The Richest Man in Babylon - An ERM Community Webinar : 24th September 2020 7.30pm

One of my next projects is to give a pro-bono talk to RI students next Tuesday on Financial Independence. The teacher who contacted me wanted me to put in some maths lessons into the program and share a little bit about my life story. The lecture is a summary of The Richest Man in Babylon that was reskinned aggressively for folks who play the League of Legends RPG. 

I know that a project like this would excite some fans and readers, so I will be creating possibly an NSFW version of the talk for the public as my community would be conducting a free webinar next Thursday.  

We also have a guest presenter Ivan Fok who will be doing a demo of his latest tool Pyinvesting.com which is adopted heavily in my ERM program. 

You can sign up on this link: https://us02web.zoom.us/webinar/register/4915990503812/WN_TJPfYUPXSmKpg4m6L4izbw 

As I conduct business, I will be doing a little promotion to my students for a refresher class I intend to hold for them in November. That would be followed by a short pitch for a potential customer to a course preview the following week. We know folks hate sales and promotional materials so we will keep this to a 5-minute minimum. 

My aim is to eventually build this into a full-day program as part of a business I intend to start. If you are an educator and want me to speak to your secondary school students, you can contact me through this blog. 

Programme

a) Introduction (Chris Ng) 10min

        a. Back-testing: Why the community needs a tool to do this.

        b. Evolution of back-testing from the past to the present.

b) Pyinvesting.com Demo (Ivan Fok) 15min

        a. Introduction to key features of the tool.

c) Refresher Course information for ERM Alumni (Chris Ng) 10min

        a. Short discussion on refresher programs for Alumni who want the latest ERM syllabus

        b. Details on full-day ERM refresher course on 21 Nov 2020

d) Main Event: The Richest Man in Babylon (Chris Ng) 60min

        a. This one-hour talk will be an enhanced speech made to RI students on 22nd September 2020. 

        b. Covers the main points in the Richest Man in Babylon localised to Singapore markets.

When geeks over-optimise

Hacking Life by Joseph Readle is a really good read and should be one of those non-finance books FIRE folks should get their hands on. I liked it so much after borrowing from the library, I bought a Kindle version for reference. The book is really a no-holds-barred work that spills the beans on modern-day gurus. 

One underlying theme in the book is the notion of over-optimising something at the expense of the big picture, I will share two particular examples that I enjoyed reading very much.

The first example is Seth Roberts who experimented on himself with butter. He figured out that 60g of butter improved the speed by which he solved simple maths problems from 650 ms to 620 ms. This enabled him to publish a book called The Shangri-La Diet. Well-meaning cardiologists have been telling him that he's killing himself with the kind of diet he is putting himself up with. As it turns out, traditional medicine turned out right - Seth Roberts died at age 60 from coronary heart disease and an enlarged heart. 

The second example is our favourite guru Tim Ferriss. He outsourced arranging and coordinating of dates to competing teams all around the world, even designed a nifty way to pay out bonuses to his army of virtual assistants. Some of his mistakes were hilarious - he had so many dates a day, he forgot that one date was an orphan and asked about her parents on their second date. Of course, he is still single today. 

I think it is a disappointing omission that the author did not have a section on money. This is something I am guilty of before. 

One of my dumbest ideas over a decade ago was my aim to be paid a dividend every month. Those days, the only stock that paid on January, April, July and October was the problematic shipping counter First Shipping Lease Trust, I lost a lot of money on that folly. These days, I am happy to be paid 8 out of 12 months of the year.

We have some instances of over-optimising in the in financial blogosphere :

• Obsession with credit card miles and cashback money. Maybe matter not to spend the money in the first place.
• So much drama when a bank revises the terms for their multiplier accounts and nerfs your deposit account. If you buy the bank stock, you are effectively taking the other side of the bet with a % dividend.
• Quibbling over ETF expenses when they are already really low. I think once you buy a UCITs counter like IWDA, further differences of less than 0.% should not matter too much.
• So much ink spent on the 4% safe rate of withdrawal. Plenty of time to lose sleep over this after you can live within your dividends.
• You may not agree with me on this: That incessant whining and bitching over accrued CPF interest for folks who buy their homes using CPF. 

The rise of technocratic software developer types is possibly the root cause of over-optimisation. Computer Science and Engineering teach us to master a system and then use the rules of the system to milk it for a powerful advantage. As the role of software developers begin to ascend, a new kind of data-driven technocratic guru will take over the non-fiction literary space. Many of these fixes can solve an immediate problem that you have, but can quickly lose the big picture. Case in point, negging a chick can get you laid but does nothing to build a long term relationship. 

This is also a reminder that I should not go too far when building quantitative models which is really starting to distinguish my programme from competitors. 

My students sign up because they want a shot at early retirement and the kind of lifestyle improvements it entails. That's really the big picture of why people pay for investment courses.

 

Of Geeks and Gurus

 

I'm in the middle reading this awesome piece on Lifehackers by Joseph Reagle and it has given me quite a lot to think about the relationship between the FIRE movement, Life hackers, and the self-help movement.

In the book Hacking Life, Joseph Readle divides life hackers into two categories, the first being Geeks and the second, being Gurus. Geeks are otakus who are obsessed with studying a system and then finding ways to game it for the purposes of personal efficiency. Gurus leverage on personal branding and self-promotion to earn a decent living dispensing life advice to others. My view is that the two categories are not mutually exclusive and Investment Trainers often need to be both to survive in the competitive landscape of investment training.

My analysis will focus on the FIRE movement which is, in essence, Lifehackers focused on the domain of Personal Finance. This is one of the hardest domains to master as financial markets are often more random walk than a predictable system that can be gamed easily. Instead in the financial blogosphere, you may find tiny subcultures of geeks who specialise in credit card point manipulation. 

Understanding that Geek/Gurus is not mutually exclusive allows us to analyse this divide in a 2x2 matrix, which I will do as follows:

a) Not a Geek / Not a Guru

If you are neither a geek nor a guru, you are likely a victim of the capitalist system. Money Maverick on his own FB wants the FIRE movement to forgive "dispassionate" consumers who just want to get on with their lives and lack an interest in hacking the financial system. Actually, we forgive them, but this puts them under the mercy of the financial institutions that can extract close to 50% of their insurance premiums paid on the first year and a fraction of that thereafter. 

Financial advisors thrive in Singapore because most citizens aren't geeks or gurus. 

b) A Geek but not a Guru

If you scour the financial FB groups, engage in battles against financial trolls and know how to buy IWDA on Interactive brokers to save on investing fees, you might well be a financial geek. 

Financial geeks are an important piece in the FIRE community because they keep the finance industry honest. Members of the public, thanks to the Internet, can fund a lot of honest criticism of the financial industry and we no longer rely on journalists to call our unethical practices. 

Most financial bloggers fall into this category.

c) You're a Geek and a Guru

I'd like to say that an investment trainer needs to be both to survive. You need to understand the financial markets as a system to extract some above-average gains, position your findings clearly, but also do enough self-promotion to survive this world where style is paid higher premiums than substance. 

I have a long way to go, but the author that maximises both guru and geek perfectly is Tim Ferriss of The 4-hour Work Week. His generalised approach of deconstructing an activity into key steps, selecting crucial steps, sequencing them in optimal order and creating stakes to increase motivation is a very powerful tool for any personal situation. His self-promotion comes from using this framework to win a martial arts competition.

d) You're a Guru but not a Geek 

 I got three words for folks into this category : 

YOU DON'T CHIBAI !

When I was starting out in investing in the 2000s, beyond the CFA and University programs, short courses in investing can be fatal as the industry was dominated by the technical and options trading gurus who have a methodology that needs a degree of faith from the audience with a confirmation of this faith is often a price-tag over $5k. 

You can tell a guru is not a geek if you see the following:

• Dubious academic or industrial qualifications.
• Options training without a rigorous treatment in options 'greeks'
• Warren Buffett is the sole evidence for the success of the methodology. 
• Statements that cannot be falsified by market performance or statements that appeal to feelings
• Too many references to a set of popular purple books in Personal finance

Finally, how does one begin a journey as a geek in life-hacking? 

This can also be deconstructed and optimised into simple steps:

• Productivity - You read Getting Things Done by David Allen and actually enjoy applying the system to clear your emails. ( I struggled and ultimately failed to use it )
• Personal Finance - You get an Interactive Broker accounts, build a portfolio with UCITs ETFs, calculate your expenses and then use it to troll your insurance agent to provide the expenses data on ILPs. 

The Multi-Hyphen career

Today I will be spending more time to talk about the Multi-Hyphen Method by Emma Gannon.

The concept of a Multi-Hyphen career is not all that complex. In this economy, it is probably counterproductive to have a monolithic career. 

Twenty years this was the norm and I started out as a Systems Analyst at Procter and Gamble. That lasted about 4 years until an outsourcing exercise sent me packing to the arms of Hewlett Packard. I spent about 14 years having my identity tied to that of an IT professional. 

An engineer today will have a hard time hardwiring his career to his company or his primary vocation. The half-life of his knowledge is getting much shorter and he can become obsolete while remaining gainfully employed at his company. Looking at retrenched engineers driving Grab, I suspect most Gen Z workers will not be so eager to marry into their primary day jobs or companies. 

So enter the multi-hyphenated career. We can have multiple careers at the same time. 

Even my job is hyphenated today. 

Perhaps one day I can call myself the following :

Engineer-Lawyer-Investor-Blogger-Author-Investment Trainer-Startup Founder

Basically, that's about it for the entire book. 

I did not really enjoy this book. I felt that the rest of the book was written in a chaotic manner. 

The author jumps from topic to topic, inviting readers to detox themselves from social media on some chapters and then talking feminism in others.

There are only three useful lessons I can extract from the book :

a) Manage your career and lifestyle from a position of strength.

Most hyphenated jobs are bullshit lah. This is often back-up plan for folks who do not have the skills for a company to want to hire you full time. If you look in Singapore, most of these Millenial careers have too much "Social Media", "Marketing" and "Consulting" in them. 

Truth is, if you have "Software Developer" in your job scope, have a product to show off, there is no need for a hyphen to show that you mean business. 

That being said, skills atrophy very quickly, and those with full-time jobs need to start building their side hustles or get their first hyphen quickly. By the time that Computer Science degree hits half-life, you should have a domain-knowledge or a side business very quickly.

The best time to hyphenate your career is while the going is good. Showcasing your coding skills on Youtube and putting up code on Github may be a better way to build a better iron rice bowl.

Otherwise, you'll become one of those house-husband-internet-business type of dudes career women can identify and judge very quickly.  

b) No one knows what online skills will matter so pick them all up

When you have a legitimate IT role in a company, SEO seldom comes under your radar. When you become jobless, suddenly you become proficient in copy-writing, SEO, and mass-mailing.

Neither the author nor myself would know what new-fangled web IT skill-sets can pay the bills. 

But at least I will tell you to try everything out, keep an open mind, and emphasize the hardest skill-set first.

I am sure marketing campaigns can be complex, but I don't have the bandwidth to actually know. I do know those engineer founders have a bad record with hiring marketers because it is so difficult to measure their performance. A failed campaign can be easily blamed on the product. 

Creating a Django website with Data Science components and then building a mobile app to drive the features is really hard. The website alone requires knowledge in Javascript, JSON, Python, Django templates, etc...

Any see-gee-nah with a loud-mouth can claim to be a good marketer. In my opinion from observing others, the best founders keep firing them until they get someone that can deliver the goods. Engineering bosses have trouble identifying the good ones from the bad ones. 

Learn the basic functionality of everything you can get your hands on Canva, Camtasia,  Zoom, Gimp, Git, some email blaster, a suite of open-sourced Office tools. It's not the tool that matters, it's dealing with ambiguity and the settling in to use any tool quickly that matters more. 

MNCs don't teach this skillset well.

c) Money management should take centre-stage as multi-hyphenation is a problem and not a solution

I'm multi-hyphenated enough to say that given a choice, most people do not want such complicated work titles. My fans like the fact that I can drink Butter Kopi on a weekday afternoon, but they are not there when relatives ask for the umpteenth time whether my law degree was wasted when I became an investment trainer.

The lament of Generation X men has always been why their dads can sustain and raise a family on one job but they can't. Worse, their children may have to take on multiple roles to sustain a singleton lifestyle.   

The fundamental truth of all vocations is this :

• Having multiple gigs can be poisonous because of the lack of CPF-OA and SA contributions that can ruin your retirement plans. 
• MNCs are poisonous because your roles are often narrow and you can become functionally obsolete while on the job. 
• SMEs are poisonous because Singapore is full of horrible bosses who send you fake termination letters and slime you on their websites. 
• Entrepreneurship is poisonous because of possible bankruptcy and stigma from failure.

The only solution is to see everything as a tool to attain financial stability, a job is a means to remove all debts and get a small income flowing initially to cope with emergencies and finally to wean away from a dead-end vocation in your 40s. 

The biggest disappointment of this book is that something that tackles a multi-hyphenated career should have cashflow and money as its primary chapter. 

The author admits that she's not particularly good at money so she made it the last chapter. 

Personal Update

 

Ok, it is time for another personal update.

a) Training Business 

I'm reducing my class frequency and thought I would get a break this month, but, instead, I have a pro-bono talk coming up in a top secondary school and a community webinar planned on 24th September to talk about the latest toolset for my program. I'm taking the pro bono talk quite seriously, as who knows what kind of opportunities it can turn up in the future. The talk would be enhanced and then delivered to my own community a few days later.

b) Start-up Incorporation update

Readers are kind enough to forward this document for me to read. It reminds us that entrepreneurs should not go too far to incorporate a company solely for the purposes of tax avoidance. 

The circular from IRAS serves as a warning to doctors who incorporate to reduce their tax burdens but I think it applies to all businesses. In my opinion, I think some doctors in incorporating multiple entities for tax purposes have gone too far and lends credence to the idea that the rich will find ways to pay lower taxes. 

c) Halfway through Django Tutorials

I've completed two out of four Django modules on Coursera which is basically about using Python to build web applications. The Django framework has it's own language syntax and I doubt that I can consider myself a practitioner unless I can create a website of my own and host it in the cloud. Interestingly, this is a completely different skill-set from Data Science using Python so it's actually quite possible that data scientists and AI experts may not be all that good at this.

d) Books I am reading 

There is a limit to how focused I can be when I am learning how to code. I drifted in and out of Warhammer 40,000 fiction, but now I am reading The Multi-Hyphen Method by Emma Gannon. I thought that if I am going to hire people before year-end I need to understand what modern career aspirations are. There's no need to impose my work ethic on younger people when they live in a wholly different context where they need more than one job to survive. 

Just for fun, I have also borrowed Marie Kondo's Joy At Work.

 e) Health

Combining intermittent fasting and light exercise has paid its first dividend as I pushed my blood sugar HbA1C to 7.1. It's no big deal for most people but I was as high as 11 before my regime. Unfortunately, my triglyceride numbers peaked to 4. 

My doctor suspects that it's the four to five cups of coffee I drink every day. So right now, I am cold turkeying on just one cup of coffee a day and feel lethargic the entire afternoon. I also need to start on some cod liver oil. 

If I fail to control my triglyceride, my pancreas will commit suicide one day and I will develop Type I diabetes. But that being said, I'm in a better state given that I only have one really bad reading right now.

f) Leisure

I can't keep so many balls in the air, so I have to stop anime watching and will switch over to watching The Boys when Season 2 hits Amazon Prime. I managed to watch Tenet and really enjoyed it. I am wondering whether The New Mutants is worth watching.

Still, I managed to squeeze a D&D game last weekend.

Free-Riding the Singapore Welfare System

 

The term "free-rider" is currently having its day on the Internet. As I've made a decision to many years ago to align more fully with our Capitalist system rather than the Political system, I think my actual aim is to find as many legitimate means to free-ride in Singapore, always put in slightly less to extract maximum benefits from the system.  

The truth is that the kind of moves I make are quite noob-level. An ordinary employee can use the following means to free-ride in Singapore today :

• Open an SRS account, put in the maximum $15,300 every to get tax deductibles.
• Inject $7,000 into you and your spouse's CPF-SA.
• Take more public transport as it is running at a loss and funded by tax-payer money.
• If you serve NS, use credits to buy New Balance running shoes. I even got a pair for my dad.

If you level up as an investor, you bring free-riding to a whole new level. Singapore is a welfare-state for the rentier. You can commit the following "tax atrocities" with no legal consequences :

• Invest in securities as dividends do not flow into personal taxation numbers and are not accounted for qualifying for HDB ownership.
• Buy REITs as REIT incomes do not even incur taxation at the corporate level when the REIT distributes 90% from rental proceeds.

I suspect incorporation will allow a person to level-up as a free-rider even further. I'm looking at the following schemes and studying them carefully and will consult a company secretary to make it high-priority for my business, do correct me if I am wrong : 

• $200,000 of revenue does not attract taxes for the first three years.
• Beyond the first $200,000, legitimate deductions for company expenses can be made. This is a 17% discount on cloud-hosting fees and software purchases which I already pay as an investment trainer. I can also buy an explicit PC or tablet to be used exclusively for work to free up my home PC resources.
• I can pay myself a minimum salary to lower the tax burden more.  
• If I hire a local worker, I can even get $30,000 under the Jobs Growth Incentive.
• This is not counting the startup funding I can get for my business. I already have a small web app launched for my ERM community. 

In short, I think folks with legitimate business are the biggest free-riders of all. The government will incentivise Singaporeans to invent new jobs. 

For folks who can code in middle-age, incorporation is probably the best move a person can make given all this age discrimination we are facing. Given that I already have some revenue, I will probably incorporate, hire an assistant before even deciding what new business I will get into beyond investment training. 

What a great time to be alive in Singapore!

 

Who can I afford to hire if I incorporate?

 My classes have become more fun thanks to two reasons. 

This first is that it is longer - We have 4 days of webinars where students get to digest my material at a more reasonable pace. This frees up the one day face to face session for pure practical exercises and student engagement. 

The second is that my course is going through a mini-recession - my classes are smaller, so I get to have better conversations with my students. 

Consequently, I can be more candid during my lessons and I get to share some of the challenges I see in the future. For this class, I have at least one HR professional, so the topic of incorporating a start-up and who to hire was discussed. Also, thanks to Delane Lim's online tirade against younger workers, readers may be interested to know how to think about hiring.

Initially, my thoughts were to hire a designer or UX expert to complement my lack of design aesthetic, or even do up the CSS that I really hate doing for my website. According to the HR professional, that's actually not a very good idea because the market for UX and design folks is quite hot and I'd end up paying top dollar for perhaps mediocre design skills. No employer's market there. 

So I ask her a point-blank question - who do employers skip in this job market? This is a reasonable question because right now, I can design a job for my employee provided that this person exercises initiative and would be willing to learn.

She said that odds improve greatly if I am willing to take on students who do Fine Arts.  So basically the "non-essential" types. I don't understand why bosses discriminate in the industry because I'm pretty sure a painter or artist can be taught to use Canva and a Theatre performer can be given a sales role. 

I think an intern from a Fine Arts institution would be a good fit for a business I am about to create. I won't outsource finance and I practically can do everything else, I just hate doing all the stuff to beautify my slides. Also, a big perk is that my intern gets to attend my course for free - makes a big difference if someone picks up the DIY investing skills when they are young. 

At the end of the day, the key debate is about the nature of employee hunger.

I've done some work in the public sector. The hungriest folks in Singapore are businessmen. There is nothing more pathetic than an SME boss who tails public servants to keep pandering for "collaborative opportunities". If you have a viable product, the most productive thing is to keep marketing it rather than to spend all that time in agencies.  It is not fair to ask employees to be hungry when the real hunger is for SGUNited income support and cheaper interns.

I think hunger is a low-class way to ask for someone who is conscientious. Someone who can delay gratification, show up on time, and deliver what was promised. The FIRE community folks are punctilious in the way they handle their personal lives, but they would hardly qualify as hungry people. 

Dr Wealth staff is super-conscientious, I wonder how Alvin Chow does it. I know, because I got paid this week. 

So I probably won't penalise a Fine Arts candidate who shows up with a Starbucks for an interview, but I would probably prefer a candidate from Bukit Timah because it is more consistent with my target market - my students are upper-middle class.

The problem arises where bosses do have a reason to discriminate - that is if Fine Arts majors really lack conscientiousness. I find that unlikely because, from what I know,  dance requires a ridiculous amount of personal discipline to master. I pay a lot of money for my daughter's art classes and what she can do takes time and amazes me. 

For that reason, I will risk getting flamed for sharing the second part of my conversation. 

The HR professional told me that if I can't get any design intern, there are plenty of "part-time RMIT" types looking for opportunities in the market. 

...just kidding.... 

I this age of cancel culture, I will not risk getting flamed for sharing this second part of my conversation!

Better luck next time !