Monday, October 07, 2019

Letter to Batch 8 of the Early Retirement Masterclass.

Dear Students of Batch 8,

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

We’re seeing some really interesting twists and turns for this particular batch of students ever since I decided to make the course more democratic and gave students the chance to select the strategy to perform the screening on. The hallmark of a good DIY investor is autonomy – the ability to make your own decisions to invest in something regardless of what was taught.

In this batch, you were presented with two possible strategies for REIT investing – a “high dividend strategy” and a “strong sponsor strategy”. Students initially voted to select a strategy with good sponsors after reviewing the quantitative metrics but proceeded to reject 50% of REIT counters after one session of qualitative analysis (largely due to the fact that yields are so low). You then requested to review the high dividend strategy which was done and resulted in fewer rejected counters.

The net effect is that this batch has two REIT portfolios by the end of class. Combined with the blue-chip portfolio earlier, this class has created three portfolios in total and, upon further review, I have decided to invest my trainer fees into the blue-chip portfolio and dividend REIT portfolio.

I have also learnt a lot of new facts that I have to confirm with my usual circle of experts and blog readers. Primarily is the issue raised by a student – that if you go to higher class ward in a hospital such as Class A, you will not be allowed to downgrade your ward if you get re-hospitalised. I find this policy hard to believe given that our financial fortunes may change between hospitalisations and downgrading may sometimes need to be done because we have no choice. Nevertheless, it is good to raise controversial issues for discussion because this can help some readers of my blog.

Another really useful thing I learnt from a student concerns Islamic Finance which I have no real expertise in. The question is whether REITs violate some aspects of Islamic law and, if not, why does only Sabana REIT claim to be Shariah compliant but not the rest? I will be trying to find the answer to this question over the next few days.

[ Blog readers do chip in if you can. ]

Otherwise, this batch of inquisitive students have raised possible areas of improvement for my course. One area that demands a new write-up is what happens after holding onto a portfolio for a year - do you sell the portfolio to buy the latest round of stocks selected by the latest batch of student, re-run the stock screen last year, or cherry pick stocks not found in your portfolio?

This issue will definitely be addressed by the end of this week in the form of article I will add to my course materials.

Christopher Ng Wai Chung


  1. Yup, if you had gone in at A or B1 class for initial admission, subsequent followup (including re-hospitalisation) for the SAME issue.

    However, if financial circumstances have changed upon subsequent RE-HOSPITALISATION, you can request for downgrade subject to means-testing.

    The problem arises for those who had been warded in A or B1 class, and subsequently need long-term chronic specialist outpatient followups. I suppose Medical Social Work dept can be activated if family finances have really deteriorated. But there are those "not poor enough, not rich enough" fall-between-the-cracks cases.

    A very unwieldy method in the old days was to "downgrade" followup management to a polyclinic, and THEN get polyclinic doctors to "refer back" to the general hospital's specialist outpatient clinic as subsidised patient.

    Generic ward charges for SGH

  2. BTW regarding longer term portfolio management --- shouldn't this be part of the "learning to fish, instead of waiting for fish" philosophy of the training?

  3. Investment training cannot be totally about learning to fish. Some customers do expect the fish to be given to them.

    I walk a fine balance right now that still provides plenty of room for improvement.

  4. As for Islamic or Shariah REITs --- basically have to abide by Shariah-compliant financing activities (this is the main stumbling block), shariah-compliant insurance, and shariah-permissible activities of underlying tenants/businesses.

  5. Haha noted & respect your balancing act.

    As a customer, I do expect to learn how to make my own fishing rods & lines, what & how to source suitable bait, characteristics of higher potential fishing sites, and maybe a couple of "starter" fishing venues to dip my hooks into the water.

    Whether someone is happy with the above, or adapts it, or grows a fleet of fishing trawlers to deepsea mass fish is up to the individual. ;)

  6. Islamic law holds that making money from money is wrong. Dividends and interest are not declared as dividends and interests but declared as a gift - like saying thank you for lending me money, this is a little gift for you as an expression of thanks. Similarly, Interest on bonds are not interest but declared as a gift to the benefactors who loaned the money. Another way they work is instead of charging u interest on a mortgage loan, the agreement is structured as if the bank buys the property and leases it to you. After you pay 30 years of lease payments, you own the property (buy it at zero dollar).

    I am not an expert but came across this when looking into Sabana's IPO eons ago when studying in NUS

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