Retired or Unemployed ?

One of the issues which really bug me these days is when I meet some acquaintances from the past and they ask me what am I currently doing.

I am always stuck with these two choices :

a) I tell them that I am retired.

When I say that I am retired, most folks will view my answer with disbelief. Some ex-classmates might find it funny and that I am just trying to cover up the fact that I was retrenched or something. What happens is that I get cornered to explain what I really do and to avoid the pain of facing a drop in "status" ( which really bothers the shit outta me even though it should'nt ), I start to get defensive after that.

To overcompensate, I start talking about dividends investing and sometimes commit the sin of hubris by saying that my investment income exceeds my last drawn pay. That gives me a momentary sense of satisfaction but I feel bad after that because I did not act with sufficient humility. It eats me as I really don't think people should inflict psychic damage to working Singaporeans by talking about using wealth not to do any work like what I do. Working folks should be honored for their contribution to the economy.

I also learned that claiming that I am a private investor sounds just as bad. Some smart alec in response will ask me if I am an accredited investor which I am not. ( Nope, sorry, no second milion... yet... ) The other point is that I don't really commit to investment analysis the way some bloggers do. I use Bloomberg to get statistical data and act on research created by someone else so I don't really qualify as an analyst.

b) I tell them I am unemployed.

I am currently in the process of learning to just say that I am currently unemployed. The drop in status really hurts especially when I meet Engineering classmates from NUS, I was not the best student but I was someone to beat during those bad old days. But people will avoid asking more questions. After all, you are openly unemployed, how much more can they hurt you ?

At the end of the day, it all boils down to ego management. If I had the mental resolve to simply accept the drop in status, I would have been able to humbly just accept working in a government bureaucracy. At the end of the day, my ego just would not let me.

Anyway, right I'm trying to distinguish between retirement and unemployment.

Right now I am working on this one distinction :

a) You are retired if, without earned income, your net worth either stays the same or goes up at every time interval.
b) You are unemployed if without earned income, your net worth drops at every time interval.

Problem is that there are many retirees with diminishing net worth in their 70s or 80s which would simply be classified as elderly unemployed by this definition.

Why Gen-X chooses Cash over Compassion ?

A good friend had a conversation with me the other day.

The conversation was about Professor Chan Heng Chee. My friend said that he's a big fan of hers because of a kind gesture she made about 20 years ago. You see, my friend represented his junior college in the Pre-U seminar and got to the microphone to make a point. The person whom the question was directed to casually dismissed my friend's question but Prof Chan stopped him, and said that the point my friend made was a valid one and deserved more consideration.

That simple act was enough to make my friend a lifelong fan and ally.

I then asked my friend a pointed question.

I asked him if he felt discriminated because he did not come from a top JC. He said, yes, he definitely felt that way and, like myself, my friend spent most of his life trying to prove himself as a result of this.

I think my friend turned out rather well, he's currently doing rather well at work after being a continuous feature in the Dean's List throughout his NUS years.

Now recently, there's been some talk about Singaporeans lacking compassion.

I want to share my hypothesis on why this is do.

You see, the folks who form the backbone of the economy today belongs to Generation X.

When Generation X was in school :

a) We did'nt have Heng Swee Keat as our education minister.
b) Not every school is a good school. In fact some schools suck, and by association, authorities will consider their students to suck as well. It affects the way authorities engage students if there is an invisible L word floating on top of their heads.
c) You can't teach less to learn more. You teach more to learn more. GP is more about developing conservative points of view and not about innovation or critical thinking. And no, there is no Google.
d) Teachers don't tell you that your exams do not define you as a person. That is a very recent phenomenon. Teachers tell you that you are relegated to a lower status if you don't do well for exams and it's your damn fault because we are a meritocratic society.

Generation X who's like me know that if our grades are good, our fart will smell like truffles and people will happily eat our diarrhoea. But we keep a constant look-out over the horizon to see what can threaten our lofty positions. Other Gen-Xers are not that lucky. They get labelled "Average", "Loser" or worse "Normal"  throughout their days in school.

Now, fast forward to the mid-90s when we enter the workplace and discover this thing called Money.

Money replaces grades, GPA and t-scores in the real world. If you have it, you can buy a car or a watch. You can cut someone down with psychic damage if you can demonstrate that live in District 10 or have a Lamborghini. People always get bothered when you have more money than them, this makes relative wealth way more important than absolute wealth.

It's the grading curve all over again !

So what happens...

The Gen-X guys with the qualifications will pimp it to get more money to reinforce their positions in real life. The folks with poorer qualifications know that control of Money means that they no longer to subject to tiny acts of discrimination in Singapore society.

The hunt for Money becomes an all important Round 2 with a different set of winners.

The final link that makes Money and Compassion a trade-off are psychological studies which show that people who are "primed" with thoughts about money generally behave in a ruder and more abrupt manner.

So in summary, it's not an accident that Singaporeans lack compassion, this is a deliberate act of design as part of the education system in the 1990s. Grades were a microcosm of the real world, where Gen-X was socially engineered to fight for the best grades in preparation for a similar ranking to take place in real life. Once Gen-X joined the economy, their report cards were replaced with personal balance sheets where the ranking of their net worth can affect important things like spouse selection for men.

How do we get out of this mess ( Assuming that you think this is a mess )

My take is that one day Gen-X will retire from the workforce. Maybe Gen-Y who have different values from Gen-X will make Singapore a better place.

Usefulness of investing in career management.

Just read The Hard Thing about Hard Things by Ben Horowitz.

It talks about two kinds of leaders - "1"s and "2"s.

"1"s are highly intuitive thinkers and visionaries ( typically ENTJ Field Marshal types ) who revel in playing a game of competitive multi-dimensional chess with other business in the space. Bill Gates, Jack Welch and Steve Jobs is a "1".

"2"s are operational managers who are process driven and excel at making consistent and incremental changes ( typically ESTJ Administrator types ). Tim Cook is a "2".

You will need a combination of "1"s and "2"s to run an organization.

When managing a Tech career, you will need to understand your primary mode of thinking.

Most engineers and computer scientists are "2"s. They think empirically and like to frame problems in concrete terms. They are not very much into ivory tower theories. I think this is the main reason why many engineers don't climb very far in the corporate world. You skills to get you into middle management willl not be enough for you to get into senior management. This is why many engineers join MBA programs. But MBAs are only half the story, just because you take some marketing classes does not make you a visionary, and many engineers will probably focus on operational management or quantitative finance classes in business school.

The converse problem is rarer. A "1" in the corporate world will suffer in the initial stages in their career as they lack the experience and authority to push their ideas through. Many become rebels and heretics and subsequently leave the organization they work for. In this case, a "1" can get some industrial certifications to get the basic work done to bide their time or look for a mentor and hitch a ride to a career track where they can make a difference.

This concept also gave me some thought into how investing fits into this picture.

One of the fears upon getting my Engineering degree was getting permanently fixed at the operational track. After all, I an a textbook ESTJ when I was tested at age 18. Fortunately, my vision in the early part of my career was to build my salary in two ways. During the day, I manage systems and projects and earn a daily wage. At night, I use my quantitative skills to see if there is a way to constantly extract returns in the markets.

Using the skills of a pure "2", I have an income stream which is expected to plateau in middle age but I can begin to exploit market returns beyond my retirement.

Then something funny happened....

To do decent investments, you need a whole slew of skills in the liberal arts. Political science to assess the political risk of your stock counters. Economics to understand the moves made by the Feds. Psychology to assess herd mentality. Philosophy to ensure that you are not fooling yourself and engaging in logical fallacies. These combination of liberal arts skills are always profitable to discover the next stock which outperform the markets.

While investors start out as "2"s, ownership and management of multiple businesses can increase the "1"-ness in them.

They are also getting paid to play multi-dimensional chess against other investors and their peers in the salary game.

In summary, no matter how you manage your career, investing basically means taking ownership of multiple businesses. If you take this hobby seriously, you will be able to develop the ability to think on a broader manner and rapidly find ways to exploit your knowledge no matter how trivial it is.

( From a psychological perspective, I hypothesize that a strongly typed "S" can possibly enhance their "N" component of the MBTI by engaging in fundamental analysis. )

The Generation X lament.

I had a taxi ride one day and the driver, who is baby boomer in his late 50s, asked me if I knew what YOLO stood for. I said," Of course it stands for You Only Live Once". I was then treated to a hilarious conversation about how his philosophy in life is YOLO, and why he kept Vietnamese students as mistresses and his various sexual adventures in Thailand.

Fast forward a few months down the road, the Government instituted a one time transfer of tax proceeds from the tax paying public in 2013 to a group of seniors. This package is popularly known as the Pioneer Generation Package.

This package has been very well-received by the public, but I belong to a small minority that has issues with transferring wealth involuntarily from one generation to another.

a) Baby Boomers already benefited immensely from Singapore's growth.

Baby boomers did not need a degree to be gainfully employed. They presided over a period of time where you can buy a semi-detached home for $100,000 and sell it today for $2 million dollars. Many baby boomers still play a role in the workforce today. Many cling onto senior management roles without being proficient in English or Computing.

b) Baby Boomers were also young and foolish once.

Many baby boomers worked hard to build Singapore into what it is today. But like all generations, they were young and foolish once. Not all baby boomers took advantage of the economy to become successful in life.

Many were like Gen X and Gen Y and wasted their youth drinking and womanizing. Some subscribe to YOLO as a life philosophy.

When we use the term Pioneer, we can mislead ourselves into thinking that all of them are  economic martyrs, well-deserving when some, maybe even a minority, are clearly not.

Those who lived their lives wisely can expect to spend their twilight years with loving children who can provide support in terms of money and services. This was our social compact prior to the 2011 elections - families look after themselves to create a society with low taxation and plenty of prosperity. i.e. Parents raise children well. Children then support parents at their old age with their money which was not eroded by excessive taxation when they were younger.

c) No colonial government took Baby Boomer's earnings to support their parents.

The equivalent of the Pioneer Generation Package is some colonial government taking taxes from Malaya and ensuring health care and welfare benefits for their ancestors. If such a transfer took place then perhaps it would be more comforting to accept this one time wealth transfer.

Correct me if I am wrong, the British were to busy running away from the Japanese to administer the island this way.

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All in all, I'm not a big fan of the Pioneer Generation Package.

If it makes uncomfortable reading for you and I sound a little ungrateful, I apologise, I voted this government into Parliament but I was unpleasantly surprised by this sudden shift towards the political left.

But do understand that I'm not coming from an angle where I am disrespectful to my seniors, I do want to look after my parents in their old age and support them. But my parents are my own responsibility, they are not your responsibility and certainly not the responsibility of  other tax payers of Singapore.

Generation X did not have it as easy with the economy as the boomers. To get decent jobs we need to be very highly trained and we certainly cannot afford a car or landed property even for the best amongst us. There was some increase in asset value, it pales in comparison with what the Boomers experienced.

We are sandwiched in the workplace between Baby Boomers and Generation Y. Baby boomers are not ready to give up the throne to us and globalization is rapidly destroying the middle class making it hard for us to make ends meet. Generation X also had to fight outsourcing and deal with the influx of foreign talent.

I shall leave the critique of Generation Y to the rest of the Internet. (YOLO !)

Generation X did not get it easy, we never even asked for work life balance when we were in our 20s. We want to look after our families. Please don't take money meant for our families to feed ALL families without qualification. Most of our seniors led productive lives, saved for their future, and had a low tax regime to support them while they are at it. No one took their money and forced them to support their seniors.

We really need to rethink the way we conduct the wealth transfers.

I am not asking that you give money to us Generation X.

I am asking that you trust us to look after our parents.

I am asking that you either let us keep our hard earned money or invest the money in infrastructure, defense or even educating the future generations.

We are Generation X.

Our time never came. It probably never will.

Thoughts on my retiree lifestyle after two months.

Just to tide over the time, here are some random thoughts on my retiree lifestyle before I write something more substantial this week. I've been out of the work-force for two months and living the life that resembles a cross between a fund manager and a hobo. After picking up a distinction grade in a Data Science module from Coursera, I was spending time at the Central library to test out investment models at the central library.

a) Finances are holding up.

With the fresh flow of dividends cash rolling in end-February, I find that my net worth is actually higher than my last day at work not counting home equity ( otherwise it's even higher ). I'm not sure if this momentum can be maintained as a large portion of my stocks are invested in counters which would not do too well when interest rates go up.

I'm crossing my fingers that I will be able to successfully back-test a non-dividends portfolio to make this blog more interesting. Expect 1% from my portfolio to be placed in it for everyone's amusement. Hope that I can get this going sometime mid-April. ( Hint for the investment experts : Graham and Ken Fisher are right about Singapore stocks )

b) For some strange reason your consumption needs get reduced.

Maybe it's the lack of suffering in the workplace from having someone to report to, my willpower is much stronger when I am not working in an office. I no longer obsess about branded stationary (Moleskine blows a big hole in your wallet) and have held out against buying a Gundam Model kit for two months already ( It's a FA-78 Thunderbolt if you are wondering what's caught my fancy ). However, I still can't resist a good read and still paying a lot of money on books, having just completed Kevin Roose's Young Money and going to start on Ben Horowitz's The Hard Thing about Hard Things soon.

c) The 8-hour sleep part is the best.

I'm still not a good sleeper but now I have the luxury of ensuring that I get 8 hours of sleep a day. I bet most Singaporeans don't get to enjoy this very often. If you don't pick anything out from this article, you really need to try this.

d) Premium for intelligent conversation goes up a lot.

Fighting against boredom is something I struggle with everyday. Fortunately, I exercise more everyday and will begin meditation this week. What I need more of is intelligent conversation and there is'nt a lot of retirees who can engage with that once you are out of the workforce. Working folks worry about condominium payments and the financially independent may not even care about current affairs. Finding smart, intelligent people to have a chat with is plain hard if you consider that now my weekends are dedicated to family time and people are not free when I am free. ( Hint for the flaming extroverts : don't do what I do, ease into a part-time arrangement before quitting your job. You'll miss the bitching at work. )

Another words, keeping busy is a struggle but you need to build a structure around your life when no one is there to do it for you.

Right now I'm still pretty satisfied with my current arrangement, it's still not sustainable mentally because that's a part of mind that keeps telling me that I can do better if I contribute more directly to the economy and there's some residual fear of missing out.

Let's see if March will work out.