Changing one's approach to life to create more opportunities

I had a discussion with a friend on why are there so many failures today who see themselves as polymaths  - folks with wide knowledge or learning. It was suggested that these people should not be labelled polymaths, but dilettantes - folks who cultivate a little bit everything without making a real commitment to develop knowledge or skill in a field.

As I've always feared becoming a dilettante myself because I have both legal and engineering degrees but never really did any serious legal or engineering work, so I thought it be better to read the latest book that pits generalists versus specialists.

This book exceeded all expectations and, unlike other books in its genre, did not spend too much time defending a liberal arts education, a very pathetic feature of most works written by philosophy or English professors with little real life working experience. Instead the book focuses on empirical data on forecasting and innovation and showed us why the most wicked problems can only be countered by multi-disciplinary thinking.

I am going to share one useful nugget I picked up from this book which I felt is useful to readers here.

Apparently the dominant paradigm to live our lives in Asia is the "plan and implement" paradigm. Most of us lived lives that are planned by our parents. You decide that you want to become a professional, then you move towards your target by planning all the intermediate steps to achieve your desired outcome. This "plan and implement" approach is what makes Singapore so successful today. Our streets are orderly and a lot of thought and pre-planning goes into government policy.

The classic "plan and implement" model is the Gantt Chart and the certification program is the PMP qualification. The financial analogue is the Markovitz Portfolio theory. The legal equivalent is our statutes.

Where the "plan and implement" approach fails is when it comes to law students, the very folks I met and studied with during my JD program. Getting into law school requires decades of planning. You need to get excellent A level grades to qualify for law school. After that you need excellent grades and connections to get into a law firm of choice. Life outcomes between lawyers who get the biggest firms and the smallest firms can be very different.

The "plan and implement" approach fails if the entire legal industry gets upended by technology and oversupply. Imagine working hard only to end up in an industry that also admits Australian graduates all thanks to a free trade agreement Singapore has with Australia. Soon, NUS and SMU law graduates will have to contend with the new SUSS graduates.

Thus, I may be the few very unfortunate PMETs who had to compete against Indian IT professionals via the CECA and Australian law graduates via our FTA within a single lifetime.

There is an alternative approach to life.

This the "test and learn" approach. You take small bets to see what you can learn from doing something. If the bets work, you can scale it, otherwise you start doing something else with the experience picked up after a few false starts. The classic model behind the "test and learn" approach is the Kelly Criterion approach to bet sizing and the Agile methodology in software development. The legal equivalent is our common law.

It is very hard to use the "test and learn" approach to get into a professional vocation because picking up professional skills is a huge investment of time and money. Our education system also does not have any feature that gives people exposure to this alternative paradigm although reforms are happening quite fast in this area. However, this is the ideal approach for entrepreneurship and investing - keep your position sizes small and always be pivoting into a better option.

My move into the training industry came after multiple failures at planning and implementing professional career changes. As it turns out the skills I picked up from all this time in school can be combined into a career that is more profitable and time-friendly than an engineering and legal career combined.

Of course, readers should not view the two paradigms as being mutually exclusive. Many areas in life can benefit from more careful planning and agile pivots. I remember when I was in P&G the IT project managers that came in from China view P&G Singapore only as a stepping stone. Openly displayed on their computer screens were Gantt charts on how to eventually obtain Canadian citizenship. But Singapore was mere the first in many moves to gently pick up some skills in moving from country to country.

I think as Singaporeans, there is too much emphasis on planning and implementation. This is why so many of us are stuck working 45 hours a week in jobs that make us unhappy. Let's have more "test and learn" in our approach towards life so that we can make small incremental changes to make our lives better.

Which Financial Martial Arts Manual is the best ?

The financial blogosphere is very much like a Wu Lin. Different investors practice different forms of investing and, now that I have a dojo of my own, like Ip Man, there is always the risk that someone will come and pick fights with you.

While I did not study my Kung Fu from a specific master, I spent more time doing degree programs and certifications to pick up my financial knowledge. If you had done formal study, you'll understand how difficult it is to bring your investment knowledge into the jurisdiction of your choice. Another words, how to the rules and regulations work in Singapore and what products are really available for the man on the street. Particularly important are details on insurance schemes that always seem mystifying to me because insurance agents were very skilled at making insurance planning more complicated than it should be before the age of where all this can be easily found on the Internet.

Fortunately, in 2004, the really good folks from Providend Pte Ltd published what I think was, at that time, the most powerful martial arts manual known in the financial planning world even right up till today. I say this as I have even reviewed local university textbooks on this subject matter.

I remember 15 years ago, this amazing tome was selling at $110 at Kinokuniya bookstore. I waited months for a 20% sale to occur only to be told that textbooks are not entitled to the discount. After I read this book, I went on a Kung Fu rampage, trolling commissioned sales agents with knowledge that they should have known, and shaming them for not knowing more than a "mere IT server administrator". My weapon of choice then was "Buy Term Invest the Rest" - nothing pisses them off more than this fantastic idea. The only equivalent these days is to watch "Mad Dog" Xu Xiao Dong beat up fake Tai Chi masters with his MMA moves.

Of course, reading the book many years ago also instilled in me a very healthy respect for non-commissioned financial advisors. Good guys do exist ! If Providend Pte Ltd can publish such a useful guide for a layperson, I'm sure their paid financial advisory service would be way better. Even today, I work closely with Money Owl directing my students to them (without accepting commissions) to solve problems that I was not licensed to do.

Sadly, this tome is in dire need for an update to the latest securities legislation as well as government schemes. "Buy Term and Invest the Rest" has also become a blunt instrument that agents are now very skilled at handling this class of objections. I doubt other than intellectual curiosity, there is a need to hunt down old copies of this book as it is better to get a University textbook on financial planning that contains more recent information.

Even today, every time I get an opportunity to speak to Christopher Tan, I would beg for a new edition of this book. Also, I welcome readers to recommend the latest incarnation of the martial arts manual that can be used to give grief to the modern equivalent of the commissioned insurance sales agent.

Read a book and you can piss off one commissioned sales agent.

Write a book and an army of retail investors can piss off an entire industry of commissioned sales agents.

Thoughts on my 45th Birthday.

I arrived at age 45 a little sad as it is my first birthday without my dad being around.

It feels a little strange to think that I managed to reach the mid-point of my 40s. That means that my first CPF payout is expected within 10 years. This also means that a voluntary contribution to CPF would make a whole lot more sense than buying a 10 year bond as 2.5% is nothing to laugh at.

Instead of making resolutions, 2020 should be about creating new systems :

a) Some personal hobbies can make a come-back in 2020

There is just too many leisurely things to do these days. This holiday season alone, there is the Witcher and Mandalorian to watch. Rick and Morty also makes a comeback. There are too many shows trying to compete for you attention.

The best I can hope for is some form of RPG gaming in 2020 that is sustainable.

This is possibly the hardest system to keep up because it is so inconsequential but a person needs hobbies to sustain himself.

b) Need to beef up my physical fitness.

I am very worried that I am losing muscle due to a new class of drugs I am taking last year. I have already lost the ability to sit lotus position or even cross my legs when sitting down.

To deal with this issue I have to admit that DIYing my physical fitness does not work and my fiscal discipline doe not translate easily to my physical discipline. A new system needs to be created where I get some outside help to teach me how to use my condominium gym to build up my muscle. I probably will seek to have gym sessions for at least 12 weeks so that I turn it into a sustainable regime.

c) PhD feasibility continues

Truth is that I don't need a Phd.

I need cheap access to a Bloomberg terminal and a structured way to improve my own investment skills so the university environment and a gruelling thesis defence is the best way I can up my game as an investment trainer.

This is going to be a long road where I get back to the basics and pick up some really solid memory and speed reading skills. Then I will have to give myself a major math revision. To make this self-learning journey work, I will end my Economist subscription early 2020 so that I increase the books I read. I have a 50-60 book KIV list that I hope to clear.

There is a good chance that I may select an easier target like a research masters instead at the end of 2020.

Or I might even get distracted by something else.

d) Yes, there are still some goals in 2020.

My success moving forward will be based on systems I create but I still have goals to meet. Income-wise I am seeing if 2020 can top 2019 for me. From a total income perspective I want to see if I can top a junior non-equity partner of a law firm.

Investment-wise, I am not expecting my low beta high yield portfolio to repeat it's 2019 performance. I would be happy if I do not lose money in 2020. 

There is also a decent chance I can be mortgage free after mid-year, this is something I have been working on for many years and freeing up my first mortgage can hopefully lead to another property before the year is over.

MBA in a Nutshell #18 - Marketing : How to know how well you are doing ?

[ Today also marks the 100th day anniversary of my father's passing. My father would like me and my mother to move on with our lives. In 2020, I will be looking forward to travelling with my mother after today. ]

It took 18 articles to complete the section on Marketing. This is a broad subject that can allow a person to sustain a career for an entire lifetime.

Let us now summarise at a strategic level, what a marketer would need to do to measure his performance :

a) How does the organization deal with inquiries?

The marketer needs to track enquiries and find ways to address them. For my own business I have a Whatsapp group with my sales team to answer questions that come from potential conversions.

Outsourcing the common queries is something that is continuous but can be rewarding.

b) How much does the organisation pay per unit sale ?

The first metric is the amount spent for each lead or inquiry. The second metric is how much is spent per conversion. I am fairly confident my partner does this well although I do not have full visibility on this.

c) How much is spent on media and production costs ?

All the FB videos you see by other trainers cost a lot of money and erodes their earnings. I wonder whether they know that, not only do these videos it erode their earnings, they also annoying the hell out of the public.

All that being said, my production costs are not zero.

d) What are the characteristics of your customer ?

The company needs to have an idea of the age, gender, profession and psychological makeup of their customer. I am still grappling with this because I serve multiple segments. Millenials have different needs from retirees but both groups attend my program,

e) Are we hearing from decision makers ?

There is a difference between a key decision maker as opposed to a preview seminar junkie. We know the names of those who will attend every preview but have no intentions to sign up and we are fine with this, one or two actually count as my friends.

As this is a statistical game, we will  have to keep targetting a population who are happy to convert.

f) Dollar value per customer ?

Once we obtain a customer, the customer will have a long term value to the business line.

Actually, I actively avoid doing this, preferring to build a closed community that will function as a "portable brain" to support my investment portfolio moving forward. With enough smart people and a burgeoning portfolio, my community should pay for itself.

Maybe one day I might be able to develop an advanced investing class for existing members of my community.

g) Percentile analysis 

This part analyses the spending behaviour of existing customers to isolate those who can be up sold to for future offerings. A company should give these customers VIP status and find creative ways to part ways with  those that cost more than the value they bring to the bottom line.

h) Bottom Line.

Ar the end of the day, a business owner should know how much they contribute to the bottom line. Those should come in the form of an income statement. 

I was able to get visibility on my numbers recently for 2019 and I think I can bring this year to a satisfying close.

Why is it so hard to sustain a financial blog in Singapore ?

Done right, conversations should get some people thinking...

Two decent conversations occurred this week.

I was asked what keeps me going on in my career even though my dividend income has reached a point that I don't need to do anything to sustain over double my total expenses. Is there anything I really want out of my personal wealth ? While I know what motivated me to carry on, I can't seem to figure what I actually would do with my investment earnings this year beyond buying even more investments.

Another conversation was about why so many financial bloggers have either quit or downgraded their operations over the years.  We went through the roster of bloggers that were prominent many years ago when we launched BIGScribe and it seems that more than half have moved on with their lives.

I think as a blogger, I am stronger than ever although I am more "dis-corporated" as of late. The serious articles go to the Dr Wealth Blog and I push myself to make 2-3 articles for each preview I run, so the volume is very high. I am also starting to write a different kind of article for TheFinance.SG. This blog remains as a place for my personal musings and I may document my "PhD feasibility study" that may take the entire 2020.

Here are some of the points about the blogosphere:

• A fundamental issue is that blogging is a haven for introverts, but monetisation is the province of extroverts who can speak in public and put up a live performance. If you try to support yourself via the intrinsic motivation of write about what you like, you are not going to get a lot beyond a pat on the back. If you make too much money, trolls will come and mess with you.
• Thought leadership is hard even if you are willing to self-study. I don't think you can sustain something if the overall level of your general ability remains static. Some folks may be stuck at the personal finance level and will parrot Robert Kiyosaki for a while. Even the better investors are parroting Warren Buffett. These materials have been around since the 1990s. As of now, no financial blogger is exploring machine learning that is slowly creeping into finance book-shelves. I think Jim Simons is the new Warren Buffett, but no one has a firm grasp of Markov Chains to talk about different ways of looking at the markets.  Here's this : Extroverts suck at thought leadership.
• Finally, life gets into way. Money is not going to dominate your life as you move through different stages. I bet some financially independent folks will lose their status if they had a spouse with kids. This is natural. In my previews, I spoke about losing my FI status multiple times in my life.

Here is what motivates me right now to carry on:

• There is a class of baby boomer bloggers who do not have nice things to say about my career progress. Unfortunately for them, I seem to get a high every time someone disses me on the blogosphere. I don't think there is a need to start WWIII on the Internet but it just happens that I get nourishment from negativity as much as positivity. I think these losers should not be picking on a young punk like me - internally, I benchmark them against dad who made one landed property purchase and left the world a multi-millionaire. And these clowns actually think they are special because they survived the Asian Currency Crises.
• There is some residual unhappiness I encountered before my current training career. Some people have spent too much time bragging about their career accomplishments and cultural superiority when I was very vulnerable and needy on the career front. 2020 is the year of pay-back. I want to beat their highest salary earned over a year with 1/7th of the time spent at work. 
• The stark reality is that we don't have true friends or enemies. We're surrounded by hordes of frenemies whose interests are aligned and disaligned at different time periods. Because of this, if we are rising in this world, we will always face saltiness wherever we go. A lot of folks cannot contend with this kind of negativity but I seem to love it.  
• The crusade against commissioned insurance agents has to continue even though I see individual commissioned agents as my allies who provide my useful intelligence. I think a better outcome is to use political influence to Thanos snap the whole industry, removing the safe harbour clause that makes insurance sales an exception to a pyramid marketing scheme. 

If I take a step back and look at what motivates me, I come to a very brutal conclusion.

I have never really been motivated by any upside from all this that I do. 

I think the negativity keeps me going.

How to beat this class of people.

How to silence my critics. 

How to wage war. 

Maybe one day when folks decide to stop feeding the troll, I will look at what I have accomplish and enjoy the fruits of my labor.

But not today.

What am I trying to learn before end-2019

I thought this would be the right time to share some of the personal projects that I have. I have written some time ago that I will be spending a year to assess the feasibility of getting a PhD in a topic related to quantitative investing. Assessing the feasibility does not mean actually doing a PhD but to just see whether this is a project that I can succeed in doing in the future.

a) Brief tour of Quantitative Finance 

I tried to begin by reading a Dummies guide to Quantitative Finance. I figured out that this cannot really hurt as I can adapt some of the niftier concepts into my ERM programme.

Turns out that the Dummies guide is hardly for dummies and I really struggled to make sense of the subject.

A lot of arcane formulas do not come with proofs and I find myself trying to recall the eigenvectors and eigenvalues I picked up during JC and my engineering days. There are also models I am unfamiliar with like GARCH which can be potentially useful to investors if they are bloody minded enough to pick it up. It is also quite damaging to figure out that I can merely parrot an equation like the pdf of the normal distribution curve, but have no idea how mathematicians even arrive at that thing.

The best I could do right now is to gain a qualitative grasp of what I read.

So far, I have at least one motivation and super-audacious goal : Use principle component analysis (PCA) to figure out what are the best factors that produce superior equity returns with a data-set of local stocks.

I know that if I succeed in doing this, I can at least strengthen my ERM course with new insights or get started on a thesis. I cannot imagine that Bloomberg does not already do this.

b) Studies on Memory

To keep my morale up, I can't just keep doing stuff that stumps me along the way. It is time to really understand how folks memorize materials for study. In all my three degrees including even Law, there is no real need for rote learning. So I started to investigate how medical students remember all their materials. I can now summarize it into three separate processes :

• Using ANKI to produce software based flashcards. 
• Using MNEMONICS like S.M.A.R.T goals.
• Method of Loci - I decided to zoom into this because this is super-cool and allows amazing feats of memory.

In the medium term, I want to memorize the components of the STI using a Method of Loci. 

This is a vital skill missing from our education system.

c) Speed Reading

I read fairly fast compared other folks due to sheer practice so I do read clusters of words rather than individual words.  Eliminating sub-vocalization makes me read faster but pleasure is rapidly being lost once I do this.   

In February 2020, my Economist subscription will lapse and I can finally clear my 60+ books on my KIV list. If I can can finish the economics non-fiction books on my shelves, it might well be a PHD on it's own.

d) Starting a Bullet Journal

If I am going to pick up all these micro-skills, might as well go full retard and start Bullet Journalling as well. 

While I am quite conscientious on work or money related matters, I am screwing up my social life, missing out gatherings and neglecting my RPG hobby. This is increasingly illogical because, in my financial freedom, I realise that I am being tied even further to making more money and building up my training business. Success is addictive !

To maintain my hobbies, the folks I play with should be entertaining but I also need to make time so maybe a Bullet journal will help. 

I will be back in the DMs seat this weekend.

  

Thinking deeper and overthinking about Gift Exchange

As the year draws to a close, I will limit the investing articles to Dr. Wealth website and something I am working with from the folks of Finance.sg. This allows the blog to showcase the more mundane elements about my life.

Last preview ended late and I was able to witness Dr Wealth sales staff conduct a pizza party and a gift exchange.

There are 4 girls in the sales team and they wanted to conduct a gift exchange. Each girl was assigned a number from 1-4 and then these numbers were written on slips of paper. Each girl would draw a slip of paper randomly and take the gift prepared by the girl who was assigned the number on the slip.

You will soon be able to see a problem with this arrangement : During each draw, somehow, one girl would end up drawing their own number, eventually resetting the whole process and requiring a redraw.

Seeing this occur a few times, I suggested that girl simply take the gift from the girl from her left but the girls rejected my idea, saying that the process I proposed was not random enough. ( Which should not matter since they don't know what gift each girl prepared at that time. )

Eventually, through a lucky draw, every girl managed to draw a gift that was not prepared by themselves.

Back at home, I thought perhaps I should have proposed a system that will eliminate the reset but would still seem random enough to be implemented by the sales team.

I would need a six-sided dice and the girls to sit in a circle.

Roll the d6:

• On a roll of 1-2 : Girl will take gift from girl to the left
• On a roll of 3-4 : Girl will take a gift from girl to the right
• On  roll of 5-6 : Girl swaps gift with that from the opposite girl

This solution should work, but there is something amiss about my analysis. I consulted my sociologist friend who is probably just maybe one or two souls who can have this kind of ridiculous conversation with me.

What if the resets were a feature and not a bug ? 

There is something I do not totally understand about the all-female sales team. My friend said that, as frustrating as a reset is to me, redrawing slips is a pro-social event. I suspect it is likely because the anticipation of a gift lasts longer when the girls have to reassign the gifts over and over again.

This opens up a greater mental experiment.

I was not invited to the gift exchange (it's a girl thing) but the girls did tell me that their budget was $5.

What if I tossed a $5 note into the mix. 

Would they prefer my gift or something prepared by their friends ?

For me, it is obvious, I'd jumped at the $5 because I can convert it into anything I want, even something the girls would never buy like a sponge turd from Donki that I can use to troll my kids. 

I'm not too sure how the girls would react because some of the gifts had a lot of heart and I would not be able to buy at least one gift with $5 even if I tried.  

Maybe we should just enjoy the spirit of Giving and not intellectualize too much !

MBA in a Nutshell #17 - Marketing : Sales

I like this segment of the marketing chapter the most because it is highly relevant to my job as a trainer.

There are basically two general approaches to sales :

a) Consultative Approach

The Consultative Approach is slower and focuses on allowing the customer to take the lead and explain their problem. This approach is better if you are selling large computer units to company and it can be very time consuming. I like this approach a lot but sadly, do not have the luxury to practice it.

b) The AIDA Approach

The AIDA approach is the standard Attention, Interest, Desire and Action approach used by most salesmen. This allows the salesperson to be more directive and guide the customer to make the sale. Naturally, AIDA attracts a lot more criticism as it can be abused via psychological parlour tricks.

To succeed, some kind of hybridisation has to take place between the two approaches.

While my dominant approach is AIDA, I have to realise that to make a sale, I must be able to articulate the problems faced by potential customers through my preview and then resolve that problem by offering my Masterclass as a workable solution.

To complicate matters, I have to consider the dominant cultural factor in this industry.

The dominant cultural factor in sales is the realisation that Millenials do not like to be sold to, so I have spent the greater part of 2019 toning down my pitch and focusing on what the product can do to solve your biggest problems. The MBA textbook even highlights the cultural factor in Singapore as dominated by a Mr Kiasu, a person characterised by "shallow hyper-ambition". I would caution sales teams not to exploit this too much because trainers in the 1990s and 2000s earned a bad name trying to exploit the greed of their customers and many folks still have a bad taste in their mouths because of that.

Other interesting aspects of sales include :

Cross-selling is where you get them to buy accessories to accompany your product. I have no such product for now but the book cautions that value of a cross-sell should never exceed 25% of the value of the main product, and should only be attempted only after the customer is fully satisfied with the first product. I am open minded to do this at a later time.

Up-selling is where you offer a better product to the potential customer for a higher fee. I try to avoid doing that at all costs because there is a thin line between doing this and "bait and switch".

And finally, Relationship Based Selling is where we see the big picture and look at the customer over the long term. I believe strong in this form of relationship, where if the customer profits from an investment course, they will introduce their friends to sign up with a the program. This is paying dividends as some students from earlier batches are showing some genuine progress with dividend payments and they are kind enough to allow me to share that in my current preview.

Failed resolutions and predictions of 2019.

Perhaps today should be the day I reviewed the failed resolutions of 2019. Coming up with new resolutions for the year is fine and good, but reviewing failed resolutions is even better and, as it turned out, I did not meet almost all my resolutions I set in 2019.

a) I did not managed to find a law firm to hang my coat on

Critics who say that my studying of my JD was a waste of time still remain vindicated as we speak.

I was so busy building my ERM training course that I neglected to look for a law firm to hang my coat with. As of now, my ERM is still not large enough for me to become an effective rain-maker for a law firm yet and I am referring smaller bits of business in drips and drabs to my rookie lawyer pals who are growing into very competent legal professionals.

b) I did not manage to create a finance course for Millenials

This is harder than I thought because Millenials who show up for my ERM do fairly well and I have results to show in my previews. One example was lucky enough to get her first dividend payout 16 days after a course and an old alumni of Batch 1, also a Millenial, now regularly gets an average of $500 per month.

So my current program works devastating well for Millenials. The only problem is that optically, trainers tend to attract their own age category but I think my skill as a presenter has improved and I'm connecting with more audiences this time.

For Millenials who want something, I should be scheduled for a Seedly talk in March 2020.

c) I did not even attend Voice training classes  

I totally missed out on my own learning goals but I managed to attend a Quantitative Investing Course also conducted under Dr Wealth as a paying customer. As I keep investing into my student's portfolio, I did not have enough capital to take advantage of this training because I have to devote a significant amount of my earnings into tax deductible instruments. ( Wife's CPF and my SRS )

My voice issues were solved with Pipagao and Sambucol lozenges. My courses are very draining on the throat as I go rapid speed from 9am to 5pm.

d) My financial predictions turned out ok

My market projections turned out slightly better than my resolutions. I said STI may move horizontally between 3100 and 3200. I was largely right but it moved out of bounds above 3200 just today. Emerging markets had a solid 2019 as I have said last year but that's not a genius prediction.

Still, 2019 is, professionally speaking, my best year ever.

While all this sounds like a really bad 2019, professionally it was probably my best year ever.

When students make money, the trainer is successful. Consolidated student-built portfolios are up with XIRR 16.16% unleveraged. You can figure out how I did yourself as I am always leveraged by x2.  Also, earned income wise I am also scoring the highest salary I ever had in my entire professional life, and ERM has dominated my schedule for the entire calendar year.

The past few days was basically dealing with a First World Problem : Finding the cash to pump into my wife' CPF and my SRS account.

I'm happy to say that my household will still end 2019 in a largely lean state with my war-chest almost empty.

This is what would have made my dad proud.

Letter to Batch 10 of the Early Retirement Masterclass

Dear Students of Batch 10,

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

The investment decisions made by Batch 10 was very unique compared to the decisions made by previous batches, and this goes to show how much a portfolio can be moulded by the personalities of the cohort in spite of the fact that the underlying stock strategies have not changed too much from last month.

For this masterclass, there are two interesting developments that deviated from the norm of previous batches of students:

The first development is that the class rejected almost all the banks that have been shortlisted by the quantitative model. Right until Batch 9, banks were a hot favourite of the students of this program so much so that I will ordinarily force the class to reject one bank to prevent the portfolio from being dominated by banking counters. But this time round, DBS and OCBC bank were rejected by the class after a qualitative review. The main reason is that class believed that we are now in an era of lowering interest rates and this will affect the profits from the loans business moving forward. Interestingly, the class decided to keep only UOB in the portfolio, which is consistent with broker digest published by the Edge magazine this weekend where UOB was the only bank to receive BUY, ACCUMULATE or ADD calls by all of their selected brokers.

The second development was that the class failed to reject any of the REITs that they reviewed during the exercise, effectively accepting all 10 counters that have been offered to them.  The class was even able to accept BHG REIT, which lacked a decent analyst report and has been rejected by every batch of ERM students since the class began in September 2018. The catalyst for this change was the acquisition of a Beijing Outlet Mall 5 days ago which the class believed that may benefit from the Chinese economy becoming more consumption driven over the next few years. We will know in time to come whether these will turn out be good decisions.

Beyond these two interesting developments, we were able to run our emigration exercise a second time and this time we reviewed Malaysia, Indonesia, UK, US and Taiwan as emigration destinations. In the end, Taipei narrowly defeated Kuala Lumpur by one vote. Taiwan was a popular destination because of its cultural similarity to Singapore.  

Finally, I also learnt a lot from you over the weekend.  When you found out that I have Type II diabetes, you were very open with sharing some ideas on how to control my blood sugar control. I will be trying out the powder from the Amla (Indian Gooseberry) fruit once I get into a mini-mart in Woodlands. I will also be looking at the different dieting plans that you have shared with me.

Christopher Ng Wai Chung

MBA in a Nutshell #16 - Marketing : Marketing Mix - Discounts and Premiums

This is a strong article to run-down all the possible discounts and premiums that can be given out with a product offering :

Premiums

a) Gift with purchase

Last Christmas, KitKat chocolates came in Avengers tin containers. That's almost a gift and my son loved it.

b) Purchase with Purchase

If you buy something, you get to buy something else at a discount. Amazon Kindle books now give credits to buy more kindle books and I can't seem to stop buying books because of that.

Discounts

a) "Twofer" 

In Singapore, we call this buy one get one free.

b) Coupons

This is highly irritating. A coupon entitles you to a discounted offering in a future purchase. From what  I know, F&B outlets offering coupons always have the shittiest food.

c) Samples

You get a small sample of detergents or coffee to entice you to make a purchase. Baby milk powder is commonly promoted this way.

d) Contest / Sweepstake

A contest requires some skill - like a stock picking contest. A sweepstake is called a lucky draw in Singapore in that it does not require any skill.

e) Incentives

This is more like  a business to business arrangement where a manufacturer send the boss of the retail outlet to a holiday is they successfully push their product. Your insurance agents get these incentives the most. 

f) Product publicity

Press releases can lead to freebies for example.

Why are you not rich yet ?

As we speak, a lot of financial bloggers are attaining the stage in their lives where they can live on dividend payouts. Sustaining this for a few more years may even allow them to live on 4% of their income. This means that they can decouple from the workforce and then deal with the messy issues of early retirement like how to craft a personal identity without a day job.

But many of these financial bloggers will not be RICH. This is because financial capital is only one component of a person's wealth.

Sociological studies in the UK define an elite as a class with three forms of capital - financial capital, social capital and cultural capital. People in the FIRE movement dedicate their entire lives into obtaining financial capital.  Once you understand that society will reward capital more than labor, dedicating your waking hours to the accumulation of capital instead of climbing the corporate ladder for a higher salary can lead to winning the financial game. Sometimes in your mid-30s.

Social capital is much harder to attain.

The litmus test to determine the value of your social capital is this : If your child needs a job after graduation, do you have CEO friend that can help your kid get a decent head-start in life?

Most of us FIRE folks (myself included) may not be able to do that. I've known for a long time that FIRE has an affinity for introverts - you need to spend a lot of personal time decoding personal finance to "hermit" your way to financial independence. Social capital is the province of flaming extroverts - you need to get noticed and make powerful friends to accumulate that.

In my case, I have less social capital than my father. My friends largely belong to the professional caste while my dad made a lot friends when he delivered dog food to GCB owners in Nassim area in the 1980s. I'm not afraid to say that I grew up playing with Robert Kwok's descendents and attended high-end birthday parties. Now my own kids just hang out with kids who live in ECs (perfectly glad with this arrangement actually).

Cultural capital is even worse. Cultural capital is malleable and unstable across generations.

Last weekend U2 held two concerts in Singapore.

I don't hate U2 - I just think that Bono is not particularly talented and his music is the kind of emo trash rock that should not have become anthems for Generation X. But U2 attracted the large share of Gen X audiences last week with primary middle or upper class uncles as die-hard audiences. Gun and Roses have infinitely more talent, but I felt that their event was less of a watershed. (LAMC's fault perhaps )

You need to ask yourself why U2 has such cultural cachet but Modern Talking (my favourite 80s band) does not.

The answer lies in Pierre Bourdieus analysis of the rich. There comes a stage where wealthy people are so powerful, they begin to align with select cultural artifacts to distinguish themselves from the hoi polloi. These artifacts can become weaponized to exclude the poor.

It was never obvious to me when I was in IT but in Law, I recall a senior legal practitioner almost hectoring an associate to attend the Evita theatre production. This offended me greatly because an associate already is very time-starved and should just enjoy whatever she liked so I told her secretly that maybe she should just go to Jay Chou or K-POP concert, whatever she liked. Evita is going to be fucking boring.

Of course I did not win.To my personal disappointment, the associate told me that she did indeed spent one weekend watching the production. And she agreed with me that it was boring.

Modern talking will always be Ah Beng music.

In the eyes of a tired Gen X, U2 will always be cool.

Why is that so ? Because the really wealthy and middle classed folks co-opted that emo brand of rock music as their own. Then every Gen X who became affluent decided to step in line.

But the joke will ultimately be on them.

The future noveau affluent will not be my kids or their kids.

The folks who will determine the culture capital of the future are the same folks who appear in Singapore Social today, a series that I am binge watching right now.

It is these guys who will decide what music is hip, where the best alcohol joints are, and what kind of fashion will take hold in Singapore society.

So this answers why most readers of this blog are not rich yet.

They can master financial capital, but social capital is going to be a lot more challenging to accumulate. You might need to come from the Bukit Timah axis of schools to accumulate that.

From what I do know, no one in the financial blogosphere (including myself) is cool enough to dictate what music to like, what shows to watch, and what clothes to wear.

Otherwise, I will be able gather 1000 millionaires to buy enough Decathlon pants to turn it into our National costume for generations to come.

Personal Update

Ok, time for a personal update again.

a) My father's matters

I am 95% done with my father's matters. Given the circumstances, getting over the 80% mark within 2 months is a fairly decent record given what I was taught in law school.

When a bank receives notice from a law firm that someone has passed away, the bank account becomes frozen. No withdrawals or deposits are allowed. Incoming CDP dividends will also be prevented from coming in (which is puzzling to me). According to CDP, cheques will be instead be issued under the name of the deceased. A $2 fee will be charged to convert each cheque to that of the trustee of the estate.

As of now, I have yet to receive my first dividends cheque. I do expect a torrent of dividends cheques to come in as early as next week. I would have to collect these cheques and then go to CDP office to get them renamed under me. If more cheques arrive, I may have to make more visits to Buona Vista.

b) Optimizing taxes end-2019

Even though I started earning an income again last year, my income taxes remain a big fat zero thanks to generous deductions for parents in Singapore.

As 2019 comes to an end, my period of paying zero taxes is effectively over.

I've opened a new SRS account and pushed the maximum amount of $15,300 into it. It will be invested in a mix of low yielding growth REITs. I think every reader needs to do this to lock in the SRS withdrawal age at 62 years old, if you delay your SRS withdrawal age may be postponed to 63.

I am not done with this yet. I am trying really hard to squeeze in another $7,000 into my wife's CPF-SA account. How to find that money is a first world problem I gotta solve.

If next year is anything like this year, I may max out my CPF-MA or even incorporate a company to handle my tax matters. Basically, my days of getting maximum GST credits and paying 0 taxes is over.

c) JB visits this year end

Not much luck in this department. I visited Toppen Shopping Centre in JB was quite disappointed that JB malls are now starting to all look alike. That being said, the Popular Bookstores in JB are a lot bigger there.

The project I'm really waiting for is Sunway Big Box. You can read about it here. BooksXcess will open for the first time in JB and it is a throwback to the good old days when I could hang out at Borders close to the Christmas period.

All this being said, we are likely to see peak malls in JB very soon. They look the same and I think they can't all survive on Singaporean financial support alone. Many of these malls will die out and turn into ghost buildings.

d) Leisure and Hobbies

Not much on this front. I refused to go to AFA because there is a huge mob there. I will be trying to get into Singapore Comic Con but I have a class on both days.

Right now I'm trying to see whether I can get back to running D&D games but finding a time slot when everyone is present is quite a pain.

I am binge watching A Man in the High Castle on Amazon Prime. It is very depressing to watch this series because it is about the Axis wining World War II. I counteract the depression by watching Singapore Social.

e) What I am reading

As 2019 comes to a close. Magazines will be trying their luck with 2020 predictions. I have read what The Economist has to say and will be processing Bloomberg Business Week next.

f) PhD Ambitions

Life's been good for me so far. My investments are doing well. I completed law school and got myself admitted to the bar. I run a business that was successful on the third month and can say that it's been a superb run in 2019 betting me the highest income I ever earned in my life. And to think that last year I was so worried that I jumped the shark because I failed in making a career switch.

Over the longer term, I need to ask myself how to remain uncomfortable while educating myself and given what I already have, the idea of being a PhD candidate is becoming more attractive to me as I can find a way to sustain my training stint and do some research at the same time. Also having free Bloomberg terminals effectively make every qualification I earn almost free of charge.

But I am concerned that I will become too old to handle the research work. So I will test myself to see whether I can attempt a PhD.

Take a minor bet to see if it leads to anything.

I will read a hardcore text on Quantitative investing, the sort that has more equations than actual market discussions. This should be useful for conducting my course.

Then, I will start all over and pick up a Maths textbook on statistics and probability and attempt the tutorials inside the text. I don't seem to be able to remember the arcane mathematical symbols anymore so I need to get back to the basics. The objective is to be able to crack an introductory text on stochastic processes which is currently too difficult for me.

If I can self-study stochastic processes on my own, maybe I can consider a PhD candidacy in 2021 or beyond. I want my thesis to be consequential for investment managers.

If you, the reader has some suggestions on which text-books I should buy, let me know.