Monday, December 28, 2009

What is the ROI of a spouse ?

A story has been going around that an ordinary Joe took his girlfriend to a jewellery outlet and got her to choose an engagement ring. The ring she chose cost him eventually close to $30,000. Apparently the single men who heard the story were a little upset because this dude did something to "spoil the market". As a consequence, some friends are asking some tough questions to bait lady friends on facebook to define what's the ideal ROI of a spouse.

I think this question has intellectual merit and we can apply the three approaches to fundamental analysis to answer this question.

a) Discounted cash flow.

One way to define the value of a spouse would be to project the future cash flow he/she can generate for the family. In such a case, even if a spouse contributes $500 to the family a month, at 5% interest, the spouse will easily be valued at $120,000. That does'nt even consider the cost of housework in the case of women or some DIY around the house for men. In such a case, the ROI can be extremely high. If you believe that spouses are each other's possessions, the value of human capital when marriage occurs is priceless and that dude is justified in paying $30,000 for an engagement ring. The lady in return will probably have to spend about $100,000 in lingerie in preparation for the big wedding night.

b) Comparative method

Another way to value the spouse is to compare with other people their valuations and employ historical precedence to perform valuation. In such a case, some guys are justified to say that the dude overpaid because many people pay less than $5,000 for an engagement ring. Extremists may even cast blame on the lady because she chose the ring and was exploiting the dude towards her own ends.

c) Sum of parts method.

A most cynical method which is still valid would be consider the amount of finances that can be extracted if a marriage fails and both spouses will try to pick out whatever is left. In such a case, given the Women's Charter, many wives will be given a negative valuation but husbands may have positive valuation because the judgments typically places men at the losing end in a divorce settlement ( this is somewhat changing with recent rulings ). This method is extreme but has valid use for people who may have failed in marriages before or come from broken families themselves. If you use this valuation method, the lady should have been the one paying for the engagement ring and not the poor dude.

Now in fundamental analysis for stocks, three methods will generate numbers which are rather close to each other and can facilitate decision making. SPH can be $3 using one method, $4 using another and $5 using the third. But if SPH is trading at $6, you know that you can avoid it. Applying this towards a spouse will reach conflicting solutions, so perhaps an ROI analysis is not the right answer.

My conclusion...

Personally, as a dude who was a single man longer than a married man, I think we men have a lot of insecurities. I used to get upset when some other dude drives a girl home in a phallic symbol otherwise known as a car. Instead of getting upset, I should have been focusing on making myself more attractive as spouse material myself. And that focus is by pursuing my ambitions and meeting my goals. That's what men fundamentally are : economic units to facilitate the rearing of successful and productive children.

And the discipline of fundamental analysis does have its merits in spouse-hunting.

Please bother to do your due diligence. Get to know the family and understand your target sufficiently well so that you can tolerate their flaws. If the woman is neurotic and gets all ape-shit over small matters, don't expect a happy or productive marriage moving forward,DTMFA. Same goes for the man who is deadbeat and only goal he meets is to stay alive.


Saturday, December 19, 2009

Some "difficult" personal ideas

I would say that most of my friends are intellectual with a little bit of a liberal bent. In this article, I want to showcase some of my ideas and beliefs which may not be easily acceptable by mainstream folks. The aim is to welcome disagreement and possibly improve on some of these ideas.

Here they are in their pristine state:

a) Defining a purpose in life is a waste of time.

Everyone when facing some difficulty or stress may reach some point in time when they start to question if they are on the right path. This indecision can lead to rash action. Work stress two years almost drove me into contemplating the teaching profession. I look at what happened and realized that if it's your job that's a problem, you find a new one preferably with better pay and hours. It may not even be the industry sector or the company that's giving trouble. It may just be the unreasonable assholes that you worked with.

If there really was some purpose in one's life. Then God or some creator would have made proctologists solely for the aim of looking down someone's rear end. A better approach would be to figure out one's marketable strength and failing which, take action to see if some strengths may surface in the process.

b) The Asian approach to education is the right one.

I want my kids to go through the Singapore system because unlike the Western approach, the Asian system defines the syllabus and grants self esteem only to the people who can master it. The western approach doles out self-esteem in the hopes that mastery occurs. The consequences are that the folks who survive the Singapore system are more unassuming and readily gain an appreciation that they can carve out something valuable for themselves with the right effort and sacrifice.

i) Confident and capable people are best.( But can you keep them? )
ii) Capable people who are not confident are good loyal workers.
iii) Incapable people who lack confidence are willing to learn and can be taught.
iv) The most destructive people out there are incapable people who are brimming with bravado and confidence.

c) Success comes from the constant leverage of rare unique advantages and can be unfair to people without them.

Suppose we take wealth out of the equation and look at intelligence and talent, even with these traits, life does not dole out talent and intelligence to everyone. Liberals may want to be kind to people who are born smart enough to succeed but they are hypocrites when they apply the same guilt trip to those who make it through personal resources and even family wealth.

The age of people coming from a small kampong and then going into RI and then becoming a Minister to rule benevolently over us plebeians is over. It's not something I proud of but Legal and medical schools are full of folks who don't come from HDB homes.

People put too much blame on governments and social institutions when they don't meet their own benchmarks for success. I think this is inefficient. It's better to look into our own personal advantages and then pimp it to maximum effect. We owe it to ourselves to play our cards towards maximum effect.

So if you are the bosses son, i think you should just take over and run your business well. The guy from the heartlands may be leveraging on his superior intellect and charm to take your share of the economic pie. And the scholar Admin Officer wants you to pay your taxes too.

d) The Singapore Dream is dead.

There is no Singapore dream anymore. Americans got the idea right when they say that you only have the right to pursue your happiness. Getting happiness is never guaranteed.

You get married, then have children to get some discount to buy ownership in a HDB for 99 years is a lie to keep you a slave for the system. After a while you get sick and die surrounded by consumer goods that you don't really need. Consumption now generates most of government taxes.

The same liberals who are against my measures of extreme austerity are feeding the government Admin office scholars with their own consumption taxes.

That's not a dream. It's a nightmare of epic proportions.

We have the freedom decide what's best for ourselves, politically, socially and economically. My methods to replace paid income with passive income to gain personal freedom is only a small partial solution to this grand equation.

When an army of capitalist shareholders descend upon our GLCs and start voting blocks with our dollars, this should be the battlefield that we are preparing for. With enough shares, we can end the "amakudari" in the corporate world in Singapore.

A democracy will arise from capital ownership. That is my Singapore dream.

Wednesday, December 09, 2009

So this is what people call a "dangerous idea".

It's only this afternoon that I stumbled upon another conversation taking place in the Channel News Asia forum. The remarks about me and about my wife are pretty cruel but I really can't help having a big smile on my face after reading the exchanges. Discussion about my investment method and savings regime has reached 21 pages all thanks to one guy who just could not stop making personal attacks against me.

I'm starting to suspect that this guy is a my friend or a bookstore owner who is covertly helping me drive sales. It's actually hilarious how a person can get so pissed off with my article so much.

See for yourself:

Well I'm done defending myself so today I'll try to guess why people are so heated over my appearance on the papers. Let's just assume that this guy is not some IT engineer I released out of contract years ago ( hey, when you lead a team of 100+ engineers, you do these things every now and then... ).

What makes my ideas 'dangerous' and so offensive to some people:

a) Singapore is actually a welfare state.

If someone who is not a career high-flyer can generate dividends to cover living expenses. Welfare is not only possible, it can be paid even while you have a job. Singapore's low tax rates and single tier dividends taxation allows investor a chance to buy freedom from the need to remain employed. This means that if one can sustain himself indefinitely, he may be able to demand better treatment from his employers or even buy time to take a political stand. $2,000 a month is a small figure but consider how difficult it would be to get the government to give you $2,000 in this country. Someone has shown that this is possible in this little red dot.

b) People who are in the upper 20% bracket can spend at the lower 20% bracket.

I won't reveal my income but I'm comfortably in the upper quintile of earnings in Singapore. My expenses are well in the bottom 20% quintile of expenses. The idea that a Singaporean can reject material consumption yet excel in accumulation is not something people are comfortable with. For one thing, folks like me hardly contribute to the Consumption variable in national GDP.

Some may find it unnatural and perverse to do it. It's almost like an "alternative lifestyle" the fundamentalists are complaining about. I reject material consumption for security. I reject goods for experiences. And I really like what I do.

c) Fundamentally most Singaporeans can do this if they are willing to focus on it.

Our society want to perpetuate the Singapore Dream that only scholars get rich, buy big cars and achieve self-actualization because they have above average intelligence or have Ivy league qualifications. Otherwise, you have to be a rich business man, take risks in the markets or be an excellent salesperson who hit the MDRT every year.

I am none of the above.

I'm just an IT guy who has a mildly decent salary, who invests about as well as anyone else and actually, can save money only slightly better than my peers as many working class Singaporeans can live on much less than I have. I might be special because I can do all three slightly better than others all at the same time.

This means that most people know deep down inside that all this is possible which I think explains why people overwhelming think that my news coverage was undeserved and nothing special to harp about.

Anyway, to that very fierce critic. I am going to offer a fig leaf of peace. Write to me with your name and address, not only will I promise not to sue you ( I don't work that way ), I will in fact send you a set of all three of my books for the excellent marketing I've been getting so far.

Monday, December 07, 2009

Make critics your most powerful resource

Because the article resonated very much with me after that round of very negative responses from the Internet, I shared an article from Tim Feriss with the people in my Facebook. You can find the link here :

The basic lesson from the article is that while pissing people off may not be the right thing to do. Doing the right thing will always piss some people off because you simply can't please everyone. It's very easy to attract jealousy and envy from family, friends and members of the public once you succeed in doing something remarkable. The author wants to encourage people to banish the fear of being criticized and exhorts the reader to succeed anyway.

Very rare in success literature is the story of the revenge entrepreneur. Revenge entrepreneurs succeed in overcoming ridiculous odds because of the cruel barbs from the people around them. A business man's success may be due to his father-in-law who always felt that he was not good enough for his daughter.

I want to consider extending this article to derive a set of principles which makes success even easier.

a) Do consider the merit of the critics claims.

As much as we'd hate to, some critics can get you to confront the weaknesses in your approach and can teach you some humility. Some valid forms of criticism can help you refine your strategies and approaches. In the field of finance, a good critic challenges your assumptions with counter-examples of stocks which failed and forces you to examine more variables before you buy and sell. A good feedback to show that you're not sufficiently diversified can be translated to thousand of dollars in investment returns.

b) For the critics who do not add value, give them what they deserve.

Once we're done with the objective feedback, we are left with the hordes of critics who just want to bring you down because it makes them feel good about themselves. For this class of critics, consider the very attractive pay-off of showing them that they are wrong. A lot of critics who are not objective enough have a lot of personal insecurities, I suspect many may think that your success is their failure.

Since these critics are probably out to hurt you, why not return them the favor ?

Hurting critics who do not provide objective feedback can be fun. No. It should be MADE FUN.

IMHO, a critic is hurt most by a builder's success. The more critics you have, the more you can prove wrong. You will need to construct a psychic pay-off that derives pleasure from proving your critics wrong. To motivate myself, sometimes I say,"Man ! I can imagine the look on their faces when they see this ! Oh they will be sooooo flabbagasted when they read about this..."

I think these two perspectives towards your critics will have the potential of generating a virtuous circle of success and prosperity for you. You succeed in a minor way, attracting a small pool of critics. By incorporating their feedback and developing a relentless passion to prove the rest wrong, you create the drive for your next success attracting even more powerful critics against your cause.

The only downside of this approach is that you might actually begin to enjoy pissing off your critics after waves and waves of success making you seem much like an unreasonable person. But I think at the end of the day, progress comes from the unreasonable man.

No, even better..,.

Progress comes from a builder who steps on the broken psyches and dreams of his most vicious critics.

Thursday, December 03, 2009

Finance, Philosophy and You.

One element missing in tertiary education in Singapore is that we are not trained to develop a viable philosophy of life. Many of us, myself included, focused on securing a good MNC job upon graduation so our grades, CCAs and networks before landing our first job was almost entirely focused on job seeking.

Philosophy is important in lifestyle design as it forms the foundation of a viable rule of thumb in all our personal affairs. Mature philosophies, constantly challenged by life's realities, can hone our personal effectiveness as we review and tune our approach towards the way we live.

Good rules of thumb then evolve into heuristics which then become algorithms and finally become codified into a plan of action. Codes are actual blueprints for positioning our investments and managing our careers. This forms the foundation of design thinking, a new new thing in management consultant speak today.

My position as a finance writer is not so much as to give you a finance philosophy but to guide you through the development of your own financial philosophy. As you prosper and gain confidence in your own abilities and performance, I reap good karma and you can, in turn teach me something about making more money.

The next snippet can be found in the last chapter of my latest book "Sowing the Seeds of Prosperity".

The Prosperity series philosophy

Like all finance books, this books captures the essence of money management in its own unique way. It is just one way of looking at money in this world. Perhaps changes in technology will render these ideas obsolete but if I am asked to summarize all my life’s works it will be as follows.


Cultivate your human capital to maximize your earnings. This can be done by taking a your education seriously. In the workplace, strive to constantly add value and adopt a strict Calvinist work ethic no matter how secure your personal finances are. Recognize that workers have to move up the value chain from mechanical work to high level problem solving work for their clients to remain relevant in this fast paced society.


As Aristotle had once said, those who are obliged to work cannot possibly be considered free at the same time.

If possible save 100% of your take home pay and live on your dividends. Live on a tight budget and see it as a challenge to derive the maximum pleasure from the simple things in life. Rigorously track your progress on expenditure reduction and never make hasty purchasing decisions. Study the efforts of the media in inciting the consumer to spend more and learn to poke fun at this consumer society.


Build financial capital one step at a time. Employ conservative instruments for capital preservation and income first and then gradually move into equities as you get more comfortable with investing. Reduce sales charges by moving first into low expense unit trusts, then to ETFs and finally into picking your own stocks. Match investments with your financial intelligence and read about the best financial strategies from masters like John Neff and Benjamin Graham.

Diversify your investments whenever possible. There is only one Warren Buffett in this world and you are not likely to be him.


Segregate investment from protection. Stick to a term life policy whenever possible for 5 - 10 years worth of income. For added protection, review your Medisave protection and pick up some disability insurance. Avoid policies which claims to give un-guaranteed bonuses and minimize your commissions to the agent while maximizing your sum assured.


Give if you can but protect the interests of your family first. Have a will or a trust and understand the pains that come from poor succession planning. Wealth is often a great source of pain for families of the recently bereaved, you need to manage this while you are still alive. Give directly to the human capital of your children by investing in a good education, financial capital is secondary if they can learn how to look after themselves.

Wednesday, December 02, 2009

Response to the recent Internet criticism

Since my article came out in AsiaOne, I've been subject to quite a hefty amount of criticism from readers. You can find the article and comments here :

I will attempt to address the address the criticisms here :

a) I am a scrooge.

My dividends currently afford me a lifestyle like a fresh graduate professional who spends all his income. While lower than the typical median income earner, I can hardly call it a scrooge lifestyle. I am very possibly a scrooge during my single days because I simply did not have expensive hobbies and kept my full expenses to about $1,100 every month after giving my mum an allowance. As a married man, my dividends provide a modest stipend for my wife, I continue to give some money to my parents and I have enough left to take public transport and feed myself.

b) My parents are rich.

That's a relative term. My parents bought landed property and paid off the loan in the 70s. In the 80s they ran a pet shop. Revenues were variable but rents were fixed. The business folded in the early 90s. My dad took up work as a production operator and my mum washed dishes in a canteen. Life was hard but only in that sense and I apologize if this statement was misinterpreted. People who think that success can only be bestowed upon people who spent their childhood without water and electricity may be disappointed that I do not fit that mold. We were hardly rich.

c) How I funded my way through university.

I borrowed from my dad's CPF and paid back every cent. I started out $22K in debt, paid everything off in 2 years and then I could not just build a portfolio, I could even pay for my Masters degree course as well.

d) I do not enjoy life.

Well I do enjoy life. But there is no way I can prove it.

What I cannot apologize for:

a) I do not have a balanced life.

Guilthy as charged. I'm a son and husband, hold a full time job, author books, manage a portfolio and have to constantly upgrade by getting Microsoft certifications and some financial credentials. I remember taking 21 exams in 2001, some IT, some finance, had to even read two languages French and Japanese to remain competitive.

b) I am an only child and will stand to inherit landed property.

I am not responsible for my parent's family planning style. I have inherited nothing yet and my dad can always sell off the house in the future. I fail to see how this can be an advantage in the field of investments.

c) I live with my parents.

They are not getting any younger. Who is going to look after them in the future?

A minor note on the numbers and skepticism regarding my stock strategy :

a) To accept that you can have $24,000 annually from a $250,000 portfolio, you have to believe that some stocks give can give about 10% a year. There is'nt a lot of stocks which do this but they exist.
b) The payout is generated by a few key stocks which yield more than 10% and a smaller proportion which yield less than 10% for diversification purposes. This portfolio may not be well-diversified even if I have about 20 stocks in my portfolio.
c) I am aware of the high risk of the strategy and is currently diversifying with stock which yield 6-8% but have better growth opportunities.

Tuesday, December 01, 2009

The finance of self-publishing.

It may be possible that some folks might want to know if self-publishing can be turned into a profit generating enterprise. Here's some numbers to show you that it's not a viable source of income. Writing is a great way to crystallize your thoughts and commit yourself to a regime. It also gives you some credibility that can reinforce your resume.

In summary, benefits are largely indirect unless you can parley your fame into a seminar or some training courses, then books can be a source of income from back room sales and training fees.

My first book, "Growing your Tree of Prosperity" ( Still available at Borders Wheelock place and Kinokuniya at Bugis ) is priced at about $18. My cost price is about $6200. Author's margins are low at about 40%. So my profit per book is $1. I used a publisher to do the rest of my work and although they did an admirable job, my book had no editing and my distributor then did not formalize a distribution contract. These were learning experiences for me. Despite the bad grammar, my first books sold well and people still write to me to talk about it.

My Second book, "Harvesting the Fruits of Prosperity" ( All Kino and Borders outlets ) has to be priced higher at about $24 as it was a bigger book. My cost was lower about $5,000 because this time I hired my own cover layout and editing so margins were higher. The book was a lot more abstract with more powerful investment ideas and had professional editing. But this book has yet to break even. Perhaps the cover looked too much like a cookbook or people actually wanted to read "Singaporean English".

My third book, "Sowing the Seeds of Prosperity" ( Available almost everywhere ) is priced at about $21 and this time, I did my own cover design and layout. As I only paid for editing and printing, I was able to reduce my costs to about $3,800. This time, I wrote an entry level book with the readers in mind and kept financial intelligence to a unique framework. This time, I think I got the margins right.

All in all, its hard to predict how my books will fare over the next few weeks. Hopefully the added exposure in the media will help spur sales and I see Popular bookstore starting to give my books better shelf space.

You guys can do the maths, most local authors should not print too many copies as it would be hard to sell them all off and the margins are razor thin with $5 being the best case scenario.

Book royalties will generally not make you rich. You are far better off trying to invest your money in the markets for better returns.