Thursday, August 29, 2019

Do women prefer nice guys or rich guys ?

Image result for pokka

Today we are going to discuss, with actual scientific evidence, what do women actually prefer, nice guys or rich guys. This question reminds me of the flak I used to get over 20 years ago when I was a relationship troll in the forums - now in its latest incarnation on Facebook as NUS Whispers.

Even in those horrible days, there is a lot of hypocrisy over Gen-X women's purported preference of SNAGs or Sensitive New Age Guys. Fast forward to today, the SNAGs of yesterday might well be the Incels of today - involuntary celibates relegated to the dark corners the dating world. IMHO, many hard-charging, career oriented Gen-X women today are either unmarried or marry beta males and had to go through the process of dressing them up as alphas.

Let's see what social scientists have to say regarding this question :

a) Men are attracted to nice women, but women are not attracted to nice men.

We need to first begin with a proper definition of the word "nice". Basically, a nice guys supports and affirms the self-image and values of a woman and demonstrates sincerity in investing resources into the relationship. If you are a fan of the Friends sitcom, Ross is a classic nice guy. In psychology, this trait is known as "responsiveness"

Here's the deal, in 2014, Birnbaum, Ein-Dor and Segal in the Personality and Social Psychology Bulletin showed that responsiveness in a women increased sexual interest in men, but responsiveness in men do not have a similar effect on women. One possible reason for this is responsiveness is largely seen as a feminine trait.

You may find the abstract here.

b) Women are attracted to manipulative men who are also narcissistic psychopaths

Narcissism, psychopathy and manipulativeness form the Dark Triad of personality. Men of the Dark Triad are social climbers who seek prestige or status and generally unconcerned with the morality of their actions. When it comes to the Dark Triad in males, look no further than Emperor Palpatine of the Star Wars movies.

In 2014, Campbell and Muncer wrote in the book Personalty and Individual Differences was able to obtain evidence that women find men who exhibit the Dark Triad personality traits as being more attractive than men who don't.

Full text of the research paper can be found here.

c) Women just have better sex with rich men

If this does not get a guy to start buying dividend stocks and start saving money, nothing will.

In 2009 in a journal entitled Evolution and Human Behavior, a survey was conducted on 1,534 women in China on the frequency by which they attain orgasms.

The results are tabulated here :

Based on the experiment, having increasing wealth leads to higher probability of always having an orgasm and mitigates the possibility of having no orgasm during sex.

If you are offended by this assertion, the full text to the paper can be found here.

I think clearly there is an objective answer to the question as to whether it is better to be a nice guy or a rich guy. Of course, these two traits are not mutually exclusive.

Too bad the research has not been conducted yet when I was making such bald assertions when I was an undergraduate. It would be much harder to argue against someone armed with data from social scientists.

Tuesday, August 27, 2019

MBA in a Nutshell #3 - Marketing : Customer Service and Customer Focus

Image result for marketing

As we continue with our exploration of marketing, we are now dealing with some key issues of customer service and customer focus.

a) Most customers are decent and honest 

This follows research that most customers are decent and honest. While I agree with this statement, I am mixed on how to follow up on this recommendation. Singaporeans are fairly astute life-hackers and I would not rely on the good faith on others when conducting a business.

For months we had to keep tuning our money-backed guarantee program to prevent abuse. One classic champion customer asked for his money back and then continued to badger me for advice on what to do after making it clear that he acted on what was taught in the class.

This is why we can't have good things and I've learnt a lot about running an education business from people like this.

b) It is easier to retain and up-sell to existing customers than to get new ones.

It costs five times more money to acquire a new customer so it is a lot more effective to sell to existing customers than to find new ones.

This insight would work if I can come up with an advanced investing course as my students already speak the same language. Right now, however, I am still a rookie who has just about to complete his first year. The other issue is that it's difficult for me to launch a new course unless I can invest with my own money on what my students produce - this means a longer incubation period to discover and test a new way to invest.

I am slowly gathering feedback from my community on what would they like to learn. Maybe marketing people should focus less on squeezing their customers and spend more time engaging them first. 

Right now, students are clamoring for regular meetings to get updates. I'm not too sure on how to get the itinerary and the price point right.

c) Customers will ignore your shortcomings if they perceive you as caring for their well-being

This is called idiosyncratic credit in educational sociology. Students will ignore their teacher's flaws if these teachers show that they care.

This is no longer optional in financial education. Whether a trainer treats his students as a recurring source of revenue or as a bunch of friends will show from the way they engage customers in social media.

I actually think that I may have broken ground here. More idiosyncratic credit can be gained when the teacher has his well-being tied to his student !

d) A company must contend for the customer's attention before they can sell to them

Another really dumb and common sense idea is the concept of permission marketing. In order to sell to someone you must provide value to them first to earn the right to do so. This should be common sense - I started previewing my course and designing a 2 hour workshop before planning for my course is even complete.

Recently however, it came a shock to me that not every salesman follows this approach. A friend shared to social media that real estate agents have been going around ringing their doorbells and hawking their services to them. As my condominium has also reached the minimum occupancy period, my mailbox has also been inundated with letters from these pests. 

I don't understand how the reputation of these agents can be maintained by stealing our attention without offering somethings useful. To date, I've also started to throw the free fridge magnets from real estate agents away.

In summary, I am unimpressed by these marketing insights I read about.

Right now I imagine an army of MBAs channeling these insights from dated social science academic papers into figuring out how to get more eyeballs when common sense tells us that, basically, if you want anything from someone, find ways to add some value to them first. 

The more value you add to them, the more they will add value to you.

Sunday, August 25, 2019

The Dunning-Kruger Effect

A friend is undergoing social media detoxification and is no longer following up on interesting developments in the personal finance space. When I asked him why, he replied with one of the most hilarious quips I heard last week :

Some of these spaces have discussions that are so pointless, these forums should be re-purposed to become a research platform for social psychologists to study the Dunning-Kruger effect.

So delightfully vicious !

But I need to reflect on this exchange so I thought I should put up some information on this effect because it is vitally important that, in my course, we address this issue to the best of my ability. Students pay good money to attend an investing workshop to pick up Early Retirement skills, it is reasonable to say that some will become over-confident after a few rounds of dividends pay-outs. After that, some of them will confuse their luck with their skill.

The Dunning-Kruger effect affects everyone. As we pick up some investment skills, we experience a stage at first where we, at first, gain a lot of confidence so we start to behave with a lot of hubris and bluster. I was pretty much like that when I started studying finance years ago. After reading a textbook by Aswath Damodaran, I thought I was a whiz kid who can apply discounted cash flow to any asset I encounter and figure out it's intrinsic value. It took a lot of digging, losing money, and reading academic papers to realize that professionals have ditched DCF after under-performing for many years. With social media, we are seeing a lot of such folks out there at the peak of Mt. Stupid.

Perhaps one of the surest signs of meta-ignorance may be an inability to shut the fuck up about Warren Buffett.

The Dunning-Kruger effect diminishes once you study the subject matter deeper because you gain some insight to your ignorance. You need to have knowledge to know that you are wrong. Otherwise, we're wired to think that we are right. My pet theory is that this affects men a lot more because we need to over-estimate our attractiveness so that we can reproduce and we are wired to gloss over our inadequacies. 

Ok, back to addressing the Dunning-Kruger in an investment program.

This is what how my program avoids it :

a) The course is based on experimentation and results.

I never conduct the same course twice. Every lesson is based on a set of experimental results about the markets and which strategies still work as compared to those that don't. At least for the strategies taught, there is no dogma that says that any particular strategy is right. For the past two sessions, REITs have run up so much, I changed my strategy twice in a row.

Another useful aspect of my program is that I like to collect investment mistakes. I record the rationale behind all decisions made by myself and my students so that future batches can see how great decisions end up with huge losses.

I think this gives them a better perspective on hubris.

b) Not even the back-testing approach is spared 

Right now my challenge is to take note of weaknesses in the course meta-strategy. My approach suffers from non-stationarity. Moving forwards in time, there is a risk that return and risk characteristics change materially.

So far this has not affected the money made in the portfolios but I am very curious as to whether how long can a strategy is known to persist over time given that a lot of folks have a Bloomberg terminal.

c) Students are encouraged to start small and 

Students need time to get through the "valley of despair" where they really learn how to invest. The trick is to make them apply a tiny part of their portfolio (around $10,000) and leverage it up to experience the reality and stress of having a leveraged account. I try to get them not to scale up until they experience 3-6 months worth of dividend payouts.

Hopefully they can learn a thing or two about their risk appetite in the process.

I don't think my program can address the entirety of this effect. The investment journey is a long one and you cannot expect a 2 day Masterclass to make you an investing genius and resolve issues of over confidence. In many cases, sometimes course design aims to achieve the opposite, I still need my students to be motivated enough to act.

Achieving this balance is the hard part about investment course design.

Friday, August 23, 2019

Breaking the Chains of Meritocracy

Image result for breaker of chains

While I was never a precariat, growing up in a landed property estate made me very sensitive to being looked down upon. Even though I had more toys than other kids in school, I had poorer toys compared to my neighbors. I was also shamed because culturally I was not as sophisticated as my neighbors who consumed great works of Literature and knew pop culture more than I do. I watched channel 8 growing up, my fucking neighbours watched American Sitcoms. I hated cultural trappings and Literature because I don't understand why it has to become an instrument of shaming of other Singaporeans.

My solution was to study hard. Study of the factual so that it can be weaponized to meet any objective I want. Build stuff be it writing code, designing portfolios or reviewing contracts. Because I drank meritocracy's kool aid, I know that I can beat those bullies of my youth one day.

But once I have adequately resolved the financial problems of my generation, the question is whether I want to have the option to begin resolving the problems of my children's generation and answer the question of what kind of legacy I will give to them.

Keeping in mind that wealth will seldom lasts longer than three generations, I have to accept that my family's ability to generate wealth may be limited to what I can do within my lifespan. My children may be no more special than other children. With the education system becoming more opaque, the Rawlsian veil grows thicker. My daughter is quietly being streamed this year in Primary Two and there is some resolve by teachers not to allow parents to get into the way.

Concentrating money within one generation allows us to bend society's laws.

Having grown up in a landed property estate, a lot of actions of my neighbors violate our tenets of meritocracy. I had friends who get shooed in to elite franchise schools along Barker Road and don't seem to suffer any ill effects from academic mediocrity - they have degree programs waiting for them in Australia and England and then their dads will ensure that they can get a fine entry level job by pulling strings with his MNC friends. One incident that scarred me for life is somehow a neighbor could get into RI with one point higher aggregate score than me even though we both would not have qualified for a seat.

( Remember for Gen X, Australian degrees do not carry the same stigma as subsequent generations. It signals that you are rich. )

I am thinking about this lately - perhaps our meritocracy is designed is to put so much money into the hands of winners so their kids will not have to play by a meritocracy's rules when they grow up.

Right now I love my job and making money for my students, so I still can't stand the idea of being a NEET, so maybe that's my destiny - to Break the Chains of Meritocracy so my kids don't have to suffer the rules as adults.

There may be a way to play this responsibly so that they don't end up carrying a glass of champagne and talking up Surrealist art in the Singapore Tatler and becoming no better than the rich bullies I grew up with:

a) If you don't want to play by Meritocracy, you should still be useful to society.

I think a lot of freedom can be earned if you just aim to be useful to society instead of being successful. A good nursing career is useful in my book. Being a social critic who want to comment on how much inequality there is in society isn't ( unless you find a way to pay more taxes to ease your personal guilt )

A minimum baseline would be useful to society for at least 4-5 hours everyday create a business, conduct a trade, or serve others.

b) Emphasis on play rather than achievement

A rich multi-millionaire once told me that he'd be happy to let his kids play games non stop for a year and quit school. I used to think that was decadent, but now as I enter their ranks, I can see the wisdom of that !

If you play Magic the Gathering or e-sports, you will eventually learn that intensive play and accomplishments are more or less the same thing. If you treat an endeavor as a game - the way I treat my class as a game I play with students to beat market returns using my real earnings, you will take a lot of ridiculous steps to improve your gamesmanship.

This results in better outcomes than just being focused on results.

c) You can always leave if all else fails

I really don't want my kids to leave Singapore if they can't get into a local degree program. One way is to provide some passive income if they take on a working class identity here. But we don't know how much our society will improve working conditions in the future for Heartlanders so I am optimistic that they can stay and be happy here. We're also one of the few countries on the planet that will start working on rising sea levels.

A lot of affluent Singaporeans think the same way, they make plans to leave but do everything they can to stay put because it is just a better run society than any other alternative.

My kids are lucky. They don't grow up in a landed estate. My neighbors today are culturally and socially similar to us.

I also tell my kids never envy their neighbors who may pick up concepts faster than they do. Maybe it is because managing wealth and making it grow is a much simpler skill set than figuring out how to earn the money by trading your time.

Will we remain Anchorites dedicated to the God of Meritocracy or will I evolve to become a Breaker of Chains ?

Only time will tell.

Wednesday, August 21, 2019

MBA in a Nutshell #2 : Different Schools of Thought in Marketing

Image result for marketing

So we're onto our first chapter which is on Marketing. Marketing was the reason why I refused to do an MBA 15 years ago because I only wanted to focus exclusively on number. It is ironic that my career began in P&G which held thought leadership in brand management and marketing right up till today.

There are four different schools of thought in marketing and these four schools have a deep impact on my work as a trainer.

a) Product Focus

Like any engineer, if I have any spare time, it will be devoted to my main product line which is the Early Retirement Masterclass. I am obsessed with gathering the latest and greatest information for my class attendees. Almost every lesson I conduct is different and I am always innovating to make the sessions more hands-on driven and interactive. No prizes for figuring out that NDP 2019 will play a heavy role in my materials moving forward.

But sadly, it is not true that just because you invent a better mousetrap, folks will beat their way to your door. I can have the best course in the world but without the other focuses, I will not be able to scale my product to grow my revenue.

Engineers need to understand that they cannot fall into the Product Focus trap.

b) Sales Focus 

This is the part that investor-trainers enjoy the least. Selling is the hard work of persuading someone to buy something. My previews mainly conduct the work of selling but I am supported by Dr Wealth's team of excellent salespeople to expand my top-line.

I like the amount of energy salespeople bring to the table but I am also very aware that a class of trainers have given us a really bad name by spamming folks with their sales videos on Facebook.

Sell too little, and you can't survive. Sell too much and you're no better than MLMers hawking some health product and you will gain a bad reputation as a scammer. The balance to me would always be to look at the customer's needs and say enough to demonstrate that they can meet their retirement goals.

c) Marketing Focus

This is very important but also very subtle. This is where most MBA programs focus their teachings at. The 4Ps - Product, Price, Place and Promotion. This is I have meetings with my partners to determine how often we conduct previews, what demographic is buying my product and how to tilt my message to get more conversions.

This is super important and we don't get enough of it to drive the strategy planning on whether to emphasise sales and marketing.

d) Societal Marketing Focus

Trainers don't do enough of this. Having a societal marketing focus means doing good to the customer and society over the long term. Socially Responsible Investing is being bandied everywhere and I'm not even sure how real this is.

My course attempts to eliminate conflicts of interest by assuring my students that I will use me fees to bet on their investment decisions, but it cannot stop there. As my community grows stronger, I am building coalitions with other partners who share our values.

  • We promote Stocks Cafe because we believe that it is a superior product at the current price point. This I do with a small kickback.
  • I found a new margin broker recently who happily bent their backs to give competitive pricing to my students. This I do with no fee because I told the broker that his usefulness will end the moment someone gives my students a better deal.
  • I am also working with a non-commissioned advisor and directing business to them because my students are facing so much pain with their insurance policies. Denying business to possibly a commissioned agent is more satisfying than any payment I can get.

Ultimately, my position is that DIY investing is a net social good because it generates wealth for the customer and it also makes them more savvy about current affairs and world politics, giving them a stake in nation building.

In any business endeavor, all four schools of thought has to be considered when it comes to marketing.

Monday, August 19, 2019

Letter to Batch 6 of Early Retirement Masterclass students.

We have just concluded Batch 6 of the Early Retirement Masterclass. Now the momentum for the classes is picking up and I have another session in the first week of September. 

In the following letter,  I try to capture the mood of the markets.


Dear Students of Batch 6,

It’s been a great honour and privilege to be able to conduct a 2-Day Early Retirement Workshop for you.

In the world of Finance, the supernatural can take on a life of its own. August is statistically one of the worst months for the local markets and the worst performance of the STI in 2019 also corresponds to the same period as the Month of the Hungry Ghost. This is traditionally an unlucky period of the year for me. During class, I had to nurse a really bad cough on day 1 while my dad had to be readmitted to the hospital on Saturday morning.

I hope that you can see this period of time as a great opportunity to pick up some stocks. The Month of the Hungry Ghost will pass and, at such high market risk premiums relative to bond yields, the markets are quietly signalling to everyone that this may be a time to bargain hunt and wait for an upturn. The STI is also trading at its lowest level since I started the ERM Programme.

Granted, the market cycle is rapidly approaching a trough as there is increasing evidence that quarter to quarter GDP growth will hit a negative number in Q3 2019. This confirms that we are entering  a technical recession.

You are encouraged to at least buy into the passive income portfolio that we have built and lock in 6.2% dividend yields. For those with less capital, you are free to wait for the portfolio to be published in September before you make your move on the STI blue-chips portfolio.

The quality of the class discussion is very high and I note that this batch has been very balanced when making a decision to eliminate the stocks.  I would also note that during Q&A, I learnt quite a bit about renovation loans and it was enlightening to hear from the class that renovations seldom increase the resale of a Singaporean home.

As REITs are still trending upwards, it seem that we may be seeing some downward pressure in dividends for the portfolios we will be building in the future. Our co-created equity portfolio that yields 4.05% can be found in Annex A of this message. Our co-created REITs and business trust portfolio that yields 6.20% can be found in Annex B.

Nevertheless, I look forward to investing $10,000 of my own fees into my margin portfolio with an equity multiplier of 2 into each of the portfolios in Annex A and  Annex B. You will hear details of my execution in about two weeks time.

Finally,  I am dedicated to improving the quality of ERM experience. In a two week’s time, expect to see videos posted on how to perform buy and sell trades on a brokerage account.

Christopher Ng Wai Chung

Thursday, August 15, 2019

When your Singapore Dream dies, what will you do ?

A man in his 40s experiences the coming of the Autumn of his life. His parents are getting old and his children still need his support. He also has to deal with a tougher working world as he has less energy to spend at work.

My dad has just been discharged from hospital and my mum is struggling with post-hospital care-giving. For the past few days, I have been helping out to buy to medical equipment to make my mum and our helper's life easier. We bought a commode, a ripple bed, and expect the delivery of a back-rest next week. My parent's home has been turned into a make shift hospital. Delivery of adult diapers will now be a regular event at my household.

Autumn is no longer a time of earning money aggressively. All the #YOLO and personal growth will suddenly take a back seat and you will be forced to play a game a defense.  Consequently, my single-minded focus on money will naturally shift to focus on time for loved ones.

I am grateful for a good summer because I was able to earn a decent amount of money and invest it well. But now, I am entering Autumn and increasingly I will have to look into playing defense and put the welfare of my family above that of my career. 

To visualize the coming of Autumn quantitatively, the Ministry of Manpower publishes data on median salaries broken down by educational qualifications and gender for our review. This gives an idea of how our Singapore Dream will unfold as we grow older. But more importantly, it also tells us when we will be expected hit our peak earning years and when the Singapore Dream begins to die.

This can provide some insight into how long we can sustain our break-neck career trajectory and when we should start planning to give up on the Singapore Dream.

a) Degree holders earn more but plateau much earlier.

If I did not leave the corporate world, I would have under-performed my peers with degrees when it comes to salary and earned income. Fortunately, I was "outsourced" early in my career and did not drink the "career ladder Kool-Aid" drunk by many corporate executives. I knew the music would end early for engineers of my generation. The CECA agreement signed in 2005 was the death knell for many local IT professionals, but as an outsourcing professional, I saw it miles away.

You can see that degree holders in Singapore do rather well and can earn up to $10,000 per month at age 45 after which they start to decline. This corresponds very clearly to the retrenchments we are seeing in the economy and it basically means that after age 45, there is nothing much to look forward too.

b) Diploma holders earn less but can extend their careers much longer.

I read elsewhere that Diplomas and Trade schools are designed by society to increase a population's conscientiousness and this is clearly reflected in the career longevity of Singaporean diploma holders. Diploma holders have salary trajectories that continue to trend up until they can receive their CPF money.

Perhaps this is a testament to our need for worked with genuine skills and not middle management administrative skills. We have to keep this up for the middle class, give them something to look forward to right up to their first CPF payout.

c) Post-Secondary qualifications without a diploma earn less and peak earlier.

This reinforces my theory that a diploma is useful for nation building and results in the longest (but not highest earning) careers. Qualifications such as A levels are not really useful or helpful to society and it is better to get a diploma than to be a  glorified clerk in some office.

All this means something for readers of this blog who are primarily Singaporean degree holders.

Here's what kind of lessons we can all draw from this simple graphing exercise :

a) Gen X needs to get off your high horse NOW

Is a 1.8L car better than a 1.6L ? What kind of condo will be proof that you have finally arrived ? Which luxury watch is better Lange & Sohne or Patek Phillipe ?

These are the stupid and inane questions Gen X bother themselves with everyday.

Once you realize that your earned income peaks at 45, you will see the importance of getting off your high horse. You have to find ways to stop increasing your expenditure further at age 45. Setting aside some cash reserves for retrenchment should also become a priority.

The biggest threat to your life is the hedonic treadmill. You have become accustomed to a life of a PMET with a car and a condo but such a lifestyle needs a high maintenance. The downgrade needs to begin immediately upon reaching 45, hopefully before you get retrenched.

Maybe you can start by reducing purchases from Cold Storage and start shopping at Sheng Siong.

b) Invest to maintain your salary trajectory

I don't think there is any shame upping your savings to 50% of your take home pay if you make $10,000 a month - it would just equalise you to the same standard of living as a diploma holder of the same age.

Saving 50% can mean creating an investment portfolio that can provide dividends that will continue to provide increments beyond 45.

This is basically what the curve is trying to tell local professionals. After 45, your increments will come from increasing rents and dividend payments and not from salary increments.

c) If you are planning to emigrate, a plan to quit Singapore needs to be executed around age 45

45 is the peak of your earning power. By reaching this point, you have enjoyed and contributed everything you reasonably could to the Singapore economy. Now society wants you to step aside for younger people and will begin to value your skills less.

Being a global city, Singapore will always be a tough place to work. You can plan to quit by 45 so that you can transition and still remain on the upper part of a salary curve somewhere else. I have written about SIAMFIRE or retiring in Bangkok if you can't afford to stay in Singapore. There are also alternatives like Australia that pays blue collar workers well so you can go there for a kinder and gentler corporate culture.

Maybe for this National Day, you need to ask yourself how much more shelf-life you have and start planning for the inevitable. Our government has published excellent data for us to make our plans decades in advance.

What will you do when you plateau and the Singapore Dream dies when you reach 45 ?

[ NB : I will be 45 this coming Christmas. This data was a sobering wake up call to me. ]

Tuesday, August 13, 2019

MBA in a Nutshell #1 : Universal Business Formula

Image result for mba in a nutshell

If you want to summarize the running of a business into just one simple formula,  it should look like this :

1) Revenue - Costs = Operating Income
2) Operating Income - Tax and interest expenses = Net Income

There are only two ways for anyone to make more money in any business endeavour:

a) Increase Revenues

This happens only if I can get more customers to sign up for my program. One way would be to keep varying my marketing preview messages so that more potential customers sign up. Another way would be to increase the frequency of my preview talks.

There is also the possibility of adding more courses. The answer I have chosen for myself is to keep improving the value of the cost to justify fee increases.

b) Reduce Costs

It is much harder for me to reduce costs so I do avoid taking this route in my work.

Other trainers may try to squeeze in more students per class to keep costs down. What is unthinkable for me would be to look for a cheaper venue or reconfigure what students eat for lunch.

There are just four ways for a business to grow :

a) Sell old products to existing customers. Eg. Course refreshers for existing customers.
b) Sell new products to existing customers. Eg. Advanced Investment Courses.
c) Sell new products to new customers. Eg. Personal Finance Course for Millenials.
d) Sell old products to new customers. Eg. Previewing my existing course offering.

Most investment training products are about hawking established courses to new customers but my course material changes sufficiently for older customers to possibly want a refresher. ( As I am still quite new to this business, I have not started working on this arrangement yet.)

Maybe in about 2-3 years, I may consider an Advanced Investment Class to run a hardcore session for intermediate investors.

You can use this same framework to review businesses in your investment portfolio.

Can Netlink NBN Trust find new ways of generating revenue ? What about SPH ?
If not, how can they improve operational efficiency and reduce their costs further ?

Sunday, August 11, 2019

Stocks Cafe : A Nifty Portfolio Management Tool

It's quite hard to find a good collaborator in this field. Fortunately, my working relationship with Evan Koh has taught me all the good traits in a great collaboration partner.

I met Evan via my work with Dr Wealth, at that time I was not a trainer yet but I had noticed that Stocks Cafe is a really powerful tool for retail investors. After launching my program, I realize that there are psychological benefits of seeing dividends be taken into consideration when a stock goes ex-date. Evan is now a good friend, and I make a point to have coffee with him whenever he is back in Singapore. My business partner Alvin Chow describes Evan as a person whose values are firmly grounded in the notion of "adding value" and this shows in the sheer quality of features in his creation as well as his rock bottom price.

Stocks Cafe is one of the best tools to monitor a portfolio because it allows a retail investor to track incoming dividends. Dividends also arrive on Ex-date so that you do not need to endure the psychic pain of watching your portfolio shrink when it was shrinking because it was pushing money into your bank account. It also produces a lot of useful metrics on your portfolio like VAR.

Evan was kind enough to offer his $39 program at a discounted fee to my students (at $35) and offer me a small commission along with it. As a consequence of this collaboration, Stocks Cafe has become a major screening and portfolio management tool for students of my program who can get access to capabilities better than what Yahoo Finance can offer.

This positive synergy has also enabled me to start creating my first introduction to the Stocks Cafe platform which, I think, should benefit all readers of this blog.

Here it is :

If you like what you see here head over to and sign up on this platform !

Thursday, August 08, 2019

Harsh truths about local degree programs #2 - The Final Word

Before I begin...

Ok, the first installation of this article went quietly viral. While there was no discussion on this blog, but the viewership hit the roof and it became one of the most popular articles this year. 

Before I get to the substance of what I have to share today, I'd just like to address the commonly encountered criticism of my article. Some folks argued that choosing a degree for vocational reasons undermines the spirit of learning. 

I think these critics need to check their privilege. 

Singapore degrees are vocational ! 

A substantial proportion of the Singapore population have degrees and it forms a major part of their Singapore Dream. A degree is no longer some kind of license to hide on top of an ivory tower so that you can intellectually masturbate to academic papers written on Phenomenology or 12th Century Zoroastrian writings.  In order for Singaporean's FIRE aspirations to be met, society must deem their academic qualifications to be useful. 

Also, the folks who defend their love of learning conveniently ignore the fact that a lot of working class Singaporeans take on loans to study for their qualifications. Many of such loans come from their parent's CPF ordinary account so paying back is a priority. I think they also exaggerate how much a degree plays into a person's identity - a complete education often involves a constellation of CCAs as well as networks that can give a person a social and cultural advantage throughout their entire lives. 

Even if critics can muster a stronger argument, the POTS framework remain a tool for folks who are aiming to FIRE at a younger age. If FIRE is your aim, then you need a degree that can put as much money in your pocket quickly so that you can build up a portfolio faster than your peers, so having a higher pay to offset your study loan takes priority.

That being said, we can now refine the POTS model into something that is a lot more useful than what was first suggested by Kristy Shen. 

First, I adjusted the minimum salary to follow the average salary of an A level graduate which is quite low at $1,600 a month. Once I do this, however, the three year non-honors degrees get a huge bump because school fees are much lower. 

(We even managed to get a situation whereby a non-honours Arts degree has a higher POTS score than an engineering degree, but an honors Arts degree fared worst !)

So the model can be improved further. For most practical purposes, salary information does not fully describe the usefulness of a degree. 

What's equally important is the employment rate of fresh graduates.

I took a stricter definition of an employment rate that only considers permanent employment in the Adjusted POTS calculation - this is due to my opinion that nobody chooses a degree just so that he can drive Grab or sell insurance. Most of us mortals seek employment in a steady job that pays a decent salary.

Also, the Nursing and Accounting degrees were introduced to make the table more useful.

Multiplying the original POTS score by the employment resulted in this table :

Once we introduce the employment figures, Medicine remains the choice only for the most dedicated A level students. Once you see the score for a medical degree, can you even blame our doctors for wanting to specialize instead of becoming a GP and serving the community?

Science degrees remain a horrible idea unless the government can intervene to subsidize these degrees more generously. The employment rate is also atrocious. We urgently need to come up with new jokes about our science majors becoming baristas and serving french fries in Singapore. We've been unnecessarily mean to humanities majors for far too long.

Music and the Liberal Arts remains the degree only for the hopelessly insane, woke or fabulously wealthy. Like I said on social media, Yale-NUS is not the same as Yale. The same way Lippo-Mapletree is not the same as Mapletree. 

Business, Accounting, Law and Computing remains decent choices for FIRE enthusiasts have an Adjusted POTS above 0.5 and I am quite glad that to see that Nursing numbers are not bad as well ! 

So cross your fingers, my BBFA friends ! 

One day some hot nurse might join our financial blogging community !

Wednesday, August 07, 2019

Online lecture and tool demonstrations

Today I started teaching myself Camtasia and Video editing so that I can start sharing free lectures to the public as well as online tool demonstrations I typically do "live" with my students.

This is my first attempt to show folks how to use a compound interest calculator.

From now on, things should get much more excited in the future.

If only I figure how to start making live videos !

Tuesday, August 06, 2019

New Column : MBA in a Nutshell

I never believed in the magical career-enhancing powers of an MBA. Even as a first year Systems Analyst in P&G, I was able to gain exposure from seniors and managers who built fantastic careers with their MBA qualifications but somehow I never saw myself getting one.

The main reason why I refused to do an MBA was because I was contrarian. It did not make sense to pay top dollar when you can self-study the CFA for the fraction of the cost. I also did not believe that anyone should be made to study and take exams for flaky non-technical subjects like Marketing and Organizational Behavior. That's almost like trying to get a Certificate in Common Sense. I have since done worse, wasting hours of my life on Legal Theory and Philosophy in SMU when it is more productive watching paint dry and playing with my Pi Sai.

Another reason why I was confident I cold eschew the MBA were the many popular books that attempt to summarize an MBA program like 10 Day MBA by Steven Silbiger.

Today, I am still a sucker for MBA guides. My latest purchase was The Visual MBA by Jason Barron.

The next column on this blog will be based on Dr Milo Sobel's MBA in a Nutshell, following the tradition of previous columns, I will comb the book cover to cover over the next few months.

As the book only has eight chapters, I will take a super slow approach, crunching 3-4 pages at a time per blog article so that I can apply the lessons of an MBA course into my life as an investment trainer.

The best time to pick up business skills is when you are actually running a business so that theoretical ideas can be turned into practice. In essence, I am solving a big business case involving my Early Retirement Masterclass product offering.

Maybe this blog might even be able to attract a new kind of MBA candidate into its readership.

Considering that I don't have an MBA myself, this would be kinda ironic.

Sunday, August 04, 2019

Harsh truths about local degree programmes

One of the really powerful ideas in Quit Like a Millionaire by Kristy Shen is the idea that your first degree will be a major driver that determines whether you can become financially independent, so you need to choose your first degree carefully.

In her book, Kristy's thesis is the idea that you should never choose a degree based on passion - you should choose a qualification based on your grades, and what she terms the Pay over Tuition Score or POTS score.

So I decided to take her framework and shoehorn it to NUS degrees.

In my rethink of Kristy's POTS framework, the earning potential of a degree is equal to your first year's annual salary minus what salary you can credibly earn as an A level student. I don't have data on how much an A level student can earn, so I pegged it at $2,000 a month, about 20% below a diploma graduate. So in my formulation, POTS is the ratio of this earning potential of a degree over the school fees charged by the program. If you are a Polytechnic graduate, you may need to adjust the calculation based on a diploma holder's salary which is around $2,400.

To do this, I took whatever data I could from Seedly and did my best to construct a POTS spreadsheet for NUS degrees. My methodology is probably quite shoddy so you should do your own research and calculate the POTS of the course you want to take.

( I think POTS > 0.5 is a fairly good screen because you break-even after 2 years of work. )

If you review the data, you can see that actually most of the NUS degrees lead to decent outcomes. 

The most prestigious program that is Medicine obviously has a low POTS score because of the cost of all the cadavers and labs doctors need to get themselves trained. Nevertheless, the salary recorded was based on a first year registrar salaries and doctor salaries do improve very quickly throughout their careers.

The high POTS score for Law students can be deceptive. It's like the Hokkien saying goes "Ho Kuah Bo Ho Jiak". Good to see, but not good to eat. To rub salt into the wound, Law can't even match the POTS of a Computing degree where all the whiz kids and the action is these days. 

I'm also glad to declare that Singapore is not the place where we make fun of Humanities graduates.  NUS Philosophy graduates do not end up becoming Starbucks baristas. The POTS of an Arts degree is relatively high compared to Business and Science degrees. 

The real whipping boy of NUS is in fact the Science faculty. Perhaps a Science degree needs to be cheaper if we want more folks taking STEM degrees - their starting salaries really suck. 

I think the degree to really avoid is the Bachelor of Music that actually has a score that actively destroys the value of an A-level student. You can go for this degree if you can get a full scholarship or come from the High SES families of District 10. 

Also, I simply cannot imagine why anyone would pay the full fee for NUS-Yale Liberal Arts program. Starting salaries are a joke, fees are ridiculously expensive, and don't get me started on the 'woke' brainwashing that comes with it. Yes, maybe some of these guys will end up in management consulting or investment banking, but shouldn't that be reflected in the average salaries?  

At this stage, I have refrained from calculating the POTS of private degree for polytechnic graduates, this is something I leave someone else to do. I would be surprised if any private degree program will pass my screen of POTS > 0.5. 

Feel free to try and report your results.

Friday, August 02, 2019

Investing and The Barnum Effect

Image result for barnum effect

Funny things happen to Dr. Wealth part-time staff when they support our preview events.

Yesterday, one of my colleagues was telling me about a hilarious thing that happened to him when he was supporting some other event. Apparently the trainer next door was doing a preview on numerology and the staff for that event decided to strike up friendly conversation with my colleague.

This numerology masterclass support staff befriended and then attempted to "psycho" my colleague by asking to apply some numerology techniques to his phone number and then proceeded to make a couple of hilarious predictions. Some of these predictions  included "you have recently lost money in gambling". As it actually never happened to him, my colleague disagreed with all of his predictions. Before giving up in frustration, this amateur numerologist then said "although my predictions did not happen in the past, they may happen in the future".

This led to funny conversation on the Barnum Effect.

I explained to my colleague that, actually, some predictions, called Barnum statements, can be made with over 95% accuracy and I proceeded to demo some my predictions on him. I told him that he is someone who seriously questioned his own capabilities in the past, but in his future, I see him regaining his confidence when his goals begin to bear fruit. He was amused and instantly agreed with my reading !

Barnum statements are statements that can never be wrong. You can find a list of examples on this wiki page here. Coming up with creative variants of the Barnum statements on the list will allow you to sell any form of Divination, from Bazi, East Indies Voodoo to energy focusing crystals.

Investors who know the Barnum Effect have to be careful when reading investment news because mass media is replete with some variant of Barnum statements. It's very common in any field of prediction.

One of the worst culprits can be found in Technical Analysis.

When a stock is trending is a particular direction, it is very common to talk about resistance and breakthroughs. A stock can meet a resistance and reverse direction, or a stock can breakthrough the resistance level.

The question is what is the probability that the stock will do none of the above ?

Almost nil. The technical analyst can never be wrong. The question is whether the prediction has any value to the hapless investor.

Value investing is not spared from Barnum statements.

Suppose we make a claim that a stock has an investment moat or sustainable competitive advantage. It is not difficult to justify that moat. A company, at any time of the day, can have a business niche, a license from a regulator, or solid management chops. It is possible for an analyst to fall in love with a stock, declare a moat first, and then find a number of positives to justify it later. This is called confirmation bias.

Worse, this is not limited to merely qualitative analysis.

Closer to my version of quantitative investing, some FAs are cherry picking unit trusts that outperform ETFs to show that active investing works to get more sales commissions. To justify their authority they are displaying a limited number of clients who made money. You need to be a very bad FA if you do not have a few clients who have done well buying your products.

You can also engage in dishonest valuation by varying discount rate when doing discounted cash flow analysis. Lower the risk free rate and you can justify any intrinsic value of a stock.

You also need to be skeptical even when you meet quants like me.

What is stop me from conducting 20+ back-tests and presenting the best one to sell to my students and call it the GOAT investing strategy of the day ?

To me, the only solution is for the predictor is to have some skin in the game.

Don't talk cock, put your money where your  mouth is when you talk about direction of interest rates and market cycles.If you tell my fortune and see good luck in the future, let us both buy a $100 4D ticket together and see what happens. This Chinese New Year, as someone born in the year of the Tiger, I gave money to all my Pig nephews and asked them to gamble on behalf, splitting my winnings with them.

I probably won the largest amount I ever did on any individual new year.

To be consistent,  have consistently farmed my trainer fees into a leveraged portfolio built by my students and have earned enough from this to have taught a new class.

This way, while I cannot guarantee that my students will do well, I will be there to suffer the consequences if my investments go bad.

You should treat any modern day Shaman, Oracle or Forecaster the same way.