After Hell week, my class started getting bombarded by essays and more written work so I am unable to put up more postings for quite a while but today is a good day, I just finished a 2,500 draft of an essay I was supposed to submit in November so it puts me ahead, to, well... do more advanced work for my classes.
One of the ideas I was obsessed with that ideas are "weaponizeable". Ideas from disparate fields can be integrated together to solve tough problems within a domain and even provide insight to practical problems in daily living.
It started during my engineering days when I was doing some object oriented programming. I was sort of into Philosophy then and became acquainted with Plato's Theory of Forms. I always felt that the way software engineers disrupted structured programming by coming with OOP in those days were really inspired by Plato. You need to define what an abstract idea of an object is, and then subsequently you need to write code to instantiate the object to be used in the real world.
Of course, it went on in my finance writings, I felt that frugality always had roots in Calvinism and Stoicism. Breaking away from the hedonic treadmill is very similar to the Buddhist concept of Nirvana. If you really want to delay gratification and save money, you are probably better served by reading Marcus Aurelius and Seneca than Robert Kiyosaki. If you want passive income, reading Jane Austen can help retool you into becoming a Mr. Darcy.
In Law School, I try to push the envelope in my presentations, recently taking a risk assessment model known in IT audit ( Risk = Probability of Loss x Loss amount ) I picked up when I did the CISA exams and rigorous applying it to resolving some problems with sentencing in crimes of negligence in Singapore.
I am trying to share this new approach of finding gems in the Liberal Arts and Law into looking at investment ideas.
Sociological Imagination
Sociological Imagination was taught to all final year Engineering students in NUS. The idea is simple - You take a simple social observation in your daily life and ask yourself, what are it's implications in the grader scheme of things. Sounds airy fairy enough ?
Not quite. Beyond the financial statements that you read, applying a helicopter view to your finances, can help assess the outcome of a investment scheme.
Say you like SPH as a stock, it's a great yielding instrument and you get to own a publications monopoly. Apply sociological imagination you know that SPH is closely tied to how far the government will go when it comes to freedom of speech. Most of the income is in Singapore dollars and you can expand your scope to include your projection of the Singapore economy.
I think most practitioners of the sociological imagination tool commit a lot of logical fallacies. You run the risk of reading too much into a incident. If one moron heckles a bunch of students with special needs, does it reflect upon the stupidity of society as whole, the failures of our education system, or it's simply a stupid moron with a very dubious personal agenda ?
Which leads to my second tool.
Ratio Decidendi
Lawyers have a way of confounding everyone with Latin terms. When we figure out the ratio of a case, we are just asking ourselves to summarise the judgement into one line which would be the same decision that will be made in future cases.
I think something magical happens when a divergent tool like the sociological imagination encounters a reductionist tool like ratio decidendi.
You get the best of both worlds.
SPH is a stock. It may be grounded by how the government views freedom of press and tied to the Singapore economy. But we are now required to ask ourselves what drives SPH stock, in particular, what drives its dividends for someone like me.
IMHO, my one sentence after all the considerations is that the dividends are driven by property rentals like Paragon Shopping Mall. Absent property in its current portfolio, I would not really like to own a publishing business which is rapidly being disrupted by e-books. If you arrive at the same conclusion as me - you might be better off looking at the cash flows from SPH REIT instead.
I have close to 30 stocks in my portfolio, having a key driver or ratio decidendi for the stocks in my portfolio allows me to balance my school and my finance activities and fine tunes my sixth sense when I read about the current affairs in the newspapers.
In conclusion, I think at this phase in my midlife, I am really trying to approach everything as a fox. Law school is quite foxy in nature as opposed to the hedgehog approach of engineering school.
A typical LLB student can at best approach a legal problem as an LLB student. I like to see myself as a little different, I will not hesitate to attack a legal from an engineer, programmer, project manager, auditor or a finance perspective.
The more models, the merrier.
Tuesday, September 30, 2014
Sunday, September 21, 2014
Going through hell week !
I'm going through hell week and have nothing much to share with the readers.
Apparently due to fate or some may even argue, good luck, SMU has decided to slam me with three subject presentations over 7 days and a graded legal memo, making this the most intense week in the entire semester. Things got so bad, I had to cancel my Dungeon's and Dragons game and I did not even bother monitoring my portfolio even with the talks of Scottish Independence and the actions of the Fed.
Here are some random thoughts until I can come up with something more interesting :
a) Becoming a student again can save money.
I noticed that my expenses have reached the three digit level this month. There were so many cases to crunch and books to read that it's impossible to spend on other pursuits, I can't even hang out with my friends after school.
b) Scottish Independence referendum turned out to be a non-invent.
I was following this pretty intensely and actually hoping that the Scots will decide to leave the United Kingdom. Singapore left almost 50 years ago and we're doing ok, But I acknowledge that economically it's better to stay together. Damn, I was hoping for a cheaper pound so that I can go shopping for RPG books at the Orcs Nest at Charrings Cross Street.
On the whole, people are rational and voting for the wallet sure beats some nationalistic sentiment.
c) Philip Holden's Critique on University rankings.
http://www.themalaysianinsider.com/sideviews/article/university-rankings-a-need-for-critical-reflection-philip-holden
.
If it is'nt for my punishing schedule, I would be railing at this article full time.
In Singapore, English Literature majors do pretty well and get fairly decent jobs. This needs to be sustained by local universities keeping their good reputations which means that we can't really negotiate with KPIs which rank universities. I rely on the good name of NUS and SMU when I look for jobs in the future, we're in a tough market where many US graduates might settle to work as Baristas in Starbucks.
I think the tirade is too similar with William Deresiewicz's appeal to bohemian authenticity over getting a solid job in the industry.
Hey we can't live on ideals. I say we keep the KPI. That might prevent more academics from holing up in their ivory towers.
Anyway, hope that I can write a better article next week !
Apparently due to fate or some may even argue, good luck, SMU has decided to slam me with three subject presentations over 7 days and a graded legal memo, making this the most intense week in the entire semester. Things got so bad, I had to cancel my Dungeon's and Dragons game and I did not even bother monitoring my portfolio even with the talks of Scottish Independence and the actions of the Fed.
Here are some random thoughts until I can come up with something more interesting :
a) Becoming a student again can save money.
I noticed that my expenses have reached the three digit level this month. There were so many cases to crunch and books to read that it's impossible to spend on other pursuits, I can't even hang out with my friends after school.
b) Scottish Independence referendum turned out to be a non-invent.
I was following this pretty intensely and actually hoping that the Scots will decide to leave the United Kingdom. Singapore left almost 50 years ago and we're doing ok, But I acknowledge that economically it's better to stay together. Damn, I was hoping for a cheaper pound so that I can go shopping for RPG books at the Orcs Nest at Charrings Cross Street.
On the whole, people are rational and voting for the wallet sure beats some nationalistic sentiment.
c) Philip Holden's Critique on University rankings.
http://www.themalaysianinsider.com/sideviews/article/university-rankings-a-need-for-critical-reflection-philip-holden
.
If it is'nt for my punishing schedule, I would be railing at this article full time.
In Singapore, English Literature majors do pretty well and get fairly decent jobs. This needs to be sustained by local universities keeping their good reputations which means that we can't really negotiate with KPIs which rank universities. I rely on the good name of NUS and SMU when I look for jobs in the future, we're in a tough market where many US graduates might settle to work as Baristas in Starbucks.
I think the tirade is too similar with William Deresiewicz's appeal to bohemian authenticity over getting a solid job in the industry.
Hey we can't live on ideals. I say we keep the KPI. That might prevent more academics from holing up in their ivory towers.
Anyway, hope that I can write a better article next week !
Saturday, September 13, 2014
What would I do if a start-up exit made me a multi-millionaire ?
Of recent interest is that we are starting to hear about successful start-up exits in Singapore. I really enjoyed reading about the interviews with these successful entrepreneurs so I am writing this speculative piece. I think Tech is very much on the rise here and with more talent becoming engineers, we could be hearing about a lot more success stories in the future.
Of course, being a small-time finance author and university student, I don't expect a real start-up multi-millionaire to consult me, I'm merely speculating as to what would I do if I struck such a large jackpot, please please allow me to indulge in this speculative exercise.
Here's what I will do with my multi-million jackpot :
a) Buy a house without a loan.
Maybe these founders already have a home. But I think that the first priority is to clear all housing loans on your primary property. As much as some loans are classified as 'good debt'. Having no loans provide a peaceful state of mind.
We need to distinguish the ability, willingness and need to take risk. As a successful business who already exited, you have the ability and willingness to take on more debt. But in my view, you don't need to do it.
b) Ensure that you have a reasonably risk-free source of passive income.
Once the home is secure, the next step is to ensure that all your basic needs can be provided by passive income. The source of such income can vary, you can buy rental property but I prefer REITs, business trusts and high yielding stocks. A portfolio which yields 5-7% is a reasonable number and can even provide a reasonable amount of growth. You need to determine how much of monthly expenses you have and invest a sizeable portfolio to cover your needs. $1,000,000 at 6% is a pretty solid $60,000 or $5,000 a month.
If you are unsure about how to start, begin with a selection of the largest blue chip companies in Singapore or an index ETF.
c) Get yourself educated financially.
I think this is where my advice is the most unconventional. I think start-up successes are very confident individuals and many of them want to jump into becoming a venture capitalist. I think that is not a good decision. Start-up founders should be aware of how risky tech investing is and they need to account for the fact that their success may make them over-confident in their assessment of these tech businesses.
Once your basic needs are met, the next step is a solid and rigorous financial education. You need the knowledge to cope when your private banker or financial advisor throw you a curve ball. As such, an 18 month investment for a Masters in Applied Finance in SMU is a really cheap buy if you can rack up a high GMAT score. Private bankers won't teach you about option greeks, free-cash flow, bond duration and convexity, but the good folks in SMU would.
I think that we should trust the bankers and financial advisors who try to give us advice. Bankers want you to keep your money with them, so they would prefer that you keep your risk low rather than you getting your high returns. I noticed that many HNW guys have a really conventional and low yielding blue chip portfolio - bankers just want to keep their businesses, they won't risk their capital. Financial advisers are worse - they only care about commissions.
If you want to take more risk, the only way is to educate yourself and eat your own dog-food.
So this is all I have for now. In many of these articles on the successful exits, I think there is too much emphasis on jumping back into the tech world with guns blazing and venture capital funding. Perhaps it might be better to take steps to secure your victory and ensure that your family is looked after for life, then take steps to cope with the complexities of finance.
I'm fairly sure that the financial models you learn can be used to value your future investment into that start-up that will change the world.
Of course, being a small-time finance author and university student, I don't expect a real start-up multi-millionaire to consult me, I'm merely speculating as to what would I do if I struck such a large jackpot, please please allow me to indulge in this speculative exercise.
Here's what I will do with my multi-million jackpot :
a) Buy a house without a loan.
Maybe these founders already have a home. But I think that the first priority is to clear all housing loans on your primary property. As much as some loans are classified as 'good debt'. Having no loans provide a peaceful state of mind.
We need to distinguish the ability, willingness and need to take risk. As a successful business who already exited, you have the ability and willingness to take on more debt. But in my view, you don't need to do it.
b) Ensure that you have a reasonably risk-free source of passive income.
Once the home is secure, the next step is to ensure that all your basic needs can be provided by passive income. The source of such income can vary, you can buy rental property but I prefer REITs, business trusts and high yielding stocks. A portfolio which yields 5-7% is a reasonable number and can even provide a reasonable amount of growth. You need to determine how much of monthly expenses you have and invest a sizeable portfolio to cover your needs. $1,000,000 at 6% is a pretty solid $60,000 or $5,000 a month.
If you are unsure about how to start, begin with a selection of the largest blue chip companies in Singapore or an index ETF.
c) Get yourself educated financially.
I think this is where my advice is the most unconventional. I think start-up successes are very confident individuals and many of them want to jump into becoming a venture capitalist. I think that is not a good decision. Start-up founders should be aware of how risky tech investing is and they need to account for the fact that their success may make them over-confident in their assessment of these tech businesses.
Once your basic needs are met, the next step is a solid and rigorous financial education. You need the knowledge to cope when your private banker or financial advisor throw you a curve ball. As such, an 18 month investment for a Masters in Applied Finance in SMU is a really cheap buy if you can rack up a high GMAT score. Private bankers won't teach you about option greeks, free-cash flow, bond duration and convexity, but the good folks in SMU would.
I think that we should trust the bankers and financial advisors who try to give us advice. Bankers want you to keep your money with them, so they would prefer that you keep your risk low rather than you getting your high returns. I noticed that many HNW guys have a really conventional and low yielding blue chip portfolio - bankers just want to keep their businesses, they won't risk their capital. Financial advisers are worse - they only care about commissions.
If you want to take more risk, the only way is to educate yourself and eat your own dog-food.
So this is all I have for now. In many of these articles on the successful exits, I think there is too much emphasis on jumping back into the tech world with guns blazing and venture capital funding. Perhaps it might be better to take steps to secure your victory and ensure that your family is looked after for life, then take steps to cope with the complexities of finance.
I'm fairly sure that the financial models you learn can be used to value your future investment into that start-up that will change the world.
Saturday, September 06, 2014
September 2014 Update : From Retiree to Law Student.
I've just survived three weeks of law school, just sharing a personal update to keep in touch with readers.
a) Drowning in legal cases.
Right now, the largest part of my my life is tackling legal cases. In SMU, merely reading up on cases and getting a general gist of it is not enough. As we can be called upon to introduce the cases on the fly, we will need to be able to demonstrate that we understand the cases well, so reading off text is not a good idea. A large part of my current life is figuring out what is the minimum reading I will need to convince myself that I know enough. If I get too obsessed with the details, I will not have time to cover all the cases. If I am too light on my reading and skim too much, it may affect class participation grades. As in all things, being absolute noobs, we are trying strike the perfect balance.
Although I can say that I'm actually happier spending all my time reading about cases which are really relevant to that investor part of me, this aspect of my return to University life has not met my personal expectations.
I was joking to my classmates that I see a law degree almost as a last bastion of liberal arts in pragmatic Singapore and want to pick up skills in rhetoric - career be damned - but the intensity and rigour of the course along the pressure to seek a training contract, internship and then a career is starting to weigh heavily in my mind.
b) Read Excellent Sheep by William Deresiewicz
I am glad that before bed and in the trains, I was able to read this piece of work which my cousin introduced to me. Perhaps in a later post I will contextualise this piece of work for Singaporeans.
The author paints Ivy League students as sheep who get shoehorned into society's definition of success and lack the courage to explore the world on their own terms. I think the law and medical students are the closest things to Ivy Leaguers in Singapore so it strikes a chord: I had a good read but I remain unconvinced by the author on many major points.
Success and accomplishment are as important as developing a philosophy of life. The author's insistence that students develop that bohemian outlook on life is laughable, Singaporeans do not live in a welfare state ( Unless you have dividends ) and neither do many Americans. Reading the Great Books is useful, but thinking deeply in a vacuum is worthless. Austen and Eliot would be much more useful if the reader can already write code, draft laws or create investment portfolios.
The same problem infects all the English Literature types who recently took up so much limelight in the Singapore news.
Taken to the extreme, English Literature is a religion, it has it holy books by Eliot, Austen and Shakespeare. Literature has it's own fundamentalists, fanatics and zealots. Science and engineering, at least, is falsifiability to keep scientists humble which distinguishes it from the literary arts.
Of course, on the other hand, legal education in SMU is the opposite extreme compared to the bohemian authenticity espoused by the author. The case load I get occupies so much of my time that I wish to have more time to reflect upon my views on humanity and philosophy towards life. So reading this book was done at the right time: It looks like me and my classmates are heading in the direction of becoming Excellent Sheep just as Deresiewicz had theorised.
c) Personal finances
September is a good paying month for dividends, I have already socked aside some cash to pay for next semester of fees. I have stopped tracking my net worth for now and will make minor changes to my portfolio to increase my diversification further. I think the newer REITs and Business trusts launched in 2014 may come under some selling pressure so I expect to do some bargain hunting before the month is over.
My aim so far is to retain or grow my net-worth throughout my stay in law school. This way I can reduce some of that pressure to get a training contract and really focus on thinking like a legal professional, which I think is the real holy grail of getting back to school in mid-life.
d) Other areas of my life
Of particular concern is that I have not been looking after my diet and exercise lately. Mooncake festival always gives me a sugar high and I've been neglecting my running to clear all my cases and consolidate my understanding of the law.
Looks like I need to buck up on my health next week.
Hopefully I can do up another blog article early next week.
a) Drowning in legal cases.
Right now, the largest part of my my life is tackling legal cases. In SMU, merely reading up on cases and getting a general gist of it is not enough. As we can be called upon to introduce the cases on the fly, we will need to be able to demonstrate that we understand the cases well, so reading off text is not a good idea. A large part of my current life is figuring out what is the minimum reading I will need to convince myself that I know enough. If I get too obsessed with the details, I will not have time to cover all the cases. If I am too light on my reading and skim too much, it may affect class participation grades. As in all things, being absolute noobs, we are trying strike the perfect balance.
Although I can say that I'm actually happier spending all my time reading about cases which are really relevant to that investor part of me, this aspect of my return to University life has not met my personal expectations.
I was joking to my classmates that I see a law degree almost as a last bastion of liberal arts in pragmatic Singapore and want to pick up skills in rhetoric - career be damned - but the intensity and rigour of the course along the pressure to seek a training contract, internship and then a career is starting to weigh heavily in my mind.
b) Read Excellent Sheep by William Deresiewicz
I am glad that before bed and in the trains, I was able to read this piece of work which my cousin introduced to me. Perhaps in a later post I will contextualise this piece of work for Singaporeans.
The author paints Ivy League students as sheep who get shoehorned into society's definition of success and lack the courage to explore the world on their own terms. I think the law and medical students are the closest things to Ivy Leaguers in Singapore so it strikes a chord: I had a good read but I remain unconvinced by the author on many major points.
Success and accomplishment are as important as developing a philosophy of life. The author's insistence that students develop that bohemian outlook on life is laughable, Singaporeans do not live in a welfare state ( Unless you have dividends ) and neither do many Americans. Reading the Great Books is useful, but thinking deeply in a vacuum is worthless. Austen and Eliot would be much more useful if the reader can already write code, draft laws or create investment portfolios.
The same problem infects all the English Literature types who recently took up so much limelight in the Singapore news.
Taken to the extreme, English Literature is a religion, it has it holy books by Eliot, Austen and Shakespeare. Literature has it's own fundamentalists, fanatics and zealots. Science and engineering, at least, is falsifiability to keep scientists humble which distinguishes it from the literary arts.
Of course, on the other hand, legal education in SMU is the opposite extreme compared to the bohemian authenticity espoused by the author. The case load I get occupies so much of my time that I wish to have more time to reflect upon my views on humanity and philosophy towards life. So reading this book was done at the right time: It looks like me and my classmates are heading in the direction of becoming Excellent Sheep just as Deresiewicz had theorised.
c) Personal finances
September is a good paying month for dividends, I have already socked aside some cash to pay for next semester of fees. I have stopped tracking my net worth for now and will make minor changes to my portfolio to increase my diversification further. I think the newer REITs and Business trusts launched in 2014 may come under some selling pressure so I expect to do some bargain hunting before the month is over.
My aim so far is to retain or grow my net-worth throughout my stay in law school. This way I can reduce some of that pressure to get a training contract and really focus on thinking like a legal professional, which I think is the real holy grail of getting back to school in mid-life.
d) Other areas of my life
Of particular concern is that I have not been looking after my diet and exercise lately. Mooncake festival always gives me a sugar high and I've been neglecting my running to clear all my cases and consolidate my understanding of the law.
Looks like I need to buck up on my health next week.
Hopefully I can do up another blog article early next week.
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