Personal Update - Meaningless Holiday just ended meaninglessly.

Ok, time for another personal update.

a) Law School

I am so demotivated right now, I should actually be vetting my research papers instead of updating this blog.

Right now, I am going through the process of hunting for internships and Training Contracts and made quite a number of number of applications, some rejections have already starting trickling in and I am still shocked at how competitive this game has become ! I am praying for an interview in March.

Rejections as a rule leave a bad taste in my mouth because, to be fair, it seldom happens to me up to this stage in my life. I guess an important part of personal growth is to have the door slam shut in your face. Perhaps 40-something year-olds may look forward to more rejections in the future in Singapore.

To add insult to injury, I just ended a one week break which really isn't really a break at all. I initially rushed through two research papers so that I could consolidate my studies during the holidays but the consolidation took up such a large part of the break, it ended up becoming more intense than a regular study week with classes. Making matters worse, by the time I finished catching up with my work, my group assignment got released.

So for my entire holidays, I caught up with friends for just a few hours and had two fairly rushed RPG sessions.

My only consolidation is  that I did manage to celebrate Durandal's one month with my family.

b) Personal Finance

Is it just me or is the markets doing rather well lately ?

This past month defensive investors are really outperforming the rest of the markets with REITs and business trusts declaring fairly decent dividends. As most of my expenses on my son have been made, I was able to invest some amount I set aside for contingencies back into the markets. There is room for cautious optimism as the Fed would prefer to review their policy of raising interest rates. Where rates dip into the negative, I can expect SIBOR to ease up a a bit to give me more leeway to pump my dividends into the markets instead of pumping it into my CPF-OA to pay for my mortgages. Once floating rates exceeds fixed rates, it means local banks anticipate an easing in the medium term.

My challenge this year is to have net savings from my dividends, I really hope that I can shore up some REIT purchases as they are quite cheap right now.

c) Medical expenses and emergencies.

The year of the monkey continues to ravage this hapless Tiger.

The other event are medical expenses incurred by my mum for her treatment. In one instance, the financial advice from the hospital for a mastectomy was about $200 and I ended up paying paying over $2,200. In another instance, I was advised to set aside up to $7,000 for radiotherapy but the whole bill ended up only about $1,200. Clearly, there is something inherently meaningless when local government hospitals provide financial advise to hapless sick people in Singapore but I shall leave it to other members of the public to lodge a complaint. The first case is devastating to poorer individuals who do not have contingency funds, the second case damages investors who who will prepare the money in cash from their investment portfolio.

d) Readings 

I like books with anything to do with McKinsey Consulting. I read the Pyramid Principle by Barbara Minto over a decade ago and the Mckinsey Way when I was published because the anything Mckinsey is idiot simple to read and chock full of practical advice. If McKinsey wrote a book on Poems, Sexual Positions or Baking Cakes, I would buy it for the sake of curiosity.

The McKinsey Edge by Shu Hattori is chock full of tips for knowledge workers from how to structure a set of power-point slides to asking clients intelligent questions. It is a great read.

Right now, I am in the middle of this book called Simple Rules by Donald Sull. When I am done, I might have the tools to distill an entire investment philosophy into a series of simple rules of thumb. More on that later.

Sadly, I was unable to read any fiction this holiday. If I had a chance it would be Three-Body Problem by Cixin Liu.

e) Visited Singapore's Silicon Valley.

Took half a day off to visit Block 79 and the government's efforts to promote start-ups seems to be ramping up to a whole new level. I spoke to a founder and met some ex-colleagues.

I am still digesting some of the news I received during my visit .On one hand the government seems to going all in into the start-up space with tax-payer money. On the other, I got news that a really prominent accelerator is no longer in that business.

On balance, I don't buy the idea of having a Singapore start-up although I would seriously consider starting one in my lifetime. Singapore needs to have the Google and Facebooks set up shop for me to change my mind.

But the free coffee at Blk 79 is good.

Before you jump into the Engineering bandwagon...

Readers might think that I have very reason to be cynical.

Graduating in 1999 with an engineering degree would have been great if not for the actions by the Government to welcoming foreign engineers into our economy which kept all engineers on a low salary scale. As a consequence of that, Engineering departments in local universities became dumping grounds with better engineering students aspiring to succeed as bankers instead of joining the technology field.

The SMRT breakdowns are a symptom of at least a decade of prioritising services over operations.

The government timing to refocus on engineering could not be better. And I should be upset as I'm already in Law School and the new SIM university would be soon in place to create a steady supply of community lawyers possibly making me the worse market timer for my human capital in the financial blogosphere.

Should I be bitter ?

Nah... Just because I'm in Law School does not make me less of a Technologist. If anything, I am completing my education to become a domain expert. Once I get an idea of how legal practice work, I would be able to tap on my friends to see if a solution to legal partner's problems can be resolved with IT automation. There is'nt too many Lawyer/Engineers so LegalTech will stay a blue ocean field in Singapore for quite a while.

Nevertheless, I think PM Lee's drive to make engineering relevant again is credible.

First, the government is willing to create a thousand baseline jobs to give the average engineering graduate a steady vocation upon graduation. This way they don't have to resort to selling insurance, MLM or real estate to have a decent income. Second, the government is rolling out the red carpet to incite the big boys like Facebook and Google to hire the best engineering students. So the really brilliant guys are covered.

I would have been more excited if Singapore would put in place more substantial measures to resolve the Changalore problem but the government has to tread carefully in order not to drive investments away so I don't see this moving beyond empty rhetoric in the medium term.

Here's some advice for the young undergrad who has chosen to major in Engineering.

a) Your degree depreciates really quickly. Start planning for an advanced degree immediately.

You hit to hit hard and fast when you join the job market. Your skills would devalue within 3-4 years due to the paradigm shifts taking place in the software industry. What matters are the fundamental skills you pick up in university like Statistics, Technical Writing, Law, Management and Accounting. Focusing on Micro-electronics and Digital Signal Processing will ruin you as your industry disappears along with jobs which require this expertise. For me, the best investment I made in NUS Engineering school was joining the Toastmasters club, it remains useful to me in Law School when I moot against my classmates. ( At least I have fewer time-fillers when making my submissions. )

On day one of your first job, you need to start plotting for an MBA, MAF, MPA,CFA or like me, the JD.  Your skill with numbers should not be underestimated and the higher engineering salaries help in planning for the financing of your advanced degree.

b) Expect your income to look like an inverse parabolic curve so investing is crucial for personal success.

Your salary will rise for the first ten years, stagnate for the next 5, and probably decline after that. If you are not an investment banker, lawyer or doctor, your salary will not escalate every year and experience matters less in an industry which changes so abruptly. Chance are you need to be able to save more and invest to maintain your salary momentum.

Fortunately, you have a higher starting pay and no real expectation to dress well or spend like a lawyer. You need to save and invest that difference. Preferably, you need to start generating passive income to cover for the days where you have to go back to school or start a small business.

c) You need to be global. And it's not just being able to work with foreign colleagues.

This is something I personally struggle with. Ideally, an engineer needs to be very mobile and must find work in any part of world which is willing to pay for his expertise. Silicon Valley respects technical professionals and pay up to $120,000 for some technical skills.

The next generation needs to completely master the art of geo-arbitrage. Work for an American firm, pay taxes under the Middle East, Invest for yields in Singapore and spend in Indian Rupees.

d) Never forget that it is not in Singapore's interest for engineers to become too rich.

The most important lesson is something I learnt a little too late.

Some professions exact a heavy toll on society if they are paid too well. Paying nurses and allied health professionals too well would make healthcare unaffordable. Paying criminal and family lawyers too richly would deny access to justice for lower income groups.

Same goes for engineers. The government can control the tap  and bring in more engineers from lower income nations to keep costs low for businesses if hiring good engineers become too prohibitive. They did this in 90s and the 2000s. Engineers are particularly vulnerable because businesses need them to survive and they are too tame to protest when policies change.

That is the most important consideration if you decide on a Technical career. You need to quickly exploit your higher salaries and numerical expertise to carve a more certain future for yourself. The Facebooks and Googles of today will rapidly become the HPs and Yahoos of tomorrow.

This means not locking yourself down to a sector or industry. And this also means not locking yourself down to a country or region.

Look after yourself and enjoy the fine toys you get to play with in Engineering school !

Not a good day to be part of the JD programme.

I had to stop studying to write this article because my class was greeted with shock one day to find out that one of our classmates has been given a two month jail sentence for hacking into a Professor's account and deleting our property law examination scripts.

My script was one of those deleted. You can reference the newspaper article here.

As we speak, journalists are trying to contact my classmates to ask about this JD programme and I wanted to steal a march from the mainstream media to write an article clarifying some aspects of the JD experience.

Me and my classmates are TWICE victims. One is that our scripts were deleted. The other is that our investment into JD programme is now under media scrutiny.

( Not to mention that NUS might be laughing all the way to the bank )

a) Is the JD programme a pressure cooker ?

Yes. Like all good things in life, you pay an Iron Price to be here.

What was missing in the newspaper article is that qualifying for a Law degree is not enough for you to practice law in Singapore. You need to meet a minimum grade of 3.0 GPA. Georgy barely made that cut and it was that my speculation is that the fear that he would not be allowed to practice which led to him to execute that dumb move of deleting all our scripts.

This minimum grade is not easy to attain as it is an average B grade which is the equivalent of 70% and in spite of the general competitiveness of the program, some fail to qualify to take the bar exams.

Many of my fellow classmates have paid $70,000 of the program so you can imagine the expensive consequences of not doing well in school. This does not account for the 3 years of lost income and opportunity costs.

Furthermore, unlike most LLB guys, we have to complete the law core modules in 3 years so we do not have the luxury of making too many mistakes with our time management in school.

Another difference with NUS is that our seminar performance is graded. We have to interact with our lecturers by being prepared. There is no time to go through the basics and we have to delve into the case holding to survive the discussion. I might argue that no teaching takes place because we have to be fully acquainted with the basics even before class begins. When my son was born, I missed only two lectures and was back in class the next day because it would have hurt my grades.

We also do 50 hours of community service on top of  a compressed program. Most of us exceed that quota. When my daughter was hospitalized with acute bronchitis, I carried on my duties in Family Court. When the supervisor asked me why I even bothered to show up, I replied that SMU's reputation was at stake and we've been planning for the President's visit for a while so I had to make that choice.

b) The JD selection process.

Social media has started attacking the JD selection process. I challenge social media to improve it.

I doubt the selection process can be challenged, beyond an application which scrutinizes our grades. Shortlisted candidates have to write an essay. After which we have an interview where two interviewees interview at the same time so it's conducted like a duel. I even heard a very credible story of an interview candidate crying after being hammered in that round.

Some of my amazing classmates are into their fourth degrees, there is even a schoolmate who lectures in SMU at the same time. Some rejected seats at Oxbridge to be here.

If there is any criticism, I would only consider that JD candidates should requires 2 years of working experience because its designed to complement LLBs rather than compete with them. ( My classmates are likely to disagree with this point.)

( After some sleuthing, my classmates confirmed that Georgy himself graduated from Columbia with an LLM in 2011 so there is an Ivy League connection to all this. Link )

c) Foreigners in the JD program

Xenophobes are attacking SMU's openness to foreign students because Georgy is Russian. That is very unfair to my foreign classmates who work hard and bring a lot of civil law perspectives into the class.

More importantly, foreign students are important because they bring different values to an academic program. From what I experience in all the degree programmes I was in, Singaporeans dial up the competitive factor by being unreasonably kiasu. My foreign pals are a welcome addition because they see their role in a different light and don't see their journey as one with better GPAs and starting salaries.

Only small fraction of JD students are foreigners, I suggest xenophobes go apply pressure to other parts of Singapore like Changalore. The JD programme is a far cry from the liberal introduction of foreign engineers into the Singapore economy which has kept salaries down for over a decade.

d) Some minor IT points.

We are slowing figuring out what Georgy did to hack into the system, I was curious as to whether he employed a VPN to cover his tracks, if so, I would like to know how he was caught.. We are thankful that he deleted the scripts rather than making changes to the scripts because he may have been able to escape undetected.

The typical remedy to this incident like this is to adjust the security policy to prevent the USB ports from being used for all schoool PCs. I cannot imagine how much this would inconvenience the staff in SMU. I even imagine an OTP system for lecturers found in University tender in the medium term.

Anyway, I welcome any JD student or alumni to supplement this article. If you are NUS and want to revel in schadenfreude, you are also welcome to post because some of the negative feedback on JD graduates have also been very illuminating.

Valentine's Day Post - Singlehood is the new Venereal Disease ! Huzzah !

When I was single, I used to say that children are the most common venereal disease in this world. Now that I am a father of two kids, it is now a convenient time to declare that single-hood is the newest and most virulent venereal disease in this world.

Something is different about VD in 2016.

At the personal level, I can no longer celebrate Valentine's with my wife, she is still under confinement so instead I will buy a cake, some snacks, and celebrate with my in-laws which consists of about three couples and five kids. The focus of Valentine's Day is actually on my kids - Clio already has declared her wish for chocolate cake. There is also, of course, the issue of money and inflated prices of roses and general lovey-dovey stuff today which does not make economic sense to go out today.

At the broader level, I am seeing a change in the focus of business on VD. The most touted movie right now is a chick flick called How to be Single and not one which celebrates marriage ( like 50 Shades of Grey ). Otherwise, I am seeing a ramp-up in business activities to get singles to celebrate their status. I don't see any reason why singles need to be depressed on this day at all.

Actually it makes sense for local businesses to pivot from couples to singles. Couples these days are quite driven to settle down and have kids, most of the more highly educated ones actively plan for the future so it may not make so much sense to overspend on one special day.

Singles however, have all that freedom to do whatever they want.

Of course, this year is interesting because we may be seeing the effect of the rise of hook-up culture and the Dating Apocalypse brought about by hook-up apps like Tinder which backs my thesis that Singlehood is the new VD. Tinder gives guys (or fuckboys) a means to tap into a weak, localised networks for hook-ups by demand. And networks have an amazing ability to spread because now we effectively have some sort of peer-to-peer network which provides hook-ups on demand.

The effect is that the most eligible guys have an app which can ensure that they always get their fix. This raises the premium on single-hood relative to marriage. So the demand for marriage drops with single-hood as a more viable substitute. While people still get married and start families, the numbers will be reduced as rational guys take on Tinder and find a serious relationship later after they tire of hook-ups.

The net effect is universally bad for women who are serious about family and relationships. The pool of eligible men will dry up creating longer waits for a women to find a spouse and time is going to be an issue because men are still quite visual and expect their spouses to remain visually appealing.

Another interesting issue is the rise of match-making apps and whether they can turn the tide by using the same networks to help facilitate more marriages and family formation.

But somehow, I am pessimistic about the prospect of these dating apps.

Imagine a Tinder as a Stock Exchange where there's plenty of liquidity and trade. Your match-making app is like a sluggish OTC market with very low liquidity and a brokerage fee. Worse, when a match occurs in a match-making app, both market players disappears completely. I expect men to have both apps on their smartphones and will be very choosy while using a match-making app because Tinder will always be there to suggest alternatives.

Right now, the jury is out on how apps like Tinder will affect our local dating scene but the pivot of local businesses towards singles might be the first symptoms of a Tinder-fuelled singlehood becoming a better lifestyle choice.

Ironically, perhaps the only way to break the network effect of a hook-up app is via an actual disease like that spread by the Zika virus.

For family men, we will get to observe and have some popcorn to eat, but we will have to educate and direct our kids when they grow up if we do want them to settle down and start families on their own.

Microagressions - The breakfast of champions !

This is a very special Chinese New Year for me.

For the first time, Millenials have come together to crowdsource the micro-aggressions that were thrown their way for this New Year. I think this is a very useful dataset which should excite any armchair social scientist like myself.

You can access it here.

I want to assert that micro-aggressions are the breakfast of champions !

Micro-aggressions encapsulate all the dreams and nightmares of Ethnic Chinese families in Singapore. Once you create a taxonomy around these micro-aggressions,  you will be able to find the Singapore Dream and the Singaporean Nightmare hidden within it.

Some readers may remember that I have written about a model called Colonel Blotto some time ago where I theorised that living in a competitive society is committing your time and energy into various "battlefields". These "battlefield"s can be about getting workplace promotions, improving your social economic status, playing board games competitively or starting blissful families.

My thesis is that in a CNY gathering, you are in a game of Colonel Blotto against peers of your generation. Lose a battlefield to a cousin and their parents will toss a micro-aggression at your parents. The stakes in this game is your personal self-esteem and the pride of your folks.

My model then predicts that those with very little attention, focus, energy and resources can have a winning strategy by dabbling in many obscure hobbies. They can easily find niche that nobody else really cares about to occupy and become the master of his "battlefield" or domain. Doing this reinforces a person's self-esteem and gives him some way to one-up another person in another social situation.

There is an inherent problem with this strategy of finding an unoccupied battlefield - We still live in pragmatic Singapore that does'nt give a shit that you are the global expert on furry BDSM fiction. In Singapore, only a few "battlefields" matter and the CNY power plays give us a hint as to what these battlefields might be.

Based on my casual observation this is what matters :

a) Education

" You study at University of Buffalo ah. What kind of degree ? Bovine insemination izzit ?"

Many micro-aggressions are centred around education.

Professional courses like Law, Finance, Engineering, Medicine and Accounting trump general degrees. Ivy League and Oxbridge universities trump local universities which in turn trump private universities. I think Polytechnics so far have largely reached parity with JCs, but ITEs are still ranked below them. And the old discrimination against the Normal Stream still stands as it is ranked below the Express Stream which is now ranked below IP.

b) Career choices

" Whaaa your boyfriend is in the design industry ah ? I'm sure he is a leng zhai and a nice person. "

It looks slightly better here with some shade thrown at media and fine arts career tracks. The emphasis seems to be a lot of humble-bragging rather than throwing shade. And once again, only a select few careers are worthy of respect in a Chinese family.

It always goes back to Law and Medicine.

c) Conspicuous consumption

"Welcome to humble home.Please excuse my small car." * Gestures to the Maserati parked at the front porch of his bungalow *

Kate Spade has a good run during the 2011 elections. I sort of predicted that LV's will fall out of style as I think secretaries and personal assistants have started buying them so they are no longer aspirational. Perhaps the Hermes Birkin should be fully weaponised this year.

 d) Starting a Family

"No girlfriend ah. You've got a Tinder account ? Swipe to the right. So simple ! "

NB : I actually did that to tease a cousin ! But I did it before CNY.

This never changes and is so common, singles are not even showing up at CNY events because they don't want to be fingered as latent homosexuals. Married folks without kids are barren and invited to go for artificial insemination ( I was childless for quite a few years after marriage and understand the pressure  ).

 e) National Service

" See my son so dark and ugly because of jungle training. He just book out from OCS !"

This is something new to me. I've never felt that National Service would ever be weaponised in Chinese New Year because officers serve a longer tenure. I was also never inflicted with micro-aggressions over my lowly Corporal rank.  Some uncles who were cooks bragged about feeding sock-water Milo to their officers.

This is interesting because NS has been enhanced so much that people are now prouder of becoming an officer. Can't be all that bad for nation building.

Conclusion

How you deal with micro-aggressions will affect your own personal life outcomes.

As on only child, I have less of a personal choice because my parents have no other source of pride and have to stake their esteem on my personal success. But I am quite happy going through the laundry list of power plays and slowly ensuring that my ego will not be dented by the more common ones relatives tend to inflict on the younger guys. So I certainly played by the rules and made sure things looked good on paper.

For the others there is always the option to run.

At the end of the day, the game may be futile. I know that for Chinese families in general, retrenchment, infertility, dyslexia, autism, people coming out of the closet, divorce and criminal convictions will make the winners of one generation losers of another. This is normal.

So even if I do well, my children may undo the good work I did to look good in front of my relatives.

The wonders of a traditional Chinese family is this - If my kids screw up, everyone will make me account for the micro-aggressions I myself have inflicted in the past. So I put quite a large premium on raising my kids well.

But more importantly :

风水轮流转

We all revert to the mean.

Therefore, micro-aggressions should be wielded judiciously every year.

Year of the Monkey - Unbent, unbowed and unbroken...

First off, a Happy Lunar New Year to all the readers of this blog.

Regulars might know that the previous year of the Goat had been a bitter-sweet experience. My mother was diagnosed with breast cancer but I was also blessed with the birth of my son. I was hyper alert during the last few days of the year of the Goat because somehow I felt vulnerable after everything which happened to my family. A consequence of that was I pre-poned work on my research paper in anticipation that troubles would not allow me to finish them in March.

Turns out the paranoia was justified.

Just this afternoon, my dad fell down and had a nasty gash above his right eye and I spent about 7 hours at A&E at Khoo Teck Puat. My dad is ok now and resting at home, but I only finished my reunion dinner at about 10.30pm. It is actually fortunate that my wife was also not present today as she is confined at my in-law's place with my two kids. So, technically I had reunion dinner alone at the Subway when I had a sandwich waiting for the doctor's report.

The Year of the Goat would have been on balance good for Tigers. But it did not turn out as optimistic as I had thought. The year of the Monkey is supposed to be bad, but I guess it's something which would unfold over the next few months.

Nevertheless, it's great to survive a tough year and move on.

I am grateful for what I have.

Strange that this year is the one which I anticipate the least awkward questioning from all the relatives.

When I was single, people asked me when will I get a girlfriend.
When I got a girlfriend, people asked me when I will get married.
After I got married, people wanted to know when I would have kids.
After I had my daughter, people wanted to know whether I should try for a son.
Now I have a son and a daughter, the only question is whether I will get a job but I think I would not get so many questions in that area as I am quite public about my retirement and I have three semesters left of school.

Actually, I am not out of the woods because relatives react to life situations, I would have to endure questions about my HBA1C readings this year.

The truth about me is that I wrote off the Western notion of happiness quite a while ago. The Western notion of happiness is about following your passion. You find it on Facebook with the smiling faces of the folks who wanted to dodge the bullet and decided to travel somewhere else to avoid the inquisition from relatives. Western psychology has all the answers - buy experiential goods instead of material goods. Fake a smile to feel good inside. Hang out with folks who are relatively less wealthy than you are and you will be happy.

The Eastern notion is not an easy pill to swallow. Xing4 Fu2  or 幸福 is happiness in the Eastern context and beyond the individual's control. Your relative's conception of 幸福is the formation of the nuclear family with at lease one son and one daughter, they get to declare whether you are 幸福 or not. 幸福is also beyond the reach of a "selfish single".

I guess I am fortunate to be an only child. There is no sibling out there to carry out the proper duties of a son so I don't get to dodge the bullet. Over the years, I ticked every single box to make it less embarrassing to face relatives during the Lunar New Year.

But this year, at age 41, there is a slight change to the rules of the game.

This year, I get to ask the embarassing questions.

But I will be kind and use my newfound powers judicially...

恭喜发财 ! 万事如意 !

#1 Peak Prosperity - The Poverty Simulation angle.

Sometimes, getting an article for this blog is so easy it is as if the Gods conspire to help you with your next posting.

This week, news started to spread about Singapore Island Country Club members conducting a poverty simulation for their members. Of course the news attracted a fair share of brickbats and I'm not going to go about making things worse.

My stand is that a poverty simulation is good thing even though there might be a better way to go about doing it.

It can be argued that my life as a law student is some sort of poverty simulation, I have to feed my growing family without touching my investment capital for a minimum of 3 years without rejoining the workforce. After three years, I will review my portfolio to figure out whether my financial independence is for real. If it is not real, then my retirement would have to end and I would have to accumulate more capital for the next stress test. (Likely a passive income of $10k/month with no more mortgage, so it would be a tough target to meet.)

Poverty simulation is only a symptom of Singapore's problem and not the root cause.

The root cause is the decline in social porousness of Singapore society. The rich is losing touch with the rest of Singapore society.

The section on Edinburgh in the book Geography of Genius  tries to explain the rise of the Scottish intellectuals like David Hume. Scotland's intellectuals are particularly interesting to me because they are known to be quite scrappy and like to find practical applications to their theories so they appeal to my engineering nature. One section I find particularly relevant to Singapore is that the city of Edinburgh which spawned the development of medical and intellectual advancements had great social porousness during its peak of its intellectual prowess. Particularly interesting is that social spaces were areas where a blacksmith and intellectual can trade and argue at as equals.

I would argue that social porousness was present when Singapore first gained independence. We lived in the same kampongs, students in top schools had very few economic advantages over ordinary students. Some ministers had degrees and some, like S Rajaratnam, don't. By contrast, the modern education system in Singapore focuses more on sorting individuals based on intellectual capacity and then confining them to different silos so that they can learn at their own pace. SAP education makes it worse by some form of government-approved racial segregation. One bright spark is National Service where people of different castes and strata could get together to fight as a unit.

From the lens of social porousness, it would be hard to fault the poverty simulators. You spend your youth ensconced in your parent's Maseratis and having all your wishes fulfilled by domestic help. It alienates you from the common man, but you remain human, so you fear falling from grace.

Why not simulate poverty first to cope with your fear and anxiety?

Let's not judge poverty simulators too harshly.

Instead, we can consider turning Poverty into a CCA in our middle-class infested secondary schools.

A Poverty Society can be fun and enriching.

Kids from upper class elite schools learn about the rich-poor gap, the GINI index and then have poverty camps to simulate perhaps a life in the HDB heartlands or a pocket money of working class families. They can have field camps to neighborhood secondary schools and maybe role-play a perfect for a day. For fun and recreation, they can role-play the Beggar Sect from Chinese Wuxia drama.

Done correctly, the rich can be shamed or guilt-tripped into wanting to create decent jobs for fellow Singaporeans.

[Prologue] Peak Prosperity : How do we know that Singapore is in decline ?

I've got less than an hour before my lectures begin so this is going to be a short post.

Right now I am in the process of researching the concept which has the working title of "Peak Prosperity" which sounds so interesting, it may warrant a new book from me in the future.

In my previous books, I would pull out bad news and events from thin air to conclude that the Singapore Dream is being threatened by external forces. This time round, I hope to be more methodical so I would have to read more deeply before forming my conclusions. The biggest problem right now is that technology is displacing jobs faster than we can retrain but this problem affects the whole world and we are actually better equipped than most countries to deal with this problem.

So, the book I am reading is The Geography of Genius by Eric Wiener which may shed light on societies which reach its peak in the past and then declined with the times. My progress is quite slow and have covered only Athens and Hangzhou so far but on casual observation, city states reach their peak when they are the most open minded. Athens accepted foreign traders and had a great marketplace and only began its downward spiral when its citizens began to closed their minds to new ideas. Hangzhou was also the kind of place where people were encouraged to experiment and synthesise new ideas - Su Dongpo was a poet and an engineer.

Similarly Singapore is thinking twice about its foreign talent policy, I guess to prevent a decline, Singapore would need to continue to admit talented individuals but at a pace which is acceptable by the electorate. I think the government may need to, once again, pursue an unpopular FT policy once our transport woes are resolved.

But this research continues because I have to figure out what metrics can be used as a leading indicator to predict a decline in Singapore.

Right now I have no hints on which numbers to look at.

Any feedback or suggestions are welcome.

Thoughts on being a father a second time.

Last night, my son Durendal Ng Mun Khoi, was born. It was a happy day for me and my missus and right now, mother and son are doing well.

There is some excitement over why I chose such a strange name for my son. Durendal from what I gathered from the web is also a card in some collectible card game. If it is spelled Durandal, it's  the name of a kind of bomb which is used to penetrate airport runways. So on first inspection, it's quite a ferocious name.

For our case, Durendal is named after a holy sword wielded by an Ancient Frankish knight called Roland who served as one of the paladins under Charlemagne, the first Holy Roman Emperor and the founder of Carolingian empire in Western Europe. If you play a lot of RPGs, this is the origin of the Paladin class.

But more importantly, embedded in my son's name is the french verb "durer" which is "to endure" or "to last".

Most fathers can write about their hopes and dreams of their newborn son and how optimistic they are about the future. I have decided to take the opposite stance and share with readers the doubts I have about Singapore society that Durendal and his elder sister Clio ( who is named after the Muse of History ) would have to navigate in the future.

Naturally as a father, I will do everything in my power to help them thrive, but I doubt that the world that Durendal and Clio will live in would be better than ours.

The future of Singapore may not be lived by its citizens, it may have to be endured.

a) Children always revert to the mean through generations

Without even seeing my kids in school, I can sort of predict my children's IQ.

If a solid lawyer-doctor couple with 150 IQ each. Their kid's average IQ would not be 150 but 125 - The mean of father and mother's IQ then averaged against 100. That's why you may hear of ministers being somewhat disappointed with their progeny. It's actually built into our genetic code. Things always revert to the mean. Without even taking an IQ test, parents are better off assuming that their children are average and start planning for it.

And as it turns out, thing don't look bright for average Singaporeans.

b) Average is Over - Actually being average downright sucks !

I used to write about the three kinds of work following the ideas developed by Robert Reich over 10 years ago. Manufacturing, Service-oriented and Symbolic analytical work. Things will shift even more dramatically against manufacturing in the future. And services jobs are being automated even faster - we are not even sure if taxi drivers would even exist in 20 years time with driverless cars being tested right now. Worse, symbolic analysts are losing their jobs at a rapid rate because of huge paradigm shifts and the rise of artificial intelligence. Server support administrators used to be able to support 16 machines per head count with solid pay. These days, thousands of clustered virtual machines can run a business conglomerate in a cloud.

As of now, the sexiest jobs go to those who manipulate machines to manipulate symbols. Being a strong programmer is not enough, you need solid statistical skills and enough domain knowledge to solve business problems in your industry. Look at what Fintech is doing to our banks. It's only a matter of time that someone comes up with some sort of Lawtech to disrupt the legal industry  ( and if no one does, I am going to just do it myself. )

Perhaps only 1% of the human population can do the work required to manipulate these machines because they require so much logical and mathematical proficiency. After that, in order to succeed in solving a useful problem they must also achieve mastery in a business domain. Then you have to manage the different specialists at both ends, programmers and salesmen to accomplish your vision.

The average Singaporean cannot do this.

c) Educational pathway for the average Singaporean is still inadequate.

Average generally means someone who cannot qualify for a non-local degree. The 50th percentile would need to settle for a Polytechnic diploma. The good news is that while I was in charge of data.gov.sg, I was aware that the Government was already investing $1000 more a year on the Poly student compared to his or her JC counterparts. The question is whether the investment is bearing fruit for the Nation ?

From this very brutal but logical posting from Limpeh, the pathway for Poly graduates is not world class yet. Paying for a private degree will signal to gatekeeper that you are not good enough for a decent job and it costs a bomb compared to a local degree. But what Limpeh hints at is much darker. If a parent pays for private degree, the kid would go through it and thinking that they are superstars in their own degree programs, which really isn't as competitive as the course administrators claims to be, graduate with a sense of entitlement.

There are a lot of admirers for the German apprenticeship system. But the German economy has a network of Mittelstands or family-owned world-beating SMEs who can give craftsman a decent career.

We don't. We just have SMEs who want to stick their hands out and ask for government help to bring more foreign workers who can tolerate being underpaid and abused.

d) We are a yardstick society

Regardless of the well-meaning words of our politicians, Singapore has always been a yardstick society.

But it's not the government's fault.

If women continue to see men as a pillar for financial support, then the yardstick will always be about income and wealth. The men who are likely to start families with the most good looking women would always be the pilot, lawyer, doctor or accountant. Economic growth in Shanghai was rapid because Shanghainese women do not care whether you are short, tall, ugly or handsome. To get Shanghainese women to say yes,  give her an apartment. Even now China is expecting more than 5% growth in a horrific year.

The solution is not to get rid of the yardstick but finding space for different yardsticks.

And we did try that too ! Resulting in the DSA program which led to RI being shamed even though they remain an elite Tier 1 institution.

In Conclusion - What does it mean for baby Durendal ?

It means daddy may not bring you into a better world which was promised to daddy when he himself was born in.

We will not know whether you will become the sword of your father's ambition, but you must endure.

There is a genuine possibility of Peak Singapore - a point of prosperity which heralds a golden period for us and then it's downwards all the way. Problem is that we may have reached Peak Singapore 2 years ago.

But as of now these are the plans for my kids :

a) I spare my kids form enrichment classes except perhaps swimming and cycling. Kids need to play to develop their imagination. I had Dungeons and Dragons which defined a huge portion of my life.

b) Tuition money is invested into a portfolio to be compounded and released until they start working. My kids need to enjoy learning to  have hope of becoming the top 1% of knowledge workers. Tuition may not be best approach unless they reason with me that they need it but they need to learn independently. I will be personally very hands-on in this area as I expect to cover the Science and Arts subjects with ease by then.

c) If they cannot get into the JC track, they are expected to start work unless a local university admits them. If they are not academically inclined, why force them ? If my plan works, my kids would be able to tap into any online course material to pick up the skills they need.

d) They will all learn to manage money. Money management is where average folks have a great advantage over the sophisticated intellectuals. This is where there is plenty of evidence that active managers underperform passive ETFs.

Personal Update : Two years have passed since my last paycheck !

It's time for a another update.

It's been two years since I had a pay-check, if this were a disaster recovery exercise, I would say that it has been rather successful so far as I still did not draw upon my capital.

a) My son is not here yet.

At the personal level, I am waiting for the birth of my son. It can happen any day now. Right now I am more afraid than my wife who seems to be quite calm.

b) Financial markets

For all the doom and gloom, the markets did not faze me at all.Maybe I have more urgent priorities balancing school work with families.

Results wise, like most of you I continued to lose money since the new year. However, as my portfolio is defensive in nature with a beta around 0.5, I tend to lose about half of what the STI would lose. I will recover a bit every three months when dividends get issued but I can only farm back about $2000 a month this year as I should be focused on my family expenses.  As my savings are humble as a student, I would be putting it to reinforce some of my heavily beaten down small cap dividend positions.

But this is a great time to have a job and savings !

The STI ETF is yielding a big fat 4.2% and trading around a P/E of 12, so stock selection is not really required to get a good price from the markets. It might be time to start hankering for a SG-REIT index ETF, at a time like this passively holding such an index fund would lock in about 7% yields, not bad at all if you are planning for retirement,

Yes, the main thesis is  doom and gloom and this would have to run its course.

But are things that bad ?

Chinese manufacturing may be contracting but China might counteract it with a growing services sector. A lot of consolidation may stem from corrupt officials curtailing their spending. The economy may well become even less corrupt and the Chinese economy might become cleaner and more transparent over the long term.

Oil prices are low and oil firms are suffering. Sure, this is bad for oil firms, but households can now have more income for other things after spending less on gasoline and petrol. I imagine a GDP surge in some economies which are dependent on oil. I can also imagine companies making quite a bit on the re-opening of the Iranian economy.

Singapore real estate is heavily regulated. Prices will hit a low but the government can remove some cooling measures and things may rebound after that. Real estate prices are something that's never out of the government's control. Nevertheless, if you are betting on real estate going up indefinitely, you might be wrong over the long term as SIBOR is not going your way at all. ( I bought an EC. I was  betting on price gap narrowing between my EC and private condos around the area over a period of 10 years which is different kind of gamble. )

At this stage, I don't think things will be as bad as painted in the media. My bet is that markets may be down slightly, up slightly or up by a lot. But markets are unlikely to be down by a lot in 2016. One upside is the TPP although the consensus is that SG would not benefit from it that much at first.

As in all bear markets, there are market neurotics who say that the sky is falling, these are the buggers who have no business buying any stocks. There are also non-investors who are spreading gloom because they have no skin in the game abetting the neurotics to further depths of despair.

My job is to stay calm, keep in touch with the news and continue collecting my dividends and use my new found legal skills as a fall back plan. Markets will recover eventually and it's good to come up with a plan to exploit that after all the neurotics have fled and their homes have been foreclosed.

c) School - Finally started to look for an internship / training contract !

I've been procrastinating in this area. I spent my first year clearing my community service requirements and the last holiday was spent worrying over my mum's health problems. But I can't procrastinate anymore as I fear that my grades would drop to a point where I would not be welcome in the better firms in Singapore.

There is also the shadow of ageism lurking in the corner as I know of seniors my age who have not scored a TC yet. So today, I seem to be the only Year 2 in a Legal Career fair for students to find training contracts and internships. I left my resume with some firms and one fairly large firm is already showing interest in my profile. I'm crossing my fingers that I can get a TC by this semester.

Anyway, this semester seems more ridiculous than the last one, some of us get out of lecture rooms visibly confused. There is now no attempt to systematize or build a framework around the course material anymore. We are at the deep end. Everything is a just a stream of consciousness, not unlike the last two David Bowie music videos....

d) Books I an reading

I am actually going to stop my Economist and Edge subscriptions to clear my backlog of books. I am reading a very amazing book by Cal Newport called Deep Work.This books has interesting insights which fundamentally change some of the ideas in my own line of books.

This will be discussed in another posting soon enough...

Does nobody really owe you a living ?

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

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

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

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

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

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

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

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

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

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

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

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

Religion is not the opiate of the masses.

The opiate of the Singapore masses are jobs !!!

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

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

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

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

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

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

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

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

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

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

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

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

Net Present Value of Suffering.

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

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

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

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

I will propose a different question :

Instead ask yourself, can your child suffer ?

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

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

Life is suffering.

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

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

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

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

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

Can you suffer ?

Singaporeans want an Australian Singapore, not a Singaporean Singapore.

G'Day readers !

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

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

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

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

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

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

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

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

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

So what is the solution ?

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

The solutions actually lie with ourselves.

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

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

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

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

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

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

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

Today is a great day !

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

What is the risk of NOT doing something ?

Leong Chan Teik was a great benefactor of mine.

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

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

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

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

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

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

But enough about me...

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

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

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

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

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

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

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

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

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

Do you want that life ?

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

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

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

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

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

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

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

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

Survived a tough year !

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

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

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

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

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

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

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

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

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

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

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

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

c) Law School become exponentially harder at year 2.

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

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

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

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

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

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

d) Tough six months ahead in the personal front.

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

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

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

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

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

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

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

It summarizes Western Logic into three propositions :

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

Eastern logic is very different :

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Force Awakens also contains the answer....

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

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

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

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