So what advice can I give to a C-grader ?

In my last post which divides Singaporeans into A-graders, B-graders and C-graders, I might have done C-graders a disservice and came off sounding like a jerk when, actually, I mean no disrespect to 70% of the Singapore population. In this posting, I want to share some of my thoughts on how difficult it is to help C-graders (or everyone) succeed in Singapore.

A challenge readers threw at me in the past was to come out with a plan to help someone who makes $1,600  but has no tertiary qualifications. Now,  if you asked me this question 8 years ago, I would respond like most newly, minted financial planners - I would parrot the need to start saving 10% of his income and dollar cost average into a Global Equity unit trust with the lowest possible expense ratio.

Now I'm not sure if this advice makes any sense.

For one thing, it takes a very special person to buy a personal finance book from a local author. This person is probably intelligent, motivated and possibly quite gritty to follow-through financial advice. I'm not even too sure whether I truly benefit my reader, as my reader would probably have also read The Richest Man in Babylon, The Intelligent Investor or A Random Walk Down Wall Street - all exceptional books which can give them the social mobility that they crave.

What I'm actually saying is that readers of my books and blogs are self-selected. Even if you have a C-grader self-image, I can almost guarantee that you will enjoy upward mobility in the years to come. Why ? Because you would rather read a boring finance blog than to catch-up on the latest antics of Jin Dafeng or Xu Laifa in the weekend Taiwanese drama !

The challenge, which no author or blogger can overcome, is to help the majority of folks who simply don't read.

Which brings me to the next part of this discussion.

The magic pill to help everyone succeed financially is the psychological trait known as conscientiousness. 

Conscientiousness folks plan ahead, know how to delay gratification and have always  plan for World Domination. Conscientious folks tend to be richer and enjoy better health. I dare to say that most financial blogs are run by people of above-average conscientiousness.

I will go on further to say that all class and social divisions will eventually settle into differences of conscientiousness instead of wealth or privilege. Another words, humanity will choose to structure itself to privilege people with long term planning and who can delay gratification regardless of starting wealth and education. Case in point,  how does Chan Chun Sing become a minister ? Grit and conscientiousness such that a humble background can't stop him. If you don't like the PAP, how does Low Thia Khiang beat the odds to conquer Aljunied GRC ? Same thing - Persistence and never-say-die !

Now for the grand PHD-level insight :

Future class struggle is a weapon of those who are NOT conscientious, who need to band together to disrupt the social order. ( Mindgasm moment ! I am the new Karl Mark ! )

So, what can we do to increase our conscientiousness ?

Unfortunately, not much. There are many books that talk about Willpower. Most of these books dwell on the importance of conscientiousness, but not how to cultivate it,

If you see yourself as a C-grader, I have only one piece of useful advice for you :

Practice your willpower in one area of your life so that it will affect other areas of your life positively. 

If you are the kind of student who can resist temptation to hang out when you can do your tutorials, you are exercising some that muscle to save more money and pass the CFA in the future. This willpower reserve will help you maintain a healthy diet and have a develop a happy  marriage as you get older.

Ambition never sleeps.

For the past year, I've been scheming and plotting my possible career moves beyond retirement.

It started about 3 years ago when a good friend asked me to perform some sort of "valuation" for a Doctor of Jurisprudence qualification from SMU. I had to compute his increments and current salary and make a projection for the future and compare it with the scenario whereby he gets a legal qualification and becomes a lawyer. The exercise was interesting and I told him that he had to work till about 51 years old to break even and if I were him, it'll be worth a try. I thought that for a single guy, becoming an A-grader might be useful in a singles bar situation which can't really be quantified by a financial model.

Result : He thought he'd be better off with his current career. ( And, on hindsight he did the right thing, he has been doing well today. )

Two years later, I was struggling with my day job which is mainly ordering food for activities in Block 71 and thinking about how pathetic my engineering career turned out to be while my investments were starting to able to replace my day job without me writing a single line of code, my friend, over coffee, returned the favor and asked me to pursue the advice I gave him some time ago. 

I was quite surprised at how that idea took hold of me then. Becoming a lawyer at age 43, after 14 years of engineering work and managing my own portfolio - it was ridiculous, vain, impractical, audacious, suicidal and borderline insane...

...which was exactly what I wanted to do in life !

As I have already "retired" there was almost no opportunity cost. Most engineers at my age are looking at a bill of $500,000 to attend law school, mostly from lost income. They will never recover from this financial cost and most will end up being apprenticed to someone half their age upon graduation.

I don't need my financial models to know this is the right move for me. If anything, it may resurrect my career. Furthermore,  SMU's Bloomberg terminals alone makes my fees a bargain.

I am a very old candidate, the preparations to be admitted were extensive. I started casually taking writing classes in Coursera and started reading books on Rhetoric. I started networking with current students of the course. Closer to the essay and interview round, I crammed the LSATs as if I was planning for a US University so that I can catch up with the younger and more energetic dudes. I still have doctor's handwriting.

So, two days ago, SMU said yes. 

Therefore, if everything works out, I will become a lawyer in 4 years. 

I may not choose a traditional career path and may rope-in  my lawyer friends ( all super-smart and motivated individuals ) to see if the industry can be disrupted by legal prediction tools which perform natural language processing and statistical analysis. This could mean a start-up with both programmers and lawyers ( Think about the couples that will form in my company ! )

Starting August this blog will also become a study blog to talk about how we can keep learning  as a student or a working professional. I will complete the Data Science Specialization track in Coursera to ease myself into my life as a full-time student. Moreover, since my Engineering and Finance student days, we're starting to learn a lot more about cramming for exams. Scott Young completed an MIT Computer Science course in one year. 

Do the Heather Chua test !

As a further elaboration of my last post, I think that once we go beyond our anger with the Foreign Talent policy, Singaporeans will need to deal with a very socially stratified nation over the next 100 years.

After Independence, Singaporeans collectively decided on meritocracy and pragmatism as our core philosophy, inadvertently but voluntarily, we have also started a very aggressive eugenics program which was made even worse when we account for the effects of globalization.

The effects on the ground is for everybody to observe. Increasingly, we are marrying within our class divisions :

Admin Service Scholar marry Admin Service Scholar
Goldman Sachs marry McKinsey
Lawyer marry Doctor
Engineer marry Accountant
Technician marry Clerk
Hawker marry Shop Assistant

This phenomenon is called Assortative Mating and is currently taking place in all developed countries.

Within generations, children will not only inherit the parent's wealth, they will also inherit their's parent's genetic potential. In 100 years, we will become a caste-based society. You might be categorized on the geo-location where you come from, District 10 being where the 160 IQ upper caste folks who live who will attend the best schools in Singapore.

In this post, I will not debate the morality of this phenomenon.

I want to offer a mental experiment or a sociological tool to detect class differences in society, I call this the Heather Chua test :

Imagine if a troll like Heather Chua were to make a statement sharing her distaste for  marriage between two people of Class A and Class B.

a) If Heather Chua's action angers you, then there is certainly a class division which already exists, but society may not want to acknowledge it based on political correctness. The division already exists but is sub-consious.

eg. The original posts is a marriage between RGS and ITE. It angered everyone. There is a class division between RGS and ITE but Singaporeans don't want to acknowledge it due to political incorrectness.

b) If Heather Chua's action does not being anger but  mild amusement, then, there is no class division.

eg. If the marriage is between someone from Swiss Cottage Secondary School and Bukit Panjang Government High, then the reaction will be mild amusement as there is no class  division between alumni of more or less equal status.

The Heather Chua test is a useful tool because we can detect cracks in Singapore society. The political left will use it as a weapon to destroy meritocracy. The political right may use it to form lasting family unions. Trolls in the future will find new ways to enrage readers by applying the test on racial divides or even gender.

Once we understand which caste or division we belong to, we can get into the next phase, on how we cope with the caste based society.

This I will share with you in my next blog post.

How to thrive as as a B-Grade Singaporean.

One of the things meritocracy and pragmatism has done is to inadvertedly create class divisions within Singapore. We see evidence of trolls like Heather Chua and Wee Shu Min succeeding in making many people angry simply because they were consciously aware of such divides and used it to elicit an emotional reaction from everyone.

As a realist, I will not debate class divisions in this blog. I will try my best to define it and suggest the various actions to cope with our reality today.

First let's try to define our class divisions :

You are Grade A Singaporean if you come from RI, ACS or HCI. If you study in the Ivies or MIT, you also qualify as Grade A. You might also qualify if you are GEP, lawyer, doctor or a government scholar. Income-wise, you also qualify if your income belongs to the top 10% percentile of folks in your age. If every Chinese New Year, your aunts admonish their kids and ask them why can't they be more like you, you are possibly Grade A.

I am a Grade B Singaporean like most of you readers of my blog. I was mostly schooled in government schools coming to a decent JC only after my O levels and after working really hard ( Because I was certainly not smart or gifted ). I went to a local University and managed to get a decent engineering job upon graduation. Income-wise, we are are somewhere between 70-90% percentile of our cohort. Every Chinese New, your aunts nitpick on you whenever there is a chink in your armor. For singles, you are asked why you are not married. For married couples, you are asked why you don't have kids.

Grade C and below is everybody else. Competitively societies like Singapore consider 70% of the population to be everyone else and only important during the elections where one man gets one vote. Decent education, decent jobs, full stomach and a decent shelter, but Grade Cs do struggle very hard in this society which made an infernal pact with globalization to sacrifice the middle class. If during Chinese New Year, your mum defends you vigorously and says "My child is a good person, you leave him alone", you are probably Grade C.

I want to share what it feels like to be a Grade B Singaporean and what we can do about this. ( Hopefully a better blogger can advice the 70% of Singaporeans which truly need the most help. )

a) Grade B suffers from elitism too.

When I was under employment, I had to convince senior management of why engaging the Ruby on Rails community would be great to improve participation in competitions. I was impressed with how quick it was to scaffold a working website in 5 mins  after I attended a boot-camp. Senior Management was incredulous, I was interrogated my senior management who simply could not accept that a language could be that awesome. I was repeatedly under assault until a scholar stepped in and said that I was right about the language and its rising popularity and then, suddenly without hesitation, I was then allowed to proceed with my engagement activities.

14 years IT experience matters not if you are Grade B. A one sentence from a Grade A scholar ( who's a great guy BTW ) saved my presentation from oblivion.

 b) Grade B Singaporeans need to find a good niche in the industry.

This is important advice to Grade B Singaporeans. You need to choose an industry where you could get to the top on your own merits. An American MNC will always favor strong performance and not school grades.  One of the reasons why ex-P&G folks like me will always respect the company was that some Senior Managers have only A levels and some staff who would never be promoted may have degrees from the Ivy league. This is the mark of a true meritocracy.

( P&G has it's own entrance exam. I believe that any good company would always have one )

c) Grade B Singaporeans cannot ignore financial markets.

Quitting the workforce and subjecting myself to the mercy of the financial markets has been good to me for the past 3 months. Even Sabana REIT would not cut my dividends because I did not come from the right University or was not gifted. Sabana REIT cut dividends for everyone this quarter , the ones from Cornell, MIT or GEP who owned Sabana  all got 1.88 cts this quarter. A microcosm of fairness is hard to come by in this country. We must embrace it.

I can't emphasize how important it is to supplement your Grade B income with dividends which do not discriminate based on your position in society. This can put you within striking distance from Grade A if you work hard, save and invest your funds wisely.

d) Contrary to what the political left says, Grade B has very strong social mobility.

Last, I want to share a message of hope to most of my readers who are Grade B like myself.

Even though I was not in a top JC or secondary school, I was able to participate in S Papers, Olympiads and various competitions when I was younger. When competing against average Grade A folks , a diligent  B-grader can win.

A good  friend calls such a person the Goblin champion - Not a real Champion like a Champion from RI, ACS or HCI but a Goblin Champion who can use the right strategy to overcome a higher-caste opponent. Case in point, having earned income and a dividend flow from the markets which exceeded my pay can result in an annual remuneration similar to an MP's allowance ( but only for last year for me, now my income would be Grade B for quite a while until I rejoin the workforce ).

When you hit 40s and get retreched, a Grade B can easily slip to Grade C if you are not careful. But Grade B always had high social mobility in Singapore, you need to be conscientious and apply the right tactics to transcend your caste boundaries.

My blog is here to help you do that.

Retirement after 3 months.

It's been more than 3 months since leaving the working world. It's time for another update :

a) Finances are holding up better than the working days.

Judging from the 3 months of performance, it's actually more profitable to make market calls at home than to work for someone else.

Finances have been holding up quite well thanks to the rise in REITs over the past 2 weeks. To be fair, I had been struggling to push my investments out of REITs for the past year due to the tapering but found only a handful of good stock opportunities that can maintain my current yield. Those positions are, therefore, unnaturally large and are starting to pay-off in a serious manner. 

My net-worth rose by more than 11 times my last drawn monthly salary in this quarter ! Of course, all this can revert to the mean very quickly since I don't ever take profits. The next three months will see me trying to move my focused bets to other market opportunities to raise my passive income further. 

b) Learning goals are aggressively met.

The Coursera Data Science specialization has started and I am currently doing 3 classes simultaneously. At my current pace, I completed one full month module in 3 days so I'm on the roll. Hopeful my training in R programming will allow to create some advanced tools for managing my portfolio. Currently, my engineering expertise and financial know-how are separated by quite a wide chasm and I'm still trying to get them to work together and Bloomberg is just too useful for serious investors to want to start coding.

There is a substantial chance that I will be pushing my learning goals in a radically new direction, I still can't share this with the readers as the institution that I am pursuing has not given me a positive answer yet. I should be quite game changing for this blog if that happens. 

c) Started attending my first AGM.

I started attending AGMs last Friday with the Sabana REIT AGM. I got  a nice phone charger as a door gift but lost out to the other uncles on the buffet table. Ended up only with one cup of coffee. AGM buffets are worse than morning rush hours on the MRT.

Please attend the AGM only if you have valid business questions.

d) Exercise and fitness is consistent but  not going so well.

While I have been running since I stopped work, I just could not increase my distance. Instead, I have been compensating with sit-ups. Now I can do 60 sit-ups after a run. Advice from a fried is to add push-ups to my exercise but I can't even  do a single one at the moment so I am doing some shitty push-ups inclined. 

e) Weekdays and weekends have now swapped places.

After three months, it has finally started. Weekdays are spent watching $7 movies, playing the markets, meeting friends for lunch and shopping for books. Weekends are spent with family so my mobility is reduced. Friday starts to lose it's meaning. Sometimes, you look forward to the Mondays as the stock market is open.

To think that years ago, I hated Mondays so much as I managed the team which maintained the stock market systems. 

f) What books I am reading

I am clearing the backlog of books I accumulated during my work days. Currently reading a book on actual work practices of Equity Analyst to professionalize my home-run operation and trying hard to make time for Michael Lewis' Flashboys. 

The only thing interesting is that I strongly recommend Brandon Sanderson's Stormlight Archives. Epic Fantasy at it's best while we're waiting for George R R Martin's "Winds of Winter". 

Which is higher : Your Charisma or your Intelligence ?

You may need some gaming experience to appreciate this article.

I hypothesize that the modern workplace is a series of Intelligence or Charisma checks to climb up the corporate ladder.

Intelligence is required to solve complicated workplace problems. Workers with higher intelligence produce more work at a better quality. Take for instance, you are given a table of figures by your boss to figure out how your department is doing. If you know how to employ pivot tables or excel macros, you are very likely to solve the problem much quicker without going overtime. I have solved at least one Windows server issue where the solution was to run an executable from a French website. In such a case, my French came in handy to resolve a work related problem.

Charisma is required to persuade other people. Whether you are making a proposal to your boss or your client, high Charisma is required to meet a sales quota or to create the impression that you deserve a raise. Most of the time clients will want to do business with you based not so much on the product you are selling but whether they like you as a person. Charisma determines whether you can establish rapport with others Medical doctors are sued mostly based on their bedside manners rather than the accuracy of their diagnostics.

Here's how you can apply this insight :

a) Know whether you are stronger in Intelligence or Charisma.

No one is perfectly balanced in both. You should be able to figure out whether you are more Intelligent or Charismatic. If you can't figure it out, ask your closer friends.

b) Choose a career which employs more checks in the attribute that you are strong in.

Some IT guys who can talk know nuts about systems administration. They can be very dangerous when they become project managers because they tend to be overconfident and may be unable to deliver on SLAs. If your Charisma is stronger than your Intelligence, you should do much better in IT sales. Similar, if you are smart and very strong in product knowledge but can't close a sale because you can't talk your way to save your life, perhaps you should have been in the R&D department.

Sales is the best career path for folks who are high in Charisma - the higher your charisma, the lower the product sophistication required for your sale to be made. Investing works for folks who have a high intelligence because of the sheer amount of microeconomic and macroeconomic understanding to decide which stocks will outperform others.

Of course, some of you think that you are so awesome you have both high Charisma and Intelligence. In such a case, you should get into a field like management consulting or even politics.

c) Overcome your weak attribute

While I believe in focusing one's strengths and not wallowing on weaknesses, there are some limited ways to deal with an attribute deficit.

Charisma can be improved by spending time doing public speaking. You can also improve your Charisma by reading magazines like Psychology Today or reading textbooks on psychology or rhetoric.

Scientists are still working on a way to consistently improve working memory, so it's not easy to increase your Intelligence. You can read trade journals on your industry or the Economist. Formal study in Philosophy and Economics may also be useful in this regard.

At this stage, D&D players will start to ask me : What about Wisdom ?

I think Wisdom is an attribute which is important over the longer term even though it's not very much respected in the workplace. Intelligent people make mistakes all the time about how to balance work and family. Wise people may not even want to make a decision to optimize their careers, they can choose to walk away. That's just how things are going to be.

If after reading this article, if you continue to work based on your poorer attribute, Wisdom is probably your biggest deficit and unlike D&D, Wisdom comes only with experience.

April Fool's Stock Portfolio to watch.

There is no better day than April Fool's Day to launch a non-dividend portfolio for all you readers here.

This portfolio was the result of days experimenting with the Bloomberg machine in the Central library.

What I've done is look go through the universe of Singapore stocks to find which strategies can dramatically outperform the market.

Here is how the stocks were selected :

a) We search for stocks which have a Net current asset value per share which is is higher than the price. This filter searches for value stocks with assets in the balance sheet that exceed market capitalization after deducting for all liabilities. This is a powerful value-filter inspired by Benjamin Graham.

( Current Assets - Liabilities ) / Outstanding Shares > Market price

b) Within this universe, I then back-tested the portfolio based on cherry picking the best investment ratios which result in out-performance within this set of stocks. I tried many ratios which include P/B, P/E, P/S amd dividend yields in my back-test.

It was discovered that lowest PS ratios gave me the best results over the past 10 years. So the filter only takes the lowest 25% percentile in price to sales ratio.

The resulting portfolio was found to return 75% per year ( Yeah ! ) over the past 10 years. This intuitively makes sense as we are not just buying stocks with have a value in the balance sheet way above the market prices but we are also choosing the stocks with the highest business revenues within this set.

But now I have a problem, the filters gave me a lot of China stocks which have a very wide bid-ask rate. Imagine buying a stock with a 10-20% sales charge since these stocks are so disliked by the market and the fund managers would not touch them with a ten foot pole. ( eg. China Haida was selling at 0.22 but buying only at 0.17 )

So investing in this portfolio will cause me to lose money  from day 1.

So I had to make a compromise. I ranked the resulting portfolio by market capitalization and buy only 5 of the largest companies in this list, sacrificing $5,000 of hard-earned blood money for the benefit of my beloved readers.

The result is as follows :

ISIN CODE	NAME	PRICE	SHARES	Total Value	Price Paid	Original Value
E18	ECS Holdings	0.65	2000	$1,300.00	0.65	$1,300.00
ON7	Weiye	0.07	14000	$980.00	0.07	$980.00
H64	HTL	0.28	3000	$840.00	0.29	$870.00
KI3	Hu An Cable	0.1	10000	$1,000.00	0.102	$1,020.00
U01	Unifoods	0.07	13000	$910.00	0.073	$949.00
Total				$5,030.00		$5,119.00

This portfolio is less than 0.5% of my net worth. This should be misconstrued as stock advice,  please do not attempt to mirror this portfolio on your own unless you really have money to lose. I am just sharing my approach of filtering the right stocks based on the proper fundamentals.

I will be updating the results every month and may add a deeper later of analysis to these 5 ultra-value stocks.