Sunday, January 11, 2015

One year after leaving the workforce !

Wow ! Since Christmas, my life has been a series of milestones.

It has been a year since I left the workforce, and it's been so long I am probably not even classified as someone as someone who is unemployed any-more. instead, I am now someone who is no longer participating in the labour force.

The economy has really changed a lot, I'd just like to speak about two trends which was not anticipated when I quit my job last year at about the same time.

a) SIBOR is up. Real-estate bulls are in for a beating of a lifetime.

I have had a balanced real-estate/equity portfolio for quite a while. What is really irritating and I believe this is being shared by many readers all these years are the kinds of fools who would never believe that a bear market in real estate is possible.

With SIBOR being up so drastically over the past two weeks, many of us with a home mortgage ( myself included ) should be expecting a higher payout over the next few months. This should be something that needs to be anticipated. But if you are a rentier who has to pay out of your mortgage for your bank loan, there is now a distinct possibility that you can have a net cash outflow after servicing your loan. Worse, there is going to be strong downward pressure on real estate prices now that it costs a lot more to service mortgage loans. That should be part and parcel of the risk of real estate investing.

What is delightful to me, however, is that some folks who have a livelihood selling real estate and loans would have to contend with less agreeable clientele as I believe many common folk will be a lot skeptical of the snake oil they are peddling. Sometimes it takes a real bear market to teach folks to be less trustful of salesman types.

( I do welcome critics to analyze the mortgage deal which I secured about 3 years ago, my perpetual rate moving forward is 0.68% + 3 mth SIBOR. So far I am seeing no rush to refinance. )

b) Oil and Gas sector no longer looks good.

I've been waiting for this for the past 15 years with great relish. A confluence of factors are driving down oil prices, mainly the US unlocking their shale reserves and a slowdown in China largely triggered by anti-corruption measures. Personally, I'm even inclined to think that low oil prices are a result of the world coming together to screw Russia over their annexation of Crimea. ( Otherwise, why would OPEC actually not cut their output ? )

Low oil prices can wreak havoc in most economies, but my take is that it is generally good as household end up with more discretionary income.

More importantly, even after the shake-out in the banking sector, oil and gas executives continue to be the cockiest fuckers you meet on the corporate world. For the  first time in 15 years of my working life, they are now quaking in their boots.

If you've been a regular reader of this blog, you might remember my article in the past where I exhorted my friend not to envy his whoring and arrogant friend who works as a hotshot in the oil and gas industry. Apparently, my friend is getting the last laugh now.

What is the moral of the story ?

The economy will eventually humiliate everyone and make fools of us all.

When I had my first job with Procter & Gamble, I felt like an invincible genius who got myself a first class ticket to the millionaire suite because what could possibly go wrong with a consumer goods company which looked immune to economic cycles in the 1990s. Who knew that the entire IT department would be sold to to HP within a span of 5 years ?

These days, even Coke is retrenching workers. 

So far I am doing fine, one record year paying taxes, a mortgage loan and school fees all without touching my investment capital.

Who knows what would happen next year ? Will I lose my financial independence ?

Singaporeans will learn that capping foreign talent will hurt the pockets of the local middle class workers. Getting rid of young workers from China and replacing them with our aged workers can only end in lower productivity and this is now being seen in all our metrics. I fully expect an electorate who will be much less xenophobic as I believe that ultimately all of us still vote with our wallets.

Perhaps I should start getting cosier with the law firm partners who come over to SMU. I've not been talking to them so far as I've yet to even figure out which area of the Law to specialize in.



  1. Hi, I think you have taken up quite a good mortgage. Mine, in comparison, is a perpetual 1 per cent plus Sibor or SOR (I can elect for either) which I signed up for a year ago. Looks like the banks were more generous during your time!

  2. Yes, I also think its a great mortgage. My wife is behind this more than me.