Wednesday, January 27, 2016

Thoughts on being a father a second time.

Last night, my son Durendal Ng Mun Khoi, was born. It was a happy day for me and my missus and right now, mother and son are doing well.

There is some excitement over why I chose such a strange name for my son. Durendal from what I gathered from the web is also a card in some collectible card game. If it is spelled Durandal, it's  the name of a kind of bomb which is used to penetrate airport runways. So on first inspection, it's quite a ferocious name.

For our case, Durendal is named after a holy sword wielded by an Ancient Frankish knight called Roland who served as one of the paladins under Charlemagne, the first Holy Roman Emperor and the founder of Carolingian empire in Western Europe. If you play a lot of RPGs, this is the origin of the Paladin class.

But more importantly, embedded in my son's name is the french verb "durer" which is "to endure" or "to last".

Most fathers can write about their hopes and dreams of their newborn son and how optimistic they are about the future. I have decided to take the opposite stance and share with readers the doubts I have about Singapore society that Durendal and his elder sister Clio ( who is named after the Muse of History ) would have to navigate in the future.

Naturally as a father, I will do everything in my power to help them thrive, but I doubt that the world that Durendal and Clio will live in would be better than ours.

The future of Singapore may not be lived by its citizens, it may have to be endured.

a) Children always revert to the mean through generations

Without even seeing my kids in school, I can sort of predict my children's IQ.

If a solid lawyer-doctor couple with 150 IQ each. Their kid's average IQ would not be 150 but 125 - The mean of father and mother's IQ then averaged against 100. That's why you may hear of ministers being somewhat disappointed with their progeny. It's actually built into our genetic code. Things always revert to the mean. Without even taking an IQ test, parents are better off assuming that their children are average and start planning for it.

And as it turns out, thing don't look bright for average Singaporeans.

b) Average is Over - Actually being average downright sucks !

I used to write about the three kinds of work following the ideas developed by Robert Reich over 10 years ago. Manufacturing, Service-oriented and Symbolic analytical work. Things will shift even more dramatically against manufacturing in the future. And services jobs are being automated even faster - we are not even sure if taxi drivers would even exist in 20 years time with driverless cars being tested right now. Worse, symbolic analysts are losing their jobs at a rapid rate because of huge paradigm shifts and the rise of artificial intelligence. Server support administrators used to be able to support 16 machines per head count with solid pay. These days, thousands of clustered virtual machines can run a business conglomerate in a cloud.

As of now, the sexiest jobs go to those who manipulate machines to manipulate symbols. Being a strong programmer is not enough, you need solid statistical skills and enough domain knowledge to solve business problems in your industry. Look at what Fintech is doing to our banks. It's only a matter of time that someone comes up with some sort of Lawtech to disrupt the legal industry  ( and if no one does, I am going to just do it myself. )

Perhaps only 1% of the human population can do the work required to manipulate these machines because they require so much logical and mathematical proficiency. After that, in order to succeed in solving a useful problem they must also achieve mastery in a business domain. Then you have to manage the different specialists at both ends, programmers and salesmen to accomplish your vision.

The average Singaporean cannot do this.

c) Educational pathway for the average Singaporean is still inadequate.

Average generally means someone who cannot qualify for a non-local degree. The 50th percentile would need to settle for a Polytechnic diploma. The good news is that while I was in charge of, I was aware that the Government was already investing $1000 more a year on the Poly student compared to his or her JC counterparts. The question is whether the investment is bearing fruit for the Nation ?

From this very brutal but logical posting from Limpeh, the pathway for Poly graduates is not world class yet. Paying for a private degree will signal to gatekeeper that you are not good enough for a decent job and it costs a bomb compared to a local degree. But what Limpeh hints at is much darker. If a parent pays for private degree, the kid would go through it and thinking that they are superstars in their own degree programs, which really isn't as competitive as the course administrators claims to be, graduate with a sense of entitlement.

There are a lot of admirers for the German apprenticeship system. But the German economy has a network of Mittelstands or family-owned world-beating SMEs who can give craftsman a decent career.

We don't. We just have SMEs who want to stick their hands out and ask for government help to bring more foreign workers who can tolerate being underpaid and abused.

d) We are a yardstick society

Regardless of the well-meaning words of our politicians, Singapore has always been a yardstick society.

But it's not the government's fault.

If women continue to see men as a pillar for financial support, then the yardstick will always be about income and wealth. The men who are likely to start families with the most good looking women would always be the pilot, lawyer, doctor or accountant. Economic growth in Shanghai was rapid because Shanghainese women do not care whether you are short, tall, ugly or handsome. To get Shanghainese women to say yes,  give her an apartment. Even now China is expecting more than 5% growth in a horrific year.

The solution is not to get rid of the yardstick but finding space for different yardsticks.

And we did try that too ! Resulting in the DSA program which led to RI being shamed even though they remain an elite Tier 1 institution.

In Conclusion - What does it mean for baby Durendal ?

It means daddy may not bring you into a better world which was promised to daddy when he himself was born in.

We will not know whether you will become the sword of your father's ambition, but you must endure.

There is a genuine possibility of Peak Singapore - a point of prosperity which heralds a golden period for us and then it's downwards all the way. Problem is that we may have reached Peak Singapore 2 years ago.

But as of now these are the plans for my kids :

a) I spare my kids form enrichment classes except perhaps swimming and cycling. Kids need to play to develop their imagination. I had Dungeons and Dragons which defined a huge portion of my life.

b) Tuition money is invested into a portfolio to be compounded and released until they start working. My kids need to enjoy learning to  have hope of becoming the top 1% of knowledge workers. Tuition may not be best approach unless they reason with me that they need it but they need to learn independently. I will be personally very hands-on in this area as I expect to cover the Science and Arts subjects with ease by then.

c) If they cannot get into the JC track, they are expected to start work unless a local university admits them. If they are not academically inclined, why force them ? If my plan works, my kids would be able to tap into any online course material to pick up the skills they need.

d) They will all learn to manage money. Money management is where average folks have a great advantage over the sophisticated intellectuals. This is where there is plenty of evidence that active managers underperform passive ETFs.

Saturday, January 23, 2016

Personal Update : Two years have passed since my last paycheck !

It's time for a another update.

It's been two years since I had a pay-check, if this were a disaster recovery exercise, I would say that it has been rather successful so far as I still did not draw upon my capital.

a) My son is not here yet.

At the personal level, I am waiting for the birth of my son. It can happen any day now. Right now I am more afraid than my wife who seems to be quite calm.

b) Financial markets

For all the doom and gloom, the markets did not faze me at all.Maybe I have more urgent priorities balancing school work with families.

Results wise, like most of you I continued to lose money since the new year. However, as my portfolio is defensive in nature with a beta around 0.5, I tend to lose about half of what the STI would lose. I will recover a bit every three months when dividends get issued but I can only farm back about $2000 a month this year as I should be focused on my family expenses.  As my savings are humble as a student, I would be putting it to reinforce some of my heavily beaten down small cap dividend positions.

But this is a great time to have a job and savings !

The STI ETF is yielding a big fat 4.2% and trading around a P/E of 12, so stock selection is not really required to get a good price from the markets. It might be time to start hankering for a SG-REIT index ETF, at a time like this passively holding such an index fund would lock in about 7% yields, not bad at all if you are planning for retirement,

Yes, the main thesis is  doom and gloom and this would have to run its course.

But are things that bad ?

Chinese manufacturing may be contracting but China might counteract it with a growing services sector. A lot of consolidation may stem from corrupt officials curtailing their spending. The economy may well become even less corrupt and the Chinese economy might become cleaner and more transparent over the long term.

Oil prices are low and oil firms are suffering. Sure, this is bad for oil firms, but households can now have more income for other things after spending less on gasoline and petrol. I imagine a GDP surge in some economies which are dependent on oil. I can also imagine companies making quite a bit on the re-opening of the Iranian economy.

Singapore real estate is heavily regulated. Prices will hit a low but the government can remove some cooling measures and things may rebound after that. Real estate prices are something that's never out of the government's control. Nevertheless, if you are betting on real estate going up indefinitely, you might be wrong over the long term as SIBOR is not going your way at all. ( I bought an EC. I was  betting on price gap narrowing between my EC and private condos around the area over a period of 10 years which is different kind of gamble. )

At this stage, I don't think things will be as bad as painted in the media. My bet is that markets may be down slightly, up slightly or up by a lot. But markets are unlikely to be down by a lot in 2016. One upside is the TPP although the consensus is that SG would not benefit from it that much at first.

As in all bear markets, there are market neurotics who say that the sky is falling, these are the buggers who have no business buying any stocks. There are also non-investors who are spreading gloom because they have no skin in the game abetting the neurotics to further depths of despair.

My job is to stay calm, keep in touch with the news and continue collecting my dividends and use my new found legal skills as a fall back plan. Markets will recover eventually and it's good to come up with a plan to exploit that after all the neurotics have fled and their homes have been foreclosed.

c) School - Finally started to look for an internship / training contract !

I've been procrastinating in this area. I spent my first year clearing my community service requirements and the last holiday was spent worrying over my mum's health problems. But I can't procrastinate anymore as I fear that my grades would drop to a point where I would not be welcome in the better firms in Singapore.

There is also the shadow of ageism lurking in the corner as I know of seniors my age who have not scored a TC yet. So today, I seem to be the only Year 2 in a Legal Career fair for students to find training contracts and internships. I left my resume with some firms and one fairly large firm is already showing interest in my profile. I'm crossing my fingers that I can get a TC by this semester.

Anyway, this semester seems more ridiculous than the last one, some of us get out of lecture rooms visibly confused. There is now no attempt to systematize or build a framework around the course material anymore. We are at the deep end. Everything is a just a stream of consciousness, not unlike the last two David Bowie music videos....

d) Books I an reading

I am actually going to stop my Economist and Edge subscriptions to clear my backlog of books. I am reading a very amazing book by Cal Newport called Deep Work.This books has interesting insights which fundamentally change some of the ideas in my own line of books.

This will be discussed in another posting soon enough...

Monday, January 18, 2016

Does nobody really owe you a living ?

Mr. Chan Chun Sing, in my humble opinion, may well be the best Secretary General in NTUC we would ever have. He gave a talk in NTUC while I was still an IT Assistant Director there and to get the ball rolling, I tried to corner him with a tough question on social mobility. I felt he handled the question well and from a rhetorical perspective, balanced logos with pathos. He had to bridge the elite-union gap which was not easily done. On the whole,  he was logical but also connected with the union leaders and explained assortative mating in simple terms which I felt was very impressive.

It was no accident that he soon become the Sec Gen of the organisation because he, too, came from humble beginnings.

I would like to welcome Mr. Chan into the blogosphere. You can find his first article here.

Now, that being said, I do not wholly agree with his first article.

The idea that "No one owes Singapore a Living" has been with us for 50 years. We have been using it to exhort our workers to work harder and smarter. Economies have been changing and we continue to use the same battle-cry over and over again.

I think after 50 years, Singaporeans know damn well that as a non-welfare society no one owes us a living. Advancements in the modern economy actually demonstrates that in the case of investors like us, quite a lot of folks owe us a living.

If you own a bond, the debtor is contractually required to pay you interest. A REIT holder is entitled to 90% of dividends paid to the trust to maintain tax benefits. While dividends are not assured for equity holders, minority shareholder have the legal recourse to fight shareholder oppression and in some cases, may even sue on behalf of the companies against the directors.

Play the game of finance well, and you might even be able to set up a trust for your loved ones in the future. Beneficiaries of a trust can take legal action against a trustees. There are the ultimate guys who are owed a living from their trustees.

Another words, quite a few parties owe capitalists a decent living.

The problem of course is that few workers are capitalists and in such a case, nobody owes workers a living.

I doubt NTUC has a plan to help us survive the Second Machine Age where society gets run by algorithms, my personal defense is to used these algorithms in industries which do not expect to be disrupted by them,

Now that being said, NTUC needs to confront the narrative which has led to Singapore's state today :

Religion is not the opiate of the masses.

The opiate of the Singapore masses are jobs !!!

Maybe authorities need to consider some ideas I have shared in this blog :

a) Push financial education into a Life Skills module for secondary school students and more flexibility for CPF investors.

Modules need to cover some basic financial planning and office automation skills. If Singaporeans retire early via investment income, it frees up jobs to be taken by others. Understanding financial independence starts at a young age. We should also allow Singaporeans more access to our CPF savings. nothing manifestly unfair if CPF account holders be allowed to invest 100% of their OA beyond $50,000 and be entitled to excess dividends beyond the 2.5%.

b) As a society we need to inflict a moral burden on the top 5% that they need to start businesses and create jobs for the rest of the 95%.

The rich can survive business failure and owning a successful enterprise can be a  badge of honor. This means retooling the scholarship system to recognize rich students without bonding them or subsidizing their studies. Put them in a special programs to grant them access to venture capital and business networks.

c) More government jobs of last resort which provide some shock therapy to older workers. 

No matter how you look at the problem, there will always be worker in their 40s and 50s who cannot develop new skills and no longer have taxis to drive because cars would be driverless soon. And the hard truth is that your mind closes at middle age and you no longer as fast as your younger colleagues - olders workers can be stubborn, dogmatic, and very annoying.

To plug the gap, a drastic solution involving an employer of last resort needs to arise from our uniformed services. Of course defence is rapidly modernising and becoming knowledge driven by the state needs to consider 6 hour a day jobs at small wages for middle agers. We are too slow in creating School administrator and low level health care workers within the system. Some of these jobs may be transitionary jobs which allow older workers to rejoin the private sector.

Sometimes, as a middle-ager myself who directly competes with Millenials for class-room distinctions, the government and some companies may need to seriously slap some of us around. A life spent making money in 20s till our 30s and raising kids gives some of us a mindset of entitlement. If we did not train our mental muscle to save money and pick up new skills when we were younger, a system of employment needs to be built to initiate that shock therapy to get olders to wake up their ideas. Behavioural economists are best placed to generate these transitionary shock therapy jobs to zap older workers to become productive for the economy.

All in all, I am very glad that the Sec Gen of NTUC finally has s blog. I consider myself a dissenting ally who can look into each blog posting and find ways to build on his ideas.

The idea that "Nobody owes us a living" has had a good run. Singapore has accumulated reserves over 50 years and own many bonds. The bond issues do owe us a living.

When thousands of workers and unionists start learning and earning  to become capitalists and shareholders, we can move beyond this slogan !

Friday, January 15, 2016

Net Present Value of Suffering.

This post is inspired by the large number of articles in response to the release of the O level results. Well meaning educators start to assist readers in choosing between a Polytechnic and a JC. One of the ideas which has been around since I was 16 years old is the idea that if a person is academically inclined, he should go JC and if he is practically oriented, he should go to a Polytechnic. Throughout the 90s, the same argument was used to help A level students choose between NUS and NTU.

Before I begin, I'd like to say that even if you are an elite super-scholar married to a medical professor, policies concerning Polytechnics are important to you. Reversion to the mean in IQ means that while IQ is heritable, children of elites will be on average only slightly smarter than the median population. The median Singapore is unlikely to have a degree given that about only 25% of the population are entitled to get degrees. This means that even elites benefit from government policies which reinforce Polytechnic education and apprenticeship programs.

Back to the usual advice to O level kids, I don't think this advice is helpful at all.

70% of JC students get to go to a local University and get a ticket to the middle class. A local university graduate starts at $3300 - $3600 a month. In contrast, 20% of Poly students get into a local University but they get to develop useful industrial skills which net them $2100 starting pay if they start work after getting a diploma.  The argument about academic or pragmatic inclination melts in the face of national income data. Everything boils down to whether you are confident as to whether your child can be top 70% in a JC or top 20% in a Poly. If not, a Poly should be chosen regardless of your child's inclination because it guarantees a set of industrial skills.

I will propose a different question :

Instead ask yourself, can your child suffer ?

Unlike Polytechnic educators, JC educators have KPIs tied to A level results. JCs whie being cheerful on the outside can be quite cruel to their weaker students. Weak students are "counselled" to drop subjects so that the numbers of the JC looks good. Strong students who take H3 or S paper get to enjoy a more collegiate relationship with their lecturers. Worse, the workload of a JC student is 40 hours a week compared to 25 hours a week for polytechnic students. JC students need to hit the ground running. I suspect a lot of humanity is lost in those 2 years and I suspect makes JC students more Machiavellian and narcissistic.

This question reflects a broader truth about Singapore as hinted by the Buddha eons ago.

Life is suffering.

Suffering is spread over the lifetime of an individual but suffering can brought forward similar to a discounting mechanism.

The choice of the JC brings suffering forward but slightly discounted. If you fall into the 70% you stand to get a quick ticket to the middle class and enjoy a salary 50% above diploma holders.

The choice of a Poly is not an inferior choice. You can get into the top 20%, you maintain your momentum. But if you fail to get into a local University, your route would be more circuitous. You can still make a lot of money becoming  a top salesman or an entrepreneur but each option has its own hardship and requisite amount of suffering.

Where government policy comes into the picture, tweaks need to be made to Polytechnic programs to balance the option against JC's ease into the middle class. This means creating apprenticeship programs which also allow skilled workers to have a good life. This is in effect, increasing the discount rate of suffering when students pick the Poly route.

So in balance, if you have just received your O level results and contemplating JC or Polytechnic, the proper question to ask yourself is :

Can you suffer ?

Sunday, January 10, 2016

Singaporeans want an Australian Singapore, not a Singaporean Singapore.

G'Day readers !

If you really think about it, these days Singaporeans want an Australian Singapore, not a Singaporean Singapore. The story in the public is that these days is that Singaporeans are clamouring for more work life balance - what is thought to be abundant in Australia. New workers joining the work force are starting to engage the HR departments differently than the Gen-X workers in the past. Gen-X workers like myself want rapid progress and pay escalation, they just want to claw their way up the ladder. The Millenials tend to be more balanced and want to have leisurely pursuits.

Things got into a spin when NMP Chia Yong Yong replied to a query from a polytechnic student on whether the Employment Act should be amended to give workers more work-life balance.

While I personally do not agree that amendments need to be made to an act to limit working hours of Singaporeans, I actually found Chia Yong Yong's tone quite patronising. While her short reply was logical, it lacked pathos and ethos. Personally, I found her speech distasteful not just because it showed a flagrant lack of understanding of why Singaporeans now want more work-life balance, it is particularly disturbing when a lawyer can go up to a polytechnic graduate and and position his request into that of a trade-off. Chia's message was that if a polytechnic graduate works less, they will lose their competitiveness and cites her clients comments to back her reasoning.

Lawyers work punishing hours. Casualties in top law-firms are real - terminal illnesses and broken families and relationships are aplenty. My seniors who doing their training contracts are working up till 5am in the morning and have to return to the office at 9am the next day. But the legal industry is also one with huge barriers to entry. To get admitted to the bar, you must have a law degree from a limited list which is approved by the Ministry of Law. My seniors who are on-track for equity partnerships know that there is a heavy personal price to pay for success, but there is a genuine possibility of success. More importantly, in my opinion, lawyers are very much insulated from foreign competition compared to polytechnic graduates.

On the other hand, polytechnic graduates expect different life outcomes. Statistically their salaries have only increased recently after being stagnant for two years. Starting salaries are about 40% that of the starting salaries of a lawyer. More importantly, most polytechnic graduates along with other university graduates face a market with very aggressive competition. He can be working alongside Malaysians, Chinese and Indian counterparts - many with Masters degrees willing to do the same work for lower pay.  There is no guild in Singapore restricting workers to a list of just a few polytechnics. In the same way, we Engineers have the same problem. Does IES ever tell the government that engineers must graduate from a list of 15 universities to work in Singapore ? No, we've always had to deal with foreign competition that keeps us drawing lower salaries.

My second argument which I think Chia Yong Yong really needs to think about is that while Singapore workers are competing with foreign workers, Singapore must also compete to keep it's own people from leaving for places like Australia and New Zealand which may levy more taxes but provide more work-life balance.

I had a deep meaningful chat with a classmate weeks ago. I was actually in admiration of his personal success. He married earlier than me and had secondary school-going kids. He has a decent 6-figured annual salary which is government backed and his children are doing one to two standard deviations higher than the median in school. But he feels that he does not have adequate reserves to retire and is contemplating emigration. His figures out that if he contributes a decade to the Australian economy, he might be able to get welfare for the rest of his life.

Chia Yong Yong needs to understand that it is the folks who are doing statistically well are thinking of bailing out.

My third argument is that the nature of work-life balance is that we need it as we get older and reach major milestone in our lives. Yes, the polytechnic fresh graduates wants to consider more work life balance but so does the married person who just had kids. Older folks can't pull in 16 hour days. Based on what I have googled so far, I can't seem to find evidence that Chia Yong Yong has a family of her own.  Is Chia Yong Yong implying that, for the same reasons, a female lawyer who just had a baby would also make Singapore less competitive if she wants more work-life balance ?

So what is the solution ?

I hope readers appreciate that legislation is not the best way to solve problems. Given that I do not work and chose to spend 12 hours a day reading legal textbooks and cases, I might know a thing or two about cutting time spent in the workplace.

The solutions actually lie with ourselves.

As it turns out, the Stock Market can give your your Australian Singapore.

The Australian welfare system provides about $1,000 SGD a month. A portfolio of $150,000 yielding 8% can provide this payment. A Singapore worker can calculate what his taxes would be in Australia and start building a portfolio with the difference in amounts as our taxes are much lower. If you are a fresh polytechnic graduate, you might wish to consider spending your 20s struggling a bit to build a career and establish this portfolio, get some overtime down your belt before you become encumbered by a family and mortgages. All you have is energy and youth.

A young person can forego your work life balance short term and achieve your Australian Singapore goals over the long term.

Ultimately, work-life balance does not occur at one point in time.

There is a time to work like a mad man, and there is a time not to work at all. If you look at your lifetime in totality, you will probably achieve the work-life balance you deserve.

My seniors suffering at the office pulling in 20 hour days may one day just spend 3 hours golf in the future when they hit my age. But that would depend on whether they can resist the lure of conspicuous consumption which we would talk more about one day.

Monday, January 04, 2016

The $5 latte solution is not as radical as it sounds ! [ Yayy ! Got featured on the Business Times. ]

Today is a great day !

My classmate came up to me and told me that I am featured in the Business Times today. Naturally, I bought a copy and as it turns out, I was mentioned in one paragraph on page 12 of the Business Times in the BT-Citibank Young Investor's Forum in an article titled The $5-latte problem and a radically conservative solution by Cai Haoxiang.

The context of the article is to talk about the feasibility of a salaried worker becoming financially independent if one starts saving at a younger age. I thought perhaps I put in my own thoughts to build on Mr. Cai's article.

So, yes, it is true, I eschewed Starbuck latte most of the time in my 20s and 30s, but I bought latte whenever there was a Christmas special - I particularly missed the Egg Nog Latte which was discontinued many years ago by Starbucks. I even ordered a Pumpkin Spice Latte last year when I started to wonder what all that fuss was about.

I think the $5-Latte problem has a lot of traction because it is  quite easy to understand. But in truth, if you do the math of saving $4 of drinks everyday or sock away an additional $120 a month,  it would be hardly enough to really get you into the financial independence zone in your 40s.

For intermediate readers, we demand a more rigorous approach to classifying our wants so that we can meet our early retirement goals with higher probability. If you are a regular on this blog, it would inevitably require becoming more philosophical about your personal finances.

Let's take this to next level and think about three kinds of products that we tend to encounter. My inspiration came from a book entitled How Much is Enough : Money and the Good Life by Robert Sidelsky.

The first products are band-wagoner goods. You buy bandwagoner goods when everybody else buys them too. An iPhone is a bandwagoner good. If your kids come back from school and want you to buy something because all their other classmates has it, you can tell it's a bandwagoner good. An example of bandwagoner good which is more subtle is a watch like a Rolex or IWC, peers egg each other on to buy these watches even though I tell the time using my handphone. For the folks who play RPGs, if you buy something to prevent psychic damage being done to you because everybody else has it, it is a band-wagoner good.

The second kind of goods are oligarchic goods. Oligarchic goods are priced based on your relative position in society rather than on absolute cost basis. If too many people own an oligarchic good, it loses its value. A yacht is oligarchic because it is highly expensive and you have for a labour or services component which increases with time. This keeps yachts highly exclusive and meant for an elite few. Too many yacht owners dilute its prestige.

In my opinion, a subtle example of an oligarchic good is a mid-career law degree. The primary cost component of my JD is fours years of earnings which is quadruple that of an INSEAD MBA. If too many lawyers get admitted to the bar, the prestige and pay drops and a lot of very argumentative people then kick up a big fuss and the government gets into action. Needless to say, when I discovered that I had actually tried to buy an oligarchic good a few days ago, I had a mental orgasm which lasted days.

For RPGers, if you finally do manage to own an oligarchic good, you inflict psychic damage on everyone else.

The third kind of goods are just utility goods. You buy something because you really need to use it. My Economist subscription falls into this category. It does not deal or resist psychic damage.

[ This is a not a collectively exhaustive list of goods. Your economic texts mentioned other like Giffen Goods etc....  My D&D books do not fall into any category although I would say that they are useful for me to relieve stress and maintain my friendship with awesome geeks. ]

The solution to the $5 latte problem is as follows :

a) First you should develop an obsession for utility goods and avoid band-wagoner goods. 

Focusing on useful purchases which add value in your life and takes up some of your time so that you will not be distracted by conspicuous consumption. I play D&D and read a lot of books. In my IT days, I have a hobby of collective certification exams, which developed my willpower to overcome all three CFA exams in one attempt. It is cheap and freakishly useful for my career and personal finances considering the cost of an MBA in 2000s.

b) Second, you need to have the ability to meditate on the ultimate oligarchic good -  Financial Independence. 

Financial independence gets harder when inflation and lifestyle expenses go up. Stock selection based on fundamentals is a discipline requiring hours of intense study and then access to a Bloomberg terminal. Only a select number of salaried workers will obtain it within a small window of employability before ageism in the workplace kicks in.

I spent 15 years on this one oligarchic good and may spend more years maintaining it because I wish to secure my wife's financial future after I pass on !

( When too many people become financially independent, there will be no workforce to support the companies giving out the dividends so it is not exactly universalizable. )

c) Do not mistake a band-wagoner good for an oligarchic good.

The job of a marketer is to promote a band-wagoner good and create the impression that it is an oligarchic good. The marketer will try to tell you that if you own an iPhone, you must be more amazing and intelligent than anybody else. Wow, an Rolex or IWC on your wrist, you must really know a thing or two about luxurious living !

If you can recognize something as a bandwagoner good, I think it loses its exclusive value and people are buying it because everyone else is buying it.

Anyway,  I think this blog has come a long way.

In the past, after writing a book, I had to seek out a journalist to tell my story and sell the idea of working and saving hard for an early retirement which would have been a really boring and conventional idea is you think about it given that forex trading gurus are promising their trainees that can leave the rat-race yesterday.

Now, thanks to the support of the folks who support us financial bloggers with eyeballs, journalists are taking the initiative to write about us financial bloggers.

If any reader knows Mr. Cai Haoxiang, please let him know that I am grateful for being featured in his article, and I hope to buy him a nice big Venti Latte if he is willing to meet me for coffee.

Sunday, January 03, 2016

New free E-Book from all of us financial bloggers !

The folks at BigFatPurse took on the Herculean task to organise us financial bloggers to write a book on investing your first $20,000.

I don't wish to take too much credit for this as I have only contributed one article, so please download this from BigFatPurse website here. I am grateful that in spite of a busy year juggling law school and my family life, I am able to at least contribute to a new publication in 2015.

The article I wrote targets intermediate investors and mentions five steps to the setting up a personal portfolio which is as follows :

a) Deciding on a theme.
b) Determining your asset classes.
c) The need for diversification
d) Backtesting your results.
e) Rebalancing the portfolio

The ultimate aim of investing $20,000 this way is to achieve about $1,400 to $1,600 dividends every year so you will be encouraged to push your savings to $100,000 or even $1,000,000 in the future. It's a powerful morale booster.

Anyway, I leave it to all of you readers to download this free piece of work.

I would say that for most of us who worked on this project, we were quite energised by the process and may consider working on larger projects with specific themes in the future. While I cannot guarantee that such products would be free, I expect that, given our own financial status, to be very cheap compared to similar offerings elsewhere.

So please stay tuned in this part of the blogosphere, 2016 would be an interesting year.