessmen need to contend with high labor costs and rents as well.
I think I would rather critically examine how LKS and Son actually make their money, which is to invest in toll-like investments and get tenants or broadband subscribers to pay to use their infrastructure. When these assets reach critical value, spin it off in SGX and sell it to Singapore investors, let them deal with port strikes and slower Chinese growth that come soon after divestment.
Start investing early to get the compounding engine in your 20s. If you come across a business idea which trumps your portfolio of real estate, manufacturing firms or toll businesses, then think about running a business.
You are more likely to succeed as a long-term investor, similarly you are more likely to fail in a small business.
b) 20% to pay for lunch with friends
20% is a crazy amount for net-working. Do make sure if this is done in Singapore, the person you are giving a treat to is not a government servant. I spent some time re-examining this advice and I wonder if there is a hidden meaning embedded in those words that can only be appreciated within the context of a Chinese regime. In a Chinese SAR like HK, you can definitely knock yourself out giving treats to supposedly 'useful' people. But in Singapore, it may be better to stick to a hawker centre or food-court and exchange knowledge and practical advice instead.
I would take this budget out completely and merge this into the savings budget. Instead, I will invite friends out to discuss the economy, business ideas, good investments and the latest books over $1 kopi-o.
c) 10% for travel and the broadening of horizons.
This is not such a bad idea, but can we travel as part of work ? During my younger days, I used leave to extend my travel so that I can see other parts of the world on company budget. Yes, I've not been to Disneyland, but I built outsourcing teams in KL and Bangalore. Anyway 10% of my savings when I was 25 would not get me beyond South-East Asia.
I would also bunch this budget into the investment budget. And when you are in your 20s, if you wanna recharge go to KL over the weekend.
d) When you are poor, spend money so that people can see it.
It is this advice that really rubbed me the wrong way. Some old folks may have this idea that you gotta fake it until you make it. In the good old days, people might take your word for it, just be a slick salesman. But these days, we live in a high-surveillance society. People will use social media to find out what you're really made of and verify your claims. It's also much harder to sell to a sophisticated web-savvy customer.
Showing off by using bright and expensive clothes may work in a Toastmasters competition, but when it comes to work, every bit of substance counts.
Don't believe me ? Google Richard Li and you will find that he regrets claiming that he had a Stanford degree but he dropped out.
I would say respect decorum when the need arises and dress to meet standards. You should also be consistent as to the kind of person you are regardless of whether you are rich or poor, otherwise, your friends who helped you in the past will say that you have changed.
In summary, I think LKS has shared good advice to many readers, but it's more fun to examine the context by which this advice holds true.
In a similar vein in Singapore, many multi-millionaire trainers exist to give advice to ordinary people. The advice should be assessed by looking at how useful it is to the ordinary folks and not judged solely by the wealth of the trainer.
You may judge for yourself by reading the article here :
http://mirror.e27.co/li-ka-shing-teaches-buy-car-house-5-years/
I'm not going to be like the rest of the Internet and talk about what a great article this is.
If you are a florist struggling after the World War in HK, following this advice will likely make you a billionaire. Otherwise, advice is advice. It should be judged by how many millionaires you can make with it. And as a previous shareholder who owned HPH Trust, I will not take anything that a seasoned businessman say without applying my own critical thinking skills to his ideas.
Here's my take :
a) 25% as start-up capital
Li Ka-Shing advocates putting aside 25% of one's income as start-up capital. Strangely, he does not advocate savings. The aim of this fund is to ultimately do a business. This belongs to the class of advice which worked for Li Ka-Shing but may not work for most average Joes. As a savings component, 25% is too low ( At least start at a ridiculous 50% so that every month of work earns a month of rest ).
Most people suck at business which explains why the high failure rate. In our current economic situation, businessmen need to contend with high labor costs and rents as well.
I think I would rather critically examine how LKS and Son actually make their money, which is to invest in toll-like investments and get tenants or broadband subscribers to pay to use their infrastructure. When these assets reach critical value, spin it off in SGX and sell it to Singapore investors, let them deal with port strikes and slower Chinese growth that come soon after divestment.
Start investing early to get the compounding engine in your 20s. If you come across a business idea which trumps your portfolio of real estate, manufacturing firms or toll businesses, then think about running a business.
You are more likely to succeed as a long-term investor, similarly you are more likely to fail in a small business.
b) 20% to pay for lunch with friends
20% is a crazy amount for net-working. Do make sure if this is done in Singapore, the person you are giving a treat to is not a government servant. I spent some time re-examining this advice and I wonder if there is a hidden meaning embedded in those words that can only be appreciated within the context of a Chinese regime. In a Chinese SAR like HK, you can definitely knock yourself out giving treats to supposedly 'useful' people. But in Singapore, it may be better to stick to a hawker centre or food-court and exchange knowledge and practical advice instead.
I would take this budget out completely and merge this into the savings budget. Instead, I will invite friends out to discuss the economy, business ideas, good investments and the latest books over $1 kopi-o.
c) 10% for travel and the broadening of horizons.
This is not such a bad idea, but can we travel as part of work ? During my younger days, I used leave to extend my travel so that I can see other parts of the world on company budget. Yes, I've not been to Disneyland, but I built outsourcing teams in KL and Bangalore. Anyway 10% of my savings when I was 25 would not get me beyond South-East Asia.
I would also bunch this budget into the investment budget. And when you are in your 20s, if you wanna recharge go to KL over the weekend.
d) When you are poor, spend money so that people can see it.
It is this advice that really rubbed me the wrong way. Some old folks may have this idea that you gotta fake it until you make it. In the good old days, people might take your word for it, just be a slick salesman. But these days, we live in a high-surveillance society. People will use social media to find out what you're really made of and verify your claims. It's also much harder to sell to a sophisticated web-savvy customer.
Showing off by using bright and expensive clothes may work in a Toastmasters competition, but when it comes to work, every bit of substance counts.
Don't believe me ? Google Richard Li and you will find that he regrets claiming that he had a Stanford degree but he dropped out.
I would say respect decorum when the need arises and dress to meet standards. You should also be consistent as to the kind of person you are regardless of whether you are rich or poor, otherwise, your friends who helped you in the past will say that you have changed.
In summary, I think LKS has shared good advice to many readers, but it's more fun to examine the context by which this advice holds true.
In a similar vein in Singapore, many multi-millionaire trainers exist to give advice to ordinary people. The advice should be assessed by looking at how useful it is to the ordinary folks and not judged solely by the wealth of the trainer.
Friday, February 14, 2014
What single dudes can learn from the Investment masters on Valentine's day !
There are many parallel's between finding a perfect portfolio and searching for a good spouse.
On Valentine's day, let's look at at some concepts in investing which can be easily translated into the realm of Love and Romance.
a) You need to know what you want.
In fundamental analysis, some investors search for value stocks and some go for growth stocks with a great story. Similarly, you need to have an idea of what kind of girl would suit you in a relationship. Not spending time thinking about this problem will result in having needs which only a few women can fulfill on planet Earth, i.e. you might end up wanting a decent and conservative girl that will whip you silly and rock your world in bed.
A growth stock is like the hot, tanned chick in a bikini who pole dances and can show you her hidden tattoo if you are nice to her. A value stock is like a beautiful girl who loves playing with children and who is courteous to your parents and gentle with you. Some people go for growth, others, go for value.
b) You need go to the right place to find that special someone
Once you know the kind the stock you are looking for, you need to set up a screen to filter through the universe of stocks in SGX. Value investors go for low P/B, P/S, P/E with high free cash flow and dividend yield. Growth investors go for the consistent growth in revenues and EPS for the past 5 years and a story to sustain that momentum.
Similarly, conscientious girls are best found in schools and the accounting department in the workplace. If you want someone fun and outgoing, you can always go for dance classes. Don't go to a venue to find a particular type of girl that generally does not exist there. I could be proven wrong, but I doubt you can easily find a conservative and gentle mother for your children if your hunting ground is in China Black.( Note : I know there's no more China Black but you get the picture. )
c) Getting a wingman or a male friend to comment on someone who is your potential target.
Sometimes it's hard to understand why a stock is being sold as a bargain. Maybe there is forex risk. The company may be losing out to an innovative upstart. Or the stock belongs to a sunset industry. Reading the comments of a good financial blogger would give you an idea owning the stock is a good idea.
Similarly, perfectly good-looking women may be single in her late thirties. A wise guy will find out why this is so by probing her friends or doing some research. Maybe the hot-chick is tremendously neurotic or she is expensive to upkeep. The dating market can be as competitive as the finance market. Many good ones are already taken during University.
You need to find someone with a flaw that you can tolerate to be happy in this world.
d) Determine your appropriate level of commitment.
If you are just scoping the stock the first time, keep your exposure to a minimum at 1% of your portfolio. After a few quarters and some dividends later, you will have a keen idea of whether this stock is one to keep in your portfolio. You can increase your exposure to 5-10% if that is the case.
Similarly in dating, you should not be rash. When you first get to know someone, dating casually will do. A person who thinks like an investor will certainly not go for one night stands ( that's for the folks who play options ). Make sure that you really know someone and her family before you commit to a marriage or cohabitation.
So there you have it. By training yourself to be good at picking stocks, you will find that many techniques can be brought to other areas in your life.
Hope that you have a Happy Valentine's day and have found someone that you can truly buy-and-hold for the rest of your life.
On Valentine's day, let's look at at some concepts in investing which can be easily translated into the realm of Love and Romance.
a) You need to know what you want.
In fundamental analysis, some investors search for value stocks and some go for growth stocks with a great story. Similarly, you need to have an idea of what kind of girl would suit you in a relationship. Not spending time thinking about this problem will result in having needs which only a few women can fulfill on planet Earth, i.e. you might end up wanting a decent and conservative girl that will whip you silly and rock your world in bed.
A growth stock is like the hot, tanned chick in a bikini who pole dances and can show you her hidden tattoo if you are nice to her. A value stock is like a beautiful girl who loves playing with children and who is courteous to your parents and gentle with you. Some people go for growth, others, go for value.
b) You need go to the right place to find that special someone
Once you know the kind the stock you are looking for, you need to set up a screen to filter through the universe of stocks in SGX. Value investors go for low P/B, P/S, P/E with high free cash flow and dividend yield. Growth investors go for the consistent growth in revenues and EPS for the past 5 years and a story to sustain that momentum.
Similarly, conscientious girls are best found in schools and the accounting department in the workplace. If you want someone fun and outgoing, you can always go for dance classes. Don't go to a venue to find a particular type of girl that generally does not exist there. I could be proven wrong, but I doubt you can easily find a conservative and gentle mother for your children if your hunting ground is in China Black.( Note : I know there's no more China Black but you get the picture. )
c) Getting a wingman or a male friend to comment on someone who is your potential target.
Sometimes it's hard to understand why a stock is being sold as a bargain. Maybe there is forex risk. The company may be losing out to an innovative upstart. Or the stock belongs to a sunset industry. Reading the comments of a good financial blogger would give you an idea owning the stock is a good idea.
Similarly, perfectly good-looking women may be single in her late thirties. A wise guy will find out why this is so by probing her friends or doing some research. Maybe the hot-chick is tremendously neurotic or she is expensive to upkeep. The dating market can be as competitive as the finance market. Many good ones are already taken during University.
You need to find someone with a flaw that you can tolerate to be happy in this world.
d) Determine your appropriate level of commitment.
If you are just scoping the stock the first time, keep your exposure to a minimum at 1% of your portfolio. After a few quarters and some dividends later, you will have a keen idea of whether this stock is one to keep in your portfolio. You can increase your exposure to 5-10% if that is the case.
Similarly in dating, you should not be rash. When you first get to know someone, dating casually will do. A person who thinks like an investor will certainly not go for one night stands ( that's for the folks who play options ). Make sure that you really know someone and her family before you commit to a marriage or cohabitation.
So there you have it. By training yourself to be good at picking stocks, you will find that many techniques can be brought to other areas in your life.
Hope that you have a Happy Valentine's day and have found someone that you can truly buy-and-hold for the rest of your life.
Wednesday, February 12, 2014
What Streetfighter II has taught me about finance.
For the past week, I've been trying to game the Bloomberg machines at the Central Library. Patrons are limited to 1 hour of use per day. This really reminds me of the time I had to queue for a Streetfighter II machine at the NCO club which was next to Raffles City about 20 years ago.
Time flies, but some things ever change. My Blanka would not last every long against the kids and Bengs who were very good at the game. Similarly, the Blooomberg machine has shed some harsh truths about the various investment strategies used by fundamental analysts.
My objective for getting the Bloomberg machine is to first myself in its use and then to see if I can derive some interesting insight on Singapore markets.
As I'm still pretty new at Bloomberg, I was able to use the stock filters and do some back-testing on local stocks. Try not to use some of the results I present here as investment advice but possibly as something which can lead to better insights on fundamental analysis in the future.
All numbers take the top 10% percentile of stocks in the Singapore universe. Portfolio is equally weighted among different stocks and rebalanced annually and backtested over 10 years.
Lowest P/B ratio gave mean return of 42.79% with standard deviation of 20.46%
Lowest P/S ratio gave mean return of 38.51% with standard deviation of 22%
Lowest P/FCF ratio gave mean return of 30.57% with standard deviation of 19.75%
Lowest P/E ratio gave mean return of 29.05 with standard deviation of 19.43%
Highest dividend yield gave mean return of 23.37% with standard deviation of 15.02%
Highest dividend growth over 5 years gave mean return of 16.67% with standard deviation of 16.66%.
Highest ROIC gave mean return of 19.59% with standard deviation of 18.84%
Here's the best part, if you design an equally weighted portfolio of Singapore stocks you will get a mean return of 32% with a standard deviation of 20.06%
The only decent conclusion so far is that an equally weighted portfolio would result in a fairly decent performance against other strategies which includes my favorite high yield strategy ( which has merit only because of it's low volatility ).
Over the next few weeks, I will be refining my filters to cover multiple criteria and expanding my backtest to cover 20% percentile of stocks since employing only 10% of the universe results in a higher volatility.
Time flies, but some things ever change. My Blanka would not last every long against the kids and Bengs who were very good at the game. Similarly, the Blooomberg machine has shed some harsh truths about the various investment strategies used by fundamental analysts.
My objective for getting the Bloomberg machine is to first myself in its use and then to see if I can derive some interesting insight on Singapore markets.
As I'm still pretty new at Bloomberg, I was able to use the stock filters and do some back-testing on local stocks. Try not to use some of the results I present here as investment advice but possibly as something which can lead to better insights on fundamental analysis in the future.
All numbers take the top 10% percentile of stocks in the Singapore universe. Portfolio is equally weighted among different stocks and rebalanced annually and backtested over 10 years.
Lowest P/B ratio gave mean return of 42.79% with standard deviation of 20.46%
Lowest P/S ratio gave mean return of 38.51% with standard deviation of 22%
Lowest P/FCF ratio gave mean return of 30.57% with standard deviation of 19.75%
Lowest P/E ratio gave mean return of 29.05 with standard deviation of 19.43%
Highest dividend yield gave mean return of 23.37% with standard deviation of 15.02%
Highest dividend growth over 5 years gave mean return of 16.67% with standard deviation of 16.66%.
Highest ROIC gave mean return of 19.59% with standard deviation of 18.84%
Here's the best part, if you design an equally weighted portfolio of Singapore stocks you will get a mean return of 32% with a standard deviation of 20.06%
The only decent conclusion so far is that an equally weighted portfolio would result in a fairly decent performance against other strategies which includes my favorite high yield strategy ( which has merit only because of it's low volatility ).
Over the next few weeks, I will be refining my filters to cover multiple criteria and expanding my backtest to cover 20% percentile of stocks since employing only 10% of the universe results in a higher volatility.
Friday, February 07, 2014
Why Malaysian Chinese already rule Singapore ?
In case you might be thinking that I'm pulling yet another Adam Khoo...
Happy Chinese New Year !!!!
Singaporeans with a Malaysian background already dominate many spheres in Singapore. Our nation has grown from the brain gain that we have received from their ethnic Chinese population.
Khaw Boon Wan ,our National Development minister, came from Penang and should recently be congratulated for reducing COV to about $5,000.
Olivia Lum, founder of Hyflux, started out the in sleepy Malaysian town of Kampar and is responsible for the creation of many local jobs in Singapore today.
According to The Triple Package by Amy Chua of the Tiger Mother fame, Malaysian Chinese form an ethnic group which I think has the same traits as many successful American immigrants today.
Let's examine each component of this Triple Package :
a) Sense of Superiority
We can say that Malaysian Chinese do have a sense of superiority. While it is'nt targetted towards Singaporeans, I would say that they feel very much persecuted at home and denied many privileges back in Malaysia. Many could have done well in the Universities in the north but are very much better off studying here where their merits can be recognised in our country. The sense of superiority would be directed back to their homeland where they feel that they are still doing well economically despite being constantly forced to function with a handicap.
b) Insecurity
Although Malaysians do integrate well in Singapore compared to other foreign talent. It would be naive to think that they do not suffer from some scorn within Singaporean society today. Some Singaporean Chinese complain that they speak Mandarin with a strong accent, and many are disadvantaged in the workplace due to poorer English. Any group which faces scorn or a drop in status will develop a chip on the shoulder so I would think that naturally many Malaysian Chinese do want to prove themselves here. Not just to the meaner Singaporeans they face at work but also to their fellow citizens back home.
c) Impulse Control
Immigrant populations come built-in with a lot of impulse control. Imagine the life the Malaysian student in Senai, who has to wake up at 4.30am to attend a Junior College in Singapore. He probably spends 3-4 hours travelling. He does that because he thinks that a Singaporean education is a ticket to a better future. That kind of willpower and conscientiousness simply cannot be imagined if you are a local. As it often happens on the ground, Singaporeans still do better in school and do well in academic scores, but I bet Malaysian Chinese may do better over the long run because a difficult lifestyle also means more opportunities to develop resilience and grit.
So, what this all mean for us Singaporeans ?
I won't want spread any fear about Malaysian Chinese, half my family is Malaysian, my daughter practically grows up in Johor as well. I also consider the brain gain from Malaysian a primary reason why we are an economic miracle today in South East Asia.
Here's what I think :
a) The advantages of being Malaysian Chinese will not last one generation.
The main reason is that we are not too bad and remain largely kiasu. We already work the longest hours in the world.
Unlike the US, Singaporeans of all races would rank pretty highly with the Triple Package. Singaporean parents always think that their kids are the best and very much more neurotic than our ASEAN neighbours. The kids of Malaysian Chinese are likely to grow up Singaporean and will adopt our values and weaknesses. They will not have the fighting spirit of their parents. Many will end up requiring Adam Khoo's services like Singaporean kids these days.
b) Policy considerations should be made to keep Singaporeans and the country "Insecure" and conscientious.
The Triple Package may have policy implications.
Singaporeans have been recently asking for too many populist measures from the Government. We already have a fairly good healthcare and social security system.
But some changes do bother me like taking out the t-score for PSLE. Why do we want to make our future generations less competitive ? I think the West gets it wrong, we need to master something before we should be given any self-esteem. The worse thing for Singapore is that our children think that they are really smart but get rolled over by harder working students in China who are better at handling stress.
Stress is necessary for the building of character. Introduce a t-score for University entrance.
I would'nt want to get into the welfare or minimum wage debate but it's quite clear where I stand on this debate.
c) Fight the Philistine culture
The rise of a materialistic philistine culture is also something we need to guard against. My observation of the Singapore middle class is that as hardworking as it is, it has never developed a culture of intellectualism. Even intelligent Singaporeans do not focus on ideas, they focus on material goods and things. There are over 400 Maseratis in Singapore but not a single Nobel prize.
Impulse control is cultivated by a culture which promotes Intellectualism as you need patience and dedication to develop a philosophy and outlook on life. The Patek Phillipe watch just needs a bank loan.
And we've chosen the quick fix as a way to measure status in our society.
Happy Chinese New Year !!!!
Singaporeans with a Malaysian background already dominate many spheres in Singapore. Our nation has grown from the brain gain that we have received from their ethnic Chinese population.
Khaw Boon Wan ,our National Development minister, came from Penang and should recently be congratulated for reducing COV to about $5,000.
Olivia Lum, founder of Hyflux, started out the in sleepy Malaysian town of Kampar and is responsible for the creation of many local jobs in Singapore today.
According to The Triple Package by Amy Chua of the Tiger Mother fame, Malaysian Chinese form an ethnic group which I think has the same traits as many successful American immigrants today.
Let's examine each component of this Triple Package :
a) Sense of Superiority
We can say that Malaysian Chinese do have a sense of superiority. While it is'nt targetted towards Singaporeans, I would say that they feel very much persecuted at home and denied many privileges back in Malaysia. Many could have done well in the Universities in the north but are very much better off studying here where their merits can be recognised in our country. The sense of superiority would be directed back to their homeland where they feel that they are still doing well economically despite being constantly forced to function with a handicap.
b) Insecurity
Although Malaysians do integrate well in Singapore compared to other foreign talent. It would be naive to think that they do not suffer from some scorn within Singaporean society today. Some Singaporean Chinese complain that they speak Mandarin with a strong accent, and many are disadvantaged in the workplace due to poorer English. Any group which faces scorn or a drop in status will develop a chip on the shoulder so I would think that naturally many Malaysian Chinese do want to prove themselves here. Not just to the meaner Singaporeans they face at work but also to their fellow citizens back home.
c) Impulse Control
Immigrant populations come built-in with a lot of impulse control. Imagine the life the Malaysian student in Senai, who has to wake up at 4.30am to attend a Junior College in Singapore. He probably spends 3-4 hours travelling. He does that because he thinks that a Singaporean education is a ticket to a better future. That kind of willpower and conscientiousness simply cannot be imagined if you are a local. As it often happens on the ground, Singaporeans still do better in school and do well in academic scores, but I bet Malaysian Chinese may do better over the long run because a difficult lifestyle also means more opportunities to develop resilience and grit.
So, what this all mean for us Singaporeans ?
I won't want spread any fear about Malaysian Chinese, half my family is Malaysian, my daughter practically grows up in Johor as well. I also consider the brain gain from Malaysian a primary reason why we are an economic miracle today in South East Asia.
Here's what I think :
a) The advantages of being Malaysian Chinese will not last one generation.
The main reason is that we are not too bad and remain largely kiasu. We already work the longest hours in the world.
Unlike the US, Singaporeans of all races would rank pretty highly with the Triple Package. Singaporean parents always think that their kids are the best and very much more neurotic than our ASEAN neighbours. The kids of Malaysian Chinese are likely to grow up Singaporean and will adopt our values and weaknesses. They will not have the fighting spirit of their parents. Many will end up requiring Adam Khoo's services like Singaporean kids these days.
b) Policy considerations should be made to keep Singaporeans and the country "Insecure" and conscientious.
The Triple Package may have policy implications.
Singaporeans have been recently asking for too many populist measures from the Government. We already have a fairly good healthcare and social security system.
But some changes do bother me like taking out the t-score for PSLE. Why do we want to make our future generations less competitive ? I think the West gets it wrong, we need to master something before we should be given any self-esteem. The worse thing for Singapore is that our children think that they are really smart but get rolled over by harder working students in China who are better at handling stress.
Stress is necessary for the building of character. Introduce a t-score for University entrance.
I would'nt want to get into the welfare or minimum wage debate but it's quite clear where I stand on this debate.
c) Fight the Philistine culture
The rise of a materialistic philistine culture is also something we need to guard against. My observation of the Singapore middle class is that as hardworking as it is, it has never developed a culture of intellectualism. Even intelligent Singaporeans do not focus on ideas, they focus on material goods and things. There are over 400 Maseratis in Singapore but not a single Nobel prize.
Impulse control is cultivated by a culture which promotes Intellectualism as you need patience and dedication to develop a philosophy and outlook on life. The Patek Phillipe watch just needs a bank loan.
And we've chosen the quick fix as a way to measure status in our society.
Tuesday, January 28, 2014
Influence of Dungeons & Dragons on my investment style.
The daddy of all role-playing games has turned 40 lately.
I'd just like to share the influence Dungeons & Dragons have on my life.
I picked up D&D when I was 10. I started out with the D&D Action figures by LJN ( I used to have Warduke the Fighter and Strongheart the Paladin ) and was told by a senior in my primary school that there's such a thing as a role-playing game. Being a spoiled brat that I was when I was a kid, I was able to got to a place called Leisure Craft at Orchard Point to buy the 1st Edition Player's Handbook ( Yes, I started with AD&D, BECMI is for wusses ). It took me a while to really understand the system and I was only able to start DMing a game for my classmates a year later ( I think it was a Dragonlance module ).
Here's what D&D taught me :
a) Delayed gratification can get you anything you want.
I remember when Oriental Adventures came out, Leisure Craft charged a whopping $32 a copy. Even though I was a spoiled brat who had $15 pocket money a week, I had to starve myself for 3 weeks before I could get it.
I think this trained my willpower to delay my spending. At my current stage, I can delay gratification for decades.
b) Arbitrage and Securitization is awesome.
I remember trying to get hold of a Dungeon Master's guide was problematic as I already had the Player's handbook, Unearthed Arcana and the Monster Manual. I suddenly has a bright idea.
My dad's friend who was an old coot, collects copies of Playboy magazine. Somehow, being a corrupt kid, I asked him and he give me a copy because I was curious about human sexuality. My idea was to cut out pictures of the nudes and I sold them individually to kids from Whitley Secondary school (which as next door to my secondary school). I remember getting $15 for a pic of Madonna ( yeah, she did porn ! ) I think my senior in St Johns caught me making the trade but thankfully nobody reported me.
At the tender age of 13, I was able to make a riskless gain (arbitrage) by splitting an asset in multiple components ( securitization ). If I was'nt caught by my uniformed group, I think I would be with Goldman Sachs today.
Of course, on hindsight, vintage pics of Madonna naked would be worth a lot more $15 these days. But what's a naked picture of Madonna compared to brilliance which was the 1st Edition Dungeon Master's Guide ?
NB: And that senior who caught me might have become an auditor, go figure.
c) All the advanced maths and vocabulary for the SATs at the age of 10
D&D is not a game for dumb kids. I learnt about the bell curve from the DMG and basic probability from rolling polyhedral dice. By the time I did my SATs during my JC days, I was able to get 96+% for my SAT Verbals. Needless to say, having advanced mathematics allowed me to ace my S papers and even got to an IT Olympiad training team.
Eventually, maths was critical to passing CFA 2.
d) Dividends investing
I was instinctively able to grasp dividends investing because of D&D trolls. You see, trolls are monsters who regenerate. If you strike a troll and did less damage than its regeneration, it is the same as not doing dmaage to it. I always thought that trolls would particularly like getting dividends because if the incoming cashflow exceeds the damage or your expenses, you will never be defeated by the monster called Modern Living.
Just be careful of fire or acid attacks.
e) What the rules did not explicitly say that you can't do.
The most important lesson I learnt from D&D was much later during my JC days. I joined a group of pretty insane players and there were all sort of crazy RPG antics which was suited to a different kind of blog. One wizard Stoned to Flesh dungeon walls, fireballed the flesh and told the fighters to eat their way through their rooms. He also cast an Item spell on various undead creatures to shrink them into a cloth-like state and threw the resulting "skeleton-dolls" on party enemies. The druid fire-trapped his mouth and bit his enemies. The fighter has boots of flying and attacked monsters by dropping a Daern's Instant Fortress (10d10 damage, like Mjolnir ) on them.
In between game sessions, my fellow players told me that one way to play D&D is to simply follow the rules. But they played the game differently. They did things which were not explicitly prohibited by the rules. Very often, they interpreted the rules in hilarious ways. ( eg. Any closeable item can be firetrapped. A mouth is a closeable item. )
My DM called them rules-rapists, they went further than any rules lawyer from other RPG groups.
I think playing D&D with this group had the most profound influence on my life.
- There is no law in Singapore that say that Engineer's can't write a bestselling non-fictional work.
- There is no law in Singapore that say that you can't create a perpetual cashflow to replace your living expenses.
- There is no law against 8.5% portfolio if your risk appetite can handle it.
- There is no law against reinvesting 150% of earned income to ramp up your cash flow.
- There is no law that says that you can't work and earn one income and supplement your expenses from another source of cash flow.
- There is no law in Singapore that say that you can quit the rat race at 39 to reinvent yourself.
Friday, January 24, 2014
Thank you Mr.15hourworkweek !
Sometimes, the effectiveness of one's writings and financial ideas should best be explained by a reader.
This blogger read my first book, took my $100,000 challenge, and completed it before the age of 28.
He now runs a much more successful blog.
http://www.my15hourworkweek.com/2014/01/23/growing-my-tree-of-prosperity/
Note : My books are no longer on sale at local bookstores. You can buy it from me by writing to me at chrisngwaichung@hotmail.com. In a few week's time I will open an e-commerce website to sell my remaining stock.
This blogger read my first book, took my $100,000 challenge, and completed it before the age of 28.
He now runs a much more successful blog.
http://www.my15hourworkweek.com/2014/01/23/growing-my-tree-of-prosperity/
Note : My books are no longer on sale at local bookstores. You can buy it from me by writing to me at chrisngwaichung@hotmail.com. In a few week's time I will open an e-commerce website to sell my remaining stock.
Thursday, January 23, 2014
Dun Pretend - Outcomes matter.
Another interesting insight from the Harvard Grant Study is what's NOT a significant contributing factor for longevity ( Living beyond 85 ) was found to be as follows :
In fact, having an advanced degree or a happy childhood is a greater contributing factor to attain longevity.
But I just came back from a run. I ran for about 30 minutes because I had developed a headache after 3 hours of statistical programming with R. Running produces endorphins which can eliminate headaches.
There are other reasons why I run and have one fibre meal a day, my blood sugar control is poor and medication is no longer sufficient to keep things in control. If my condition gets worse, I will develop a vascular problem which will eventually affect my chances of living to 85. ( Three vascular conditions and I am not expected to see my 70th birthday )
Exercise is an area in my life that I'm pretty sure I know why I do what I do.
In other areas, I am less confident of the outcome I want.
I now have the means to retire, but at this point of time, I am as busy as before trying to pick up all the latest technologies I missed out while I was working. The outcome I want is still unknown.
Some people run to deal with boredom. That's a valid outcome but there are better ways of dealing with that. Others run because they want to look good, although I think that requires much more vigorous exercises.
The key takeaway is that if you want to do anything, know what of outcome you want to achieve. The thing that you do, might not be significant in meeting your objective over a long run.
- Low cholesterol.
- Heavy exercise.
- Lack of obesity.
In fact, having an advanced degree or a happy childhood is a greater contributing factor to attain longevity.
But I just came back from a run. I ran for about 30 minutes because I had developed a headache after 3 hours of statistical programming with R. Running produces endorphins which can eliminate headaches.
There are other reasons why I run and have one fibre meal a day, my blood sugar control is poor and medication is no longer sufficient to keep things in control. If my condition gets worse, I will develop a vascular problem which will eventually affect my chances of living to 85. ( Three vascular conditions and I am not expected to see my 70th birthday )
Exercise is an area in my life that I'm pretty sure I know why I do what I do.
In other areas, I am less confident of the outcome I want.
I now have the means to retire, but at this point of time, I am as busy as before trying to pick up all the latest technologies I missed out while I was working. The outcome I want is still unknown.
Some people run to deal with boredom. That's a valid outcome but there are better ways of dealing with that. Others run because they want to look good, although I think that requires much more vigorous exercises.
The key takeaway is that if you want to do anything, know what of outcome you want to achieve. The thing that you do, might not be significant in meeting your objective over a long run.
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