Monday, March 23, 2015

Passing of a Giant...

I am writing this article from SMU Labs as I'm in a middle of hell week where I would need to make two group presentations this week.  Ordinarily, there would not be a blog update until I am done with all my work.

But today is a very sad day and I think a blog post dedicated to Lee Kuan Yew would be appropriate. 

I did not start out as a huge fan of our government policies. In Young PAP BBS, you can find traces of me complaining about the foreign talent policies about a decade ago, but as I got older and started building my portfolio, it became blindingly obvious that Singapore does reward hard work, frugality, study and astute planning. Income taxes have been slowly displaced by GST and we can experience a high standard of living if we can make do with not owning a car. 

As with all dividend income investors who find that they can stop work in their late-30 ( And there's not much of folks like me around in Singapore right now ), we owe a great debt to the policies which makes all this possible. Single digit income taxes and no expropriation of capital gains by the government goes a long way towards a prosperous investor class.  If I were an American, I think I would still be paying off my student loans from my first degree, much less paying off my JD with my investment income and enjoying my second lease of life as a student. 

I think of late,  a lot of anti-LKY people are speculating whether it is time to loosen up after his death. I do not know what kind of Singapore they ultimately want. I think that no matter how they articulate their desires, ultimately their fondest wish is to be on top of everybody else in this society over the long term. But in the short term, they want to enjoy the welfare which our ancestors worked hard for after independence. 

I think LKY's death should lead us to think twice about the value of reforms and change. After all, the hardcore pragmatism which took us here got us from third world to first world status. 

Singapore needs to take this opportunity to go back to good old fashioned values of hard work, savings and self-reliance. 

Not hand-outs or welfare misappropriated from tax payers. 

Friday, March 06, 2015

Update : Chinese New Year is over !

It has been two Chinese New Year holidays since I have left the workforce.

Here's a quick update and some thoughts about life  in general.

a) Starting community service tomorrow.

As a JD student, SMU mandates 30 hours of service to the community service which must be done in order to graduate with a law degree. The Sikh Welfare Council has very kindly given me two students to provide tuition for the rest of 2015.

So beginning tomorrow, I will be teaching E Maths to these two students, I look forward to making friends with this family and would like see myself as a life coach rather than a maths tutor.

This is the first time I'm doing some serious good in my life. At the back of my mind, I keep telling myself that complete acts of altruism are rare. I should do a good job for myself - if my students succeed, it's a great way for me to re-skill myself as a tutor while studying just in case things don't really work out after 3 years.

b) My classmates just upped their human capital over 2 weeks of mid-term holidays.

When school reopened this week, everyone looked a bit despondent but I felt that they shouldn't be. Immediately after announcing the budget, the Government gave all my classmates a big bonus by restricting the list of universities with recognized law degrees by 8. Many argued that the impact to my batch would be minimal as students currently studying in those Universities would not be impacted.

On the whole, I think it bodes well for my classmates as firms begin to form rational expectations about a crunch in lawyer supply in the future and ramp up hiring for the present. But this is just the amateur economist in me talking.

c) Consolidated my portfolio for the new year.

On the financial front, I have finally decided to break my portfolio down into three parts so that it can be managed separately. Currently my 31-counter portfolio breakdown is Equity/REITS/Business Trusts at a ratio of 30%/40%/30%.

My overall yields last year did not meet expectations as it ended at about 7.2% but it's still a decent figure which paid my mortgages, school fees and family expenses. This year, I'm ramping up my yields to my desired 8%. I think the weaker SGD may help in this regard.

Overall portfolio went up about 3%  in spite of minimal reinvestment of my dividends.

d) Why I feel like I am GIC or Temasek. 

I'd just like to share one final thought about the politics of employing reserves to create an inclusive society.

Just like Temasek or GIC, I struggle with my finances in spite of the margin of safety that I have built for myself. If I were to employ half of my capital gains since I left the workforce, I would not have to struggle with kopitiam yong tao fu everyday because my hefty law school fees would be resolved at the snap of my finger. It also does not help that I have recently installed Carousell on my Android phone and have been hunting for vintage RPGs and Avalon Hill War games.

I think fiscal prudence and frugality is an important part of Singapore's pioneering spirit which made us what we are today. Spending should not be a trivial case of opening the floodgates and then justifying to oneself that we can afford something or whether its sustainable over the long term.

There is value in thinking that money that is not spent can provide as much utility as money which was used to make lives better over the short term. With high reserves, currency raiders would think twice before attacking our economy. In the event of huge recession like that in 2009, permission from the President can be sought to unlock the reserves to help us recover faster.

Wealth is confidence, you don't need to spend it for it to make you feel good.

As such, while Tharman remains my favorite minister. I don't agree with the shift to the left even though we can afford it and it's sustainable because we've always been conservatively fiscally.

We should simply continue to be frugal and not allow that entitlement mentality to creep into this nation that we've been building for the past 50 years.

Monday, March 02, 2015

The problem with skills-based education.

One of the more populist changes made to the education is skills-based education.

Skills-based education is a very attractive idea. If a person is skilled or qualified enough to do the job, he should be entitled to it. The middle class, middle income voter is more likely to support it if it subtly promises to overhaul the perceived unhappiness about the education system or 'meritocracy'.

One idea which is repeatedly flashed on my FB feed is the idea that our best students are exam smart, lack emotional intelligence and practical skills. Our top students are just simply sponges who rely on memory to get ahead of the curve.

I don't think a skills-based education and associated ideas can resolve the problems of the middle class. If you are in your late thirties or early forties like me and harbor fantasies that you are a unique snowflake with awesome technical skills but is constantly brought low by the education system and the elites, you probably need to take a good look at your own life-choices before casting blame at the government or the policy makers.

That being said, here are some brutal hard truths which some readers might find hard to swallow.

a) An education system not only has to train citizens, it also has to sort citizens based on conscientiousness and general intelligence, traits which are useful in nation building.

The first hard truth is that even if someone is skilled enough to do something that pays well, the fact that many people with the minimal skill-set are available just means that some folks with the skills cannot be matched with the job. The employer can choose an employee with better communication skills and is more conscientious ( with higher paper qualifications ) to pick up the job.

The case in IT is simple, there are many systems engineers who have the NCC Diploma and can run a script or administer a server. The one who gets to become a senior systems engineer can track his servers on spreadsheet without being told  and can communicate well with the customer.

The hard truth is that another role of the education system has to sort citizens based on their conscientiousness and general intelligence independent of actual technical skills. This sorting mechanism has been refined over the years to target individuals who 'deserve' the highest paying jobs in society.

Bad news for most folks is that this sorting mechanism is actually improving, exams are getting so hard that you need to be a pretty talented person to balance school with CCA activities. Just look at the PSLE maths questions these days, I bet even teachers need guidance on how to solve them.  

b) A skills based education does not mean that rote learning is defunct. 

When I was managing operations in SGX, I had an incident that the counter M41 was down, When discussing the incident, I was able to explain to the customer that some folks cannot buy or sell the MIIF counter. The SGX staff were impressed that I did not need to refer to the ISIN file to know what a stock counter refers to, but they are not aware that I am a dividends investor who know my codes due to time I spent monitoring my portfolio.

As someone back in the education system studying to become a lawyer, there is a misconception that we rely a lot on memorizing the code of laws to do our work. Nothing can be further from the truth,

The objective of professional mastery ( and I should be qualified to say this as I am trained to be an engineer, investment analyst and now trying to be a lawyer ) is met by creating a knowledge framework. This requires the ability to sort information and engineer some form of hierarchy to store them in a logical manner to assist in problem solving and recall.

In software engineering, it can be understanding data structures in a framework of classes and knowing how instantiate the right object to solve a engineering problem. The solution requires an assembly of the database, business logic layer and a presentation layer. No solution is workable without consideration for user friendliness and ergonomics.

In finance, various asset classes can be commonly described by statistical properties like the mean, variance, skew and kurtosis. These assets are then assembled into portfolios, which ultimately are aligned with a person's life goals.

In law, offer, acceptance, consideration and intention to create legal relations form the contract, which are vitiated by factors like mistake, misrepresentation, illegality and duress which are then broken down into further sub-categories. Chunking up from contracts is the notion that some promises need to be enforced by society.

Regardless of what field we are in, general intelligence picks up  the concept, generates the hierarchical trees in the form of Mind-maps and then commits the resultant chunks into memory.

Learning cannot be distanced from rote learning. But with a high general intelligence you can chunk your knowledge into components that make rote learning possible and effortless.

c) Even if skills-based education is properly implemented, it would not resolve a person's unhappiness with the system. 

I think this is the most brutal part of my essay.

I'm starting to see patterns in some of my anti-government friends and their own frustrations that would lead them to do horrible things like curse an old man on his hospital bed and spread news about his death even when it has not been confirmed by the press. Worse, they delight on seeing the son get diagnosed with cancer. My dad has a stroke about 3 years ago, even if I disagree with PM Lee's policies I should be human enough to acknowledge his pain at the prospect of losing his dad.

Back to my philistine friends, the change they want is neither fairness nor equality. The change they want is something that will put them on top. On top means big flashy cars, branded watches and effortless living ( via wining Toto ! ).

With ASPIRE and a skills-based education system, what would happen is that ITEs, Polys and JCs will be given more or less equal standing within 20 years, all of which would provide a reasonable chance of getting into a university. The effect is that the pool of talent in the top 20% of the cohort will then redistribute themselves evenly between the three institutions. The top 25% will continue into University and still take on the best paying jobs the market.

But regardless of how the education change, hierarchies remain the same.

Some stigmatization would end, but the corporate will develop new forms of discrimination. In the future, companies in Singapore may refuse to hire Australian graduates or local graduates with no honors classification.

In conclusion no government, PAP, WP, SFP or NSP can put my Phillistine friends on top of hierarchy.

Hope you've enjoyed this brutal essay.

Gong Xi Fa Cai !