Friday, August 31, 2018

The Art of the Good Life #37 : The Dogma Trap.

Today I got called to the Bar. So it is a happy day for me.

But I can't seem to stop being a magnet for weirdoes.

At the Supreme Court, my mother asked me why is there a strange looking flap at the back of my barrister's gown. I said I don't know. It looked like a gun holster, so initially  thought that perhaps it contained some kind of weapon in the medieval era. Then this strange person whom I will designate as Tiger Mum, overheard my conversation with my mum, brutally interrupted me, and said," If you don't know, why don't you ask other lawyers. After all, you lawyers must be intellectually curious, right ?"

I have no idea who Tiger Mum is, but I'm not surprised that this is the kind of mum that produces the straight 'A' kind of JC students who eventually end up in law school (or become nervous wrecks) , but this was a happy day so I smiled and just walked away. 

Why must lawyers be intellectually curious?

It certainly helps in litigation but intellectual curiosity is not a trait that I found when I dealt with legal counsel when I was working as an IT professional, the ability to block my project initiatives did not require curiosity at all, just a stubborn adherence to some kind of rule which, on hindsight, can be quite arbitrary.

Tiger Mum is dangerous because she is dogmatic. She has fixed ideas on how lawyers should behave. Right now, the legal industry is undergoing a lot of change, so I feel sorry for her kid because we probably will end up being a different kind of lawyer than those in practice today. That is an article for another day.

You can identify dogma in three ways : they attempt to explain everything, they are irrefutable and they are obscure.

The investment world is full of gurus who spout quotes from Warren Buffett as if it is investment dogma.

Take for instance the following quote from the Oracle of Omaha :

Price is what you pay, value is what you get.

Of all the WB quotes, I hate this one the most.

You can seriously use this in any situation to sound wise and profound.

Victim : "Oh shit, I just got a margin call."
Guru : "Ah, price is what you pay, value is what you get. You should review your investments. You are not buying value."

a) It can be used to explain everything.

"So what if you bought a low P/B stock, it has negative free-cash flow. Price is what you pay, value is what you get. You got no value, that's why you lose money. "

"You did not enjoy yourself in Geylang last night ? Price is what you pay, value is what you get. Better get checked for STDs."

b) It is irrefutable. 

Price is indeed what you pay. Value (or lack thereof) is indeed what you get. Sometimes you obtained value if you make money. If you lose money, you did not get value. Hindsight 20-20.

How can you falsify this statement ?

c) It is obscure. 

What is value ? I have been investing for over a decade and frankly, I have no idea what value means within the context of this statement, it might a combination of factors in factor investing.

Based on my quantitative approach, I can at least say with some mathematical precision that, in SGX,  value is low P/E, low P/B and high dividends but it does not persist across time periods. Some people will say that value is an investment moat or a good management team.

Anyway, the book has a really effective way to trip up demagogues who spout dogma in the investing world.

Simply ask them this :

What kind of facts would need to arise for you to consider your idea wrong ?

Back to that strange flap on barrister gowns...

A lot of folks initially thought that the flap was some kind of a pouch for clients to pay barristers so it functioned as some sort of a money pouch. But a deeper investigation showed that the barrister gown evolved from a mourning dress during the period of Charles II 1685. It is remnant of a hood. You can find details here.

So dear Tiger Mum, If you are intellectually curious about something, Google it and make sure you have credible sources.

Happy Mass Call 2018 !

Wednesday, August 29, 2018

More on Quitting the System...

Ok, this is not going to be long post. The hits on the last article was absolutely crazy ! There is a chance it might crack top 5 of my most popular blog posts of all time here.

Here's more interesting developments :

a) Ruffled some feathers in the blogosphere

A Millenial blogger reached out to me in private conversation because it seemed to her that my article was referring to her specifically. Regardless of whether I was actually referring to her ( I read many Millenial bloggers because I want to figure out how to have more Millenial engagement ! ), I felt that if there are flaws in my article, the public forums are the best place to air them and I prefer the BIGS World Facebook group because its members take personal finance more seriously. I shared with her that, privately, I will not really change my mind.

I felt that I was accused of spreading doom and gloom by this blogger. Granted, I also can't sound as if I'm from the movie Frozen and be positive and self-affirming all the time, but clearly you guys like my doom and gloom articles. So why change my style ?

It's not as if every time someone talks about private degree candidates, no one will jump in and point out that some private degree holder can become millionaires and have many local grads working for him. I think this detracts from fact finding the root cause of 33% discount in salaries which I am personally interested in because I have kids who may end up not getting a seat in a local Uni in the future.

Instead I would like to channel a scene from the latest Donnie Yen movie, Big Brother. In this movie, five secondary school kids from a worst performing class was expelled and one of them was complaining about the world being unjust because the fight involved kids from better performing classes but the kids who were expelled all came from the shittiest class in the school. Big Brother Donnie Yen basically told them that if they felt that they were treated unjustly, the proper response is  to show the world what they are made of.

Complaining about injustice rarely results in anything.

b) Malaysia is a big place.

Someone pointed out that my statistics employ nationwide statistics from Malaysia so settling down in Kulai would have a different cost of living compared to settling down in KL.

Upon further reflection, there is an additional dimension to this that is ethnic in nature.

Malaysia is different from Singapore. It may be possible that living like an ethnic Chinese may be different from living like a Bumiputra. Sadly I do not have the numbers to confirm this possibility. I am not ready to take this blog to address this sensitive issue.

c) Investing in Bursa Malaysia

Another interesting point is whether investments should be made in Bursa Malaysia instead. Like most societies, Malaysia is less kind to REIT investors than Singapore. Resident and non-resident investors pay a 10% withholding tax on all REIT dividends.

Once you get out of Singapore, F.I.R.E. becomes a lot more challenging once you factor in salaries and taxation. Our dividend taxation regime makes Singapore one of the most underrated Welfare States in the entire world.

Welfare for the owners of capital, that is.

Monday, August 27, 2018

Why I sometimes think about quitting Singapore.

I think I am doing relatively ok in Singapore.

My work planning for the next workshop is proceeding quickly, markets are doing quite well in spite of an impending trade war and my passive income is edging higher this quarter.

Recently, I had a conversation with a friend who is now taking concrete steps to resettle himself in Australia. The complaint about Singapore is typical fare - Society has become more unequal, flats will be taken back after 99 years, and the CPF board seems unwilling to allow folks to ever see their hard earned money. I've done my fair share defending our policies, but I am always mindful that I gamed the system quite well ( being D&D trained after all ) and I was a huge beneficiary of the low dividend tax regime which I exploited from a reasonably young age. 

But even though I am objectively well ahead of most working people here, the thought of quitting Singapore never really left my mind.

When I was an engineer, I thought of quitting everyday when outsourcing was at it's peak and local IT staff were driven out of companies by foreign "talent". When my investments started to do better, I "switched sides" when these same folks who competed against me in the workplace also consumed products and services and, most importantly, paid rent to us locals landlords. This is the reason why I feel that the Government will reopen to doors to FT once our infrastructure can take in a bigger population. Some Singaporeans do benefit immensely from this.

Today my reasons for quitting has changed - I will quit Singapore if my children are unable to get a degree from a local university.

ITE and Polytechnic figures for permanent employment are dismal with about 40% being stuck with gig economy six months after graduation. Polytechnic salaries were stagnant for close to decade prior to the 2011 elections which saw a U-turn on the FT policy. Recently, someone asked me whether Singapore would enter a period of the Lost Decade like Japan: I should have answered that Polytechnic graduates just came out from one 7 years ago.

On this note, I do not understand why so many bloggers, in a bid to please or molly-coddle private degree holders, write such painfully PC posts to them, telling them that managing their Linkedin accounts and working on their EQ and skills future portfolio would somehow erase the lead local graduates have on private university graduates. It's actually quite patronising when these Millenials bloggers have local degrees and claim to be doing quite well in workplace. It sound like gloating to me.

Here's what reality treats folks with private degrees....

Let's face it, if private degree are holders are making 66% of a local grad's pay, alleging discrimination from the industry can only explain a small part of the salary gap. This is because any businessman would happily reduce their manpower costs by a third if they happily reject local grads and hire private graduates instead. A better way is to talk to an SME boss and ask them about their own experiences with private degree holders off the record. Personally, over the years, I had one or stories complaining they soak up more management attention, and a manager's time is also money. This can be another article on another day.

As it turns out, there are some really harsh realities of private degrees that students and private universities do take a certain share of the blame.

All our private universities are audited on procedures but are generally not required by regulatory bodies to meet  standards on content and delivery of material. Furthermore, private university students are customers of these institutions. Local university students are not customers, they are products of their institutions who answer only to the government and industry. It follows logically then that the content that is taught would be less rigourous.

There is also a propensity of private degree students to take management and business courses which, sadly, does not have a "moat" around them ( because they are easy as fuck compared to a tech course ). This is even when there is evidence that fields like engineering and technology practice less discrimination and has higher salaries.

Ok, enough with the brutal manhandling.

Let's have a candid discussion about the mechanics of quitting Singapore for diploma folks contemplating a private degree.

I did some Googling on Malaysian statistics. A Malaysian household spends about $5,300 MYR every month but their household is fairly large at about 4.3 members. So we can say that an average  Malaysian needs about $1,230 MYR every month or about $410 SGD to survive.

To generate about $410 SGD per month, a Singaporean needs a portfolio of only about $70,300 generating 7% yields every year. This is currently achievable using a portfolio of REITs.

Now suppose a polytechnic diploma holder finds a job at $2,200 per month, forgoes a private university degree, and has decided to quit as soon as reasonably possible because he can't stand being in a Crazy Rich Asians elitist society any longer than necessary.

Based on our own statistics on household expenses, a single man can sustain himself on about $1,400 SGD per month. So, it does not take a stretch to imagine that with some lifestyle adjustment, a private degree holder can save about $500 a month. At a rate of return of 7%, this private degree holder can achieve this $70,300 portfolio size within 9 years. Shorter if he gets his increments and farms his bonus back to his portfolio.

A polytechnic diploma holder can start work earlier if he forgoes his private degree. He starts making money at around age 22. So a reasonable escape to Malaysia can take place at around age 31.

The trick is to retain your investments in Singapore while trying to carve a new life and career in Malaysia.

So there you go. I won't quit while I consider myself to be winning here, but not everyone gets to win in a society like Singapore.

I won't write an essay saying that with grit and willpower, private degree holders can also make it in Singapore. That's still up to the individual. With grit and willpower, Bruce Jenner can become Caitlyn Jenner.

But if you are a polytechnic student contemplating a private degree, I showed you a way out of Singapore if you decide to forgo a degree qualification. It's not as politically correct as Ong Ye Kung, but I think it's a workable plan given current market and employment conditions.

But I think with a passive of $400 per month at age 31, you might actually grow to love our country more.


Saturday, August 25, 2018

After Action Review : Unstructured sharing session with young people.

There is good news that banks are changing their engagement strategy with Millenials. They are moving away from the hard sell strategies that turned off an entire generation of consumers in the past and are now experimenting with alternative approaches of engagement that focuses on having more candour and authenticity with the public.

As part of this experiment, sometimes financial bloggers are brought in to engage with younger consumers. This is a very new thing and I am honoured to be chosen for this experiment. 

Yesterday's sharing session would have been rather challenging if not for my stint in Law School where I spent most of my time cracking legal problems with youngsters. Nevertheless it exposes some really interesting questions that I was not really prepared for. The participants are mostly beginners, so his article might be useful to rookies.

a) How do you deal with fear that before you invest in markets ?

This question threw me overboard. I can answer questions on how to deal with interest rates and survivorship bias but I started investing a very long ago and forgot that people do feel afraid when they start investing. Furthermore, my own personal answer is not satisfying. I started with unit trusts and refused to buy an actual stock until I passed CFA III. I also know that surrendering your financial future to a commissioned sales agent is really bad idea. 

My only solution is to deal with it one step at a time : Open a brokerage account. Buy the Philips Lion S-REIT and wait for the first round of dividends to come. See if you lose sleep over this investment. When you are ready again, start buying the top 15 highest yielding blue chips on the STI. 

Get used to having dividends drip into bank account because it will provide a buffer against fear at a later stage.

Dividends are the opiates of the capitalist class. Dividends conquer fear.

b) What happens when a spender marries another spender ?

Millenials are particularly interested in relationships. Obviously, I spent quite a bit of time talking about Family Law and Divorce. 

I explained to the crowd that I was lucky because I am a Saver who married another Saver but most couples are Saver-Spender couples and need to establish some ground rules on money management. Often the Saver would have to rein in the Spender within the relationship.

So one guys asked me a question as to what Spender-Spender couples can do about money ?

My answer may be considered both unhelpful and politically incorrect. I told the person to let the couple be because investors need most of the population to consume in order to continue to collect rents and dividends from their investments. 

Why stop a happy couple who living life to the fullest ?  I also told them that I can introduce a great divorce lawyer if the marriage fails.

Let me know if you have a better answer than me. 

c) Can people live a such a disciplined lifestyle to achieve early retirement as I did ?

The short answer to this question is "no".  Because there is an entire industry devoted to "assist" folks who, for some reason or another, do not wish exert their control over money. 

Money has a bias. If you are extroverted, conscientious and disagreeable, you'll find that making money is a lot easier in a Capitalist economy. This also means that agreeable and likeable folks will try to stop you from attaining your ambitions in favour of "greater harmony amongst equals". Over the years, I keep getting asked why can't I conform to others : work hard, travel every year, buy a lot of insurance, get a BTO at a younger age and pay expensive tuition for your kids.

I've been living this life for more than a decade. 
  • After my first appearance in Me and Money, people mocked me for being single and a scrooge. 
  • My second appearance after my wedding drew criticisms because I did not have to raise any kids. 
  • At least one publisher laughed at my books because I was not a millionaire then. 
  • When I used a Nokia handphone reinforced with rubber bands to keep the battery casing on, colleagues found the whole thing amusing.  
  • Using a SAF notebook to track my daily expenses, that's insane ! 
  • Losing a BMW in the stock market in 2008 was something folks laughed at at the depths of the recession, they became incredulous when I continued to farm my entire pay-check into high yielding counters. 
If you play the game of life to win, people are going to talk. You play a lot of Euro games like Settlers of Catan, you know that the guy with the highest Victory points will get maximum grief from everyone else on the gaming table and this is supposed to be a "fun" setting. ( In Catan, people send a robber your way when you are ahead )

They will continue to resist you.

So it's more than discipline. Picking up finance skills requires discipline. 

But dealing with "well-meaning" folks who want to shoehorn you into a conventional Singaporean lifestyle requires discipline and being extremely disagreeable. 

Anyway, yesterday's session has been fun. It's a new market and I welcome this refreshing turn towards more authentic engagement by our bigger financial institutions in Singapore.

[ The picture in this article is related to a pretty bad Hokkien Joke I cracked with the participants during dinner. ]

Wednesday, August 22, 2018

The Art of the Good Life #36 : Read less, but twice.

[ I'd really like to thank the regulars of this blog who gave me huge pop in yesterday's course previews so much so that my first class is confirmed. The number of sign-ups have reached a new high, proving once and for all that life as a freelance trainer is possible. 

We only have just one more preview left before the class starts in September. For those who missed yesterday's session, write to me one more time and I will see if I can secure a seat for you. ]

We're back to our regular programming.

Chapter 36 is about how to read books - Rolf Dobelli recommends applying the following heuristic when reading books :

Spend the first 10 minutes scanning the book, going through the table of contents and diving into the introductory chapter. If the book does not meet you expectations, stop reading it. If the book managed to hook you, don't even stop at one reading. Read the best books twice for thorough comprehension.

So apparently, I apply the opposite approach towards reading books.

What I do is to spend a day or two skimping through a book. I will read every chapter semi-seriously and if a chapter bores me, I will read it very quickly with minimal comprehension, skipping to the chapters that interest me the most. So instead of reading a good book twice, I read multiple books lightly within the same genre or field. Themes in personal finance and psychology tend to repeat itself  so after reading 5-8 books within the same field, I will know enough to apply the concepts to my own life or even write a small article on it on this blog.

In some cases, Rolf Dobelli's approach will make more sense. If you are reading legal cases, some judgments may have to be read 6-7 times before you can figure out the ratio decidendi of the case. Otherwise, you'll likely be asking to be hammered if superior asked you about your research.

The field of finance gives you more leeway to explore and make mistakes. You can look at an investment from multiple perspectives and it helps if there is a way to understand more perspectives per unit time regarding a company stock or a new asset class.

So we might be back to that old question - it is better to be a fox or a hedge hog when reading books.

I think we need to adopt the right role based on what information we're trying to pick out from the books we want to read.

As far as legal cases are concerned. My humble opinion is that the best lawyers pick out just a few  arguments to reinforce their case theory but they have to argue it so thoroughly that it cannot be dislodged by opposite counsel. This puts up a strong case that the best cases are run by hedge-hogs.

Investing requires requires an almost fox like mental agility because stocks ultimately are businesses which are subject to the mercy of various stakeholders, political and economic developments.

In spite of our differences, I agree with Rolf that if you are below the age of 30, you just need to read indiscriminately. This is the time to explore and develop the competency to be able to have the confidence to rejecting a book after 10 minutes of skimming. In this sense, Rolf's application of the secretary's problem to reading is the work of a genius.

But being a practical guy, I still think some books are a waste of time and we should never major in minor thing. I think you can skip the poems and use fictional works purely as a form of recreation.

( This is why I mainly read fantasy fiction - might as well well go all right right ?

The main bulk of your readings should still be about practical things and how this reality works.

I think a 4:1 ratio of non-fiction:fiction should be a good place to start.

Sunday, August 19, 2018

After Action Review : Financial Independence, REITs and Leverage talk.

Here are some thoughts on yesterday's talks :

a) General Performance

My first rule for free talks is that the Sponsor must succeed commercially for future talks to take place.

As this is a talk sponsored by Maybank Kim Eng, what is important to me is that they find sponsoring not just me, but other financial bloggers, worthwhile.

As the talk is free, we have a 45% rate of folks showing up based on sign-ups which was about average for the industry but we have a decent number of folks opening accounts on that day so I am very pleased that the sponsor met their objective.

This clearly opens the doors to more talk of this nature in the future where BIGScribe fans can attend a finance talk for free.

b) Open-mindedness is important to be a good corporate sponsor

At this stage, I also liked to thank the sponsor for making things very easy for myself.

Working with financial bloggers means taking some of the bad along with the good because we want to come across as being authentic rather than being just a shill for financial institutions. I think yesterday's event was a game changer in that I was able to be very candid with the audience about some harsh truths about leverage and keeping the cost of investing as low as possible to succeed over the long term.

Some of the stuff I say may actually offend some sponsors. My talk has sections on minimising brokerage and keeping borrowing expenses to a bare minimum may not go down well with corporate sponsors who may not be as open-minded as Maybank Kim Eng, but these guys has been really sporting by allowing me to speak openly about it.

This also reflects another aspect of financial independence, I'd turn happily turn down an opportunity if I am disallowed from being authentic to BIGScribe fans.

c) Areas of Improvement

There was one glaring area which could have been improved.

Initially, we wanted to send folks who sign up with the sponsors a list of screened stocks based on the criteria I selected but the risk of offending the SFA was simply too high, so we mutually decided that either party was taking too much risk if we sent out information on the actual stocks.

I am going to try to work with future sponsors on coming up with the proper disclaimers to make this possible in the future but this means more lead time.

If any reader has a suggestion on how to proceed, let me know.

d) Question posed during

Some of the questions posed during the talk can make solid blog articles on its own.

One question was whether its ok to deviate from equal weighting and weighing counters based on dividends yields instead. I actually believe that it may actually lead to better performance. For now, I do not have the skills to backtest portfolios like this.

Other questions clearly overestimate the ability of financial bloggers. I was asked whether Singapore faces a Lost Decade like Japan. I'm not even sure whether PM Lee can answer a question like this. My only answer is that if we remain open to foreign talent, we're likely to be able to avoid this  scenario from taking place. If we become xenophobic like the Japanese, sure, we will trigger the Lost Decade instantly once we start aging.

Another possible answer is that given that the STI has not advanced beyond its peak in 2007, we are already at the tail end of the Lost Decade ! But I think this kind of pessimism is unwarranted given that household incomes have been rising for quite a number of years already.

e) Bridging into the Workshop and preview coming Tuesday

Some fans expressed interest in the Preview for my Workshop coming Tuesday. Note that 50% of the material has been used for yesterday's talk.

I encourage more fans to write to me privately if you want to show up for my talk on Tuesday.

Saturday, August 18, 2018

The Art of the Good Life #35 : The Focus Trap

[ I'll catch you guys later for my talk on Financial Independence, REITs and use of the leverage. Unfortunately, my voice is not 100% as I've had some sort of bacterial or viral infection for the past 2 weeks. But I can talk and may need some pauses to get a drink to carry on. I may also get hoarse as the talk goes on as I'm expected to speak for about an hour.  ]

We're a little behind on this series so we have some catching up to do.

The second article this week is about focus.

According to the author, focus is just about as important for time and money. Unlike time and money, focuses cannot be divided and split into many parts. Those who multi-task usually end up being less productive because of the "context switching" that occurs when switching between tasks.

There are five recommendations to maintain a laser-like focus in life.

a) Don't confuse what's new for what's relevant. 

So far, everything I said about cryptocurrency after reading about the 2018 Barclays Gilt report has come true, cryptocurrencies, when modelled like a disease, are unlikely to make a comeback. In inventing an asset class, Millenials, continue to HODL when equities could have returned even more in the meantime. Equities have been around for more than century.

b) Avoid content that is free.

This is harder for me to follow this advice as brokerage reports can be free. It would also be hypocritical as most financial blogs provide articles for free as well.

That being said, there is a lot of time-wasting news out there that are just there to attract eye-balls. I fail to see why people even bother about the Pan Ling Ling Hong Hui Fang dispute.

c) Multimedia is overrated

This I agree. I think the most valuable financial insights are found in text, notably research papers rather than videos. Even when I give talks, a lot of focus was put in making ideas accessible to the audience. I can't really show off the big guns even though I did think them through.

( Particularly, how factor based investing applies to S-REITS )

d) Focus cannot be divided.

Well this has been mentioned earlier. Research on the futility on multitasking and, for that matter, open offices has been shown to reduce productivity of workers.

e) Act from a position of strength.

This means putting yourself in a position to avoid advertising and pointless information. I think Instagram is a serious waste of time but I'm quite mixed about Facebook because I use that to maintain contact with my fans most of the time.

It is also a place for me to get the latest updates on my investments.

Wednesday, August 15, 2018

The Art of the Good Life #34 : Mental Relief Work

As we get older, I find that some of my friends are starting to become cranky old men.

A friend who drives for Grab would tell tales of his life and talk about how horrible young people are today and why he feels like punching some of them to show them the error of their ways. I would always tell them that we're too old to right all the wrongs in this world.

At the broad level, a lot of us find themselves complaining, whining and bitching about the injustices of the world. This is often about the events in the Middle East but it can be closer to home in Myanmar.

In this chapter, the author tells us that we're not responsible for all the wrong in this world. He offers five points for our consideration.

First of all, there is nothing much we can do personally. The author takes a nasty jab at the World Economic Forum, saying that objectively they have achieved nothing in spite of having all these resources at their disposal. What more can we expect from an individual.

Second of all, donate money. If you are more effective making money and passing it to the volunteer, don't try to do the volunteer's work directly. 

Thirdly, cut down the amount of news you consume. Watching images of disaster will not help reduce the amount of suffering globally.

Fourthly, understand that the universe is teeming with life and, thus, not too far from evil. Evil is universal and cannot be stamped out.

Finally, you are not responsible for the state of this world.

Richard Feynman calls this "social irresponsibility". Becoming socially irresponsible made him  a happier man !

Another words, you are not Spiderman.

You have no super powers. Hence you do not have to shoulder such great responsibility.

It is way better to simply lead an upright, productive life and don't be a monster.

Monday, August 13, 2018

We are messy nation ! Eat me !

Right before National Day, the 1987 cohort of Swiss Cottage Secondary School just had a reunion. For the past 27 years, we were unable to coordinate an activity with such scale so, rain or shine, I made it a point to attend. For me, there were the usual concerns with class reunions based on the experience other people had when they went for them - would wealthy tow-kays use it to humblebrag and do the usual round of virtue signalling ? Would it turn into a pissing contest where men compare their wealth ? Would women bitch about each other and criticise their plastic surgeries and sagging boobs ?

For Swiss Cottage Secondary School, there was none of that. 

We're old friends trying to get reacquainted again. In our 40s, we know that excelling in one area of our lives may mean giving ground in some other area of our lives. Everyone is glorious and, yet, everyone is flawed. Nobody is hopeless. Nobody is perfect.

We're messy that way.

This experience is different from an anonymous financial blogger who spoke of his own class reunion in a much more negative way when some high flying doctor challenged his approach towards financial independence and said that he was not living up to his potential. 

This story could have been about the problems other people faced, some elite from Raffles or  Chinese High.....That was until I realised that this blogger shared the same Junior College as me !

I have much faith in my classmates in NJC. I can't believe anyone I know from my JC days would say this.

I'm grateful that I come from a neighbourhood school. It's a place where people interact and see each other as human beings. Be comfortable with each other.  My only regret is that as a geek and mainly English-speaking, I find it hard to relate to most of my pals in secondary school and was very much a social outcast. 

Coming back...

Do you really need to say that private universities are not seen in the same light as local universities by local employers ? With starting salaries 33% lower than local graduates. This makes the case loud and clear.

Do you need to say that polytechnic and ITE education has room for improvement when designing a curriculum for graduates who are not heading to a degree program ? Latest survey show that close to half of ITE and poly graduates are not getting permanent employment with a large number only getting jobs in the gig economy.

Do you need to say that neighbourhood schools students come from messy families ?

The great tragedy is that I think we pounced too quickly on Mrs Yue-Chang and robbed us of an opportunity to learn more about how elites see us neighbourhood students. 

Were her words based on some kind of statistic that only CJC had ? 

And then the question is "neighbourhood students" as opposed to what other kind of student ? 

The kind which come from affiliated schools ? Or those who only profess Catholic values ?

Do neighbourhood school students suffer some kind of discrimination in CJC because they are not pure blooded enough? Are they second class citizens ?

The biggest loss for me is that we probably had this one chance of ending school affiliations and legacy admissions if we can expose the kind of biases educators have against us neighbourhood students, we can do something for this country. 

Come on. We live in Singapore. Let's get real, do you think only one educator in CJC thinks like Mrs Yue-Chang ? She was merely unfortunate enough to vocalise it.

Consequently, if a large number of educators would discount a neighbourhood school student, what does this mean for us ?

Crushing Mrs Yue-Chang only removes a symptom. The same way crushing Wee Shu Min only removes a symptom.  

The root cause are the legacy admissions, school affiliations and possibly web of alumni networks that make it more attractive to attend the right school in Singapore. 

If we do not identify the real enemy in this case, more Mrs Yue-Chang's will surface.


Happy National Day !


Saturday, August 11, 2018

My next talk #2 - REITs, Leverage and Financial Independence

First of all, I better apologise in advance for my next talk because of our standard practice of allocating seats in free events. We released 260 free tickets for a venue that has only 160 seats because of the habit of folks applying for seats and then not actually showing up for the talk. While we expect less than 160 attendees to show up based on our experience with free ticket events (Attendance is approximately half of tickets given out), there is always a small risk that more than 160 attendees appearing because of high demand for an event.

In such a case, I can only advise readers of this blog to show up early to ensure that they can get a seat.

Today I will explain the margin ratio which another one of those concepts which I'm not too confident about explaining well for the talk.

Margin ratio = ( Values of shares bought ) / ( Amount of financing )

Suppose you choose to have an equity multiplier of 2. You bought $200,000 of REITs using $100,000 of your own money. The value of shares bought is $200,000. The amount of financing you took from the broker is $100,000.

Your margin ratio is $200,000 / $100,000 is therefore 200%.

Suppose you choose to have an equity multiplier of 1.5 instead. You bought $150,000 of REITS using $100,000 of your money. The value of shares bought is $150,000. The amount of financing taken is $50,000.

Your margin ratio is $150,000 / $50,000 is 300%.

Imagine your margin ratio as hit points that you manage on your margin account. At least for Kim Eng margin account holders, you will not be asked to "heal" your margin account until it dips below 140%.

So let's imagine that your portfolio of REITs loses 30% of it's value.

If you previously employed an equity multiplier of 2. The $200,000 of REITs is now worth only $140,000.

Your margin ratio is $140,000 / $100,000 is 140%. This means that the broker will be calling you with bad news very soon, you have to top up your account or your positions will be liquidated.

However, if you previously employed an equity multiplier of 1.5, the $150,000 of REITs is now worth only $105,000.

Your margin ratio is $105,000 / $50,000 is 210%. You will not suffer a margin call in such a case.

There is some wisdom in adding cash or leaving dividends in your margin account to keep margin accounts above a safe level like 200% or even 300% if you are experimenting with leverage the first time.

Wednesday, August 08, 2018

My next talk #1 - REITs, Leverage and Financial Independence

I'm not too sure whether it would be productive promote my next talk. Without any substantive marketing, I was told that 80% of the tickets have already been taken up. The registrants have already exceeded the number of seats available but as the talk is free, a substantial number of registrants would not show up.

Nevertheless,  if you do not mind the risk of standing through out my talk, you can still register for the talk here :

I thought perhaps I should talk about some of the heftier concepts of leverage over the next few blog posts so that attendees will not be confused when I explain these concepts at the talk itself. Explaining these concepts were a struggle so it's better for me to pre-empt the key questions on my blog before the talk itself.

One confusing aspect of leverage is terminology. I used to say 200% leverage on this blog which is kinda confusing because there is no formal definition for X% leverage anywhere.

What I actually mean by 200% leverage is to have an equity multiplier of 2.

So if you have $1 and  you borrow one more dollar, you have $2 to buy a portfolio of REITs. This comes with an upside of getting higher dividends but it also magnifies your loss.

If you have equity multiplier of 2, it also means that you have a debt to equity of 1. You have $1 of debt and $1 is owned by you.

A more conservative approach to leverage is to leverage your portfolio by 150%. Tis way, you have $1 and you borrow $0.50, allowing you to buy $1.50 of REITs. I recommend that most interested parties start with this amount just to get the hang of the volatility of the margin account.

So when I say 150% leverage, what I mean that the portfolio has an equity multiplier of 1.5. If you apply a lower equity multiplier, you will still be able to magnify your gains but the odds of a margin call becomes much smaller.

If you have equity multiplier of 1.5, it means that you have a debt to equity ratio of 0.5. You have $0.5 of debt and $1 is owned by you.

For my talk, I will try to use equity multiplier as a terminology, but this creates yet another confusion because I have to explain what the margin ratio is.

This will be another blog topic as we ramp up towards 17th August 2018.

Sunday, August 05, 2018

Help, I am becoming a D&D character !

When the directors of BIGScribe wanted to have a meet-up to plan the next event (click here if you want to attend my next talk which is free), I told Kyith that I'm always free because I was am still currently an "unemployed hobo".

Kyith then went onto the urban dictionary to get a formal definition of the word "Hobo" which I reproduce here :

" A hobo is an itinerant worker, a career which sprang up during the depression. A hobo, unlike a bum or a tramp, is more than willing to work, but mostly for a short duration, as their main impetus is travel, the love of the journey above the actual destination. A bum is stationary, feeding off of those unfortunate enough to cross his path; a hobo merely travels from town to town, finding work when he can, but only for the sake of financing his next adventure. NEVER call a hobo a bum...they'll kick your sorry no-bo ass! "

In Dungeons and Dragons, some player characters are known as murder-hobos. It basically describes a typical fantasy role-playing character, someone who goes around killing monsters and taking their treasure. D&D PCs also do not have a steady income. Most earnings come from the ransacking a treasure hoard that are found in most dungeons.

Too little has been said about freelancing work.

Thanks to my dividend flow, my finances can withstand having earned income coming in dribs and drabs. Even dividend income tends to come in on a quarterly basis, so for the past 4 years, I stopped thinking and spending like a person with a monthly income. All my budgeting efforts are made on a quarterly basis with planning made every January, April, July and October. Quarterly planning is definitely more intense and stressful and I generally spend less at the beginning of the quarterly and ramp up only before the next dividend payments season start.

There is the occasional upside that occurs every now and then.

First, I'm happy to say that Growing Your Tree of Prosperity has finally sold out, giving me close to half a week of living expenses of late. The copies I have left now are copies I will probably leave for my children. This raises questions as to whether I would publish another book on the updated $100,000 challenges for a new generation of fans. I think if I ever do this, I would like my work to come under a proper publisher given that the book was a Straits Times bestseller and I actually sold off an entire print-run at the end.

The next upside would be a more challenging but interesting one. I'm still in the process of planning my next serious workshop under Dr. Wealth. I would not put in any details here because they are a much better marketing engine than this blog can ever be. If you are interested in attending a preview, write to me privately ( and I will see if there is a way to enroll you into their mailing list but all preview seats have been taken up quickly and there are no seats available right now.

If this works out, I would be able to get something small to complement my passive cash flow. This is a reversal from the employment model I have employed in the past. Instead of using passive income to support a source of actively earned salary. I will have a small flow of active income to reinforce my passive income flow.

There is a philosophical antithesis to becoming a D&D character or a murder hobo.

The converse is being an NPC. In Skyrim, these are the guards who are stuck in a dead-end job because they took an arrow to the knee. For most of us, we spend the larger part of our lives as NPCs and this is the default lifestyle for most people. It is a good life of comfort and predictability.

For part of the FIRE community, I am now seeing some genuine efforts to see if there are alternatives to the NPC lifestyle.

Hopefully in a few years time, we will see more Adventurers in Singapore.

Thursday, August 02, 2018

The Art of the Good Life #33 : Prevention

This chapter begins by asking ourselves what is wisdom ?

This is a difficult question made more so if you play a lot of Dungeons and Dragons.

In D&D, characters are defined by attributes in both Intelligence and Wisdom. Intelligence is a trait favoured by Wizards and governs language and skills acquisition ( in the appropriate edition ) whereas Wisdom, favoured by clerics,  determined your ability to resist spells that affect your emotions.

Occasionally, a D&D player can end up with a character that has high Intelligence but low Wisdom and vice versa and it would be quite difficult to portray such a character properly in a role-playing game.

Rolf Dobelli has an interesting solution to this puzzle in D&D.

Whereas a person with high intelligence can find all sorts of creative and novels way to get out of the trouble, a person with high wisdom is usually smart enough to avoid trouble from happening in the first place. As such a cleric may be able to diplomatically talk his way out of fight, a wizard would throw a fireball to end the fight as quickly as possible, possibly triggering all the ramifications of murdering a bunch of hobgoblins in enemy territory.

A enjoy playing wizards a lot, but as I got older I realise that my playing style also reflects my general lack of wisdom that has made many of career transitions fail in the past in spite of my strong academic ability.

I was trained primarily work in an American MNC. We focused on results often through innovative approaches towards short-cuts and creative solutions in daily work. I thought I could attack bureaucratic paperwork when I transitioned into the government agency aggressively but for every short-cut I tried taking, things took a turn for worse, and I got slowed down even further.

A good government officer has wisdom but that often brings work habits that are bad in a faster moving environment. My most effective colleagues are expert ring-fencers. They had a deep encyclopaedic knowledge of what their specific job role and took steps to avoid taking on extra work which fell off the cracks. This way they can prevent being saddled with the paperwork in the workplace.

They even had better appraisal grades because they do their work well when it finally falls on their laps and there is very little that you can pin on them as fewer mistakes were made during the year.

Financial planning requires an equal does of intelligence and wisdom.

The intelligence is requires to decode the mathematical jargon and resolve the puzzles that Mr. Market constantly throws at you on a daily basis but wisdom is required to address the deeper mysteries of personal finance such as to realise your own personal risk appetite.