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.

Today, this happened...

There is no article for today.

Instead The Simple Sum has written a nicely done up article on me.

I'll catch you guys on Friday.

MBA in a Nutshell #15 - Marketing : Marketing Mix - Promotion

We are now going to spend a few weeks talking about the last of the 4Ps which is promotion.

There two kinds of broad promotional strategies :

• The Pull strategy employs advertising to get the consumer to want your product and so the demand will cascade from consumer, retailer, wholesaler and manufacturer. 
• The Push strategy works in the opposite direction where selling will be made from the manufacturer to wholesaler, retailer and then to the retailer. 

I doubt that these strategies are mutually exclusive so I expect companies to use a mixture of both. 

Theoretically, I play the role of "manufacturer" with Dr Wealth as my "retailer" but in actual practice I make almost no decisions on promotion. In my case, I doubt any strategy can be categorized this way.

Once a promotional strategy is determined, the next thing to take care of is advertising strategy.

We must first determine what kind of demographic, geographic and impact we want to achieve in our advertising. I struggle with this because I have undergraduates and retirees interested in my program. Generally, in such a case, I will  just target the 80% middle hump in your demographics so largely older Millenials and Gen X for my case.

Finally the metric used in advertising is CPM or Cost per thousand. Simply take the media cost and divide it by units of 1000 members of the audience. A typical CPM is abut $300 for a mailing campaign. Thanks to online marketing, 1000 impressions can be as cheap as $2.80.

I leave this work to my partners who are aces at this, but sometimes I wonder whether paying some money to mainstream media may boost profits.

Probably not worth sacrificing hard earned money on this at the moment. 

Shinigai (死甲斐) - Who would you short in Life ?

I just read an article where Warren Buffett asked a group of graduating graduates who thy will bet on in life if they could buy up 10% of the person's lifetime time for an upfront equity investment. He reasoned that, very often, the person with the highest IQ will not be invested in most of the time. Instead the most dedicated, conscientious and resilient person with leadership qualities would probably attract the most funding.

I would not be afraid to say who I will bet on in this blog : Alvin Chow of Dr Wealth would be top of my list. Heck we are partners in two businesses and make real money in both - supremely rare to meet people like this is real life since I did come from a retail business family.

Beyond the Dr Wealth people, the guy I will take a large leveraged bet on is Evan Koh, creator of Stocks Cafe.Their record of producing solid businesses or careers is beyond reproach.

Naturally, I like engineers and computer scientists who can combine a quantitative bent with a helicopter vision. Bonus marks if they are tad unsentimental and can see a business opportunity without all that touch-feely sentiment I see in ordinary human beings. Like I tell my students - Buy or don't buy.

There is no hold or qualified-buy statements in my class.

The harder question posed by Warren Buffett is which classmate will you short in life.

Who will you bet that would invariably destroy their human capital through their lives ?

The obvious answer from psychology is to pick the unconscientious guy, but high IQ guys also tend to be unconscientious. Kinda risky to bet against Sheldon Cooper or Einstein.  The disagreeable fellow will actually earn more in his lifetime compared to his peers, so it's also risky to short the jerks and assholes in school.

Perhaps in psychology, you should short the BBFAs. The introverted, agreeable and unconscientious guys in class.  Even then, you need to be careful because they might inch into the public sector or even marry up the economic ladder.

I do maintain a "short list" of my friends and classmates. This is a secret list of friends I keep tabs on who are on a self-propelled journey towards mediocrity in life. I keep this list because I want to avoid what they are investing in and the kind of personal projects they pick up.

Everything these guys touch turns to ash. Businesses they build lose money and friendship. Investments lose money. Diplomas and courses they study are not completed. Actually you can even build a self-help framework by just doing the opposite of what they do.

A friend ( who is definitely on on this list ) suggested the Shinigai (死甲斐)  which is a totally bogus idea we made up to be the opposite of Ikigai.

Some people just want to pursue projects that are the opposite of their Ikigai:

• They do stuff they hate - Five minutes ago, it was stuff they love, but then it is revealed that to succeed, real effort needs to be invested in that task.
• They do stuff they are shit at - They have no talent or skill at the project they pursue.
• They do shit that does not pay - No one will part with money for this person's shit.
• The do the kind of shit the world does not need - No one gives a shit what they do.

So there you go - this week, quietly build a Shinigai checklist and position the pursuits taken up by your friends. If they get 4/4, it is time to short them like there is no tomorrow. 

Don't do the shit they do. Don't even listen to the music and movies they watch of fear of getting tainted. 

But keep them around just so that you can refine your open short orders. 

But if you have no one in your list, you better watch out - Maybe you are on the list of all your friends. BWAHAHAHAHA !

Invest before you investigate

I was reading a book entitled What Philosophy can Teach You About Being a Better Leader by Reynolds, Houlder, Goddard and Lewis and was pleasantly surprised that it turned out to be an above average read for investors.

The authors asked to resolve this paradox concerning two uber-investors Peter Lynch and Warren Buffett:

• Lynch believes in hard work, but Buffett believes strongly that inactivity is much more intelligent behavior.
• Lynch was quite an opportunist but Buffett was famous for his self-restraint.
• Lynch makes thousands of decisions a year, Buffett only a few.

Although I think Peter Lynch is bad influence to retail investors because he seems to trivialize stock picking and made it seem to easy in his books, I find myself drawn to his behavior. One thing I do is to invest first and investigate later. A stock that is favorable to analysts and gives a high dividend should be invested into first before time is spent poring through their financial metrics. Generally, if I have a high yielding counter and I get confirmation from a blogger I respect, I would x10 to my holdings. Aggressively getting into a stock at a good price is better than waiting for others to pontificate and get in slowly after the fact.

I don't think there is a contradiction to Lynch and Buffett's approach. I think the unifying principle that determines how much effort you need to analyse the stock is the Kelly Criterion. 

If you reduce the Kelly Criterion into it's mathematical components, it basically means three things :

• Take a larger position in a security that gives higher returns.
• Take a smaller position in a security where the risk free rate is higher.
• Take a smaller position in a security where volatility is higher. 

This should not be limited to position size - this can be applied to intellectual effort as well. 

But the rules are different - maybe intellectual effort is inversely proportional to position size.

• Spend more time investigating a stock if you suspect that it may give lower returns.
• Spend less time investigating a stock where the risk free rate is lower.
• Spend less time investigating a stock where the volatility is lower.

Why does Lynch seem so hyperactive compared to Buffett even though their performance was equally stellar? My hypothesis is that Buffett has cheap financing in the form of insurance float so he does not need to think too hard to win when it comes to investing. He may also invest in less volatile stocks. Lynch has always been categorized as growth investor. 

I'm not a Buffett or Lynch scholar unlike many other financial bloggers so maybe I am wrong but I think there is credence to the idea that the Kelly Criterion can drive the amount of intellectual effort you put into portfolios as well.

A dividends portfolio consisting of 10-12 stocks can be designed to have a volatility about 2/3rds of the STI ETF. If you have such a portfolio, the intellectual energy you need to analyse this portfolio is going to be very small - so small that you may want to invest first, extract the dividend income and investigate incoming news through the Business Times later. I take these things one step further and even go as far to say that rookie portfolios need to have these mathematical qualities. 

If you go with a a few growth stocks and go in with leverage, then you've got a serious problem. Your volatility is high so the amount of intellectual energy is going to be humongous. You have to pore through every financial statement and think hard before you make a decision.  

What do you guys think ? 

Once this idea reaches maturity, I may do a more comprehensive article on the Dr Wealth website so I want my personal blog to showcase my more zany ideas. 

MBA in a Nutshell #14 - Marketing : Marketing Mix - Place

We are still trying to progress through the 4 Ps of marketing. Today we are covering Place.

The first we thing w need to understand are distribution options. There are three levels of distribution options.

We commit to intensive distribution if we are aiming for maximum exposure. We do this by using any wholesaler or retail outlet that would let us stock our goods. Most consumer products fall into this category.

We can also use elective distribution if we sell the higher ticket items. The RPGs and boardgames I play are normally sold through special FLGS stores.

Finally, we use selective distribution to aim for limited exposure. Specialty goods that a highly differentiated or luxury items fall into this category. For decades, Shiroi Koibito white chocolate biscuits can only be found in Hokkaido but these days you can buy them at Donki.

Specifically, there are four general forms of distribution channels that a business would need to choose to reach their customer.

Direct Response Marketing is the method adopted by my program under Dr Wealth. We sometimes employ our databases to get folks to attend our previews which results in converted customers for training. It is the conversion rates that makes me lose sleep at night.

Retail Marketing is probably the most common form of marketing where goods are placed in stores. In such a case, placement of products play an important role. Retailers are moving toward house-brands that erode the profits of manufacturers.

MLM or Network Marketing is actually a legitimate form of marketing that is mentioned in textbooks. MBA books like to think that MLM is going to rise in Asia, even going as far to say that MLM is more culturally compatible with Asians because we still believe in selling to family and friends. In all my preview workshops, attendees consider MLM one of the worse ways to make money - way lower than Internet Marketing or Forex Trading.

Finally, when an MBA text mentions Cyber Marketing, you will know that this book is a little bit dated. Cyber marketing is the predominant form of marketing today and probably warrants a separate textbook on its own. I've always wondered whether a formal textbook exist that contains the same material as those dubious Internet Marketing seminars.  If you do know of a textbook, let me know. 



 

Personal Update

The week has been less relaxing than I thought. I was supposed to conclude my training for Batch 9 and then spend the next few days doing noting much but I ended up doing some administrative matters regarding my dad's matters.

a) My dad's matters

Things are moving much faster than I was taught in law school. In Part B, we were taught that you do up a will because things get slow and complicated otherwise. I ended up going through the Letters of Administration route, and initially I thought things would be really slow, but everything concluded in two months, a credit to our super-efficient Family Courts !

Some of the issues I had to deal with are as follows :

• Sometimes the Family Court may not understand your investments completely. You need to be patient and work with your law firm to answer their queries. I wrote an email explaining that non-renounceable rights are not traded so have no market value and even attached ESR REIT's circular to show them. The paralegal then forwarded it to the Courts via E-Litigation.
• CDP needs the letter of administration be a certified true copy. Work with your law firm to certify everything before heading to CDP to complete your task. I should have known this myself but because I did not think about this, took a few extra cab rides. 
• CDP share transfer from one account to another is $10.70 per counter. Budget this for probate matters if you have many stocks ! It may also take a month to happen !

If you really want to handle issues of probate well when it is your turn to pass on, my only advice is to make sure you have a child who is both legally and financially trained and trustworthy enough to play the role of trustee. My dad succeeded in doing this, but I have no idea how can I execute this myself.

Even now I cannot imagine what would happen if someone is not trained in these matters.

b) Training and Personal Finance matters

When I started on my gig, I really thought my career would peter out by now, but things are better than ever. One side-effect of  having a career taking off this year is that I now have to take very proactive steps to manage next year's income tax statement which means opening and maxing out my SRS account and contributing to my wife's CPF account before this year closes.

Tax-deductibles are no longer a running joke for me so I have to start executing what I have been teaching my students these past months.

Maybe I might even need to incorporate in 2020. 

c) Leisure and Hobbies

I could get into some light RPG gaming one a month but I'm not sure whether this is sustainable because I prefer to create a totally new investment program next year. Otherwise I managed to install an old game I bought last year called Banner Saga that is a turn based RPG tactics game. 

My job is slowly crowding out my hobbies and even binge watching Netflix is now a luxury I cannot afford. What occupies my time is the notion of thought leadership - my investment articles on Dr Wealth have a readership that far exceeds this small blog and we're in competition for eyeballs and that means I need the knowledge to not just produce more articles but to deconstruct the work of other bloggers who may disagree or critique my ideas. One out of four articles I contribute will be less user-friendly and will read like this.

Maybe this is new multi-dimensional chess game I'm playing. 

d) What I am reading

I did not enjoy Narrative Economics by Robert Shiller, the epidemiological economic analysis is great but the book is just a historical rundown on the narratives that impacted financial markets in the past. A good book should teach people how to think about new events and not just rehash old ones. I would have been much happier had the book provide a framework on how to measure and track the infectiousness of ideas as they wreak havoc on your investment portfolio. 

The Man Who Solved the Market by Gregory Zuckerman is much better, tracing the lives of Jim Simons, one of the greatest quantitative investors of all time. I believe that a close reading may unlock the use of Markov Chains in determining which market cycle we are in which can be fantastic for investors like me. 

I have to admit that the idea of picking up a PhD in Quantitative Finance is appealing to me much more these days but I'm worried that my age would make me slower at exploring fresh new areas of mathematics. 

MBA in a Nutshell #13 - Marketing : Marketing Mix - Price

Wow ! It took ages to get out of the product segment.

The segment of Price only has enough material for one article. Here are all the possible approaches to price a product

Premium Pricing - Charging a high price relative to other brands. Hermes is a great example of a brand that does this. I wish I were here.

Fair Pricing - Price that is objectively regarded as being reasonable. NTUC Fairprice is definitely in this category. (OBVIOUSLY !)

Penetration Pricing - Charging a low price to generate volume. My program was here a year ago. I would argue that many unicorns like Grab employs this strategy.

Parity Pricing - Charging a price that matches that of competing brands. If you cannot differentiate your product, you will have no choice but to do this.

Cost-Plus Pricing - Charging a mark up based on costs incurred. You don't really want to get into a business that does this. I suspect the smaller law firms are slowly moving into this territory.

Idiosyncratic Pricing - Price based on what the value is to the individual customer. Another heaven I wish I could be in. The rules for selling in this domain is almost all consultative driven.

Leasing arrangements - Allow the customer to lease to push decision making into lower level management. Photocopiers employ this strategy very well.

Preemptive Pricing - Nasty stuff. You lower the price to damage a new entrant into the markets. I don't like doing this but over time, some folks may want to compete in my territory. As I do not spend my trainer fees on living expenses, I have enough dry powder to start a price war and even engage in painful IP litigation. As a somewhat paranoid, I have already assumed that this would happen and have a network of allies on standby. I guess the price for success is eternal vigilance.

Push versus pull pricing - Pricing at a compromise between buyer and seller. This is possibly what happens when a B2B arrangement occurs.

Threshold pricing - The reason why charging $99.99 will eliminate a lot of buyer resistance compared to pricing something at $100. This is so common I am not even sure whether it works anymore.

As much as I believe that I deserve Idiosyncratic and Premium Pricing, I don't think the market will allow my own product to be priced this way yet. I think the training industry has not really recovered from the crazy 2000s where these guys with fake credentials hawk derivatives strategies promising some kind of pipe dream to the hapless investor.

We currently price fairly for a 2-day workshop and lifetime access to a FB group. Price increases occur frequently, but I generally do not increase price unless I convince myself that value has increased.

Letter to Batch 9 of the Early Retirement Masterclass.

Dear Students of Batch 9,

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

The highlight of this session is that we managed to successfully conduct a new version of the Emigration Exercise that used to be done for earlier batches. In this exercise, students get to roleplay an emigrating singleton and to investigate one destination that they would like to emigrate to by digging out the economic data of a target country. Once they reach their destination country, students will have to determine whether they can live on the dividends generated back home in Singapore. Students will also get to present one new stock that they would like to purchase once they open their trading accounts in their new home.  

We were unable to pick a favourite destination today after looking at the data because New Zealand (Wellington) and Thailand (Bangkok) garnered equal votes. The results of this fun and enlightening exercise will be shared in a future article on the Dr Wealth blog.

I have also learnt quite a bit from Batch 9.

The first thing I learnt is that I can reduce my expenses further when I pick the GrabHitch option carpooling feature when calling for a cab. I will make it a priority to try this out from Bukit Panjang this week.

During the qualitative analysis segment of equity counters, the discussion on OCBC was unusually lively.  Students shared useful insights on how OCBC is resonating with millennials with their first mover advantage on CDAC accounts and the tactical positioning of the Frank sub-brand. The class also unanimously agreed that OCBC apps and webpage were more user-friendly compared to the other local banks. As I am not an OCBC customer, I was pleasantly surprised that my previous impression of OCBC as a stodgy old bank no longer reflects the reality experienced by their customers today.

The biggest pay-off from teaching Batch 9 came was when I discovered that one really smart student is an actuary in real life so I jumped at the chance to ask her what kind of insurance does she buy for herself. Her answer – just term life and H&S, totally made my day. If you ever want insurance advice, you should mirror the moves made by the folks who actually create them for a living.

By this batch, the ERM has more or less settled down with our methodology of stocks selection and this batch of students has managed to choose six blue-chip stocks and six REITs to form the core component of the portfolio. I find this class even-handed and balanced in their approach of stock elimination, so I look forward to investing with my trainer fees before the end of this week.

As a response to feedback during this course, I will be taking steps to align the final portfolio closer to the asset allocation exercise done as part of early stages of the course. We are always improving our material after your feedback, so you can expect a supplementary write-up to be posted on the FB group within the next few days.

Christopher Ng Wai Chung

MBA in a Nutshell #12 - Marketing : Marketing Mix - Product - Boston Matrix

The Boston Consulting Matrix was my first exposure into the power of 2x2 matrices. Some genius found a way to build a map of where all your products stand vi-a-vis each other based on the twin axes of market share and growth rate.

This generates 4 possible quadrants :

a) Star - High Growth, High Market Share

These are the stars of the show who have a dominant position in a high growth industry. If your product is placed here, this is an enviable position to be. While my ERM class is growing fairly quickly in 2019, my market share has some room for improvement. At this stage, the only way I can resolve this issue is to clone myself.

b) Cash Cow - Low Growth, High Market Share

These are the bread and butter product lines that you need to have in your company. While the growth is no longer there, like dividend stocks, these product lines generate the cash flow used to sustain the rest of your company. The Stars of yesterday tend to become the cash cows of today.

c) Question Mark / Problem Child - High Growth, Low Market Share

Some industries can be high growth but you may not have a dominant position in this industry. Problem Child is named this way because it is not too clear how much more you want to invest in marketing these products. I suspect that effort will have to be made to differentiate this product further in order for marketing to succeed.

d) Dogs - Low Growth, Low Market Share

I would characterize a large number of my competitors as falling into this category. There are a lot of training vendors who cover value investing and each vendor has to compete over a shrinking pool of investors who are getting more sophisticated tools and information portals to invest in local markets. We're even seeing some major information vendors leave our market.

A significant part of running is getting rid of your Dogs so that resources can be deployed to turn your Problem Child into Stars.

After positioning all your products into a Boston matrix, a company owner can then decide whether to include/exclude a product, bundle one product with another, or raise the price.

For my own program, we have been refining materials, adding value and raising prices for a large part of 2019.

Living the NERFed Murderhobo RPGer Life

The weekend post is a little late because I spent the greater part of Saturday and Sunday attending a course on Quantitative Investing by Dr. Wealth but as a paid customer. I'm not ready to blog about it because I want to do this some justice to the course, so instead I just want to do a philosophical piece about life.

I had a small epiphany about my life lately.

Of late, I have been drifting away from playing D&D and putting a lot of focus on my life as a trainer. A cursory explanation is that D&D does not pay but being a trainer does, but I think as a financially independent person there are reasons that go beyond money as I slowly move away from gaming.

I think my problems with playing RPGs is a reflection of what I've consistently encountered my whole life.

In D&D, players like myself are murder-hobos. We trend to play great-axe wielding barbarians or pole-arm swinging Sentinel Paladins.  Otherwise we will be spellslingers like Diviners or Sorceror-Warlocks who never sleep. We focus on killing monsters, taking their treasure, and solving the problem is a quick, ruthlessly efficient manner.

The problem with murder-hobos is that we are seldom the majority in a gaming table. There are a class of gamers that my friend terms Yolofomos. Yolofomos want to play Kristina the Elven Beastmaster Princess who can develop a telepathic link with her pet cougar, maybe even have sex with it. The worse Yolofomos are those anime-loving BBFAs who insist on playing some kind of bard or "colorful personality". Such Yolofomos still focus on role-playing and exploration but can be objectively quite bad at it.

The truth is that Murderhobos are quite fine with Yolofomos and can work around inefficiencies in party tactics. They enjoy role-playing and exploration too. But you see, if a Murderhobo becomes too efficient as killing machines, Yolofomos feel threatened because " you play like that, it's not fun for me anymore. "

Enter the DM. The DM will do his best to make the game fun for everyone.

In theory the DM will run the module objectively and then split the rewards evenly. But in practice, the DM tries to stroke the Yolofomos by giving them more powerful magic items or over-budget monster encounters to challenge the Murderhobos and fudge the game for Yolofomos.

So Murderhobos RPGer have a perennial problem. They are always playing D&D in Hard or Inferno mode while Yolofomos get to play it in Easy or Normal mode. I once took a sub-optimized monk and went through 4 levels without a key material component to cast my most powerful spell when a fellow party member was given a Necklace of Fireballs that only found use after he rage-quit the party and I managed to hold of it.

KABOOM !

An investor will find this story very familiar.

Ed Thorpe, who found an innovative way to do card counting, was eventually marked by various casinos and barred from entering them. He eventually joined the biggest casino in the world, the Stock Exchange, and did very well as a hedge fund manager !

So fundamentally, what is a Murderhobo?

IMHO, Murderhobos are folks who incorporate mathematics and a cold economic logic into their basic lifestyles and personal philosophies. They have a Bayesian sort of outlook in life. For example, we know that given the way RPG modules are designed, there are probably secret doors in empty rooms, so we search for them. ( Then we get accused of metagaming )

Societies will always have mathematical loopholes whether they are a some kind of advantageous beta that works in a back-test or asset structures that are just too tax-advantaged to ignore, so we Murderhobos pile into these loopholes. Because I am empirical, and coldly logical about investment markets, if I find that a strategy works, it is only fair that with the right conviction I can supercharge it with leverage so that I can beat all the best talking heads in the blogosphere?  Right now, as it stands, even my unleveraged students have a decent XIRR and all my portfolios are positive.

But I think my D&D experience has taught me saltiness lurks around the corner. I've been playing in this kind of hostile environment for three decades.

I am seeing a lot more passive aggression directed with at my business partners or myself these days. Overall, I think it is a good sign that we're growing. I want to take this in good spirit. Although I will never mention this here as to who they are, I do know which blogs are my biggest critics, and I do tell my students to read them and reflect upon their writing. Investors do best when they have a contrary opinion.

But here's the deal with financial markets.

My business can fail and my career can be over in a minute.

But until my models fail and I start seeing some investment losses, the Singapore Government, the real DM in this game of investing, can't NERF me without Singapore losing it's status as a financial hub.

So if I find a +5 Sword in the form of regulatory boost to REIT gearing ratios, or decide to pound someone with my Juris Doctor feat, no DM will be there to save a Yolofomo.

 Anyway, if I get back to D&D publicly, I think I will be a DM moving forward and will probably find PCs in the financial circles.

We can run an all-Murderhobo party !