Personal Update

Thought I'd just share some random thoughts given that have just completed a major 29-week book review.

a) My dad is still at hospital

Right now my dad has been in hospital for close to three months. I got in for pneumonia but the doctors discovered a lot more issues with him and he had to undergo an operation to remove some abscess near his spine. Thereafter he was found to be allergic to four kinds of antibiotics, so we had to decide whether to treat his infection or his allergic reaction.

The consequence was that he was shuttling between Yishun Community Hospital and Khoo Teck Puat. Right now, there is some hope that the infection might be gone and I'm crossing my fingers that he can get to the physiotherapy stage where he can get ready for discharge.

I guess I can't really complain as my dad is on default Medishield so he was warded under C ward. The cash payment for 2+ months of hospital stay was barely $15 and we're discussing options to buy more rehabilitation gear at 90% discount.

If you have gone through what I have, you will be grateful for our healthcare system in Singapore. Other than some delays while waiting for MRI scans, I don't see how our system can be any better.

b) Still chugging along as a trainer

I don't have a lot of updates on my life as a trainer. I'm actually getting quite close to my 1 year anniversary and both class enrollments and portfolio performance has been great.

Right now I've spent quite a bit of my own money on updating my power point slides to make them more professional so I've paid hundreds of dollars on templates and vector graphics. I am still too busy preparing for the August masterclass to get started on some free online lectures to promote my product offerings for curious folks on my training style.

I'm still not sure how long I can sustain this, but I'm taking it one day at a time.

c) Almost overspent this month

I just paid off my outstanding credit card loans and, for the first time, I have about $500 to last through August. ( which is fine since August is a good dividends month and I got classes in two week's time )

For four years, I have been financially responsible, balancing my dividend payments against my expenses as a law student. This month was the first month that I had almost overspent, largely because I insisted on buying more stocks and using whatever dividends I had to pick up a high end laptop.

My Surface Book 2 at $3,900 was great, but it was not good enough to replace my iPad Pro when it comes to reading newspapers and consuming information. I bought more software and a Business Times subscription as a result of my purchase but was quite disappointed that the Apple ecosystem is so hard to wean myself out of. The worst part is when I found out that my new system is incompatible with the overhead projector which I use to conduct most of my previews.

I may not be done spending money. I will be upgrading to a mesh wifi network and a new tablet before September.

d) Playing Pathfinder : Kingmaker.

For leisure, I've decided to read a piece fictional work for a change, covering Jonathan Strange and Dr. Norrell by Susanna Clarke.

As I need to keep my expenses low until mid-August, I would be playing Pathfinder Kingmaker to pass my time. D&D players will be pleased to know that Pathfinder has evolved into a totally different RPG with it's own fiddly parts. Hopefully, I don't have to wait to long for the next installation of Baldur's Gate under the new 5e engine.

The Model Thinker (Final Episode) - Income Inequality

I can't believe that we've arrived at the final chapter of this 29-week long exercise.

In this final chapter, the author applies many-model thinking to the problem of income inequality.  Applying different models to review the issue of inequality is something every Singaporean should try to understand because this is  a priority for our 4G leadership moving forward.

Let's go through the perspectives one by one.

a) Technological changes favor educated workers

Using models of growth, we can theorize that one cause of inequality is that technological growth favors educated workers over unskilled workers. Making matters worse, increased supplies of unskilled labor keeps unskilled wages depressed. During Singapore's attempts to attract foreign talent, it was the polytechnic graduates who did not experience meaningful increases in starting salaries for a decade.

If you agree with this model, you should basically lobby to decrease our dependency on foreign unskilled labor. Have employers bid for unskilled labor through a COE-like system.

b) Positive feedback in the internet economy creates a winner-takes-all system.

Because we are so much more connected to each other, social influences matter a lot more these days. Folks who generate some profit will generate even more profits in the future. We tend to pick a vendor that other people prefer and information travels a lot faster. This strengthens the hand of any incumbent in the business world.

If you agree with this, then the government has to impose some kind of a negative feedback model to make the KPI for government tenders slant towards diversity in choosing vendors. But this may increase the risks of government projects significantly.

c) Political capture by CEOs

Pay for CEOs is determined by compensation committees who are also part of the same social strata of other CEOs. Increases in pay of a few CEOs will lead to higher pay for all other CEOs.

If you agree with this, the best solution is to introduce a member who represent the workers or the Unions in every compensation committee. On this note, I do not understand why everyone is so fixated on getting more women on corporate boards when priority should really go for more non-degree holders to join these committees instead.

Non-degree holders of both genders probably face more discrimination than women in Singapore society.

d) Thomas Piketty Rent-from-capital model 

Where the market returns more than the growth in the general economy (r > g), capitalists will have significant advantage over folks who just exchange time for money. Thomas Piketty have yet to meet guys like me who back-test models and apply leverage to earn significantly more than  most capitalists.

If you agree with this, then you, like the many SJWs and assorted assholes, you should fight for more  investment taxes, or pushing for more wealth taxation if necessary.

(NB: I fight you tooth and claw at the ballot box to ensure that you do not succeed.)

e) Assortative Mating

For me, the biggest cause of inequality is that graduates marry other graduates. In fact, in law school, top students marry each other. If people marry randomly across the social strata, our GINI coefficient would have been 25% lower.

So when an SJW comes at me screaming about dividends taxes, I will ask her why she love ACS boys and refuse to marry ITE guys ? I will attack her husband's high educational qualifications and then declare her a hypocrite.

If you agree with this, then you will agree that a dating agency matching RGS alumni and ITE graduates should be set up in this country and paid by taxpayers. Another possibility is an MGS-Republic Polytechnic dating agency.

f) Inter-generational Income dynamics

This is not a cause of inequality but a system using Markov processes to model it. Singapore has done this exercise and we're still doing ok. Those at the bottom of the ladder still has a decent chance to get to the top. (For now...)

g) Persistent Inequality

This is the idea that children that grow up in low-income neighborhoods receive fewer opportunities. The schools along Bukit Timah road receives more donations and have better parent volunteers.

If you agree with this, then we need more rental HDB flats along Bukit Timah Road so that our rich friends get more interesting neighbors. 

So That's the end of The Model Thinker

Wow ! I can't believe that this column is over after 29 episodes !

The Model Thinker is one of the hardest books I ever had to cover and I do understand that readership of this column is about a third of my usual articles. Still, I have grown quite a bit reading this book.

I will probably keep the next few weeks free before declaring the book that I will feature in my next weekly column.

Is it time for SIAMFIRE ?

I am an outlier Singaporean man because I do not go to Bangkok to hire prostitutes.

In fact, my effect is so powerful that my friends who go Bangkok with me are often worn out so badly that they also do not have the stamina to call prostitutes.

Why ?

We're just too busy eating the great food there and going to their night markets.

Also Bangkok is home to Battlefield Bangkok which is the best Tabletop Game Shop in Southeast Asia.

If you read the rest of the blogosphere and popular finance books, we're starting see variants of the Financial Independence Retire Early approach to life.

Enter SIAMFIRE, a variant of FIRE for folks who find it hard to retire in Singapore but might be able to live on their passive income in Bangkok.

SIAMFIRE is like FIRE with relaxed prerequisites. In Singapore, the 55 year old single retiree would need $1,721 SGD a month to eke out a bare existence. An expat living in Bangkok would only need $903.77 a month according to this website. The trick is to get permanent residency in Thailand and maintain your trading account back home to extract dividend payments.

Suppose you can structure a portfolio that yields 6%, to cover $900 worth of dividends a month would only require $180,000. You will need $340,000 if you want to pull off the same stunt in Singapore.

There is a hidden advantage to setting off to Bangkok to settle down - your cash cushion to fight off sequence of return risks shrinks to $900 x 24 or $21,600. This is consistent with the advice from Christy Shen's Quit Like A Millionaire, if your investments are not doing too well, it's better to spend more time travelling to places like Bangkok than to stay in a developed country like Singapore, this buys tie for your equity portfolio to recover.

I did some googling to see whether this is feasible for a 40-something year old single man. 

While I am not an immigration expert, it seems that the fastest way to get a VISA is to marry a Thai lady to get a Non-immigrant O Visa, then try to get permanent residency three years laters (which seems to be an onerous process). The pain of operating with a VISA in Thailand is that it needs to be renewed every 90 days.

Also permanent residency status can be given to investors who have $3M-$10M THB.

The FIRE mindset combined with geo-arbitrage is a wonderful way to ensure that somehow your financial aims will always succeed.

I leave it to you guys to figure out how to execute KLFIRE. From what I observed, it is even easier than SIAMFIRE.

Too bad my wife is already a Singapore citizen.

If you are a reader who have already succeeded in SIAMFIRE. Give me a shout on the comments section and share with us whether there are any downsides to this plan.

Can your money ever be happy ?

When reviewing the financial literature of the moment, one of the questions  I ask myself is whether a particular book or story can dethrone The Richest Man in Babylon by George Clason as the best entry-level read for absolute beginners. Ken Honda's book entitled Happy Money could have been such a candidate.

Through no fault of the author, the book did not make the cut. Coming from a Japanese perspective, the book was crowned a best-seller, but bench-marked against books from the US, however, it seems more spiritual than practical.

There is hardly any practical investment advice in this book.

The ideas in the book are based on two tropes - one found in many finance books, the other, an important part of Japanese culture.

The first idea, which is quite Western in origin, is the idea that your thoughts can shape your reality. There is this belief that if you approach your financial planning in an optimistic manner, somehow your wealth will multiply. This stretches back as early as 1903 with the book As a Man Thinketh by James Allen that preaches that good thoughts result in good outcomes with modern incarnations of similar ideas in books like Rhoda Byrnes The Secret.

The second idea, which is authentically Japanese, is the idea that every object has within itself a spirit or kami. You will find this a lot in Marie Kondo's series on decluttering when she spends a moment of reflection to thank the home that we would be about to declutter. Marie Kondo did spend some time after getting her sociology degree as a Shinto temple maiden. This is why the idea that the money in your wallet can have emotions like happiness can only arise from a Japanese finance author.

The most ludicrous story involves Wahei Takeda, the Warren Buffett of Japan. One desperate guy came to Wahei in desperation, seeking more money. Wahei told him that he would receive money provided he said arigato or thank you 100,000 times.  The story claims that by the time he was able to borrow the money, he did not need money in his life anymore because this shift in his mindset has already made him a rich man !

I guess sometimes I read a great book and it goes into the reading list of my students of the Early Retirement Masterclass, and more often than not, I end up wasting my time so that  blog readers would not have to bother.

The Richest Man in Babylon by George Clason remains the most inspiring and practical finance book to read for folks trying to get their personal finances in order.

The Model Thinker #27 - Rugged Landscape Models

Imagine if we were to run a project to determine the optimal point of leverage for an investment portfolio. If an investor employs too low a leverage, he will extract too small a gain in the stock-market. If the leverage is set too high, then the investor can be wiped out in the next downturn.

The fitness of an investment strategy can thus form a Mount Fuji like shape. As leverage goes up, the fitness of the portfolio hits a peak and then drops thereafter.

In practice no one really knows what the ideal leverage multiplier is. Warren Buffett was theorized to have it at around 1.7. My personal rate is between 1.3 and 1.5. Making matters worse, we aren't really sure whether leverage has multiple peaks.

Making matters even more complicated is that the portfolios we choose as well as the market cycle will determine the optimal leverage rate. Being back to lock down investment grade bonds that produce bigger coupons than the leveraged financing rate is crucial to portfolio survival. A portfolio of growth stocks can threaten the survival of the portfolio as small swings get magnified by a large degree on a daily basis.

Leverage ultimately depends on other factors like the return and volatility. But adding more factors increase the dimensionality of the Mount Fuji graph and what we will really get even in the simplest of cases is a rugged terrain like the diagram shown above.

In such a case, finding an optimal point becomes even harder. If we take the path with the highest gradient, we might be able to locate a localized maxima but miss out on the global maxima somewhere else.

In the face of such confusion, I only have a simple rule of thumb that can help most investors.

Just keep your equity multiplier somewhere between 1 and 2.

The inevitable rise of the Second Fiddle Husband.

In a better age, our daughters should be looking for Second Fiddle Husbands.

If you examine the 2017 data on local universities, out of 16,160 university graguates, 8,338 are female. There is an excess of 516 female graduates. If you look at similar statistics for ITE, you will find 3,242 of excess male ITE graduates over females.

In every society, women are conquering higher education and the knowledge based workforce. The logical conclusion of this sustained imbalance is that at the upper end of the education spectrum, there will not be enough men to go by with the excess of males graduates being a consistent feature of vocational education institutions.

What does this mean to society?

In the book Microtrends Squared by Mark Penn, women of the West are now prepared to marry Second Fiddle Husbands. Instead of marrying a man for his economic resources and power, women may have to undergo a change to their mindset and go for a men for his willingness to raise a child and play second fiddle while she brings home the bacon from work. In Asian societies, this is going to be really hard unless some limited form of polygamy gets reintroduced to restore population growth.

According to the book, the best way for this to occur is for the couple to agree to this arrangement prior to marriage and there is actually evidence that such marriages are happy ones.

What is not good is for men is to become Second Fiddle husbands involuntarily. For example, a lot of guys in Singapore become engineers and start out with decent salaries and they assume roles of financially responsible husbands. But over the years, as some men may lack communication skills, political savvy, or may face outsourcing, often these men eventually end up earning less than their wives who may become teachers and accountants and, through no fault of their own, end up becoming Second Fiddle within the family.

The damage to the family and marriage is long ranging. These Gen-X men end up harbouring a lot of resentment within the marriage because the narrative amongst my generation of men is that it is dishonourable to "eat soft rice". Involuntary second fiddle husbands have a higher rate of committing adultery. This may be one of the effects of losing power and respect at home.

Men are losing power in all societies.

So there might be a solution to all this beyond raising our raising our daughters to be able to accept husbands who earn less than they do.  Even as I say this, as an old school patriarch dad, I might have issues seeing my daughter date some useless Manic Dream Pixie boyfriend who adopts the Hakuna Matata philosophy even tough he might be the only choice morsel left in the dating market for the women of the future.

I would also encourage my son to double up on picking up difficult and rare skills and manage his money better because at the top of the income pyramid, the fight for the right kind of successful men will really heat up in the future. With a trust fund, an advanced degree, and a willingness to text back in the middle of playing a computer game, there will be endless hordes of beautiful women to enable me to live vicariously through my son's life.

But in the face of these changes in society, men really do not need to care about what's happening to them over the long term.As men drop out of the academic ladder, they are getting more better choices to support their bachelor lives. Better consoles, streaming, and the rise of AI powered sex-dolls await them.

Unlike our daughters of a better age, sex dolls function 24x7.

They will also not judge these men for the lack of achievement in their lives.

Treat your personal finances like a balanced RPG party.

As it turns out, while I was reading Quit Like a Millionaire by Kristy Shen, I was also playing Pathfinder:Kingmaker so I was able shoehorn one of Kristy's frameworks into something that RPGers can relate to.

You have to imagine your personal finances as a party of fantasy adventurers. These are the archetypes you have in your party :

a) Fighter ( Tank )

The fighter is a the mainstay of the party, holding back monsters, and ensuring that most of the aggression is targeted on them. Fighters are highly defensive and focus on dealing consistent damage to their opponents.

In Kristy's framework, fighters are the optimizing function for your personal finance. Strong financial optimisers find ways to minimise their expenses and get the most bang for their buck. This comes from finding the best deals on Shopback or figuring out the cheapest Chai Png you can order that sates your hunger. While fighters do not become fantastically rich, they are most consistent ally to bring you to financial independence.

Finance books that have an emphasis on optimization are books like Your Money or your Life by Vicki Robins.

b) Rogue (DPS)

The primary bringer of massive damage to the monsters are the rogues of the party. In many other RPGs, rogues are also the skill monkeys, solving role-playing challenges by engaging in subterfuge and diplomacy.

In Kristy's framework, rogues are basically hustlers. Hustlers want to win big and make lots of money so you will realise that the focus of rogues is on the upside. Like it's fantasy counterpart, Hustlers may see volatility in their revenues because sales and even SEO is involved in this component of personal finance. It is no coincidence that Rogues have a low Armor Class and hit points.

Finance books that focus on hustling are those written by Robert Kiyosaki and Tim Ferriss. These books, while useful, can seem a little scammy.

Just like the Rogues in your party.

c) Wizard (Area of Effect High Damage and control)

Wizards are the primary bringer of massive damage to enemy crowds. The wizard stays at the backdrop most of the time engaged in scholarly pursuits, but when the time comes, the wizard hurls a huge fireball into a crowd of monsters to soften then up for the party.

In Kristy's framework, Wizards are basically Investors. If you are high level and have a lot of capital , your wizards can unleash a torrent of spells on his opponents. Wizards belong to many schools. The school of Divination may read stock charts like tea leaves. The school of Evocation will overchannel their investments with leverage. The school of Necromancy engage in annuities to harness the power of the dead. Occasionally, spells backfire and lose a chunk of your net-worth. The reflects the unpredictable power of financial markets.

Finance books that focus on investing channel if popularity of Warren Buffett. I have a particularly fondness for Wiley Finance.

Beyond Kristy' framework, the RPG analogy stretches further.

What outcomes we get depends on our executive function and outlook in life represented by the Cleric in the party. Clerics focus on healing and buffing their fellow party members. Incidentally clerics also need a high Wisdom score !

Who will you reinforce in your party ?

Where should you tilt your emphasis on personal finance ?

When you are younger and lower level, Fighters play a major role. You need to keep them fully healed and buffed to fight monsters in the easier dungeons. At higher levels, investing is mandatory to have a proper financial plan. You need a powerful Wizard to kill a demon with one word and teleport the party to the dungeon with the best treasure.

Lastly, like every party of geeks, there is a fifth member who always the Bard.

The bard uses musical and creative performances to reinforce the morale of the party. If you think about it, the Bard is the most ancillary member of the group representing the Epicurean side of our financial personalities. Enjoying yourself so that life does not become totally meaningless is an important function in personal finance. For my own personal approach, I rarely buff or heal the bard. If the bard becomes unconscious in a fight, I just leave him be.

If you are Gamer and FIRE enthusiast, you might wish to ask yourself, who will your cleric buff next ?

This has important implications on which books to read and what kind of financial skills you will develop.

Master/Slave Morality in Personal Finance

The dichotomy between master and slave morality was proposed by Friedrich Nietzsche and made immensely popular by the writings of Mark Manson in the book Everything is F**ked.

If you value equality more than fairness, then Nietzche would accuse you harboring Slave morality. That belief that society would benefit from equal outcomes for everyone. The textbook for slave morality in Singapore would be Teo You Yenn's This is what inequality looks like. The political left and social justice warriors are strong proponents of slave morality as they fight for wealth redistribution and identity politics.

If you value fairness more than equality, then you are likely to harbor some kind of master morality. This is the belief that if someone contributes more to humanity, he should then deserve more than your fellow man. Our government manifesto would be Singapore's version of Master Morality. Everything in society, from our beliefs in streaming to our civil service hiring practices all betray this principal. The political right are strong proponents of master morality.

I was fortunate enough to read personal finance books that span both the master/slave morality spectrum of late.

a) Slave morality - 55, unemployed and faking normal.

Let's begin with Elizabeth White's book 55, unemployed and faking normal. 



Elizabeth White breaks new ground with a book on how Personal Finance written with a emphasis on Slave Morality looks like.

If you have a degree, but later in life, you end up working in NTUC as a price tagger, you might see yourself as a loser. Elizabeth White takes it to the logical extreme - she's a Harvard Business School MBA alumni, a single mum whose daughter is also a single mum. Elizabeth ended up borrowing money from her shirtless neighbor to keep herself solvent when even her contract work dried up.

The book resonated with me because I also felt a lot of ageism when I was in Law School.

My well-meaning professor, in wanting to help older students find an entry level job, sent me a resume that lists a Polytechnic Diploma as a job requirement. It was one of the most depressing and humiliating days I ever had while studying in Law School. The book revealed to me that having multiple degrees may be great if you have a better career waiting for you, but at an older age it just becomes one more reason to feel humiliated and depressed. Also it is a grim reminder for PMETs to "get off the high horse" after your 50s - as no one gives a shit about your qualifications after that age.

Another very difficult chapter to read is the chapter on how to borrow money from relatives when you have no one else to turn to. Read my lips - I'd rather let someone sodomise me than borrow money from my relatives or friends (margin financing from brokers is fine). Watching my parents fight after my relatives borrowed money from them is one of the key incidents that shaped my attitude towards money.

Otherwise the book does not really focus on sustainable solutions. There is a lot of blaming of government policies and the book subtly hint about forming a political alliance via a Resilience Club.

I don't recommend that folks read this book, but the content is very novel and refreshing.

If you hit absolutely rock bottom, this is the only personal finance book that can help you get somewhere.

b) Master Morality - Quit Like a Millionaire

Needless to say, books on master morality are much easier to read. I am very happy and privileged to read Quit Like a Millionaire by Kristy Shen and Bryce Leong.



Where Elizabeth White's life went downhill, Kristy Leung started out in Communist China where her family barely had food to eat. Her father's buddy gave her father a piece of sweet potato that kept him alive to get an academic position in Canada many years down the read (Heartbreaking to know that her father's best friend did eventually die of starvation).

Coming to Canada changed her life, and Kristy's emphasis on the concept of "eating bitter" or Chi Ku allowed her and her husband Bryce to travel the world today as a millionaire couple.

This book is just too good to be covered in one blog article.

My favorite idea in this book is Kristy's mathematical framework to compare undergraduate degrees with each other. Kristy is definitely right that choosing a degree based on what pays well is more rewarding than choosing one based on passion. This mirrors my own personal concept of "Don't major in minor things."

Another great idea is that if you find that your passive income stream may not be sustaining your lifestyle well enough, rather than cut down on travel, you may wish to travel even more. Kristy identifies Thailand as a cheap place to "bide your time" when your portfolio recovers from a downturn. This is one of the most brilliant and creative hacks to FIRE I have ever read.

I find that this book aligns very closely to master morality because Kristy does not whine about Canada but acknowledges that Canadian society is already quite re-distributive in nature, instead she shows readers how to do as much tax loss harvesting as possible.

Quit Like a Millionaire is so good, it qualifies to be on the reading list of students of my Early Retirement Masterclass. Expect a few more blog articles on this book over the next few days.

If you have nothing to read, why not pick up a copy this week?

Being a system of morality, there is nothing inherently wrong with aligning yourself towards master or slave morality even though I am very clearly biased towards master morality.

What is interesting these days is that adopting each mindset would result in personal finance books that are very different from each other.

Which book did you enjoy more ?

The Model Thinker #26 - Multi Armed Bandit Problems

In my opinion, this chapter was not written very well and I had to google some Youtube videos to really understand the concepts this time round.

Imagine you have two choices when deciding on an investment strategy.

Each strategy would either give a 'good' outcome or a 'bad' outcome that may or may not be related to actual investment returns. This is because, in some cases, a strategy may return less but do so in a way that gives you more psychological comfort. You can also assume that each strategy spans an entire investment philosophy so you can only engage in one strategy at any one time.

Suppose you have already have a strategy that works and gives makes you feel good 60% of the time.

Now, suppose you attend an investment course and the instructor shows you a totally new investment strategy.

Do you switch strategies and adopt what the instructor proposes or you stick to status quo?

There are some ways to resolve this dilemma.

The sample and greedy approach would mean giving the new strategy a chance and try it, say, for 10 years. If a good outcome occurs more than 6 out of the 10 years, you then adopt the new strategy for good.

The adaptive exploration approach will try the new approach for 10 years, after which the proportion of good outcomes will be weighted to determine the proportion of old and new strategies to employ. So if the next 10 years produce 8 good outcomes. The subsequent 15 years will be split 6:8 ratio according to the good results arising from old and new strategies.

The most powerful approach would be to choose the strategy that provides a higher Gittens Index which is complicated mathematically ( as shown above ) but introduces a discounted element into consideration and addresses a historical record of good and bad outcomes. The Gittens Index is dynamic and based on the outcome of every subsequent year an investment strategy is being adopted.

While it would be clunky to use the Gittens Index on a blog, some qualitative insights are useful.

If you are a young investor with a much longer horizon, the Gitten's Index will give the future the benefit of the doubt and you are encouraged to try out a new investment idea for size. There is more room for exploration since you have more time to take advantage of compound interest. I would like to think that leveraged investing adoption will be more favourable to younger investors who have more time and less capital.

If you are an older investor and moving towards end of time horizon, perhaps you want to stick with an investment strategy that has worked for you all these years. Older investors are looking to refine their already mature investment strategies and will rather add one or two stocks into their portfolio rather than adopt your investment philosophy whole sale.

The Great Sexual Recession of 2019

Singapore's GDP had a nasty Q2. quarter to quarter it shrank 3.4% surprising many economists. The effect of this result prompted a survey on my ERM alumni who, generally speaking, have a lot more skin in the investment game than the general public. You can see the choices in the poll above, but as it stands, my students believe that a deep L shaped recession is a slightly higher probability than a shallow V shaped recession.

Actually, I do not share the same sentiment as my students.

My take is closer to DPM Heng - the next recession will occur but it would be a very short-lived V shaped recovery and a good time to accumulate more equities.

However, to have a concentrated population of aggressive investors vote on an L-shaped recovery can be disturbing. One of the consequences of believing in this prediction is a flight to bonds to avoid the more serious parts of the downturn.

The other is that society needs to cope with a Sexual Recession.

A Sexual Recession coming on the heels of an Economic Recession is an almost forgone conclusion.

In 2007, blue-collar men in the US retreated from dating world to play computer games like Skyrim, never emerged, and declared that they lead happy lives in surveys done on their Life Satisfaction.

2019 already does not bode well for Gen Z. Younger folks are experiencing youth underemployment as many degree holders are working on gig economy jobs that do not require skills obtained during their degree programs. A combination of Netflix shows, cheap games on Steam and 3D VR shows on Pornhub will push a lot of men to avoid dating women totally.

(This blog has a lot of fans who identify as BBFA and see this lifestyle as a good thing.)

The knock on effects on the economy will be drastic but possibly invisible.  You can read about how difficult it is to detect Singapore recluses here.

Later marriages, when it happens, will feature a permanently low fertility rate. Men who delay marriage will marry women who have lower fertility. This will drive families towards smaller homes. Car sales of 7-seaters will decrease and knock on effects will hit the education and discretionary consumption sectors further down the road.

At this stage, I am not too sure whether society can come up with a solution here.

The most effective solution is to keep having a lot of jobs and a booming economy. Singapore is ahead of Europe in many ways. My suggested solution is to fast track permanent residency for foreign spouses in Singapore to deal with the labor crunch to stimulate more businesses at the same time.

Imagine an ITE graduate who earns $2,500 a month. He ranks below the median income in Singapore because median salaries here are pegged at $4,400. Let's be realistic here : How is he going to get a wife when local women put such a large premium on economic resources in Singapore ?

The average wage in Bangkok is 25,500 Baht or about $1,100 SGD per month. In fact, lawyer wages in Kuala Lumpur is only $56,000 MYR a year or $1,550 SGD a month. So if a foreign spouse marries a Singaporean ITE graduate, she would be marrying someone who earns more than a lawyer back home.

Same applies to Singapore women. I know a lot of Singapore women who may be perceived as ball-breakers by Singapore men but are "exotic and full of personality" to expat men.

Singapore needs to be both a global financial and marriage hub to survive the Great Sexual Recession of 2019.

If you wish to read about the sexual recession, you can following this link.

The Standard Model of Success

In Physics, the Standard Model is a theory that describes three out of the four fundamental forces of the Universe as well as categorizing all subatomic particles. Since the model was created, physicists were able to predict the discovery of the top quark or the famous Higgs Boson that is responsible for objects having a mass.

There is this general idea that success cannot be captured in a universal model because context and culture changes. Books on workplace politics and managing superiors will be totally obsolete once AI takes control, societies implement universal income, and all white collar jobs disappear.

However, my visit to Australia has rekindled my interest in coming with an elegant model for success after reading an Australian business self-help book by Nigel Collins called The Game of Inches. I am not too sure how you can get a copy of this book in Singapore but I like Australian self-help because it is unpretentious and down to earth, quite refreshing change from US self-help that has become very niche, academic, and inundated with angry voices like Mark Manson and Jordan Peterson.

The original book describes a successful initiative as being a result of four simple iterative steps which I think helped clarify my thoughts about being in the training business :

a) Find the gap

You need to find a niche your business is in. There are a lot of trainers who teach value investing. As REITs melt up, expect more REITs courses to be launched in the medium term. By digging my heels into the Early Retirement niche changes the training to focus on outcomes regardless of investing strategies or market conditions. Leverage is an example of how the course is timeless.

It will not end with just leveraging securities for future courses. My vision is a course so effective and counter-intuitive, folks who teach the CFA would willingly pay for it.

b) Take action

Exhorting someone to take action is, in the words of many who work in the judiciary, trite. You need to put in effort to bear fruit. I was not impressed with this suggestion from the author although I agree that this is correct. In less than a year, I have a Early Retirement Masterclass with a walled garden community of over 200+ members. This is clearly a result of taking taking small incremental action to build a community.

Taking action is not enough - the author needs to go beyond this to perfect the Standard Model.

c) Gather feedback

For successful businesses, feedback is absolutely necessary. My class simply had no room to gather feedback for the first few runs because of my inexperience. Feedback allowed me to create a better class. I'll admit it - people still find my teaching blazing fast and I need to slow down in August but my feedback scores have gone from 65+% to 91% after reflecting on every single brickbat thrown at me by paying customers.

d) Enhance / Delete your offering  

Once feedback is obtained you start taking a scalpel to remove elements to your offering to make it better.  One painful I did with the guidance of Dr. Wealth is to remove sections concerning career management and budgetary control. This is because folks consider themselves pretty ace at it and will not pay for it. Instead, I expanded the REITs section to form its own super-chapter. This August, we going really hardcore on fixed income.

Without sharing too much about my private earnings, a combination of all four behaviors is financially rewarding. And here's something more interesting - the portfolios I build with my students have also done better with more investor and macro-economy focused content. The frequency of class increased three fold.

But something is missing.

You can find the missing component in a book called The Flywheel Effect by Jim Collins.



The first time you take action, you should be launching your business with minimal bureaucracy. This is something I am very grateful to Dr Wealth for. They have a bias for action and more willing to get something going rather than getting it perfect - something which I missed every since I left the private sector.

After you iterate and gain some feedback, the action you take must bias towards scaling your business. I think this is what keeps small companies small. For each crucial feature I remove from my class, I add a new feature that folks benefit from. Folks following my business will know that prices keep going up, but we've onto two hands on exercises on portfolio creation. I'm might also moving into OTC bonds in a very serious way.

My personal philosophy is that financial independence is no excuse not to scale something up. I have come to the conclusion that I might be a compulsive money maker and this is some kind of sick game I'm playing with fellow lawyers to see whether I can outflank their escalating salaries over the next few years.

But that will be another article on another series of books before the end of this week.

The Model Thinker #26 - Learning Models

Learning models can find a lot of useful applications in investing and gaming.

Reinforcement learning models how individuals choose an action to take. The probability of choosing a course of an action relative to other actions is based on how rapidly the person adjusts to new reality, the original probability of choosing this action, as well the reward beyond a level of aspiration.

So, as rewards increase, learning becomes faster. Also a positive surprise where outcomes exceeds expectations, learning can also be accelerated.

Adding a level of complication to this is that sometimes, aspirations are often endogenous. Aspirations tend to keep going upwards until it reaches the a level equal to the mean reward.

Learning can also be social. People learn by watching others. Models of social learning depend on now just how rewarding a behavior is, but also how popular this behavior is. So, if someone is doing something rewarding, then I die die must follow ! That is the Singaporean way.

Learning models may explain the recent REITs melt-up and why banks are starting to declare dividends on an quarterly basis.

At the individual level, folks are impressed with REIT yields. This is because the financial planning industry has been educating innocents to accept returns sub-3%  for endowments and various annuities. When a well-managed REIT pays about 1.5% four times a year, it does not take a genius to figure out that hordes of older investors will flock to this product like bees to honey. Making things more interesting, REITs can have escalating rents over time.

This generates a positive surprise for investors.

At the social level, the growing popularity of REITs as well as it's rewards creates its own momentum as folks see other folks make some money from the recent melt up and plow their money into REITs further.

Banks are now getting into the quarterly dividends game because frequent rewards with a surprising upside is what will generate loyal equity holders over the long term. This is an inevitable trend moving forward and explains why stocks like even mid-caps like UMS remain robust in the face of a decrease in Purchasers Manager's Index.

This is the reason why I say that Dividends are the Opiate of the Capitalist masses. In fact, if you know about learning models and leveraged investing, escalating dividends through leveraged REITs can potentially be the Fentanyl of the Capitalist masses.

Recently, my FA friend told me that his idiotic agency manager actually believes that annuities can be sold to an investor like me because annuities have a predictable pay-out and complements my passive income portfolio.

I never laughed so hard in my life !

The Shopping List and a minor Personal Update

Yesterday BIGScribe, the company a couple of investment bloggers incorporated, paid a huge dividend. To let you guys to understand the kind of dividend we got, according to a fellow shareholder, the payout over 4 years was 225% of the capital we paid.

To be fair, this is blood money and hardly passive income, bloggers had to write and speak in public to generate these returns. Collectively, we were able to create generate a nice side hustle even before side hustles became a thing.

Interestingly, my money was gone less than 24 hours after getting the money.

My money has gone into buying a high-end Microsoft Surface Book 2. It is high time I started to enjoy some of the money I made and I've been putting off this purchase for months, opting to invest my trainer fees in the portfolios my students built. 
( In fact last month, I put in double of what I promised to my students because I really believed in their analysis and was promptly rewarded with a REITs melt-up. )

The outcome is that I am constantly short of cash and the BIGScribe dividend was the first time I rewarded myself significantly since leaving law school.

( My recent Australian trip was considered one week of full time work for my family )

Here some details of my expenses :

My Surface Book costs originally a whopping $4,500 ! I waited until they had a sale that was able to slash the money off by $700. I did not save on the discount because I bought a Microsoft Office License and Camtasia so that I start a new life  as a Vlogger. Over the next few days I will be buying a microphone to get started.

Two of my major tech expenses this year would have formed the basis for a new savings hack I will teach my students in August.

This is the creation of a shopping list. Simply put up all purchases above $1,000 into a list and impose a moratorium lasting at least 60 days before you make a decision to buy anything on the list. This allows you to buy time to observe price changes on Amazon and Carousell. For the experts, this website called camelcamelcamel.com tracks the largest price drops on Amazon giving you ridiculous savings opportunities. 

Here is what how I avoided about $1,400 of expenses from my efforts:

• I was about to farm my hard earned trainer fees into a Google Pixel 3 XL. On the day before I was supposed to buy it, I tried to root my OnePlus 2 phone and managed to put Android Pie into my four year old phone. Oneplus 2 with Android 9 gave me another 6 months of use and Google, cognisant that their phone have become overpriced, launched the Google Pixel 3a XL, saving my about $700 plus.  
• This Surface Book 2 purchase was comparatively more impulsive. A month ago, Microsoft started to talk about the Surface Book 3 and even launched a cheap 15" version without the high-end graphics capabilities but it was taking ages to come to Singapore. It turned out that BIGScribe monies came in on the day Challenger tried to launch a sale to offload the high end models before the Surface 3 gets out. The sale was timed to last only a few days and only two branches had inventories so I pushed hard to make a buy decision quickly, visiting three branches before one even had a unit to sell to me.

I believe a person has to pay the price to have anything good. Over the next few months, I will be working to increase the frequency of my course previews having "trained" myself by observing others. We will also be adding a lot of new material to our program which will excite the most jaded and experienced investors in Singapore.

Thoughts from attending E-Commerce Seminar Previews.

There was one last preview I attended prior to my trip to Australia and that is one that talks about E-Commerce. This last talk was draining because the trainer seemed to be quite good at saying nothing for quite a number of hours. Because this seemed to me like an entrepreneurship workshop, I can't really rely on my financial knowledge to deconstruct the talk.

I will instead paint the general idea of how what you are likely to learn in this course :

a) First you source for things to sell from a wholesaler.
b) Then you bring a few units it into your home and keep it there.
c) After which you attempt to sell it on a modern sales platform on the Web.

The rest of the preview, the trainer addresses the crowd's objection. If you do not wish to perform fulfilment, then you can engage in drop-shipping the items direct to your customer. If you don't know what to sell, the trainer will even recommend a product to you, potentially creating a conflict of interest as he may get kickbacks from the manufacturer.

A couple of things bugged me about this talk :

There are generally ridiculous promises of five-digit revenues you can potentially earn every month reselling items on sales platforms. It may actually be true, but take note that revenues do not equal profits and the audience went away not really knowing how much this opportunity is rally worth. I am inclined to believe that the sales figures were grossly exaggerated. Big numbers are possible, but just not probable.

A seasoned eye can often tell when the trainer hires people as fake customers. A real customer does not enthusiastically run to the booth to register for the course like the kind of psycho who shows up Anthony Robbins seminars.

Business and financial courses cost real money.

If you really want to fake an enthusiastic crowd, show them how to hesitate before deciding to buy a course. In my own preview last night, one customer did indeed rush to the booth to sign up immediately - She was the talk of the town for the rest of the evening from my colleagues.

As fan service for this blog, I am actually going to recommend a business idea right here for anyone to address. The folks who produce Dungeons and Dragons recently made a dick move to grant Target early access to sell the D&D Essentials Kit.

I am putting the link right here :

https://www.target.com/p/dungeons-dragons-essentials-kit-game/-/A-76151594

I have been trying to get a copy through auctions but may be stuck paying double for this game. There exist a business opportunity for the next two months to bulk buy from Target and arbitrage to local gamers in Singapore. If you engage in this trade, let me know - I want to buy from you !

For folks who want cheaper access to business ideas, I strongly suggest reading Chris Guillebeau's 100 Side Hustles.

https://www.amazon.com/100-Side-Hustles-Unexpected-Quitting-ebook/dp/B07H752CPH/ref=sr_1_1?crid=2QXSTAKGD3EB1&keywords=100+side+hustles+chris+guillebeau&qid=1562287598&s=gateway&sprefix=chris+guillebeau%2Caps%2C1551&sr=8-1

It is impossible to read this book and not have some novel business ideas of you own to earn some side income. This book has since been incorporated into my Early Retirement Masterclass reading list for incoming students.

I hope this E-Commerce talk will be the last talk I will attend in my journey to learn how to conduct previews. It is physically exhausting to listen to stories of how people succeed selling things without giving you any details on how to source and how much real money to expect when you start. I was lucky in the last two sessions on real estate because the presenters were fairly good looking.

From now on, my own previews will develop it's own character and even at the expense of some profits, I will be injecting more class and substance to my previews so that, even if you do not end up being a paying customer, it would be useful time spent and you can always read this blog for free.

Debunking the Souffle Life post Financial Independence

There is a particular lifestyle in Singapore that I could not really put my mouth to it - I wanted to christen it "The Souffle Lifestyle". This is the kind of low-impact, low-intensity life folks who pursue financial independence aspire to.

So if the most intense activity you did is was to eat Souffle Pancakes, playing League of Legends and masturbating to Pornhub last weekend, then you might be the kind of the person who enjoys living this kind of life. Messages promoting the Souffle Life is obviously being channelled by many trainers peddling passive income schemes, primary of which involves the keywords "Shake Leg".  Other messages include walking along the beach at Bali and bragging about your life of travel and leisure.

This is now low class in my book.

I did not get a lot of headway debunking the Souffle Life until I read an unexpected book by Cal Newport entitled Digital Minimalism which contained a significant component on the FIRE movement. The book introduces the Bennett principle that suggests the opposite of the Souffle Life which I have an experimental name of the Mala Lifestyle.

Bennett proposes that leisure should be strenuous - you get more out of your leisure based on the amount of equivalent exchange of energy. Like a Mala dish that is not only hot and spicy, it is the kind of dish you mix and match to eventually get it perfectly right for yourself.

Digital Minimalism proposes principles to design a life post Financial Independence :

a) Prioritise demanding activity over passive consumption

Leisure should strategised.

My biggest regret for my Australian trip was to follow a tour guide. I wanted to minimise risks and I thought having having an extra person around would be useful if something went wrong since I will be with my kids. A free and easy trip would have given my family more control and we would be able to just focus on a few activities we'd liked.

With free and easy, we would have actually more rest with more intensity.  We could just plan one activity each day and beat a hasty retreat once my son gets cranky. From the hotel room, we could have planned the programme for the next day or binge on Australian Dairy products.

b) Use skills to produce valuable things in the physical world

Sadly I'm not particularly good with my hands, but I see myself as a craftsman of ideas that I share behind a pay-wall. Now, almost everyday, to cope with a late breakfast thanks to intermittent fasting, I think of ways to refine my training materials and add more value.

I recommend that the moment you FI, start going through the catalogue of the Nanyang Academy of Fine Arts and just enroll in a crafting course. It may be the most meaningful thing you can do after figuring out how to live on dividend money.

c) Seek activities that require real world, social interactions

I was particularly impressed with this chapter because Cal Newport used board-gaming as an example of a social interaction that is designed to be intense but yet friendly. ( Just don't play Illuminati, Diplomacy or any Game of Thrones board game.)

Dungeons and Dragons serve this purpose quite well for me in the past. These days I see my training program as a long RPG campaign I run for paying customers. ( Who literally collect gold. )

With these three fundamental principles, we are now ready to debunk the Souffle Life and replace it with something a lot better. You have to flush out the continuous engagement with video games and replace it something like joining the Toastmasters and taking a class on book binding.

The Model Thinker #25 - Signaling Models

Signalling models are very important in Singapore society. These models identify conditions under which people send costly signals to reveal information or their type.

One of the most important forms of signalling in Singapore are academic qualifications, with the best corporate jobs going to folks with the highest Latin honours or 1st Class qualifications. This is in spite of the fact that most engineers on the job are unlikely to be made to solve calculus problems as part of regular work.

The simplest model works by setting the cost of attaining a qualification along with its benefits which are distributed to equally to anyone who earns that qualification. A stronger candidate will expend fewer resources to obtain the benefit, so they will strive hard to earn it. A weaker candidate will have to pay a price that is too high to gain the qualification so they may simply just skip it altogether. We are seeing the benefits of private or even Australian degrees dwindling in recent times while the fees remain largely higher than local degrees. This explains the closure of many private schools in Singapore - there is simply very little signalling value of these degrees here in Singapore, so much so, that if my son were to ever be forced to get an Australian degree, it would be to emigrate and never come back home because of what having an Aussie degree may signal to a local employer in the future.

Signalling is always costly. Degrees in Medicine cover statistics in fine detail and yet our GPs hardly do hypothesis testing as part of clinical work. And don't get me started in Legal Theory and Philosophy, I am still waiting to start a fight over what the Grundnorm is for our POFMA law.

Cultural anthropologists say that there are three kinds of costly signalling we may see in society.

Unconditional generosity basically means giving until it hurts. We see a lot a liberal signalling of late. A lot of young liberal Singaporeans brandishing copies of Teo You Yenn's This is what inequality Looks like to signal how woke they are. A good friend actually went ahead to make a donation to homeless and invited these virtue signallers to join him in the program - no one stepped up. When my friend asked me, I kept quiet initially but after a while I just admitted that I don't want to. I'd rather be a stingy bastard than a hypocrite.

( I did promise my friend that I earmarked a small sum of money for the Workers Party if they lose the AHPETC suit though. Given that I voted PAP three times in the past, I owe WP some dough so they don't face an extinction event. )

Wasteful subsistence behaviour is how most men avoid becoming BBFAs. In primitive societies, it's actually more economical to gather fruits and pick berries, but folks who hunt tend to have more offspring. Hunting is energy draining but it may signal superior genes. Translate this to modern society and you will understand why some guys will spend money getting an LV handbag for their girlfriend when it is probably much better to buy her some Singapore Savings Bonds instead.

Lastly craft traditions employ time and resources to create ceremonial objects with little practical value. The ability to inject meaning and culture to these ceremonial objects may also signal one's value as a potential mate. From what I have experienced, I have never seen an engineering major attract the eye of a good looking lady with a well designed power amplifier but I have seen many English Literature majors impress women with a poems that melts her heart.

As such, engineering types may need to deploy their higher incomes to buy that LV handbag.