Links to all my CNA articles for readers who find my blog

I was thinking about what to write this morning while buying breakfast when my pal beeped me to tell me that one of the articles just appeared on Channel News Asia. 

I've been working on the article for a significant part of the week and getting exposure on how real journalists work. 

Over time, I hope to create different articles for different platforms.

The most triggering and contentious material will remain on this blog. The only thing I will not break is any laws here. For folks who enjoyed my articles on Financial Advisors, Polytechnics and Private Universities, you can expect to be entertained here at no cost to you.

The consequential and useful material has been in Dr. Wealth for years now. It will cover some of my investment research findings. Obviously, I contribute to Dr. Wealth blog to drive my own business, so there's almost a guarantee that there will be some substance there. But make no mistake, they are all for the reason to increase my sales.

I consider myself lucky if I can contribute to Channel News Asia more than once a year. For articles like this recent one, I need academic research to be thorough before I contact CNA. I also would need to work with a professional editing team which requires multiple iterations. This week I lucked out because LKYSPP published the findings on a basic standard of living.

It's not different from the anime industry. This blog is like light-novels. Dr Wealth blog is more like manga. But only a few make it to the TV screen as anime like CNA.  

So please enjoy my latest article. I've also added links to my previous article with CNA.

• Single and secure? Does family life come at the expense of financial freedom?
• You can still retire at 40, even with a longer life expectancy.

If you want more details on what I do along with horror stories from my employment days, come spend an evening with me in my preview.

Sign up here.

Almost out of crypto for now !

 

I've been writing too much this week, so do expect to see a lot of content coming out over the next few days.

I'm just going to give a short update on my crypto adventures.

Days ago, I told myself that when ETH-USD hits $4,000 I will liquidate my 2x leveraged holdings in ETH and convert my money to fiat. I intend to take a break from crypto and maybe get back next time with around $20,000 of funds. The reason is that due to gas fees, I need my crypto positions to be more meaningful.

Maybe I don't know what I was doing, but you might think that having a x2 ETH position should be profitable but based on my experience, the gas fees make speculation pointless unless you have a decent amount of capital. I was told, in hindsight, that I should trade during afternoon Singapore time.

Something has changed since I made my leveraged position, now I got to pay for gas for everything.

a) I paid gas to enable the sale of my leveraged tokens from TokenSets.

b) I paid gas to sell my leveraged tokens on Tokensets.

c) The system did not pay me in ETH. Instead, I got some mongrel currency called WETH, some kind of ERC20 crypto that I need to unwrap into ETH.

d) I paid gas to unwrap my WETH to ETH. But lucky the ratio of exchange was 1:1.

e) My ETH was in my Metamask, so I transferred it to Geminii which cost me gas.

f) On Geminii, I paid a fee converted by ETH to SGD.

g) Transferring SGD to my DBS account should be free I think. 

In the end, I started with $2,400, I ended up with only $2,100 in my bank account.

Maybe you guys would know how I could have done better, but my crypto holdings right now are at $70 USD of ETH in my Metamask. My $2,100 actually came from my spare change of $50 left on Coinbase many years ago. Maybe my $70 will grow again if I keep it there for another year. 

Folks are now speculating that ETH-USD will hit $10,000. I believe them because ETH is the basis for all things Defi. 

Anyway,  I hope that I can come back with a vengeance, starting at $20,000 in some currency that can allow me about $100-$200 every month in Amazon credits.  

Right now I'm waiting for Crypto.com to approve my account so I can get a card that gives me unlimited Spotify.

Folks who read about fantastic profits should appreciate something like this for a change.

Some blokes feel super intelligent after they start getting into cryptocurrency investing. Not me. I feel pretty stupid every time I try something. I don't understand why so many crypto bros love talking about investments with their dates until they get blacklisted on a spreadsheet. 

Why middle-aged men are destined to be lonely

As an extrovert, I participate in several chat groups that are mainly populated by Gen X men like myself - uncles. I have about three main uncle chat groups - one primarily PMET, one middle income and one full of investor hot-shots. 

These days I don't participate much, I prefer to observe and I realise that these days the uncles are getting more and more disagreeable. This article my attempt to understand why and predict the outcome of these male relationships over the next few decades. 

I will begin with this idea from Jordan Peterson's writings - that when men come together they start forming hierarchies, which brings up important questions. How do middle-aged men decide who is at the top and bottom of the totem pole when they come together?

Maybe some anthropologist can chip in, but I suspect that men rank themselves the same way I teach my students to rank stocks. We basically pick a few factors, normalise them to estimate how many standard deviations they deviate from the mean, called a Z-Score, then we sum up the Z-scores. Just like the way we rank PSLE students under the old scheme. For stocks, the factors are easily found by backtesting. For human beings it is much harder. 

What factors do middle-aged men use to rank each other ?

Sociologists like Mike Savage who talk about social classes in the 21st century provide a hint on how scoring is done. 

We use three main sources of capital to rank each other. Financial capital or wealth probably takes the biggest score or weightage, that is uncontroversial. Social capital comes from how prestigious the careers are and may even cover things like family and personal relationships. Cultural capital is a function of taste and divides various clique from each other.   

The implicit score uncles rate themselves, T, therefore can be governed by the following mathematical relationship :

T = A ( Z-score Financial Capital  ) + B ( Z-Score Social Capital ) + C (Z-Score Cultural Capital )

The dynamics of each group will vary the weightage of the scores. A middle-class group will have a high-A. A group of poets or writers will have a high C. Investors who are all 7-digit level will actually weigh A less and focus on B where a lot more problem solving can be done. 

Ok, so we now have a working model on middle-aged men rank against each other, let's apply this to what we see on the ground :

a) Highest and lowest scores are always in danger of leaving the group

Every group has a norm and acceptable a score range. If you are the smartest guy in the room, you may leave because you might not derive the maximum benefit from being there other than getting your ego stroked. You may join a different network where you can get a sense of belonging and you have some way to learn from others. 

Similarly if you score really low in a group, there is serious pressure to leave because you feel inadequate. 

I think insight on this explains why people drop out from a group over time and why some classmates will never show up for a class gathering.

b) The higher your score, the louder you can be without disrupting norms but if your score is not high, STFU.

I call this Jack Ma effect. 

In every group, the top scorer gets to be Jack Ma. He gets to dispense worldly wisdom and generally the other guys will refrain from correcting him. The opposite happens, if due to middle age, Jack Ma does not have particularly strong career outcomes, them he becomes the Jack Ma after being chastised by the Communist Party. Sometimes I try to eavesdrop on uncles in a kopitiam to find out what their version of Jack Ma is saying - it's often rather humorous, very anti-PAP, and completely unbacked by the real world.   

If my model describes male interaction well, it does not bode well for all of us uncles. It means that we will not be able to stay in some groups that we have cultivated over the years. At older age, a lot of older men can only interact with their families. 

There are one or two ways around this problem. 

The first is that our self-esteem can be divorced from our groups if we simply join diverse groups. I do hang around in investment circles, although the discussion can get very trite and boring sometimes, but the most value add to my life is when meeting writers and content creators who operate by a different scoring system. This also means I will get back to the RPG community one day.

Another solution is to hang out with much younger people where ranking is impossible because of the generation gap. To do that, you need to be open to new experiences and withhold judgment when you see younger people make life changes. If anything, forces of progression and change will likely render your judgment wrong anyway. Of course, you need to pull your own weight, try to keep conversation engaging and always entertain your younger friends.

Of course, at the end of the day, I prefer my model to be wrong than right. 

But you can be the judge of that.

Is CPF really the equivalent of a 60:40 fund ?

Sharp readers from BIGS forum and this blog have raised an issue on my last article which claimed that the CPF was equivalent to a 60:40 fund. The readers were rightfully incredulous. How can the CPF program which returned a fixed amount of 2.5%-4.0% be the equivalent of a 60/40 fund?

I went back to trace the origins of the reference and found this link. You can take a crack at reading this paper.

As it turns out the readers were right. The original paper was full of spurious assumptions that do not gel with our observed reality. 

• Singapore cash rates to be as high as 4% from 2014 - 2024.
• Singapore government bond yields to be high as 5.3% over the same period of time.
• Global equities to return 5% above inflation over that same period of time. 

The collective effect of these assumptions was that it overestimates returns of cash rates and in turn, CPF returns as it is tied to bond yields once it is above the floor, but it also downplays equity returns - I recall Professor Jeremy Siegel of Wharton offering a different rule of thumb suggesting that equities return 6.8% over inflation. 

Once the right assumptions are in place, any conclusion can be made. 

The paper goes on to construct an efficient frontier and magically lines up CPF returns horizontally against a 60:40 portfolio. 

It then concludes that Singaporeans get the best deal because they get 60/40 returns at low risk. 

Now, I want to take it one step further. 

I was able to repurpose my Python code that produces efficient frontiers and I can extract actual historical data for the past 20 years for an equity (VT) and bond (BNDW) ETF. Using the same methodology, I pegged my CPF returns as a sole proprietor who performs an actual voluntary contribution spread over CPF-OA, SA and RA. 

My returns, not counting my tax benefits, are fixed at 3.3%.  

The resulting diagram from my program is as follows :

This makes more sense in practice, there is no way CPF returns can line up against an efficient frontier of a real global equity and bond ETF. But that's not a big deal given that CPF investments are risk-free.

All these raises issue that vindicates what a reader "Unknown" has said. The truth lies between Terence Ho and Teo You Yenn. For every left-winged fanatic hell-bent on raising taxes, there may be a staunch government apologist out there with their own "alternative facts".

There are, of course, other issues that raise eyebrows when we study the paper further. 

There are very credible academics in our local universities like NUS, why invite four westerners to author the paper under this entity called Towers Watson? 

I guess the next thing to do is SOP for this blog. 

You have friends in CPF. Tell CPF staff to read my articles and maybe even explain this strange working paper. 

Coffee shop talk and trade-offs

 

Just the other day I was at a kopitiam at Bishan, I overheard two heartland uncles having a whingeing session about the Singapore government. The louder guy has slightly more white hair than me, but my guess is that he is also Generation X. 

At first glance, he sounds fairly intelligent. After some time, I realise that he's just very entertaining.

He argued that there are three types of citizens in Singapore.

• Those who are slaves and voluntarily subject themselves to slavery.
• Those who are slaves and actively rebel against slavery.
• Those who are slaves but do not know that they are slaves.

I could help but suppress a chuckle because you can't have slaves unless there are masters, but I had to suppress my urge to correct him. On social media, I get a lot of half-fucked commentators who contradict themselves all the time. The two uncles went on to say even more ridiculous things like how NTUC Union Membership will take away a perk once the perk was found out to be too good to be true. 

A lot of my disagreeableness comes from becoming quite old myself. Even Millenials who are a generation below me are hitting their 40s and suffering from being part of the sandwiched generation.

Political questions can be much better argued if there is a baseline understanding of key issues facing us. For example, CPF can be used for housing and retirement - if you opt for bigger housing, you will wind up with a lower income replacement rate when CPF Life comes live at age 65. 

If we do not have a reference book to understand the trade-offs policy makers face, we will fall to simple narratives such as those espoused by left-winged academics like Teo You Yenn and our discussion will forever be trapped at the rhetorical level where the government will always "give you a chicken wing but take away the whole chicken" 

As such Refreshing The Singapore System by Terence Ho, is the best book that I can find that sets the minimum benchmark for intelligent conversation to take place. The book highlights the major trade-offs that the government has to deal with and all its attempts to resolve these dilemmas.  

 

I'm going to highlight a few useful points I picked from the book which is not too obvious to me :

• After adjusting for income transfers, Singapore's GINI index while high is actually still lower than the United Kingdom. And yet Tories still get re-elected.
• Singapore wages are not really high compared to our GDP per capita, but once we factor in CPF contributions and the high taxes in other countries that are levied on their middle class, we beat the USA and Finland. So we're paid well not because we are good, but because our government is very lean.
• A study in 2014 concluded that CPF returns are broadly similar to a 60:40 equity:bond fund but with a lower downside risk due to our high credit rating. There were only three periods where returns fell below the inflation rate. Those morons who think that the Malaysian EPF is better are free to get out of this country. 

Even as I deeply enjoyed reading this book for leisure, I can feel a tinge of sadness because one thing that jumps out at you is that most Singaporeans will never be able to appreciate the trade-offs the government has to make every day. In my view, Opposition parties with bite-sized zingers and simpler narratives are guaranteed to gain more ground in Singapore.

Even the author of the book is aware of this, our government has made our programmes so complicated and have fine-tuned our systems so much, even a basic degree may not be enough to understand all these issues. I know of friends who worked in MAS who has queries on the intricacies of CPF Life. I'm not surprised if CPF employees have the same questions as well. 

This book is a difficult read and it would be rare that a citizen will buy it so that he can more productively engage in political discussion. 

Nevertheless, I expect my readers to be a cut above the rest. 

Buy this book and keep it as a handy reference. Worse case you can give a social justice warrior a nasty concussion on the head as it is also a fairly hefty volume. 

Raising a Math God

 

The latest rant from a Tiger Mom complaining that her "Math God" son ended up crying after the first PSLE maths paper raised some eyebrows on my social media feed. 

I think we're a long way from cultivating a love of mathematics and difficult problems, so instead, I want to spend a little time on what the endpoint should be for mathematics training. Of course, having a strong foundation in maths is important to develop money-making skills, but a good intuitive grounding for mathematics should be seen like developing the sensitivities when studying the humanities, you are learning something that can guide you to solve problems you face in daily life. Maths formulas are a great addition to your toolkit of mental models.

The Ten Equations That Rule The World by David Sumpter shows the way and opens with how to use Baye's Theorem and why basic decisions can be enhanced from an understanding of it. Sadly, while the book is a valuable read for me, it does not seem accessible to laypeople, yes those that were emotionally scarred by the PSLE. The chapter on betting, possibly the best read in the book, is on the practical applications of logistics regression.

But I don't want too harsh, the work is beautifully written for a book on maths, but it is a long way from solving Ivan and Helen's issue with coins towards what's discussed in the book. I can barely cope with the chapter on Markov processes even though I really enjoyed it.

If I get to write something so ambitious one day, I would start with the first chapter with a formula that's way easier for layman audiences. 

I'd go with this :

The continuous compounding equation is how we grow wealth, but it does not look like what we normally learn in secondary school where there is a (1+r)^t term that we normally use to calculate compound interest for banking deposit problems. This exponential equation arises occurs when the frequency of the pay-off gets smaller and smaller, from a year to a month to even compounded values every second. So if you find stake a shitcoin for 20% APY but get a few cents every 3 or 4 seconds, this may be a better way to calculate how much you can earn after 5 years.   

Maybe in my financial training next session with Raffles Institution, I should actively teach this version of continuous compounding. If anything the math teacher should be happy that I'd open the first-order differential equation for them. 

I'd also have a novel way to teach this. I'd remind them that their rivals from Barker Road who called them a "lousy school" have the motto, "The best is yet to be".

This equation capture the essence of that motto. Wealthy people understand continuous compounding innately and find ways to collect some dividends, not just every year, but every second if possible. This is done via business ownership where goods can be shipped out every second. But the canny businessman knows that to do better every year, r needs to be positive. 

If r is negative, the motto will become "The worst has yet to come." There will be no hope for a better age.

Then maybe a RI opposition party member can reverse the quip and say "Oh you come from the school of paupers."

The Ten Equations That Rule The World by David Sumpter remains a top read for folks who want to develop a mental toolkit. Almost the same way Gun, Germs and Steel is the opening read for folks who want a grounding on anthropology.

Maybe one day, I'd list the reads for folks who aim to get a basic grounding in every subject. 

But maybe 2-3 readers of this blog will appreciate it.

Keeping up with the times

One of my inspirations in my current career is the Charismatic churches of Singapore. 

As I am still very staunchly atheist, you might be wondering why I follow the movement of these evangelical movements here. I read in a book once before of a group called the Saddle-backed Church that somehow had this ability to attract non-Christians to attend their sessions and I wanted to obtain this power for my own benefit. So when I was in the Toastmasters movement, I did a few rounds of church hopping to see what drives these massive crowds. 

The truth is, after a few visits, I wasn't impressed. Beyond just references to one holy book, there is really nothing for free-thinkers and non-believers.

I remain unimpressed until I stumbled upon a video on Rev Kong Hee of City Harvest talking about Postmodernism. This impressed me because his deep understanding of it was really unexpected for a religious person. Kong Hee is a really smart guy! Kong Hee was able to communicate with folks who are unlikely to be Christians because philosophers take a lot of pride over their secular values. At that point in time, I knew that Kong Hee's power would grow and, if left uncontrolled, tragedy would follow.  

The rest was history.

When I designed my training preview, my primary purpose was to generate sales. Once we stabilised the numbers, the question was what we can learn from Evangelical pastors to make the preview as valuable and entertaining as possible even for most non-paying customers. 

I realised that the best pastors keep a lookout for what's happening in pop culture and try to be relevant to young people. 

And, more importantly, I can adopt this without causing religious people any offence. 

Pastors and trainers all rely on a little bit of faith. For pastors, it is the faith in a religious being. For secular trainers like me, it is faith that a market bear can turn around to bring profits to the investor. A lot of work I do is provide assurance in the face of the Unknown. 

Right now, my students want to know whether Sasseur REIT is a sell call given political events in China. 

Here are two amendments I made to my slides for tonight where I will be talking about current events :

Of course, we won't have a proper preview without this new slide :

Over time, I have made a few friends who occasionally drop in to attend my previews for fun without ever signing as a customer. After all, when I attend these evangelical sessions, I do not donate any money.

I intend to grow this non-paying audience, who do add value and make Q&A livelier. 

If you are free later at 730pm, why not just drop in and ask me a few questions during Q&A, follow this link :

https://www.drwealth.com/ermintro/

While it is not this blog's position to say this, I think all religions in Singapore can afford to be more plugged into pop culture to remain relevant to young audiences.