What is the risk of NOT doing something ?

Leong Chan Teik was a great benefactor of mine.

Close to a decade ago, Leong helped me promote my first book Growing Your Tree of Prosperity by featuring me in the Sunday Times "Me and My Money" section. Thanks to that interview I had with him, I was able to just make it into the Straits Times non-fiction bestseller lists at tenth position for just one week  - not bad for a rookie who never published a book in his life !

So Chan Teik found that he update I wrote during my birthday was interesting enough to be featured on his website NextInsight. This had the effect of doubling my traffic over the past week. Naturally some questions were raised in the NextInsight article so I thought to generate more traffic, I would attempt to address those question on this blog.

The original allure of the article is probably the mention of the two "first world problems" financial independent people experience. It is quite novel that a person who lives on dividends would need to overcome more bureaucratic obstacles when sponsoring his spouse for citizenship. It is also unexpected that investment income would to be of much use to apply for a domestic helper. I think that I would face more problems of  nature if a procedure required income tax records or records of my CPF contributions so it might just be good that I move on in my life and become a rookie lawyer after  I graduate from my JD program.

More interestingly, the question in NextInsight focused on whether it is rational for someone of my advanced age in trying to become a lawyer. Lawyering is lucrative but it is mainly a game for the younger and more energetic dudes. Because of the lack of work-life balance, many lawyers eventually burn out and end up running cafes. It is too early to say that I would not end up like that, but I will do my utmost to get called to the bar at least before finding some other kind of vocation if legal work does not suit my personality.

The maneuver to qualify and get into law school is not a trivial one. My opportunity cost is around $550,000 if you factor in my lost income and fees. Expecting to recover those losses is not reasonable unless I can spend 15 years in the legal industry. A large part of deciding to become an SMU student came from the realization that I have reached financial independence and can choose not to work for anyone if I choose not to. This effectively makes the opportunity cost bearable because it is also a short 4 year break to consider my (or lack of ) career options.

So the pull factor of law is trivial. I just get a kick knowing that I can code, manage a finance portfolio and litigate a case. As yet, no one in Singapore has experimented with the kinds of business models can arise from a synergy of all three fields. But training in law is valuable on its own, I know what kinds of trusts I can establish for my kids and can advise my family over property ownership. The knowledge is really practical and legal training makes a person's mind sharper when dealing with other areas of our lives.

But enough about me...

Readers need to ask themselves what is the risk of NOT doing something ?

Put your money in safe banking accounts and you get eaten by inflation. The downside of money market accounts are just as bad as equity portfolios once you lengthen the time horizon.

Similarly, older engineers in theirs 40s are obsolete. The world is now driven by big data and hard core statistics, programming is less so about structures and records and more about  random forests and principal component analysis. Servers have moved into the cloud allowing one administrator to maintain thousands of virtual machines. Do you still program in .NET and not moved into R, Ruby or Python ? Even taxi drivers are disrupted by Uber who will in turn face driverless cars.  

If you want to see your future, just look at your bosses in the tech firms who were stars when they were much younger.

Watch them get escalated at 2am along with you when servers fail.

Watch them get a pay-cut when revenues are down.

See them get retrenched when the company decides to kill off their most expensive staff.

Watch them retreat (or fail to retreat)  into a government agency or statutory board.

Your bosses got kids doing the PSLE and some have aged parents.

Do you want that life ?

In your youthful arrogance. you think about why the company would hire such lethargic managers with no corporate vision. But the truth is that your bosses' life is likely to be your future if you maintain the status quo.

( Actually they are better than you because they needed to be stars in their 20-30s to become managers in their 40s. )

So I don't like to stay still. When people are thinking or partying, I like to take action and I want to disrupt myself before someone comes along and do me in.

Because I can't be like my boss. He was a superstar.

I have to invest my money and ensure that in my 40s, it provides my family an alternative to an engineer's pay-check.

Now I have an investor's paycheck which replicated most of previous salary, its time to let go of my engineering paycheck and replace it with a smaller lawyer's paycheck but the possibility of a good upside if I can just think of a way resolve a law firm's productivity woes with some software that I either write or resell.

So that's my current game plan for law school.

It has some risks but I think over the long term, I get a better sense of control over my life.

Survived a tough year !

It's my 41st birthday today and it's been a rough year, unlike many of the other bloggers, I will not be talking so much about my achievements but more about how taxing this year has been for me. At the end of the holiday season, I will look to 2016 and see what we can possibly look forward to.

I joked that I am going through what possibly is the most expensive mid-life crisis compared to most of my peers. If you look at a low-end Maserati Grand Turismo, it costs about $492,000 in Singapore. Law school costs only $70,000 but after considering the lost income from my day job, the opportunity cost goes somewhat to around $550,000. This is why I never went beyond KL for travels this year.

The year started well for me with folks born in the year of the Tiger expecting a good year ahead. Unfortunately the tides turned and soon enough, 2016 became a year I would rather forget.

At age 41, I am reminded of my own mortality and limitations and managing one set of number and expectations does not mean that events would turn the year into some sort of mid-life nightmare.

a) Finance - 2015 is a challenging year for investors. 

Most of us had a bad financial year with our investments down. I think the viciousness of the bear has been greatly exaggerated. While it is true that we're 15% down, most of the dividends investors had cashflow to offset the losses. What is important is that yields are up and bargain hunting can definitely take place this holiday season.

Of course I was also hit by increasing interest rates, my mortgage swelled from $1300 to about $2100 this year. My CPF can last about 3-4 more years under this arrangement but in two years time, I will start topping up my CPF with my dividends so this can still be managed better.

My personal take is that 2016 would not be as bad as 2015. Japan and EU continue their QE program and China is trying to grow its services industry to offset their poor economic growth. I hope that next year might be surprising on the upside.

b) Scored A+ for money management but lost the war to retire early !

On this money management front, I was able to clock 24 months of unemployment without eating into my capital and fully paying up my school fees of $70K. While my finances are expected to improve over the next year, two specific events caused me to realise that my retirement plans may not be sustainable over the long term.

First incident is that when my wife applied for Singapore citizenship, I had trouble convincing authorities that I was not a burden to the tax-payer in spite of being an unemployed law student. Our government is still not equipped with the procedures to cover income investors. I had to compile a report on dividend cash flows and had to deal with an ICA officer who was just puzzled that "stock market sends me money on regular basis". In a more unsophisticated country, I would have been accused of practicing witchcraft.

The second incident which may have  killed my retirement plan is when I tried to hire a maid to look after my dad. Without an earned income in my IRAS filings, I was not allowed to be the sponsor. My dad had to put in his spare cash of $50,000 into a fixed deposit to sponsor his own maid as all my money is tied up in my CDP. This convinced me that Singapore society, as affluent as it is, it does not have the infrastructure in place to recognise dividends cash flow as a valid substitute for earned income. A CDP statement, no matter how large, is no substitute for a FD account which puts us in a bind because of the cash drag.

c) Law School become exponentially harder at year 2.

I struggled academically this year with substandard grades even though I had experienced my strongest year of intellectual growth throughout my entire life.

Having done Engineering as an undergraduate, I had been hiding math equations and physics problems all my life having found my comfort zone during my JC days. Even when I did Finance, they were just some CFA maths problems with a slightly business bent. There's always come computer tool or app to solve a technical problem.  Studying Law is the first time in my entire life I could go through a semester without aceing a single subject.

It took me three semesters to realise that Law school is not a joke. First two semesters did not even count because I did Contract Law as an engineering student and had some exposure to managing outsourcing contracts at work. as a consequence, I have always been casual with my cases and did not put a lot of emphasis on the actual written judgment preferring to build on top of the case note. This cost me dearly this semester.

Nevertheless, there is value in struggle when learning something new. The alien concepts I learnt this semester cannot really be googled off the internet and consultation on these concepts can take a lot of time and cost a lot of money.

In summary, it's comforting to know that I qualify for a difficult subject in a world class institution. I will never be as brilliant as some of my classmates and but I can rely on my experience and technical know-how to make it in a new industry.

And next semester will be an even more challenging one because...

d) Tough six months ahead in the personal front.

Balancing the toughest semester with family would be the hardest challenge I ever faced next year. My mum has been ill and has an operation last week. She is recovering but further checks will confirm whether she needs a round of chemo-therapy. We may made the decision to avoid it as far as we can but it's all in the hand of the medical specialists. This was also the year when I've been shuttling in and out of hospitals.

On  a brighter note, I will be also be a new dad again to my son who will be arriving just before Chinese New Year.

2016 is all about juggling multiple balls in the air : ensuring that my mum gets better, financing the birth of my new son, covering three of the nastiest subjects in the JD program and hunting for a training contract with hopefully a decent law firm.

I hope and pray that I would have more positive message same time next year.

Philosophy as the Operation System of an Investor's Mind.

One of the better reads I had this holiday season is Mindware : Tools for Smart thinking by Richard Nisbett. This book  shows folks how to think and draws from various academic disciplines like Economics, Psychology, Statistics and Philosophy. It is a powerful toolbox for a problem solver and contains the keys to resolving many practical issues.

The chapter on dialectic reasoning itself should be worth the book's weight in gold.

It summarizes Western Logic into three propositions :

1. Identity : A = A. A is itself and not some other thing.
2. Non-contradiction. A and not A cannot be true at the same time.
3. Excluded middle. A or not-A can be true but not something in-between.

Eastern logic is very different :

1. Principle of Change. Reality is a process of change. What is true will shortly be false.
2. Principle of Contradiction. As change is constant. Contradiction is constant.
3. Principle of Relationships. The whole is more than the sum of the parts.

A successful investor cannot ignore Western or Eastern Logic. Both needs to be installed within the OS of an investor's mind.

An investor with only Western Logic is like a CFA level III candidate who has just invested his first $10,000 into the financial markets. He has the statistical tools to find the stocks which theoretically can result in strong performance but have yet to experience the psychological effect of market cycles. Often these investors would stick to the basic knitting and rely on the older studies of  Fama and French or Modigliani and Miller. The best students would stick to small companies with low P/B value and ignoring the effect of dividends. The strategy works until the investor gets a nasty black swan market event which affects his emotions and breaks his morale.

An investor with Eastern Logic might fare even more badly and not have a central theme or strategy when it comes to investments. Many technical analysis investors rides on the market waves without any understanding of the fundamentals. Theories will be proven false in time so why bother with statistics ? Just rely on reading tea leaves and profound wisdom of the trading mentors that they pay thousands of dollars to. At any point of time, a dotted line on a chart can be a resistance level or a level where a break occurs. Foresight is 10/20, hindsight is 20/20. Just make sure that you only present the answers in hindsight.

The sweet with investments is accepting both Western and Eastern Logic.

Statistics are moderated by R scores and some results are bounded by confidence intervals. But statistics can take an investor only so far. A statistically perfect stock may not have ample liquidity and a good business can be disrupted by a paradigm shift within the industry.

Perhaps this blend of Eastern and Western logic may be useful to assess a counter like Sabana Reits. Statistically it is one of the highest yielding REITs in the industrial REIT space but the yields were not sustainable in light of recent expiration of master leases. As investors start to realise that yields are dropping, they abandoned the counter making the yields irresistible again, but now there is a new development with this counter. Sabana is now showing a willingness to sell off under-performing assets. Played well, this may be a key for investors recoup their investments in the form of yields and returned capital.

Would this strategy work ? I have a small residue position to find out how this plays out.

Why Han Solo will be never be able to provide financial security to Singapore women. [SPOILER ALERT]

Let's face it, if you have daughter, you will never allow her to date Han Solo. This guy has an unstable job as a smuggler and can be a little too trigger happy for your taste.

The Force Awakens clearly paints the horrible consequences of dating a an unconscientious male. Han Solo turns out be a worse dad than a husband, so much so that his son Ben Solo turns to dark side and eventually kills him.

The charming and flaky male is irresistible to women. TFA's lesson is that women will go far to mate with Han Solo, even forgoing the title of Princess and taking on the mantle of General just to make the relationship work. In Singapore, I see so many Han Solos showing up in family court looking quite like the above picture when pressed to provide spousal maintenance.

The Economist would back my thesis that Han Solo is bad news for Singapore women.

In an article on good fathers, last week's issue of The Economist looked at different male archetypes based on how much men produced testosterone when aroused by watching pornography. The article proposes two mating strategies. The Han Solo archetypical male produced more testosterone when aroused tended to preferred having multiple sex partners in the hopes of fathering more children with different women. They put negligible effort in parenting. The alternative kind of men who produced lower levels of testosterone and preferred to mate with one spouse and focused on raising fewer children in a higher quality environment.  The former are cads, and the latter are dad.

Like now, society is fair to both kinds of men, rewarding each archetype equally which explains why men fall into the Han Solo category and those who don't.

Which begs the key question - what kind of men fall into the latter category and make the ideal spouse for the Singapore woman  ? What man would most father-in-laws prefer ?

The Force Awakens also contains the answer....

The ideal husband for a Singaporean woman in my humble opinion is General Hux, the Architect of the Starkiller Base. General Hux has its flaws but he is deliberate and conscientious, an ideal counter-weight to the religious fanaticism of Kylo Ren.

The ideal Singapore husband will never join a bunch of terrorists, he will work hard and bring his family honour by joining the Imperial Academy and graduate with flying colours and then climb to the rank of general for the First Order.

Can you imagine the kind of project management skills that would be required to build a planet-sized base that could tap into the power of Sun ? My estimate is that General Hux would need to lead thousands of portfolio managers to get the job done, not to mention the headaches required in project finance.

My impression of Episode 7 is that the MVP of the First Order is General Hux, not the emo piece of shit called Kylo Ren.

Interest Rates Awaken ! [SPOILER ALERT]

The big news in the investing world is that the US has finally raised interest rates. As the markets have already priced in the rate rise, interest rate sensitive investments began to rally and REITs in particular had a great session in spite of an overall down market just now.

The overall direction of interest rates in the US is going to be up but I expect the pace to be slower than most folks would expect because the low interest regime is good for growth and there is no risk of inflation as of this moment.

The situation in China may make things worse for global growth. It seems that the downturn was largely caused by corrupt civil servants curtailing their spending in the midst of a crackdown as it may be engineered by the Communist government. Moving forward, if China can clean up their act and allow their working class population to participate in their economic prosperity, growth would return with more above-board consumption, but this may take many years to happen. One possible bright spark is if the US under President Trump would have some sort of a reconciliation with Putin which I think may create some upward pressure in oil prices and bring some salvation to the oil and gas sector.

So right now, I have no useful insight for everyone because local interest rates have already gone ahead and gone up and I'm not too sure whether SIBOR will resume it's meteoric rise. This will impact many local households who will less disposable income for discretionary spending and I expect the government to follow this closely. The only possible thing a reader can do is to ask themselves what happens if interest rates hit 3% for their mortgages. For me, my worse case scenario is to prepay the mortgage entirely and get ready to return to the workforce after graduation - I have lasted close to 24 months without drawing upon my investment capital and even paid off $70,000 school fees.

A rising interest rate environment is actually quite new for many new entrants to the workforce. Many of us are so used to cheap borrowing and many households are surviving under leverage. This new economy is going to painful for folks encumbered with loans.

And talking about change and progress....

... Let's talk about the Force Awakens.

I caught TFA as soon as I could on the day it opened because I know that there will be spoilers everywhere. Star Wars is a religious experience and no amount of practical criticism is going to decide whether fans love or hate the movie so I doubt any discussion on tropes, plot and pacing would have a bearing on box office revenues.

So far, based on my shallow observations,  what divides the folks who love it ( like me ) and the folks who hate it is that the folks who hate it tend to be very emotionally attached to the Expanded Universe which had to be sacrificed to give Disney a clean slate to decide on the storyline.

The insight for me is that sometimes it helps to be unsophisticated if you are one of those readers who are more concerned about personal finances. I never developed a palate for good food or wine. I never felt any desire for watches or fast cars although I like the science behind them. This allows me to get high on simple food like thosai or satay bee-hoon.

While I remain very snotty when it comes to self-help and finance books, I remain quite unsophisticated with fantasy and sci-fi fiction. I seldom read fictional works but enjoy almost all my fiction reads ( but the Force Awakens bridging novels by Chuck Wendig sucks ). I also have a thing for B grade movies and count The Last Witch-hunter as one of my favourite movies of 2015.

The essence is this : Be discerning where it matters to you.

A finance reader should be able to spend 5 minutes and decide whether a investment book should be categorised as a classic like The Intelligent Investor or a complete waste of time like something from Robert Kiyosaki or Harv Eker.

A detailed analysis is definitely overkill when it comes to Star Wars movies.

Yes, the Empire never learned anything about single points of failure and fault tolerance, but I guess taking 5 planets down with one shot from the Starkiller base allowed the First Order to break-even. And the twist was very much expected if you followed Harrison Ford through his convention appearances and knew how much he hated playing Han Solo. That dude is Indiana Jones but everyone still wants him to be Han Solo.

Anyway, if you have a highly refine taste for wine, you will overspend on wine. Similarly if you have a highly refined taste for art, you would overspend on art. If you have a highly refined taste for Star Wars, no movie can satisfy you, definitely not one by JJ Abrams and George Lucas would do even worse.

I have a highly refined taste for academic and industrial credentials.

I think that's quite enough of me.

What can we learn from the changes to the Accounting profession ?

This is my first blog post using my iPad Pro with Apple Keyboard. I am currently blogging from Yishun Library.

One of the more interesting developments in Singapore is the initiative to allow Polytechnic graduates to obtain an advanced diploma while working as an accounting technician to qualify as a chartered accountant without getting a degree. I believe that this news is probably making waves in NTU and NUS where an accounting degree was meant to be an assured ticket to the middle class. Accountants may have some concerns as to how this may impact their earnings capabilities in the future.

The accounting profession is going through some changes which has always affected engineers in the past. In Singapore, a polytechnic diploma holder can always call himself an engineer without getting into trouble with the law ( Try doing that in Germany. ) I remember that when I was in P&G we outsourced our IT operations to Atos Origin and stipulated that our operators must be diploma holders. I remember P&G management being upset that the diploma holders were NCC diploma holders and internally felt that the vendors upheld the word and not the spirit of our agreeement. To our local poly diploma holder's credit, P&G enjoyed greater customer satisfaction when the work was insourced when we hired local diploma holders to support our global IT services. Many of these operators eventually took on hardcore technical roles meant for graduates after a year doing operations support. Those days were the Golden Age, it did not matter whether you were a diploma holder or a degree holder once you joined an MNC, you advanced based on your capabiliities and we had department heads who had neither a diploma nor degree.

[ Sadly this arrangement was not sustainable as after getting outsourced managers without degrees  were rapidly culled when we transitioned into HP. Outsourcing is a lot about showing off to the customer the qualification of the folks that you are deploying into their environment. ]

Interestingly, after going to Hewlett Packard I found that one of these ex-Atos Origin  NCC diploma operators were rebranded "Senior IT Engineers" when they were sent to support the government agencies.

Here's are some of my point for someone's consideration if he is an accountant.

a) For a start, accountants without degrees will still start at a lower base.

By and large, we are still driven by paper qualifications. A degree holder would still start at higher salaries. This measure would benefit SMEs who need accounting bookeepers who will work and study to better their life circumstances. MNCs and Government would still be aggressively sought after by university graduates and would have their choice picks.

Interestingly, some smarter MNCs might build a body of cheap accouting technicians and be willing to upgrade them once they have accumulated a good work track record. I think this is what the government wants to achieve to make the diploma track more attractive. Expect only the top diploma holders to qualify for these seats because studying part-time has no opportunity cost.

b) Redistribution of talent would not change a person's life outcome if he does not academically excel. Don't expect Singapore to be less elitist.

The effect of this measure would likely induce smart students who are assured of his ambition to consider a polytechnic diploma. This means that students with better O level results will consider a diploma if he is sure that he want to be a chartered accountant.

The JC and Polytechnic cohorts will redistribute itself. I doubt elitism would be reduced greatly - More elites will join diploma programs and make those courses as competitive as degree courses.

The number of chartered accountants will remain the same as it is based on industry demand and only small part of the diploma cohort would complete the journey.

c) Overall these measures are good for  everyone but don't expect a Utopian society to arise out of these reforms.

These measures are great because one of the problems is that if every elite go through an expensive and brutally competitive process to get certified to do something, the beneficiaries are MNC and government organisations because no one will push themselves so brutally hard to join a small local company and be paid a pittance with no opportunity for advancement. Even if they like SMEs, they have to justify these decision to future employers. With this program, SMEs can tap into some accounting talent and get support while these book-keepers study part time to get better qualifications.

d) The non-accounting modules you pick up in University will become more important.

One long term consequence of developments like this is that all graduate professionals would need to pay attention to modules which cover non-accounting subjects. Yes, the so called "superflous" modules which teach a graduate how to read, write and think better as opposed to actual accounting work. These modules are critical to differentiating yourself from the non-degree CAs in the future.

Which brings me to this important point. It's easy to reduce a profession into a list of skills. But with the industry evolving at such a rapid clip, some foundation skills in reading, writing and speaking will become more important as these newly minted "apprentices" may not have had the time to really think about a new issue and develop the ability to perform public speaking. Upon getting their charters they would still need to navigate through massive changes to the accouting profession which I predict would involve turning combining datasets of financial figures with economic data to create charts to facilitate management decision making.

e) Academic qualifications becomes a performance art.

In a nutshell, with multiple streams coming in each profession from JC, diploma and ITE programs. The only competitive advantage left if that you need the ability to relearn and reinvent yourself - and show employers that you can do that. Accountants can learn from computer scientists and engineers that in the face of competition, engineers don't really fight fair. Engineers know how to look after themselves and will compete in fields as diverse as banking, management consulting and would happily leave traditional sectors to die if they cannot give them the pay they deserve.

What matters is that the graduate continue to signal to the top employers that they make potentially great executives who can bring value to the shareholder and make their bosses look good. This is a performance art as prestigious degrees continue to have this strong signalling effect along with years in great brand name companies.

This article may end in a cynical note for some.  

Making the chartered accouting qualification to both degree and non-degree holders will not create a society which emphasises skills. Instead, brands and qualification-signalling will matter much more than skill once everyone fights in the same arena and have access to the same qualifications, the Singapore government can try to create a mindset change but this would take decades of social engineering to work.

Lessons for Investors from my last Karaoke session !

Yesterday was the highlight of my school holidays as a very generous classmate took the initiative to organise a karaoke for us. The location was at K Suites at Orchard Parade hotel, as we are all SMU students, we pay $18 per head which was relatively cheap as it is a short walk from Orchard MRT station.

As you guys might be aware, there is a significant age gap between my classmates and me. My classmates are mostly over a decade younger than me. Some of them who did not go to a karaoke with me before, and snarkily asked me whether I was going to sing Theresa Teng songs. I think they were somewhat amused when I showed them that I was actually quite a Miley Cyrus fan and did Wrecking Ball to keep them entertained.

( On hindsight, I should have twerked ! This generation of youths love twerking !)

Which is about today's topic which is Openness to New Experiences and what it can do for the investor.

I hang out with folks a generation younger and I am quite grateful for the experience. When I go karaoke with folks my generation, the songs are really different. We sang Bohemian Rhapsody and some of the dudes in my generation still sing Abba or Eagles songs. Actually you can assess a person's openness to new experiences just by observing their song choices in a karaoke, if they are stuck in a time loop within their generation, it shows a lack of openness to new experiences. I actually take notes on my iPad to note down what my classmates sing and I was able to keep in touch with the later songs - I picked up One Republic's Counting Stars that way.

I think this new economy is not so much for the young and old but there is a significant advantage of openness to new experiences.

We are witnessing yet again a new form of downturn which affects commodity stocks and the knock on effects is that the great industries of the past may no longer be attractive investments. In particular, my view is that retail is seeing what I would think a permanent downturn as more Singaporeans turn to shop at Q0010 - Funan Centre is the first of such casualties. Stocks like Comfort Delgro would also face disruption from Uber. Even fossil or bio-fuel related industries look bad as governments are now trying to massively adopt solar energy.

Investors need to be cautious but open to new ideas. Crowdfunding remains risky but can draw 8-12% annual returns but I recently got burnt by a default from a small local beauty company.

At a personal level, I'm not too sure that 2% growth in the Singapore economy would not affect corporate legal practice ( Disputes arise from disagreements about money, so less business, nothing to disagree about ) so I am also becoming more open-minded towards community work.

When we talk about openness to new experiences, we need to distinguish between two forms of open mindedness. We should avoid one and cultivate the other.

The first form which is reflexive open-mindedness makes a person unconditionally accept everything. Low IQ people tend to accept bullshit from Deepak Chopra like his now-famous  "Attention and intention are the mechanics of manifestation". A reflexively open-minded karaoke sings everything without curation and understanding the audience. That is why I sang Taylor Swift and Miley Cyrus with my classmates yesterday and did not do any Abba or Dennis DeYoung numbers.

The form of open mindedness which investors should cultivate is reflective open-mindedness which is to push new ideas through existing mental models before accepting it with open arms. For example, I stopped funding lending campaigns with a default rate rate above 16% because they were irrational based on projected expected returns estimates.  I would always stick to fundamental measures like dividend yields even when dealing with new economy stocks.

Similarly, a good karaoke kaki needs to have a filter with what constitutes bad taste.

For me bad taste in music would always include anything by Eric Clapton, Depeche Mode, Phil Collins or Timmy Thomas. ( I like Justin Bieber ! )

What Satay Bee-hoon can tell you about your financial future.

As I am still in a holiday mood, I'm just going to write an article about my life in general. 

The past couple of days have been unusually stressful. As I have only 3 weeks of holidays, I decided to rush through my computer gaming and ended up solving Legacy of the Void in 4 sittings at Casual mode. Playing games at the same intensity in law school is not particularly fun but I think that game wrapped up the entire Starcraft storyline quite well and I'm not too sure whether a Starcraft III would even be possible after this. 

Today, I finally completed the game but I am too too mentally tapped out to play anything else so I decided to get into some really serious instant gratification in the form of retail therapy - I went ahead and bought an Apple Pencil and Apple Keyboard from a friend who was willing to give it up at the same price as the Apple store. I guess this was a win-win deal, as I really don't want to pay a ridiculous amount on Carousell but really want to start doing some early semester 4 preparation this week with my ipad instead of my usual Macbook Air. 

After reeling the psychic damage of seeing my young and fabulous classmates leave the country to travel to places like Japan has forced my hand into erecting a psychological defence of my own. I, too, have to go to my happy place after my exams.The main event for me after my papers is taking my family to Beauty World which led to the idea for this article. Beauty world has strong nostalgic appeal for us kids who studied along Bukit Timah road in the 80s and 90s. 

Beauty World is going to see a resurgence of traffic due to the new Downtown Line but currently exists in a time capsule. Most of the stores I visited when I was a secondary school student are still there. I bought a Fallout 2 game for $5 from Beauty World Bookstore and found every excuse to buy some cheap toys from Grassland Book Store. 

One of things I ate there was Satay Bee-Hoon and I was very glad that it was able to capture the old taste of what Satay Bee Hoon should be. The modern interpretation of Satay Bee Hoon is too vile for me. It generally tastes like boiled rice noodles suspended in peanut sauce. At the Beauty World Food Centre, you can still find really good Satay Bee Hoon and herbal Mutton Soup for decent prices.

But what do we really mean by decent prices ? 

A satay bee hoon costs about $4 these days and the mutton soup with mixed organs costs about $8. ( Do note that this is still a hawker centre and not a food court. )

As a REIT investor, I can imagine what landlords who own the strata title units have been thinking these few years. With the downtown line bringing in more customers in the future, rents should have been on the upward climb of late, we can't even blame the hawkers for charging these prices. Instead, I believe that our food culture should be preserved and I see that in the future the labor costs of preparing the food will take centerstage with food like Satay Bee-Hoon seeing a price escalation beyond the rate of inflation in Singapore. 

Perhaps in the future, I speculate that the food landscape would be like this :

The low-end economy will continue to be serviced by economic rice, beehoon, Indian prata and thosai. Hawkers from China would be required to provide a valuable service for lower income groups so we can expect to continue to get Sze Chuan food at affordable prices. Its necessary to have this tier for every worker in the country. The new normal for food is going to be bleak and largely based on what foreign migrants bring to the table.

However, I expect food like Laksa, Satay Bee Hoon, Char Kway Teow, Oyster Omelette, and Sambal Fish to gradually push upwards in pricing to be on par with 'Melbourne' hipster food ( Which in my opinion is hilariously bland and uncreative ). Local food of this category are "kung fu" based, quite "leh-cheh" to prepare and genuine talent is required to cook up a good dish. On balance, as we Singaporeans are patriots when it comes to food, we have to be prepared to pay more so that these masters can aspire to a better lifestyle. Let's stop expecting hawkers to subsidise us and we should be willing to let them become millionaires too.

What this means is that our financial future would be different from our present even after accounting for inflation, if we wish to maintain a consistent allocation of our finances to food, we should expect a drop in quality. Otherwise, we could be looking at spending more.  

There are staples which we can order on a regular basis like economic rice and prata which would more or less continue to be affordable but a real treat like Satay Bee Hoon or Herbal Mutton Soup would be priced out of reach of a regular meal-goer as we expect to eat food like this as often as we visit the hipster cafes. I also expect a future where more people find it cheaper to prepare meals at home. 

As of now, I will be spending more time at the Bukit Timah shopping belt this holidays. It would only be a matter of time before the big developers will find a way to buy up the strata titled properties and the Beauty World of today would one day become yet another heartland mall with the standard Uniqlo, G2000,Cold Storage and Challenger outlets found in all the Heartland shopping centres. 

And that is what we call progress.

On PSLE, self-worth and net worth.

One of the interesting things I've notice is that for quite a number of years since the 2011 elections, the reports on PSLE result have changed dramatically. There is no longer an emphasis on raw PSLE t-scores in mainstream media. Instead, newspapers prefer to celebrate students who overcome many obstacles in life to do well in the exams. This is good social engineering.

However, starting this year, there is a new kind of phenomenon.

Singaporeans are coming out in social media to talk about their so-called poor PSLE results and, in an attempt to make the kids feels good, remind them that it has not prevented them from succeeding in their lives. In some cases, theses stories are, indeed, a welcome change to the PSLE narrative in Singapore - Josephus Tan, a great criminal lawyer and an idol truly worthy of worship by law students in NUS and SMU (myself included and he's younger than me), put up a very inspirational update and shared with everyone his 183 PSLE score telling kids in Singapore not to lose hope.

While these updates are great, I think that there is a darker side to these messages of inspiration.

In other quarters of the Internet, perhaps among friends, I am detecting a whole new level of humble-bragging. That's right, there are folks who have no intention of using their PSLE grades to inspire kids who did not do so well, they want to use their poor PSLE grades to bludgeon the so-called winners in the PSLE game in the past. These messages are horrifying simplistic social media fare, done often with allusions to the scholar caste lacking EQ.

Today I will use statistics to show you guys how to defuse these demotivating messages which are clearly aimed at cutting down adults and not really done with the intention to inspire kids who did badly in an exam. Readers need to armed with the cognitive tools when they see an Emporer with no clothes.

The first approach is to look at the PSLE bell-curve. In this link to the Kiasu parent's website, we can find in a typical year, how does an average PSLE student perform. And the answer is simple :

The mean score is about 200. The standard deviation is about 25 points.

So if you score 250 for PSLE that's about 2 standard deviations from the mean so you are about top 2.5%. Josephus Tan with his 183 PSLE score stand in the lower quartile, so his claim of being below average is genuine. In a very exam oriented society like Singapore, I can believe that society probably wrote Josephus off when he was 12 and if he has a chip on his shoulder, it's fair.

But let's move on...

Now let's turn to the more sensitive topic on national income and wages. In report on salaries in the MOM website,  the median salary before taxes and CPF is $3,770. I made very rough calculations on standard deviation and found it to be around $2,115.

So suppose Josephus Tan's social standing remained the same since PSLE and he has an income in the 25th percentile. Based on my back of the envelope calculation, his salary would be $3770 - 0.68 * 2115 = $2,331. Now as you can imagine, I really don't wish to guess his real income, it would definitely be many times what it would have been if he was not socially mobile. That's not even counting the amount of pro-bono contribution he has made to the nation at large.

As such, stories that shared by Josephus Tan have real aspirational value to all Singaporeans. They not only demonstrate that PSLE does not matter, they are a testament of how socially mobile Singaporeans are.

Now let us turn to kind of de-motivational messages created by adults to bludgeon each other in the rat race.Typically the kind of low scores people claim to have are not really low scores at all.Imagine a person who humblebrags about his low score of 220 which is one standard deviation above average. His score might be low in the office full of Class S superheroes, but it's actually quite good at the national level.

The next issue is that his salary would really need to spectacular if he wants to humblebrag. If he is not socially mobile, his expected earnings should be about $6,000 a month. I do expect bragging rights to be barely earned if a person can earn one standard deviation or $2115 more than his PSLE percentile score.  So for this guy who scored 220, he would need to show a salary of $8,115 to be able to get into pissing competition with any of his peers.

So, as a self-defence mechanism for adults who have going through mid-life and finding that your life outcomes are not as successful as your old glory PSLE days, maybe you can try this self-defence technique:

Maybe the problem is not that Mr. Humblebrag is not doing well enough in life to rub you in the face, but his PSLE score is simply not fucked-up enough to claim that's he's such a dramatic turnaround.

What is the moral of the story ?

Socially engineering an outcome to dethrone and muffle the acheivements of a few PSLE 270+ Class A Rafflesians superheroes will just create a caste of turnaround warriors eager to sit on the Singapore Iron Throne of one-upmanship.

Question is, are you prepared for your new overlords ?  Kiasu parents obviously don't, they are collecting data which has been censored in the press.

With my own score of 255, I was constantly reminded when I was a kid that I was not in the big leagues even though it was a decent score. It's funny on hindsight but it took me several years to recover from my failure of not being able to get into RI. Like may readers who also are fans of One Punch Man, I feel like a Mumen Rider kind of hero, Class C at the edge of Class B but certainly not at the level of  Genos, Amai Mask or Puri-puri Prisoner.

Now as law student, I now have a income of zero ! Singapore has great social mobility for my 97% percentile PSLE to become an unemployed 0th percentile peon !

So the irony of writing this article is not lost on me.

Thankfully, no one came up to me to to say that I'm not even fit to intern for Josephus Tan yet.

Exams are over ! Quick update on my life.

My last paper was today. I'm going to take it slow and slowly get back into blogging.

First, a quick update.

With 3 semesters of law school down, it has just dawned upon us that Law School is not easy at all when you compact it into three short years. Even the elite RJC types who made it into a LLB program needs 4 years to graduate, most of us ordinary mortals of the JD program who used to working Joes should have seen the suffering and pain coming a mile away. I can only say that my CFA preparations I made a decade ago actually helped me trace a convertible bond and figure how issuing it to the wrong party can amount to unlawful financial assistance.

( Incidentily, here's wishing good luck to the CFA candidates this weekend ! )

But through all that suffering, this third semester has been intellectually very satisfying. We picked up information about property and corporate law which would have been inaccessible even to conscientious folks with a good search engine.  But the price to pay was high, some of us were not prepared for just how difficult this semester was compared to the chump change which was year 1.

But apparently exams were the least of my problems.

During exam preparations, I discovered that my mum was ill and now needed to have an operation just before Christmas. We were fortunate as the problem was detected early but, I have spent some of my exam prep time reading my notes in the hospital. Needless to say, for the rest of this short holiday, I am worried sick and my focus would be on reading some books and my family.

[ Initially i wanted the readers to join me in my quick journey to become a full-stack internet marketer and produce a few e-books for sale but this plan is in the back-burner now as I am going to start my reading up for semester 4 as early as next week. ]

a) No change to the situation in world markets.

The market remains in  a bearish mode. China is still facing a downturn and we are still bracing for the Feds upping their interest rates. The upshot form all this is that REITs may actually look better than other stock investments because they are the least bad in terms of prospect.

I have no idea what would happen next but I think we'll be better served being defensive about the markets. If the STI PE ratio hits about 11, it might be a good time to start bargain hunting.

b) Bought myself an iPad Pro.

During exam season I did put up some of my money to buy a high-end iPad Pro so that my cases would look larger when projected on a 12 inch screen. As of now I an still waiting for the Apple Pencil and Keyboard to arrive in stores so that I can see if I can start creating my notes on a tablet.

I do look forward to getting an Apple Pencil as it might give me some opportunity to release some stress when I can start sketching some fantasy monsters on my iPad.

c) Readings   

My first act when I completed my exams was to finish reading Empire of Imagination by Michael Witwer which is a biography on Gary Gygax, the creator of Dungeons & Dragons. My exam preparations really taught me how to read quickly and I could project it in large font on a 12 inch screen.

More updates will come as I try to finish up the books I have accumulated on my kindle since the past 3 months. This seems to be the only activity that I achieve some flow in these days.

d) Hobbies

I did try to pick up some games today but I guess I was to shell-shocked to focus on computer gaming ( Imagine that ! ) Sword Coast Legends was a huge disappointment as no attempt was even made to make the game look remotely like Dungeons & Dragons.

Disappointed with SCL, I bought Legacy of the Void to see whether I could just relax with a RTS game and it turns out that Protoss units are so elaborate that I no longer have the willpower to micromanage my zealots to even complete the first campaign.

Failing which, I do have a final option. My awesome Millenial classmates informed me of a new 4x Fantasy game called Sorceror Kings by Stardock which looks like the kind of addictive strategy game I loved decades ago.

That's all I have for now.

Catch you guys again over the weekend.