Adventures in Kulai

I was finally able to spend a weekend in Malaysia as I took my first holiday in Kulai Malaysia which is where my in-laws are living at during school holidays and weekends.  As I have spent my first month out of my legal practice training working intensely on my workshop,  I was unable to take advantage of the lack of GST in Malaysia until last weekend.

Coincidentally, one of the best articles comparing the cost of living in Malaysia and Singapore showed up on iMoney. You can access the link here and see for yourself just how different life is in Malaysia. They've done a great job compiling what it takes to geo-arbitrage between the two countries. With such numbers, I will not be surprised that many Singaporeans will retire in Malaysia over the next ten years as the PKR government try to pick up the pieces and restore the rule of law in that country.

Transitioning to Kulai can be hilarious, I just want to share a story with all the readers of this blog that I have already shared early on FB :

I was in AEON Mall in Kulai and for some strange reason, they have decided to become super environmentally friendly in Malaysia. I would alway begin my shopping journey at Popular Bookstore because I'd like to figure out the zeitgeist of the nation post-elections. So I would start by buying copies of the Malaysian Edition of the Edge as well as a few other Malaysian business magazines to understand what the business guys are thinking about.

When I got to the counter at Popular bookstore, they said that they do not have plastic bags. I even offered to pay for them, but there was none at the counter.

CCB !

Heavily encumbered with magazines and newspapers, I proceeded to go to mynews.com, which is like a convenience chain that sells even more magazines. The stupid Singaporean in me thought that a convenience store would mean convenience right ? So I bought even more magazine and assumed that I would get a plastic bag for my trouble. But, to my consternation, mynews.com did not stock any plastic bags as well. Volunteering to pay cash for them is also unhelpful.

KNNBCCB !

Kulai must be very environmentally friendly.

I lugged my pile of books into Starbucks and waited for my in-laws to show up. Then I asked them to look after my pile while I looked for a shopping bag. After walking through half the stretch of the mall ( And Malaysian malls are huge ! ), I finally chanced upon a Daiso that had shopping bags for sale at $5 MYR.

YES ! I FINALLY FOUND A SHOPPING BAG TO HOLD ALL MY MAGAZINES !

I triumphantly walked towards the cashier and paid for my shopping bag....

...then the cashier said to me...

Sir, would you like a plastic bag with that ?

LJ ! KNNBPCB !

The rest of my trip was basically throwing my Bullock Cart wheel money at random shit.

I'd like to invite fellow Singaporeans to take a look at this franchise called Mr. DIY. If you really enjoyed shopping at Decathlon at Joo Koon, the best way to imagine Mr. DIY is that it is the "Decathlon of Everything Else". They sell Chinese knock-off toy bricks for about $1.50 SGD each so I went crazy picking up the generic equivalent of Lego and gave it all to the kids who shoed up for my niece's birthday party. I even got six faux Transformer robots for about $20 SGD.

Oh yes, one more thing.

For some inexplicable reason, Kulai has the best beef noodles on Planet Earth. Each Hainanese family has their own formula and they waaaaay better than what we have in Singapore.

You might to consider this stall if you ever come to Kulai to get your fix.

On Metformin and CPF Life

The price of thought leadership is that sometimes your ideas may sound batshit crazy. I suggest that you take this article with a pinch of salt and consult an medical expert before executing it.

Metformin is a drug that diabetics often have to take for life. This drug is really cheap. I've been taking 850mg of Metformin twice a day for over a decade and did not face any side effects since I started. Tim Ferriss earlier on the 4 Hour Body first proposed that Metformin has the power to lengthen a healthy person's life but of recent times, serious research has gone into the drug and some diabetics on the medication have been discovered to outlive a control sample of healthy non-diabetic subjects. So much so that that in the book The Truth about your Future by Ric Edelman has a small section devoted to the possibility of living much longer thanks to this medication. If you surf the web, you can find some research papers on some anti-cancer properties of this drug as well.

(Metformin already works in lengthening the life of lab rats.)

I have no direct evidence that Metformin can lengthen a healthy person's life, but I can imagine healthy folks requesting to be given this drug from a doctor to increase the duration of their time in earth. The cost is ridiculously low at about $0.15 a day. 

If taking a drug can add 5-10 years to a person's life if he starts taking it early, there are interesting consequences to a person's personal finance.

Obviously, this person can have a longer time horizon and can even hold more equities in their portfolio even in his 40s or 50s. Consequently, bonds would be less useful.

A person applying leverage with the intention of attaining financial independence earlier can withstand a  nasty margin call because he has the years to start again and attempt the process more than once within a lifetime. This assumes that life extension from the drug results in more healthier years.

But the most interesting application for Singaporeans comes in the form of annuities. The simplest way to get annuities is to simply enroll in the right CPF Life program and given that actuarial scientists are not going to have a separate mortality table for folks experimenting with Metformin, the possibility of gaming the CPF Life system with Metformin is an interesting possibility as delicious as card counting on a blackjack table.

If you believe that you have a greater chance of living longer, the obvious strategy would be to enroll in the Escalating Plan under the CPF Life scheme that gives a lower payout at first but increases it at 2% every year.

There are some reasons not to do this yet. We do not know how much a human's life can actually be lengthened. Also, we're not even sure if those years would be the good healthy ones instead of being bed-ridden. What's the point of extending your life if those years would be spent without mental capacity or stuck in a hospital bed.

As for me, I don't have a choice.

I am currently on Metformin, Acarbose and Jardiance. All these drugs have the ability to extend a person's life but my Type 2 Diabetes would set my lifespan back by 15 years.

The Art of the Good Life #32 : Envy

The most poisonous emotion in modern life is envy.

This is so poisonous, it is probably an evolutionary adaptation. I would guess that even I have very little control over envy. Suppose I work for a company and the company practices a system whereby everyone's salary is transparent. If I find out that my salary is below the median salary between my peers, I will be working hard to get out of my situation straightaway.

One defence against envy is to live in a neighbourhood where your neighbours have a lower social economic status. Of course, if you wish to do that, you need to ensure that you are sufficient modest such that you will not induce envy in others.

Social media makes things even worse. We are now exposed to everyone's positive sharing with no idea of how much internal struggle our friends may be going through. Everything on Facebook has been curated to only show someone's positive side of life.

Perhaps the solution when you encounter envy is to ask yourself the following question :

Would you swap your life with that person and take on all the good along with the bad of such a life ?

I would not swap my life with Elon Musk, although he's a much bigger troll. And I certainly would not do that with PM Lee as well because the burden would be too stressful.

No, I don't want to swap my life with  Batman's. I want to still have living parents.

I think if we sum up the good and the bad of everyone's life, a person's lifestyle would not be as envious as what is generally portrayed in social media.

Ok, lah, Superman has a great life.

Blockchain use cases to take note of

I'm still a cryptocurrency bear. I have about $100 worth of Ethereum to give myself the incentive to follow this space because it is endlessly fascinating.

One of the things I'm obsessed about is what will happen to Ethereum as it transitions to a new proof of stake algorithm known as Casper. I suspect all the investment into GPU mining gigs will become worthless and folks will start to try to own a more meaningful slice of ETH to make passive income. My own uneducated prediction is that ETH will lose its value after transitioning to Casper because mining it will no longer require massive amounts of energy and GPU power. This may happen after a short upswing when ETH enthusiasts buy up enough coin to continue mining efforts post-Casper age.

That being said, the Journal of Alternative Investments now regularly publishes articles on cryptocurrency and the latest article is on blockchain use cases.  The latest one being entitled Blockchain : Data Malls, Coin Economies and Keyless Payments by Kakushadze and Russo.

No matter how bearish you can be on trading cryptocurrencies, blockchain technology is a game breaking technological change that is inevitable. The question for me is always to ask a person pitching a cryptocurrency strategy whether it ties in with broader applications that a blockchain can bring to business in general. Consequently, investing in private equity using real money on these use cases may be a smart idea :

a) Data Mall

A data mall is a decentralised series of nodes that sell data in a marketplace. As data can come from multiple sources and in different formats, some sort of standards may need to be set to show folks how to extract and use this data. For example, data description can be standardised.

This is quite personal to me, having for data.gov.sg for a small part of my career. I imagine a private sector data.org.sg to be decentralised and owned by no one, but private sector organizations can host their own data and sell them for a fee. There is no need to convince an agency to put up data as a public good an incentivization will be done through coin economies...

b) Coin Economies

Coin economies is a system of exchange involving cryptocurrencies. It can also incentivise folks like bloggers who provide information to others.

Augur is a decentralised prediction market with an Ethereum token called Reputation. Reporters will be given coins for predicting news accurately and have coins taken from them to if they get the future wrong. This can potentially create a newspapers that reports tomorrow's news today.

Interestingly, the paper talks about dual coin systems. One coin is used to keep the economy running internally. This coin can also be converted to an exchangeable coin like BTC or ETH to maintain it's value.

c) Data Provenance

Blockchains give us the ability to verify that a piece of information is correct or comes from the right source.I suspect that when I did a Solidity tutorial to create a notary system, I was working on data provenance. We can float the hash of a block of data and subsequently someone else can check if the data was tampered with by referring to a public blockchain. Perhaps too many startups are working to find problems that data provenance can resolve.

Problem is that it is not feasible to push entire blocks of data into the blockchain. So instead, a workable system would be to track changes to the data instead.

d) Keyless payment

Blockchains can also enable technology that allows a person to be addressed by telephone number or email address. Paylah users should be familiar with this feature although I doubt Paylah runs on block-chain technology.

The issue is mainly security as the system that maps a wallet ID with email or phone number is susceptible to hacker attacks.

e) Proxy voting

This is my favourite application because it might not have been done before in any country yet. A voting system allows the stake of a shareholder to be defined precisely and votes can be cast in a tamper proof manner remotely.

There are so many ways this can be applied. Democracies can conduct referendums this way. Singapore can conduct mini-referendums to let folks in a area like Woodlands determine what kind of improvements should be prioritised in after the next elections.

In the corporate area, this can allow voting of resolutions to take place from home. This can have major impact to lawyer's fees as scheme of arrangement meetings go online.This may also reduce instances of minority oppression in the corporate landscape.

Knowing the use cases of blockchains will not change my stance on cryptocurrencies, which is largely still bearish right now.

But at least when you are confronted with an ICO White paper, knowing the kind of use cases that everyone is also looking at along with major issues concerning these use cases may help refine your bullshit detector when you meet a crypto-snake-oil salesman.

But that's still a lot of bullshit to deal with.

The Art of the Good Life #31 : Your Mental Fortress

The best ideas can be traced to the time of the Ancients.

This chapter is all about Stoicism which has become somewhat trendy of late. It might be Tim Ferriss who started the trend in The Four Hour Workweek ? But modern Stoicism can be traced back to philosophers like Boethius, Marcus Aurelius and Seneca.

It is not easy for an idea to withstand the test of time.

The four recommendations of Stoicism, according to Boethius are :

a) Accept the existence of Fate.
b) Everything you have is impermanent. This includes your health, wealth, relationships and happiness.
c) When everything is lost, console yourself that the positives outweigh the negatives.
d) Your thoughts are the only things that cannot be taken from you. Therefore, your mind is your ultimate fortress.

Stoicism is relevant wherever there is evil in our society today. Jews living in Nazi Germany probably needed the consolations of this branch of philosophy. Ditto for Syrians under dictatorial rule, legal practice trainees with foreign degrees that are not from the Oxbridge universities, and Singapore schoolchildren who score less than 200 for PSLE.

Does Stoicism apply in investing ?

I would argue yes.

No mathematical model can insulate you from fate. A backtested strategy can fall apart overnight when faced with government regulations. For example, I was particularly unlucky in debt crowdfunding as two out of four of my campaigns failed. The one campaign that led to litigation, which lasted over a year, was supposed to only have a default rate of 8%.

Will Stoicism lead to stubbornness ? I don't know but I would venture to guess that Stoic investors may be better at HODLing. Perhaps the lull in cryptocurrency can be endured.

Coincidentally, I was in Dr Wealth HQ today to get feedback on my workshop preview slides and they have a copy of Stoic philosopher Seneca's works lay on the table. I told them that the modern equivalent of Stoic philosophy can be found in Cognitive Behavioural Therapy where the bulk of the good work continues helping folks who have serious mental issues.

Aftermath : Investors Conference 2018

The great thing about being gainfully unemployed is that I can react better to a major event such as Investors Conference 2018. I have spent the better part of yesterday with a Bloomberg terminal and can now write something on what the other speakers are saying.

Note that it is not my intention to diss anyone's investment strategy. Backtesting itself is highly subjective and results can vary when the backtesting period is varied.

a) My own STI ETF presentation

The BIGScribe directors are holding all speakers accountable for their claims. In this case, I am lucky because I did not make a stock recommendation but merely three broad strategies involving Singapore blue chip stock components of the STI. So yesterday, I tried to expand my backtesting period to 15 years to see if my results can hold.

Holding an equal-weighted blue chip portfolio returned only 4.56% over 15 years. If you pick the top 15 dividend stocks, performance actually gets worse and the portfolio only returned 4.19%. Fortunately, the low PE strategy retained some of its mojo and continued to return 6.75%.

This gives me some confidence that at least some of my ideas can withstand the test of time.

Now that I have subjected my own investment ideas against my own standards, let's move to the ideas shared by other speakers.

b) Starhill REIT

This is the third time Brian and participated on the same event. In every seminar, I listen intently to Brian because I like his candid sharing of his personal portfolio and finely-honed gambling instincts ( As in the gambling instincts that make someone win BIG ).

When Brian listed Starhill REIT in his portfolio, I perked up. You see, I tend to skip retail REITs because I have no idea how the retail sector is responding the disruption from online vendors. My idea is that solid management would eventually be beaten by industry fundamentals.

I did a double-take on Starhill and backtested one of my favourite strategies, selecting the highest dividends yields then choosing those with the lowest gearing. Lo and behold, Starhill REIT magically appeared when previous backtests showed that it hadn't.

This gives me confidence that Brian knows what he is doing and I will not hesitate to add Starhill into my portfolio moving forward.

After all, the best investors steal ideas from others.

c) Sustainable Competitive Advantage

I did not warm up to quite a few ideas from other speakers.

One difficult concept is that Old Chang Kee has some kind of sustainable competitive advantage over their business. I think that any Mak Chik with a basket of Sardine Epoks can potentially change the game for Old Chang Kee so I don't really buy that argument. Maybe Old Chang Kee might have an Investment Moat based on logistics and their internal SOP but F&B is a tough business in Singapore and we are fickle eaters.

As a consequence of this, I do not really speak on moats or margin of safety. I prefer things that I can measure. Anyway, I don't aspire to become Warren Buffett and I think that these concepts are too fluffy to be useful to serious investor.

But there is no harm reading what analysts have to say.

d) Growth at a Reasonable Price

The bulk of my backtesting was focused on GARP with the PEG ratio being the focus on new strategies.

We can say generally speaking that GARP works. Strategies I employed on local stocks returned 12.44% with a semi-variance of 12.38%. A Sharpe ratio of 0.58 is not bad, but does not belong to the set of strategies which have to cross the 0.80 bar to be put into action.

However,employing GARP on local blue chip stocks disappointed me. Lowest PEG stocks in the STI underperformed the equal weighted strategy at 3.93%. So if you wish to apply GARP strategies, make sure you employ this on the larger local stock universe and listen intently to the speaker that day.

It is meant to be combined with other screens.

Over the next few weeks, I will be promoting my next event in which I fly solo, so do keep a lookout on this space.

( Hats off if anyone can relate the pic to this post. )

After Action Review : Investors Exchange 2018

Yesterday was a blast !

I remember some familiar faces and I am quite happy that some of the folks who showed up a year ago showed up again to give us support.

Here are some deeper thoughts on yesterday's event :

a) We should have staggered the fluffier talks with the hardcore ones 

I think there was only one major area of improvement that all the organisers agreed with after the event. We should have ensured that a fluffier talk always followed through a technical discussion on investment. This way the audience will not lose their concentration in the middle of the conference.

b)  The general knowledge of the audience was quite impressive

Organisers commented that my quizzes were very hard. It was quite a big risk to put up a picture of Arthur Schopenhauer and ask the audience who he is - after all, you are mostly finance folks. But I was pleasantly surprised that this audience could not only tell their German philosophers apart, but were also able to identify Sigmund Freud and Victor Frankl as well.

The point I wanted to make from this exercise is that personal finance is a broad field and you can find nuggets of wisdom to fields as far as psychotherapy and philosophy.

c) Clarifications on the STI ETF and the equal weighted STI portfolio

Shifting from a capitalisation weighted strategy to an equal-weighted strategy results in superior performance. This was the reason why the folks in the US created an equal weighted strategy involving the S&P 500 stock counters (Code : EWI).

The STI ETF is not a diversified portfolio because it is a capitalisation weighted index.  Larger companies are given a higher weightage. The banks together form about 40% of the ETF. Because of herding behaviour of STI ETF investors, more money will be poured into banks due to the way the ETF is being structured. This may be one of the reasons why the STI ETF's 10 year annualised performance was only 4.44%.

If instead of buying the ETF, you divide your money into 30 parts and you buy each of the STI ETF component stocks in equal parts, you are no longer biased toward the larger blue chips. Your allocation to banks would be limited to only 10% of the your portfolio. Backtested results of this strategy show a 3% improvement over the STI ETF annually.

Also, if you adopt an equal weighted strategy, expect to lose 20-25% of our portfolio in a particularly bad year. (1 in 40 years) This is a reasonable risk to take.

The broad concepts like bullshit jobs and life-energy exchange shared in yesterday's event will be mentioned again in future blog articles.

So do keep a lookout on this blog.

Are diploma holders too "well-rounded" ?

It all started with Unintelligent Nerd who wrote to inform me about an online rant from an investor, whom I thoroughly respect, called ThumbTackInvestor who had gotten sick of people who complain about the stock market so he wrote something to rebuke them.

You can find a link to that statement here. It is a super-entertaining read.

I thoroughly enjoyed this rant.  

But in it, TTI made an obscure statement saying that if you have a diploma, you might be too "well-rounded". I felt that this statement could be expanded into something more comprehensive so that readers can have be given more food for thought. When TTI made the statement he took great pains to make it more politically correct, so I went out to try to figure out what he meant.

In my new "unemployed hobo" state, some strange people write to me to invite me to ask to hang out, often just for fun. Yesterday, I was invited by a fairly successful Fintech company to Ayer Rajah crescent to have lunch with their employees and share some of my ideas on investing and attaining financial independence. 

Beyond just taking about personal finance, I tried to ask the Fintech company some pointed questions about the hiring of engineers. I asked their engineers why are there no diploma holders in their company. There are definitely polytechnic graduates with solid computer science degrees, but why don't they have any median polytechnic graduates because they are so much cheaper and this can dramatically reduce their burn rate.

The answers were fast, furious and brutally honest. 

One engineer, a polytechnic alumni himself, gave me possibly the most brutal answer. 

The median polytechnic graduate often comes from a lower income family and has to balance part time work with their studies. They will not graduate with solid programming skills to survive in a fast-paced engineering environment. If they are paired with an engineer to do programming in a startup, they are more likely to get in the way and slow them down.

I can corroborate this point. I witnessed the difference between an internship application from SMU and Temasek polytechnic in a boutique law firm. The TP candidates often worked part-time, many were proud to share that stint in MacDonalds. When I was a trainee myself, I found myself impressed with their resilience. And they are a lot more work-ready than U grads.

In my opinion, this is kind of festering inequality that may be worth addressing not by governments, but by the private sector. Startups are the most egalitarian organisations in Singapore, if they are not willing to take in the average diploma holder, we can't expect out elitist government organisations to do that.

I came to ask myself what I can strive to do if I ever transition into entrepreneurship. My cash flow is adequately taken care of by my dividend income, so can I do something meaningful as a business man and make a profit at the same time ? After all, diploma and ITE holders have much lower salary expectations. 

So in this post, I'm talking about helping the most discriminated person in the future Singapore economy - the non-degree holder. Look at Parliaments worldwide today, how many politicians actually lack degrees compared to the proportion of non-degree holders in society ? 

( Singapore is actually ok in that regard, MP Charles Chong does not have a degree ! )

This is not completely altruistic. I believe that a businessman that can build non-bullshit jobs for non-degree holders in the future will be solving a serious problem and can make a huge profit at the same time. 

The question is how do we do this ?

This weekend, I will be talking about the Bullshit Jobs phenomenon by channeling a book by anthropologist David Graeber. Formal definitions will be shared this weekend.

At this stage, I'm not better than an academic sociologist - I only have a well defined problem. The solution can only come later after I incorporate.

Perhaps readers who are bosses can share with us what is it like to engage in job design and how to keep the spirits of non-degree workers up in an era of massive disruption.

Remember, it's not mere job creation. 

This has to be non-bullshit jobs for non-degree holders. That's a hard problem.

Another personal update

Look like there's still room for another personal update from the time I completed my training contract.

a) Investors Conference 2018

I'll be seeing you folks this Saturday on Investors Conference 2018 and once again we've managed to sell out all tickets. My rehearsals for this Saturday's event is more or less done and to reward customers, I will be giving out four books if you can answer my quizzes during my talk, so keep a look-out for my event "F.U. Money" this weekend.

I promise an F'ing great time !

b) No time for leisure !

I've been keeping myself busy since leaving my TC. The bulk of my work is to refine the talk I'll be giving this weekend. The rest of it is aggressively keeping up with the news and my readings. To my personal disappointment (or pride for that matter), I can't even start binge watching TV shows or play any games on my PC. It's just nothing but research, doing up slides and monologues in my room.

Particularly sad is that I have yet to have a single D&D game so far.

And I've yet to even give myself a short a trip to KL just to unwind.

c) Workshop with Dr Wealth

A large centrepiece of my work over the next six months is to scale my talks into a fully blown workshop under Dr Wealth on the topic of financial independence and it's been a really exciting learning curve so far.

Yesterday I came out from a meeting where my draft preview was "torn to shreds" (in a good way) where I am learning from veterans how to craft a compelling product. The trick is to combine my research and voluminous training slides from previous talks to gain ultimate validation from market forces. I'm glad my futures partners are willing to coach me using a "Agile" approach as we work towards a credible MVP.

More details over the next month.

d) Personal Finances 

One of the things I picked up during my TC is discipline. I've tuned out distractions from social media after 4 years of getting quite addicted to my phone. I've started an exercise regime and eating healthier food in spite of being a stone's throw from Maxwell hawker centre.

My HBA1C is now at a low of 7.0. My weight has gone down to 66.7 with my BMI at 22.3, even better than my BMT days ! But it's all thanks to this new drug I'm having called Jardiance. My doctor rewarded me by taking out Janumet and replacing it with Metformin. This is $64 savings per month.

Better health always translates to better wealth. Next is to see how I can decouple myself from cholesterol medication since I eat so little meat these days.

Nevertheless, it would be a struggle to save $4,000 a month because I've lost my TC allowance. Let's gun for $10,000 savings by September instead. I've also started to cook at least one meal a day to cut down on my expenses further.

e) Financial Markets
 
Markets are really going crazy. There is so much volatility its probably better to give up trying to project market movements and instead just react to other investors. Rocking markets will occasionally generate bargains so it might be a good time to look for 8% yields in the markets right now.

Also good news for me is that my margin account is fully formed. The next six months will see me try to strengthen my portfolio and reduce the leverage. Thereafter, I will stop paying off my mortgage using my CPF and let it heal.

f) Readings

I was reading Organize your Mind, Organize your Life by Hammerness and Moore because it one of the rare books that can train a person to become more conscientious. I found the material rather disappointing as only the last chapter has practical advice for readers, the rest is too philosophical for me. This reflects the difficulty in getting folks to become more conscientious in life, something that can dramatically increase their chances of success.

Other than that, I'm rapidly mugging up the skills to make myself an expert trainer.

The Art of the Good Life #30 : The Opinion Volcano

As a financial blogger, I have to admit that I cannot follow the advice of this chapter because my blog is the vehicle where I share my opinions with everyone no matter how ridiculous they may be. In a strange way, I get rewarded by my readers. In fact, my last post had an image of a bull having sexual congress with a bear, and it logged me 1000+ views within 48 hours.

Let's do something different for this chapter. The author says that most of the time, we do not need to share an opinion. In fact, having no opinion is an intellectual strength.

Let's illustrate this with an example of a piece of news that everyone seems to be very passionate about - The latest property cooling measures enacted by the government.

a) Opinions from people with no interest in the area are not worth much

Property cooling measures affect some people but not others. They definitely affect folks who want to buy property such as young people who can't really afford to spend the rest of their lives paying for an expensive home when all they have access to is the gig economy. They will benefit from the cooling measures. On the other hand, folk who want to sell the property are negatively affected by the change because a large part of their Singaporean Dream involves escalating real estate prices and retiring comfortably in Perth.

What the measures do not impact are folks who already have one property and intend to stay in it for quite a while longer. It is this group whose opinion may not matter so much as their exposure to property developers should be small.

b) Some opinions are for questions which simply may not be answerable so should be discounted completely !

Some questions regarding the cooling measures simply cannot be answered. Such questions like when will the changes be reversed ? Or whether ABSD will be increased by a further 5% if property prices go up further ? Other includes whether today's rebound is a significant reversal or a dead cat bounce. In this aspect, many financial gurus are more omniscient than God.

c) Some opinions are for questions that are simply too complicated and should be discounted as such. Alternatively, more opinions from a diverse crowd should be sought. 

One such question is why were the cooling measures enacted when the property market recovery has barely started and a big oversupply is just around the corner.

I struggled with this question over the weekend and it does seem very illogical for the government to enact this cooling measure so suddenly. I can understand the ABSD for second home buyers, but the reduction in LTV for first time buyers baffle me because I thought the government just wants the property market to favour young buyers over older sellers ( Who's hearts are actually in Perth ).

As my own answer failed to satisfy me, I starting thinking about whether elections are coming and whether the government does not want to be penalised at the ballot box from Millenial voters.

The closest answer which satisfied me is that we're shifting to a Smart Nation economy and expect younger Singaporeans to take on bigger business and career risks. This means not saddling them with larger mortgage payments. No sane young professional will service a mortgage and throw his life behind a startup. The highly leveraged folks prefer MNCs and public sector jobs and we won't such jobs for much longer.

It is this national obsession with home ownership that's kept us risk-averse all these years. You already have a mortgage to pay, how to start a business and generate jobs for other people ?

If the objective is to keep a lid on home prices to encourage risk-taking and entrepreneurship then expect the government to limit the rise in home prices for a very long time to come because a mind-set change takes a generation to occur.

But this answer is also not satisfying because the best move in such a case is to shift to a rental economy.

Either way, HODLing property counters and residential property may be a fool's errand if this is long term objective of our 4G leadership.

Coping with Financial Pornography from Millennial Deci-Millionaires.

The question every financial blogger should ask himself or herself is whether have we reached peak Millennial Deci-Millionaires. This is when somebody goes online to talk about attaining a net worth of $100,000. This is often done by a Millennial who attained this net worth before the age of 30.

I want to congratulate anyone who meets this goal before 30 because it is a significant achievement. Absolutely nothing to scoff at.

When I wrote Growing Your Tree of Prosperity I was largely ridiculed  because authors are supposed to write about how to become millionaires - $100,000 was effectively low-balling. Thereafter, I refused to talk about making one million dollars in all my books because becoming a millionaire has become cliche. One author I knew of even wrote his book about attaining millionaire status when he was still an undischarged bankrupt, and I was adamant about not becoming a financial pornographer.

I think there is a better framework readers can employ when reading these news instead of viewing it as financial pornography.

( I use this term because I was inspired by La Papillon who really does not like savings porn and spoken out against it on the BIGScribe FB group. )

Here are some reasonable questions to ask whenever some Millennial Blogger talk about achieving $100,000 in savings :

a) How did the Millennial earn his/her money?

The first question is how the money was earned. This generation of bloggers have a wide variance in earnings. A local graduate can earn $3,600 per month but a private degree holder can only expect $2,400. Currently, the advantage goes to the Millennial who has a job in a bank, law firm, MNC or Public Sector. Otherwise, we might want to give credit to those who are doing sales where earnings have no set limits.

At this stage, we might want to be inspired if the blogger earned the money with extraordinary effort.

Maybe they held multiple jobs, worked overtime, or did so well they received multiple promotions. I made quite a bit of money doing overtime as I was the only AS/400 administrator in my first year of work and had 30% increments on a good year.

This might be an area that the reader can emulate.

b) How did the Millennial save his/her money?

If you earn more, you can naturally save more. The best approach is to see if the Millennial can share how much savings was generated as a percentage of take home pay. Absolute numbers are meaningless.

Also, when calculating the $100,000, the next question is whether it includes CPF money. CPF, along with our low tax regime, is a powerful savings engine that no blogger thanks the government for.

Beyond asking about CPF, you can benefit the most from how frugal the Millennial is. Are there various acts of demonstrating conscientiousness that you can learn from ? Is there a budgeting tool or an active denial of conspicuous consumption ?

For me, I naturally saved a lot because I never had a financial advisor. This means that I only have one term life plan from SAF. If you like to hear of my own savings pornography story, in my early thirties, I was bordering 70% savings from my take home pay, but I spent all my dividends from my investments.

Of course, I also lived with my parents, never drove a car, and ate mainly hawker food.

c) How did this Millenial invest his/her money?

This is the most exciting part of the framework.

No matter what kind of investments people claim to participate in, it's fair to assume that you can blend the equity/bond component to a pro-rated blend of 8%/3%, so reasonable returns will be 3-8% minus costs.

The magic is in controlling costs. Unit trusts and ILPS are expensive and could reduce returns by 1% every year. ETFs are slightly better. The cheapest investments are generally self-directed. This gives you the ability to estimate whether, moving forward, whether the blogger can reach a net worth of $1,000,000 before his or her 40s.

At this stage, IMHO,  I think it's safe to discount the crypto-currency and derivative components of the investment plan. Some financial porno should just be treated as such.

Of course, having gone through this exercise, the $100,000 that Gen-X accumulated should be adjusted to about $120,000 in today's money after accounting for inflation.

Most bloggers, being human beings, would have a long way to go before hitting $1,000,000 because of intervening life events like marriage and children. This can shift their priorities into things other than money.

I guess the fun is in reading about other people's lives and extracting their best practices so that you can benefit from them.

So be kind, reasonable and good-spirited when other people meet their financial objectives.

Personal Update - Done with Training Contract !

To understand the changes happening to my career, it is important to understand the events that occurred months before my training contract ended.

I was out with my pals and had a rough week at work, and two friends asked me a crucial question which I had never contemplated before. The question went like this : "When will you give yourself the permission to be happy ?"

I was struck dumb by this question, but my buddies had a good point.

I had been financially independent for four years and have paid for my family expenses and mortgage without skipping a beat. I manage a fairly decent 7-digit portfolio that is enviable by modern Singapore standards. In comparison, my work frustrations are quite trivial in comparison because, like many practice trainees,  I do the work of a glorified clerical worker. ( In fact, I think it's safer to delegate work like photocopying to me because I'm not exactly the kind of guy that's good at box ticking. )

Ordinarily, I should be confident but I was not.

Just then I realised that confidence is not an intrinsic quality in a person.

Arrogance might be, but Confidence is like a case theory. You need the backing of authority and evidence to truly feel confidence.

So I took steps to increase my confidence.

I projected major expenses over the next 6 months and found ways to avoid them. I replaced my phone battery by buying a kit from China. I then took $50 off all my monthly telco expenses.Then I started expanding my circle of influence - a friend is considering some help  starting a business next year. I wrote to general Assembly and e2i to start enquiring about Data Science, I bought new textbooks. Most importantly, I also saved $4000 a month on a $1000 allowance, and farmed it into my margin account in an era of a looming trade war between US and China. I also adjusted some of my counters to make them more defensive. We're hunkering down for possibly a long winter.

I also approached the financial blogging community and told them that I wanted a way out. Do stuff which I am passionate about.

I wanted to deal with money, not broken families and warring couples. The money is good, but the work ultimately in my humble opinion, is petty.

And thankfully, the financial blogosphere was willing to lend a guy like me a hand.

My legal career will be held in abeyance.

I will proceed to be called to be the bar this August 2018. It's not high on my list of priorities, but I am on the lookout for a small law firm to "hang my practice certificate" in some sort of a locum arrangement.

I have speaking engagements booked until September this year. Thereafter, I will be designing a 2-day workshop that systematises Financial Independence with the good folks of Dr. Wealth. The aim is to build a "assembly plant" that produces financially independent professionals consistently. I want to demonstrate that a person's livelihood can be decoupled from work.

For the next six months, I will explore the concept the of doing financial workshops for a living. If that does not work out, I will see if I can do some work with a friend on his business early 2019. If things still don't work out by June 2019, there is always e2i and picking up machine learning ( which would reinforce my portfolio anyway ).

Ultimately, my greatest confidence stash came from some work Dr. Wealth had asked me to do to track my dividends to start producing a record of my passive income for marketing purposes.

I'm now pleased to say, thanks to my use of leverage, that on average, my dividends per month has finally exceeded the monthly Singaporean household income in 2017.

So I can do this.

And of you support me, there is a chance that you can do this as well.

Keep your eyeballs on this blog.  I will share my speaking schedule beyond Investor Conference 2018 soon enough.

The Art of the Good Life #29 : The Book of Worries

As I will be ending my training contract tomorrow and will have quite a battery of updates this week, I will keep this week's installation short.

We all worry because evolution has kept us anxious about what the future has for us. Needlessly worrying about something reduces the quality of our lives and shortens our lifespan.

This section has three practical solutions to dealing with our worries.

a) Keep a diary to track our biggest worries and concerns. 

I think keeping a blog is not such a bad idea because many readers face the same concerns.

b) Buy insurance.

No, don't buy insurance from a commissioned agent, because then you would have to start worrying about paying premiums every year. Buy insurance for worries that you really care about after giving it some thought. Personally, I think joblessness and retrenchment are bigger concerns than critical illness but this is often uninsurable.

In such a case only investing can resolve your problem.

c) Focused work

This is probably the best way to deal with your worries but based on my experience, the ability to induce flow in the workplace is now limited to just a few high tech and high touch jobs. The rest is bureaucracy and paperwork.

If your work is bullshit, all the more you need to save your hard earned money.

Amazingly, the author does not mention F.U. Money as the most effective antidote to personal worries.