What happened in 2020?

As today would be the last trading day of the year, Stocks Cafe will be summarising the results of 2020 for the ERM portfolio tonight, after which I would be doing an article to summarise my investment performance for 2020. 

Otherwise, 2020 has been a wild ride.

a) Some unavoidable disappointments with 2020 amidst a pandemic

Before I begin, I want to talk about some stuff I was unable to execute in 2020. 

The first disappointment was that business revenues were not as good as in 2020. Profits dropped by 26%. But I should not be too hard on myself as I think 2021 may be worse and I should be fortunate that I have revenues in the first place. 

The second disappointment was that I have yet to incorporate a business as there is still no impetus for this. Continuing to think of my business as a start-up may not be as feasible as before as I am self-sustaining and do not need funding from a VC but need more exposure to potential customers. 

b) Business in 2020

Otherwise, 2020 turned out to be a great year. I graduated eight batches of students and we'd developed quite a number of new capabilities. Membership in the ERM FB group stands at 508. 

The biggest change in my course syllabus is that my students have decoupled from Bloomberg and can do back-testing with Pyinvesting.com. Beyond that, I took some really big risks to introduce Z-Scoring into my materials that allows us to blend different investment factors into a score that facilitates the ranking of stocks. 

Collectively, this made the course much meatier. But it's practically a new course these days.

c) Did really cool stuff with Python programming

If I'm pitching my program to a VC, I'd tell him that my students have a Microsoft Office for Investing. 2020 was also the year I started to level-up my coding skills in Python with an emphasis on solving investment challenges. 

One cool development is the ability to use some really fine data science tricks to perform regime analysis on local stock pricing information to determine whether it is a good time to enter into a local stock position :

The above diagram shows that this may not be a good time to pick up Keppel DC REIT yet.

The second capability comes from picking up some Django web app programming.  Now my course now has a web app to consolidate class input to assist in portfolio building. The version on my local machine can now blend some machine analytics with crowdsourced information. 

Combining the portfolio management capabilities of Stocks Cafe, the back-testing and screening capabilities of Pyinvesting and my homebrew crowd-sourcing tools, my students have a unique and powerful suite of tools to start building and tracking their first portfolios.

This year I continue to explore reinforcement learning and may even have to start working with fundamental data.

d) Gave some pro-bono talks to schools

I was fortunate to be invited to Raffles Institution to give a talk on personal finance. Subsequently, I was invited to Springfield Secondary School and Republic Polytechnic. These were very satisfying projects to me and, currently, my speaking projects have grown dry.

Hopefully, momentum can pick up in 2021 and I can finally physically go to a school and speak to the students personally. 

e) Even authored part of a book 

I think the most unusual development was that I was invited by my writing instructor Felix Cheong to contribute to his book, Letter to My Son where some dads were invited to write a letter to their sons. 

This is possibly my proudest project in 2020 - I was never able to publish under a mainstream publisher so this achievement is particularly sweet for me.

Anyway, this is just a snap-shot of my year. 

A lot of resolutions were not met, but a lot of good work was done.   

Hope that 2021 would be a year with greater achievements! 

Personal Update #4 : What am I reading ?

 

I wanted to read something semi-serious so I noticed that Kinokuniya seems to be promoting this book entitled There's no such thing as an easy job by Kikuko Tsumura. I thought that it would be a useful fun light read on how oppressive the Japanese workplace can get for this new generation of young Japanese workers. Perhaps hidden in the novel are useful lessons on career management.

 There's been a lot of disturbing sociological information coming out from Japan that Singaporeans should take note of that will make me read ay Japanese book on the work culture and their failed caste.

• The idea of defeated men retreating into their rooms to play computer games was first discovered in Japan. Hikkikomori is an economic phenomenon and I actually wanted to pin the blame at the Plaza Accord that was signed with Americans to take away opportunities from a generation of Japanese men. It has always been believable to me that Singapore can achieve it's lost decade if Singaporeans collectively choose a slower pace of life at the elections ballot. Like what LKY said, if you have slow growth in Singapore, might as well have slow growth in Australia.
• Now, something more disturbing has surfaced. The 8050 problem is that now Japan is facing a generation of unemployed 50-something folks living on the pensions of their 80-something parents. 

As a parent, this scares the shit outta me! As a hardcore otaku gamer myself who know people who firmly belong to the "useless caste", the idea of my dividends supporting my two unmarried kids, locked in their rooms with their Playstations in their 50s gives me plenty of nightmares.  

Fortunately or unfortunately, the novel by Ms Tsumura was not as dark as I envisioned.

It is a light and happy read that features the journey of the author through five really fantastic jobs that anyone who FIREd would kill for. This should really be a book in a fantasy section - the jobs do not require skill, does not take up a lot of time, and feature corporate cultures that probably do not exist in Japan or Singapore. If these jobs do exist in Singapore, I would actually do it for the tiny wage and continue to be an investment trainer just for the really decent folks featured in the novel who are impossibly nice! 

( These jobs pay about $1,500 SGD pm or whatever the minimum wages are in Japan. )

And yet, the stupid author quits after each one after a really short stint. The climax of the novel was satisfying as there is, in the end, a really valid reason why the author did what she did.

Even up till I do not understand why I enjoy reading Japanese Literature in English. The plot is often not half as exciting as Japanese Manga but it has a cutesy and uplifting feel. 

Like drinking camomile tea. And talking to the Detroit Metal City guy when he's not Krauser.

I was pleasantly surprised that There's no such thing as an easy job is the number 1 fiction bestseller in Kinokuniya. 

Do get a copy as it would make a pleasant read this holiday season.

Personal Update #3 : Hobbies and Leisure

 

I was able to squeeze in a little bit of computer gaming this holiday season, which is quite unusual given my schedule. But I really wanted to feel what it is like to play a game again.

The game I chose was called Solasta: Crown of the Magister, it is the computer game that best approximates the D&D 5e tabletop RPG experience so the learning curve will not be steep at all for experienced TRPGers. I chose this over rival game Baldur's Gate 3 because Baldur's Gate was given much more leeway to deviate from the original game.

Now here's the thing that annoys me about games these days - game companies like to sell games before they are ready for proper gameplay! I paid $30 for early access and it promises just 10 - 15 hours of gameplay. 

I was initially expecting the game to be full of bugs like Cyberpunk 2077, but the gameplay just blew me away and I find some of the tricks I pulled in the RPG like stacking multiple smites available in actual gameplay. The game even went further to offer archetypes that are unavailable in the original RPG like a Paladin Oath that can cast Scorching Ray and Fireball. 

So the opposite thing occurred - I wound up getting even more disappointed as I levelled my party up to 6th level and realise that I can't advance the game any further. 

( This is the stage where my cleric developed the ability to cast Spirit Guardians which is the MVP spell in the entire game! ) 

I guess I can probably play about 2-3 hours to advance my party every time the developers write a new patch for the software. 

If you are looking for a first-class turn-based RPG game, do keep Solasta in mind. That's provided developers don't quit and abandon the project before the game is complete.

Anyway, if you are disappointed at the lack of investment content, I just submitted a more serious article to the Dr. Wealth blog. It should up in a few days time.   

Thoughts on my 46th Birthday.

 

I'm 46 years old today so that means its nine years before I get access to my CPF money!

Before I talk about the upcoming year, I took a glimpse of what I said a year ago. As it turns out, having low expectations helps in case you wind in a pandemic. I was able to sustain most of my habits throughout the year.

a) No Phd attempt, but what a big year for skills development!

There was no Phd application even though it's something I am happy to KIV for the moment. 

This is a huge year. I picked up Python, which led to major developments in my course materials. Then I tried web development and even built a web-app for my students to crowdsource qualitative research. Now I am trying reinforcement and deep learning technologies on financial data-sets. 

With Datacamp, Coursera, and my own personal projects, I doubt I have much time to work on some pet project of an ivory-towered academic. That being said, the stuff I am learning is getting really hard. If I plateau ( Like why must it be a sigmoid function? ), furthering my studies might be inevitable. 

b) Need to get back intermittent fasting and exercise

I've lost some momentum over the holiday and need some time to get things back online. Hopefully, phase 3 will also see me go back to my physical trainer. It's much harder without someone to push you to do better. 

c) Keeping my business afloat

I will need a dedicated post to talk about my business and in spite of a great 2020, I am very concerned about 2021. We're heading towards higher unemployment and with a vaccine, folks will want to prioritise travel and not investment training. I'm bracing for my worst year ever in business with numbers down 50% from 2020, but I am confident that my portfolio will make up the shortfall.

Maybe with lighter class load, I can focus on another web project and maybe even authoring a new book this year. 

d) Vaccine and Travel

Like many of you guys, I do want to travel again. After my dad passed away, I was hoping 2020 be the year I can bring my mum travelling. Sadly, thanks to Covid, the most interesting trip I made with my mum is a visit to Canberra Plaza three MRT stops away. 

To allow that to happen, I need to convince my mum to get vaccinated. I will go for the vaccine the moment I can do so. 

As I don't like to follow the crowds, I expect to occur very late in 2021 in the best case!

 

Nevertheless, I think I've had an unusually good year, relatively decent revenue with no avenue to spend it. The excess was farmed with leverage into a stock market at super cheap prices all thanks to the arrival of IBKR. It should be a decent setup for the next two years.

    

 

Personal Update #2 : Personal Finances

The second instalment of my personal update is on my Personal Finances. This will not be a detailed discussion of my investments as I prefer to talk about the investment portfolio after the New Year on the Dr. Wealth Blog. 

Very briefly, my general investments did not move much as I had to survive a crash and then enjoy a brief "V-shaped" recovery after March 2020.  Dividends took a serious hit this year, but expenses were reduced, so the year turned out to be so-so in the end. 

I guess, in the grander scheme of things, I was in the luckier spectrum of Singaporeans, being able to channel close to 100% of my earnings back into the investment portfolio and was able to exploit the cheap brokerage fees and margin interest rates of Interactive Brokers. While I felt that it was more prudent to retain my traditional broker, all subsequent investment income was channelled into my new IBKR account. 

The better lessons in personal finance came right at the year-end after I was able to round up my earnings of 2020 and estimate my tax liability for 2021. While you can argue that I have a happy problem, I foresee a hefty tax bill next year (largest I ever experienced in my professional life). 

Sadly, as I have been reinvesting my earnings, I ended the year without a lot of spare change and had to look for spare cash to fund my SRS account - I was barely able to scrounge up $15,300 to max out my SRS this week. (Whew !)

There was some regret on my tax manoeuvres this because I did not understand CPF well enough.

Initially, my belief was that making a voluntary contribution to CPF would not result in tax advantages for folks who report taxes as sole proprietors as documented on the website. But as it turns out, this applies only to employees who already contribute to CPF from their salaries. As a sole proprietor, you can volunteer up to $37,740 of your earnings to reduce assessable income. The money will be distributed between all the CPF accounts, so part of this can be used to pay off your mortgages. 

In 2021, I will stop trying to manage my taxes at year-end. Instead, I will make it point to set aside 20% of my earnings into legal tax reduction schemes :

• The first priority is to max out my SRS contributions to $15,300. 
• The second priority is to them put up to $37,740 into my CPF account across my OA, SA and MA accounts.

As I'm older than my wife, I can always get the money out when I am 55. 

This way I will be able to get ERS or about $271k into CPF Life at a later stage in my life. 

2021 is already beginning to shape up as a tough year as my course sales have not fully recovered yet and likely to lag unemployment statistics in Singapore. Committing so much to SRS and CPF would be quite a burden and may even require some contributions from my dividend income.

Anyway, this note should be useful for middle-aged readers who run a business. 

I probably would not be able to enjoy a holiday until 2022. 

 

Personal Update #1 : Learning Goals

 

After completing the Quantitative Finance class conducted by EDHED Business School, things rapidly went downhill for me as I tried to complete all the other courses in the same category. One tip: Never sign up for a course that has less than 4 stars on Coursera. 

I tried to attempt a course obviously designed for folks who actively worked in trading algorithms. The explanation is not too bad, but the exercises made no sense within the context of the subject matter. We learnt logistics regression but the exercise was something totally different (called Tobit Regression), I followed the complainants who tried to solve the problem together but eventually decided to quit because copying code to pass an online exam is meaningless if you can't apply what you learnt to an actual financial problem.

Generally, I don't like to quit a learning program but given that I am constantly picking up new skills, I'm quite familiar with walking away from learning something. Usually, I quit when the subject is no longer consequential, but quitting when the subject was taught in a haphazard manner was frustrating because it was a waste of my time. 

Of course, it does not help that I am conducting a class at the same time! 

I know the technical content of my programs is not a good fit for all students, so we provide money-back guarantees in case they really get lost in my lessons. It's sometimes hard to dumb down because the other 95% may feel that they will learn less. Sadly, even if someone gets their money back after committing to an investment course, they would have wasted at least one evening of their time. 

Moving on, I will refine my work further in this direction:

• Make the previews a more representative experience as an actual course. 
• Reinforce lessons with more simple quizzes so the information sticks. 

I'm now attempting a different specialization conducted by Google so I hope to do better for this program. 

Letter to Batch 18 of the Early Retirement Masterclass

Dear Students of Batch 18,

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

The first interesting we did for this batch is to demonstrate the ERM back-testing framework on a foreign market to show just how the framework can be introduced into a foreign market. I’ve deliberately chosen Bursa Malaysia because I had a student who attended the webinars remotely and will only show up for a face to face hands-on session when the borders open next year.

We know that it must be the year-end cheer because the second exciting thing was the unprecedented number of F***-bombs I threw around in class. I hoped the class enjoyed my passionate description of F*** You money and why having a net worth exceeding $2M would shift the emphasis from making money into defending your wealth from inflation and building a Fortress of Solitude around yourself. If there are no complaints in the class feedback, I may do this again in the future.

As usual, in every class, I am unable to answer any question entirely even to my own personal satisfaction. There was a question that wants to pit lump-sum investing, dollar-cost averaging and value cost averaging to see which system can lead to the highest returns. I hope to be able to answer this question adequately in a future Dr Wealth article.  

For our portfolio creation, we continue to pivot away from a defensive stance, and I can see riskier choices made by this batch of students. For business trusts, I made two controversial decisions to include Asia Pay TV Trust and Hutchison Port Trusts into the portfolio in an attempt to juice more dividend yields in a year of recovery from the pandemic, feel free to exclude this from your portfolio if you are uncomfortable with their track record. The class has also determined to take a more aggressive stance by adding SIA and Frencken into the equity component of their selection.

Lastly, I hope that Batch 18 would participate actively in the FB group. We should be able to see each other again in March 2021 when I conduct a community webinar for the community.

Christopher Ng Wai Chung

Happiness and FIRE

 

When I made my first $100,000 and published my first book over a decade ago, the level of sophistication in self-help was not too high and I have to deal with this retort about why someone should accumulate so much money if he/she just wants to be happy in life. 

Now back then, I did not have Adlerian psychology or the DISC personality framework to break down the point raised, so I ended up reading a lot of self-help literature of happiness.  The problem with doing that in the 2000s is that there is little data on happiness and some authors thrive on writing useless drivel based on generalities derived from personal experience. 

We're now in the 2020s and I am happy to report that a team of academics have written The Origins of Happiness. This is not a book for the intellectually light-weight who thrive on the works of Deepak Chopra. You are more likely to enjoy this piece of work if you are mildly autistic because it is almost written in the same style as a book on factor investing. Instead of breaking down investment returns, it tries to ask the question of what makes us happy and even makes a case for policy changes. 

I leave the details to you guys to read the book. I want to focus on how I might change my approach to FIRE with insights on happiness.

a) Singles who FIRE may want to get married and then restart the FIRE journey as a couple

A significant number of FIRE aspirants are single, anime-loving guys, who do IT. As the study shows a significant shift in levels of life satisfaction when they become partnered. It may not be wise for a single person to try to maintain FIRE by staying single and keeping expenses low. The study even extends to old age and shows that loneliness is not just damaging to personal happiness but a major cause of death in modern societies.

Financially stable people make generally good matches, but I've been seeing a lot of single guys think that they are not financially stable enough. I think a guy who FIREs may be single for reasons beyond money. Like a friend said," Your fuck you money may just be a big FUCK YOU from the women who meet you. Got this amount of money also nobody want!"

It's harsh but can be true. 

b) FIRE should never be a reason to quit employment, although you are now free to change employer

What surprises me in the study is the effect of unemployment on life satisfaction that is disentangled from income. Unemployment can really your self-esteem and levels of life satisfaction. The effect is so high, rather than suggest minimum wages or Universal Basic Income, society may be better off creating jobs of last resort and making employment a basic human right. Another aspect that makes unemployment special is that it has a scarring effect. If someone is unemployed for a while, the unhappiness lingers even if he gets employed later.

I think the major takeaway is not to flip-table with your boss the moment you FIRE. A lot of unhappiness at work can be swapped away with a job shift may be at lower pay. If there is no dissatisfaction at work, maybe you should keep plugging to grow your investment income instead. More money does not hurt. 

c) Higher income makes you happier, but not significantly so

This aspect of the study is the most interesting. Income has a positive effect on life satisfaction, but it is so low that we're better off dealing with unemployment as a society instead. The regression models employ the logarithm of annual income and still, the effect on life satisfaction is small. Policy-wise, throwing money at hippies to make society less unequal does not do much for the happiness levels of the population. Better to give these hippies decent jobs. 

As such, I believe that the multiple degrees of FIRE like Barista FIRE or FATFIRE may not move the needle compared to the simple fact of being able to live on investment income to insure against an unemployment event. The additional boost to annual income hardly makes a dent on life satisfaction.

All in all, when it comes to everything about Life and Happiness, one simple rule to follow.

People are happy when they feel useful and needed by society. 

Don't lose track of this track in your FIRE journey. 

 

 

Why guys get defensive when women accumulate $100,000 at a young age

It's almost a tradition or a cost of entry for a financial blogger to talk about how they attained their first $100,000 as some kind of perverse freshman orientation into the world of financial blogging. I'm glad to played a small part in starting this trend when I authored Growing Your Tree of Prosperity over 15 years ago when I documented my own journey. 

When I turned my $100,000 into a self-published book and parlayed it into a feature on the Sunday Times, it was not cool. Some thread on EDMW racked up 128 pages with most postings from fellow Singaporeans cussing me for meeting my financial target.

Some folks want an idea of how my thoughts have evolved on this matter you can refer to the following links on my blog :

• In 2015, Budget Babe met the $100,000 challenge and I wrote about it here.
• In response to an increasing number of Deci-millionaires, I wrote an article on how to frame your thinking about this phenomenon here.

Back to the present day.

Denizens of the financial social media forums were given a treat when MissFITFI posted a video on how she accumulated $100,000 on her social media webpage. The thread racked up a firestorm of comments and, to an old veteran, I am now more interested in the folks who gave comments in the major finance FB forums. 

I would characterise responses to the following categories:

a) Well-wishes from the veterans and FIRE regulars 

Without applying any analytics, I noticed that there is small population of well-wishers. My personal guess is that those who are well-wishers have generally high self-esteem. 

These folks tend to FIREd many years ago and most already have families. If I make a guess, guys with daughters will be more encouraging when he sees a female financial blogger succeed. This is mirrored in the corporate world where leaders with daughters tend to be more willing to promote capable female employees.

Sadly, I think that well-wishers are a very small minority in this case.

b) Folks who wonder why they do not have $100,000 before they are 30  

Interestingly, I noticed through my own journey is that articles of this nature tend to trigger a lot of self-examination and a large number of these responses are personal justifications of why the person did not have $100,000 at before age 30. 

This is exceptionally interesting to me because in all cases, the original poster does not write an article to disparage other people but to just share one data point on their own journey. It is not in our pay grade to explain why some folks are not there. 

Adlerian psychology would be a useful framework at this state because most responses talk about things like because they served NS, could not get into a University as reasons. This is pure Freudian etiology at work. I would venture that NOT achieving $100,000 is a goal because most people have a GREEN personality and FIRE requires life adjustments that too uncomfortable and way worse for Millenials who do not have the same opportunities as older generations. No one who enjoys inertia and the status quo will ever go through the process of trying to obtain $100,000 before reaching 30. 

There is simply too much good food to eat and too many Thai discos to visit.

c) Misogynists, BBFA and assorted Gamergate beta males 

MissFITFI had a private conversation with me last night on why female bloggers tend to be targetted with more hate. After that conversation, I went to the other bigger forum to read the comments and it was really toxic as hell. Some guys were complaining that her presentation was too stilted, others criticised her portfolio. Worse, these guys are noob beta males because there were no real suggestions on ho to improve.  

My first reaction was that men generally can't handle a successful woman, so this is expected. Then I realised that those Millenial men probably don't hold back these days because of things like Gamergate. So I told MissFITFI that she's like an ace Fortnite gamer who just happens to be a girl and you can go read about the amount of harassment female gamers receive on the web.

Here's the thing on Gamergate. Social scientists discovered that elite male gamers are generally quite welcoming of female gamers into their communities. It is the lousy male gamers who find all sort of ways to put them down. 

I also suggested to MissFITFIT that she never meets her guy critics. I recall an article interviewing successful women on why they do not like dating beta men who earn less than they do. It's not because they look down on them. It is because of the tendency for beta men disparage these successful women to buff up their own self-esteem making such relationships extremely toxic.

So, in summary, nothing has changed since I made my first $100,000 so future financial bloggers should be mentally prepared to receive brickbats when they talk about their journey. 

But I think they should do it anyway and monetise the eyeballs if they can. 

 

 

What, IMHO, is the most important thing about Entrepreneurship?

Just the other day, something funny happened to me. 

A few days ago, I was supposed to meet a friend for lunch at SMU, after meeting me, she asked me to do a quick video to answer twenty questions for her colleague. Naturally, I would do anything to promote my business, so I eagerly agreed. ( Having learnt that sometimes in life, it's often better to say YES than to say NO - unless it involves investing money. )

I was given a minute barely a minute to glance through the questions and then the recording began. 

It's probably not wise to share the details of the twenty questions discussed as it might be a pleasant surprise later if it ever sees the light of day, but I felt that if I had prepared for the event (like in radio interviews) I would have said something more politically incorrect.

The truth is that I'm probably not a coachable guy and basically run a single-person start-up. I do not know what capital I need because I have relatively strong cash flow even in a pandemic year and have always bankrolled myself. What I am looking for may not be something an incubator can offer - access to some high-converting groups to provide free finance talks that I cannot normally reach in my previews. 

( I've even highlighted that SAF regulars about to retire and SIA pilots are a demographic I would really like access to. )

So I thought perhaps I can share my opinions on entrepreneurship which I would have like to have said in a candid interview. I'm sure a seasoned startup entrepreneur might disagree with me, but given what I have seen so far, these are my thoughts at the moment.

The fact is that entrepreneurship and founding a start-up has such a ridiculously low rate of success, it can't possibly be the road to riches for the folks who are involved in it. I suspect some founders are founders because they are not employable like myself. Even though the successful cases do wind up billionaires or multimillionaires, startup founders are better off thinking about other forms of motivation.

So if the motivation is not about money, what other possibilities can a fledgeling boss strive for?

For me, I think it is about freedom and control - Autonomy from reporting to an overlord or kowtowing to someone like the rest of the folks who work as employees. To many Singaporeans, they think they work for idiot bosses. To validate this opinion, some Singaporeans should work for themselves to see whether they can do better. 

Now, if the motivation is about freedom and not billions, then the most important thing about entrepreneurship is not about a grand vision or a dream which I see too often when founders speak. I was stunned when I hear of founders who can barely even explain their business idea open their mouths to ask for a million dollars. 

Which planet do they come from? Who actually opens their wallet to these pitches? 

On the other hand, I have to sell each of my seminar tickets previews by preview. Building a working product that can sell takes years, and you need to balance a strong marketing campaign with a product that can solve a problem for your clients. The only way for me to ask for money is that I have the means to multiply it. 

So I think if you put a degree of emphasis on freedom, you'd think differently about the business you want to run.

I think if you ask for a $1M and actually do get it, I think the VC would want a degree of control over your performance. You will be using the money to hire people and, in a sense, be held responsible for their well-being. If you have a co-founder, you may have to adapt to their style and the reality is that equal distribution of labour will not happen between co-founders. This kind of arrangement has too many attachments. 

So I suspect I might not go far in my incubator because I have an Antediluvian approach to doing business. Even though I'm fairly profitable, my business is also too tied to my personality at the moment to scale properly. The business I want to conduct is a cockroach business and not a unicorn, it has to produce cash flow and sustain itself consistently. Bonus points if the costs are fully subsidized by dividend payouts.

Anyway, I hope I can turn up some speaking gigs soon. With a market recovery just about the corner, interest should be at an all-time high.  

 

 

Social Escorts can benefit from learning about FIRE

 

As it is the holiday season,  I've decided to change my reading diet into something less dry. I've chosen to read one of my favourite local authors - Gerrie Lim. Gerrie Lim wrote Invisible Trade, a book on the sex trade in Singapore, that still holds the record for the best selling book by a local author in Singapore. 

Scarlet Harlot in many ways updates the developments in the sex trade for the new Millenial generation. Even though some things about the oldest profession has not changed much, social media and streaming have changed in industry tremendously. 

I'm not very sympathetic to the lady author because she is young, foolish and so full of contradictions. She seems to think that she has more honour than her colleagues because she is less of a gold digger than them. Worse, she's fine in an open relationship but goes apeshit when her boyfriend invests emotionally in another woman. Relationship wise, I do not see any happy ending for her because she's bad at picking men.  

From a financial perspective, the book did leave one thing hanging. The author believes that by the time the book is published, she would have graduated and would have been out of the profession but the astute reader would have reasons to doubt this. Would an ordinary job really be able to sustain the lifestyle of a social escort?

Sex workers and social escorts who are genuine about leaving the profession should seriously consider joining the FIRE movement :

a) Sex work is really competitive

I was not surprised that there is so much bitching within the industry but I was stunned at the amount of competition. In the workplace, some engineers may get an MBA to get ahead. Social escorts need to continuous upgrade with plastic surgery. I expect this to come with some amount of physical danger. 

Doing cosmetic surgery should be analysed just like an investment with its ROI. In my opinion, an enhancement such as breast enlargement should only be done if it can lead to higher billings per hour. 

How to measure bang for a buck in plastic surgery is something that I would want to put my data science skills into good use. 

b) Sex work has a short career lifespan

Once again consider the lifespan of an engineering or computer science degree When you start work, technology will keep advancing and your career has a certain lifespan before your tech skills become obsolete. 

In many ways, sex workers have it much worse. I think interest from customers begins to wane in your 30s. An engineer still has some employment value at age 35, a sex worker has much fewer opportunities. In fact, Annabel Chong, a sex worker who put Singapore on the world map, transitioned from sex worker to a software engineer!

As such sex work must pay but must also account for a short career life span. By understanding how FIRE works, a sex worker can start early by replacing her income with something that lasts longer and more predictable. They can also live a more normal lifestyle that if easier to acclimatise to when they leave the industry.

c) Sex worker does get access to financial advice, but from dubious sources

According to the book, agencies bosses seem to encourage their social escorts to save, which I think is good advice, but this leads to the old conflict of interest between the agency boss and the social escort.  Agency bosses would be out of work if their particularly heavy billing staff would become financially independent, so I doubt they would ask their escorts to invest their money. 

This leaves NGOs and social workers to cover up the lack of financial know-how. I can imagine that if AWARE were to look for volunteers to do such good work, they would have ample volunteers. 

I can imagine half the financial blogosphere will be very enthusiastic about helping. 

Anyway, this is a fun trashy read for this holiday season. 

Let it be known that, with this review, now my blog is a strong supporter of Singapore Literature.  

  

Is optionality overrated?

 

In my previews, I get a lot of questions on whether I teach options. Apparently, the number of advertisement bombardments from investment instructors has created this impression that you need derivatives to have a comfortable retirement. 

I don't teach options, I consider financial engineered products optional (pun alert!) in retirement planning. But I see a lot of value in understanding optionality in your life. A lot of educational qualifications may be better positioned as a call option on your human capital rather than straight-forward equity bet. 

The above image is reproduced from summation.net. It discusses the spectrum by how much people value optionality in their lives and I agree with it whole-heartedly.

If you examine young undergraduates, there will always be two kinds of students. 

The first category of students knows what they want from a young age. They are aware of which degrees earn a good living and have slowly built up a profile to capture the upside from getting the qualification. When they get employed, they have a salary upside from A level qualifications as reflected by high salary over tuition fee of the qualification. That's a straight equity bet and degrees like engineering, accounting, law and medicine fall into this category.

The second category of students is less sure of themselves. They do not know what they want but they want to develop generalised skills like writing and critical thinking to be able to delay their decision making and react to industry changes upon graduation. These degrees behave more like options, they fall into the money when an industry is chosen. This is a call option and Arts, Science and Business degrees often fall closer into this spectrum ( although economics and finance degrees do not ). 

I don't want to discuss the relative value of general versus specialised degrees because this is easily resolved by googling POTS scoring within this blog. We can let the numbers and employment figures speak for themselves.  Fact is if you specialise in the wrong field, you may end up worse off than a generalist. Some computer engineers from NTU from my cohort is driving Grab today even though most PMET jobs out there have a technical component. Personally, I would not even hire them to polish up my Powerpoint slides.

If we position an educational qualification as something with real options embedded into them - then you have confront a few harsh realities out there regardless of how well humanities professors hawk their goods in success literature.

a) Buying options are not free, you have to pay a premium 

Options have a premium. The price of SMU Juris Doctor is high at $70,000. Way higher than an LLB for the same pay. Worse, the opportunity cost is closer to $500,000. I can't argue that my JD has embedded options at age 45, but I can argue that my JD is a wonderful mid-life crisis to have as it costs as much as a Maserati. 

Like me, some young people who study useless degrees and qualifications on their own savings will find their personal justifications on very shaky ground. This is worse if they are depleting their savings to do this.

b) Options may be out of the money

Some options may be out of the money. Suppose you specialise in Semiotics ( I have no fucking idea what that is, BTW).

I think having Humanity attain First contact with a superior alien race will boost the value of your qualification but, as it stands, you will have to review the salary scale and employment opportunities on qualification in Semiotics. Instead, your superior writing abilities and critical thinking skills are probably your best bet for now, the semiotics is just incidental to the development of value in your human capital. 

I've spoken about many private degree qualifications as being similar to Paper Thosai qualifications, that was too unduly harsh. 

Instead, I should reframe these qualifications as basically qualifications which out of the money - if you exercise this option, the difference from a diploma paycheck will not be too great to justify the expensive premiums you pay.

c) More Chaos can push Options into the money

Here's the best part of having optionality. Chaos rules and increases the value of embedded options.

If the economy goes into the shits and turns upside down or experiences 30 years of golden prosperity, your options can come into the money. 

Volatility increases the value of options! 

This brings the harshest truth about private and qualifications in a meritocratic and capitalistic society like Singapore. For chaos to ensue, the status quo cannot remain. Either we have rampant growth that pushes everyone to the stratosphere or have a societal collapse.

In such situations, the generalist will be able to overcome the specialist. The gap between a local and private degree holder will narrow.

And a lot of young punks I know have that kind of sentiment or desire - this is perfectly rational given the educational qualifications they have invested in. 

Finally, I really like the image shown above. The purest equity bet on human capital in Singapore is entrepreneurship. This is one specialised singular bet on the business that you are running. Meeting fellow founders in the SMU incubator, I am impressed and amazed at the level of risk-taking. 

I constantly feel a little inadequate on my own approach towards conducting business, which is to match cash flow with business expenses and expanding slowly. I don't even have an "ask" because I don't ever want to be in a position to give up equity. 

Clearly, I am a cockroach but these young businessmen have the potential to become unicorns. 

 

 

Are you leveraging enough in your lives ?

Todd Tresidder has written quite a number of books on personal finance and I was fortunate to find one copy on leverage in the Woodlands Regional Library. 

This is a very thorough treatment on the topic of leverage and I am pleased to report that financial leverage plays only a small part in this piece of work. Here are the different forms of leverage you can apply in your lives :

a) Financial Leverage

Financial leverage is basically borrowing money to invest in a portfolio or business. It is the only form of leverage that is double-edged. If things go your way, you will get out of the rat race much earlier but you can be ruined when things do not go your way.

b) Time Leverage

Time leverage is buying time from other people so that you can become more productive. Every business benefits from hiring employees or contractors. Tim Ferriss has spoken about using an overseas virtual assistant for quite a while. This is something I hope to do if my earnings can justify it.

c) Technology and Systems Leverage 

The question is whether technology platforms can make you more productive. I leverage Stocks Cafe for portfolio management and investment metrics and Pyinvesting.com for back-testing but I hope not to stop there. I'm slowly building a tool for crowdsourcing of qualitative data from my students to make my lessons more interesting. 

Alternatively, by creating SOPs, you are creating an asset in your company as a fresh new employee can execute your procedures without too much coaching. A good system prevents a lot of Green-personality employees from hoarding company processes to become indispensable to you. 

Every entrepreneur needs to remind their Greens employees that they will never be indispensable. 

d) Network and Relationship leverage 

This is about using who you know to get ahead in this world so it covers social capital. This reads more like a networking chapter but it does have its practical uses. I suppose it is harder to buy useful contacts and allies, you need to put in the time to cultivate these relationships and make it a point to be useful to others first. 

Creating a group of like-minded allies using social media is a good strategy.

e) Knowledge and Experience Leverage

This looks a lot like an exhortation towards lifelong learning but it is important to note that in a world of MOOCs, it is very easy to pick up concepts without the chance at application. 

After going through the list, the area of leverage I can most take advantage of is time leverage as I only have 24 hours to do and have more projects than I have the capacity to do them. My challenge is to find a way to figure out how to outsource my work to an assistant. 

Labour costs can be expensive in Singapore.

From Chai Png to Haidilao

 

In case readers are not aware, I stopped being frugal when it comes to food quite a while ago. My 20s were basically all about eating chai png and the occasional vegetarian bee hoon breakfast to keep my expenses low but after I became financially independent, I started eating like a normal person again. 

Recently due to COVID-19, I have been eating rather well and as I can't restock Dr. Wealth's pantry after a successful run of my program ( a pre-COVD habit I developed), I decided to buy a meal for the Dr Wealth staff who supported me faithfully during this rally tough period of the business. Furthermore, this is not a personal expense but a business one, with mini-meeting included, I can go all out on the meal budget. Also, the fact that the STI has rallied and I am getting November dividends clearly made the expense negligible.

I've always wanted to eat at Haidilao but somehow could not because my pals do not like eating there when we have gatherings claiming that it is expensive. Instead, I eat at a lot of Mala outlets in Chinatown. 

My curiosity about Haidilao is two-fold :

• What kind of service and food offering makes it command such a high premium?
• Is the company worth investing in if we just see it as day to day business?

For the service, there were two points which I liked. I was served drinks and snacks while waiting for the table to prepared. The staff really behaved almost like air stewardesses and even informed me that someone else will take care of us when there was a change of shift. Sadly, I was not able to witness the manicure offerings for the ladies because of COVID-19 measures.

For the food, I can only say that it is generally of high quality. Beyond the iberico pork and sliced beef, the beancurd skin stood out as well as sausages made of flour and mozzarella cheese. Against common sense and warnings from the staff, I chose the most unique spicy beef tallow soup-base, which was not that easy to stomach but the food was really fragrant. I ended up retreating to the tomato and chicken soup base to reduce the pain on my tongue.

Beyond the bells and whistles, was the $75/pax worthwhile? For a business meeting, definitely. But for me, I'd prefer to eat at a cheaper outlet at Chinatown. I can forgo some snacks for a 50% discount on prices. 

But Haidilao may be decent as an investment, the management has systematised great service and have been able to scale it around the world. I can imagine the same business system delivering Swiss Fondue or shabu-shabu to other parts of the world. 

Still, I will convince my family for another meal. But I think no spicy soup base for me the next time round. Spiciness can be delivered via condiments. 

Random perspectives on emigration

I don't have very much to talk about today, I just want to share some friendly perspectives on emigration. I had an update from an old friend and I thought his experience was interesting. As it turns out, some of the folks I gamed with over a decade ago are no longer located in Singapore. 

One, in fact, had left for Australia. Personally, I was kinda glad he did so because he isn't a big fan of Singapore and, if he stayed, I thought he may be a target for radicalisation.  

But my old friend had a much more interesting story. 

He left for New Zealand after securing a job posting there and spent a year or so enjoying the suburban life there. He tells me that he lives in a small town of 50,000 and there's a game shop serving the Warhammer and D&D communities there. Even more impressive is that kind NZlanders open up their large homes to gamers on weekends and six to seven tables of gaming groups can be joined if you contact the community over social media. 

Sadly though, my friend was unfortunate as he was on a business trip in the middle of the pandemic lockdowns and was shunted out of the country. The company failed to renew his work permit but managed to transfer back to Singapore. 

The whole process seemed demoralising and his family no longer wishes to settle down in NZ. A lot of money was wasted as he paid NZ taxes and contributed to their economy before failing to get his PR there. My friend tells me that when his family is ready again, he will attempt another country but this time his wife will insist that it would be Asian with Japan as a number 1 choice.

The second story is more interesting. A top data scientist friend is planning to come back to Singapore from Japan after spending many years in Japan. I really look forward to his return because somehow I think we can think of some interesting project to do together as we have mutual interests. 

The trigger is also the pandemic. After living in Japan for quite a while, my friend feels that he is not getting enough for the taxes he pays and it is much better to get back to Singapore where we get to save or spend more of the money we actually earn. 

For every course I conduct, students are invited to assess the feasibility of living in a foreign country with dividends picked up from REITs and other income investments. Over the months I have witnessed the power of our dividend stocks powering retirement plans in foreign countries, sometimes enabling retirement lifestyles in Western countries if students are able to stomach some leverage in portfolios.

Our paper exercise does not capture the difficulties and adjustments needed to settle down in a foreign country and pay taxes that we Singaporean PMETs will never get used to. In the case of NZ, you need to work for at least a decade before you can be entitled to a pension. 

If you have emigrated or are planning to emigrate, do share your perspective with me. 

I'm now sitting pretty in Singapore, but I will always be prepared to go in case my children can't make it in a highly-strung society like this.

ERM Community Webinar - 24th November 2020 7.30pm

 

On 24th November 2020 at 7.30pm, the ERM Community would conduct another Community webinar that is open to the public. We will be doing one such session every quarter where we showcase some of the more advanced concepts to share with our graduates. 

For the session on coming Tuesday, we will cover the following :

• ERM students are taught traditionally to buy and hold dividend counters. We will examine how to employ a data-driven TA trading methodology can be used to minimise regret. This will be reinforced by a demo by Ivan Fok of Pyinvesting.com to show how his tool can assist in this regard. 
•  An update on the ERM along with some concerns on the possibility of underperformance for the next 3 months as investors go risk-on. 
• There will be a 1-hour presentation that will rehash the presentation made to Republic Polytechnic entitled "Financial Independence!". This is a motivational presentation for absolute beginners on how to win the game of life.  

You can sign up for the talk by following this link.

Money is the Modern Equivalent of Monkhood

There is a spiritual dimension of Financial Independence Retire Early or FIRE that mirrors Eastern Religions that is hinted in Naval Ravikant's Almanack which I would like to explore in this article.

First I'd like to explore two concepts :

a) The Lesser Wheel of FIRE

The Lesser Wheel of FIRE is what we would typically associate with the FIRE movement - you have a history of basic expenses that you hope to care of with your investment income. When your investment income begins to cover your basic expenses, you gain Nirvana-like freedom from the capitalist world and it opens up whole new possibilities in lifestyle design. 

For REDs, you can start a business for world domination. For the rest, it can range from a cessation of corporate ambitions, farming entire salary to stock portfolios, or leaving the workforce entirely for personal hobbies if you are Green.

In many cases, investment income continues to rise after financial independence. Adherents to the Lesser wheel of FIRE may improve their quality of life and spend based on what was lacking during their FIRE pursuit, normalizing expenses to that of a normal Singaporean.

It is difficult to go beyond The Lesser Wheel if you conduct retirement courses because the bulk of the aspirations of Singaporeans probably stop here.

a) The Greater Wheel of FIRE

I tried hinting at the existence of the Greater Wheel of FIRE in many speeches I made in the past. The pursuit of the Greater Wheel is to strive for total independence from material wants. It is theoretically possible that a person not goes beyond quitting a day job, future increases in investment income come without an increase in expenses. 

You have transcended materialism. 

I'm not at this level, I may not even be at the Lesser Wheel because my life-energy exchange is so high, it would be irresponsible to my future generations if I stop my training work. My children may not be able to have a career that is a more optimal life-energy exchange. 

The Greater Wheel does not stop spinning until investment income reaches infinity. The highest need is to have no need for anything at all beyond daily survival. 

Still, I have a few rough ideas on developing this level of FIRE to this level of proficiency: 

• Break the contradiction between frugality and hedonism - If you have cold baths for a week, a hot bath will feel good. I take cereal with yoghurt for lunch so that dinner feels a lot more enjoyable. 
• Having children to inherit your wealth will lessen the desire to spend it down - Imagine being single and have over $10 million, you may not have the years to enjoy it till the end. Children solve that problem because it is natural for human beings to want to benefit their loved ones. 
• Personal accomplishments, not material goods, should form a bedrock of your identity - If you have your self-esteem tied to personal accomplishments and not material goods, you will have fewer wants that can be attained by spending money.
• Observe folks who study the Humanities - There was a joke that says that with a liberal arts degree you can be philosophical about the fact that it attracts such low salaries. You can be philosophical without a liberal arts degree.
• Leave one material weakness - If you know what you truly like and spend on it out of passion, you would come very close to reaching the ideal of the Greater Wheel, spending on everything else is superfluous. Don't feel bad if you have a weakness of PS5 Games. But avoid watches as they can cost a king's ransom. 

If you explore the duality of the Lesser and Greater Wheel, Money actually becomes a new kind of Monkhood. 

I'm not spiritual, but I have the potential to pursue a pecuniary form of enlightenment. 

Singapore's problem is encouraging Lifelong learning for "Green" personalities

This week I did something unthinkable in my 20s - I switched universities just before completing a course specialization. 

As it turned out, I no longer wish to pursue my studies in Digital Marketing. The University of Illinois has a decent program on Coursera but the material was too macro and high-level for me. I just wanted to bring more readers to this blog and then figure out how to start a better social media campaign. To continue this agenda, I will continue by reading some technical texts on content marketing. As I dislike marketing and prefer Dr.Wealth to handle the bulk of it for me, I prefer to keep this kind of selling to a minimum.

EDHEC Business School, however, has a program that is just designed for my skill level in Investment Management Python. The program dives deep into financial programming and expects students to be proficient in programming. This program is designed to be just challenging enough for me. 

For a Dominant RED personality like me, I take charge of my learning and will jettison any project that no longer gives me any ROI. My current course allows me to develop insights and improve my web app with new features every day, so my product grows in functionality and I grow in developing market insights on local stocks. If you study under a MOOC under Coursera, you should be familiar with thousands of ambitious RED and super smart BLUE personalities hustling to get their scripts marked, many from India and Sri Lanka. 

Singapore's policy-making cannot about REDs unless it is to get REDs to create jobs - something we'd like to do because it gives us some minions to boss around. 

I think Singapore's lifelong learning problem deals with GREENs. The steady, warm and accepting citizens that are the majority in Singapore. How can you convince unambitious GREEN folks who are contented into becoming unhappy, discontented, or worried enough to sign up for a program. 

There are many dimensions to the problem that is not within my pay grade to solve :

a) The first problem is that the majority of human beings hate programming which is where the best paying jobs are at the moment. Some startup guys can even know when someone gives up on Computer Science - at the point recursion or pointers is being taught. During my JC days when computer science was an A level subject across all JCs, the dropout rate for the first three months of JC ( even in a top JC ) is about 50%. 

b) GREENs may take the easy way out even if they come from the right industry. You hardly hear of 40-something guys talk about Tensor Flow or Keras, but there's always a way to escape via project management, AGILE, Enterprise Architecture or Scrum qualifications. Stuff that does not involve copious amounts of mathematics that is in high demand today. Mickey Mouse bullshit that does not add value to the world today. 

c) The only time a GREEN gets desperate to upgrade is when he gets retrenched, then all the years to pick up foundations for harder skills are lost. Government struggles with this group because they cannot fit into the jobs available in the market at the moment. 

So here's the thing : If the government fails or sees it as something beyond their pay grade, the private sector picks up the slack. 

Here is one thing I know: My course has a very BLUE/RED dominance.  It is, after all, fairly rigorous for a fun weekend that could have been spent in a zoo. I know my constituency -  ambitious RED guys want more money to push their ambitious into the investment and business realm, they are here to improve their own investment models, not to pick a new one up from me. The analytical BLUE guys want the tools to secure their portfolio so they can sleep better or sound more intelligent in their analysis. 

RED wants FIRE to kick ass. BLUE wants FIRE so they can stop their asses from getting kicked by REDs in the office.

If I follow the industry, I think I can make myself 2x richer if I shift my focus to GREENs. Just water down the course and promise a tool to generate a portfolio at the press of a button. Just teach folks how to press the button, then triple the price and focus on legal disclaimers. Focus on motivation, creating a subjective feeling, and engender a ruinous desire for money. Any simple TA strategy will do, the important thing is that you feel good about yourself. 

I know - I can rent a Lambourgini and stop wearing bermuda on weekends replacing it with suspenders and a bow tie. My motto should have been "Shake Leg your way to Retirement". 

Does that sound familiar?

You know what prevents me? 

I'm not a saint, so it's not my conscience. 

What stops me is the fact that my community will then be full of GREENs Jonesing for stock tips every day without really develop the wisdom to disagree with me every now and then. 

It's not a community. It's a cult. It's the reason why you guys hate all these Youtube guru videos. 

If you think about it, what the fuck is the discipline of marketing all about?

Having slogged painfully at my Digital Marketing Certificate, I think that marketing is all about getting  data from GREENs over and over again using cookies, so you can fuck GREENs by making them unhappy and inadequate because they are too lazy to know any better. 

We know that the majority of humankind is bogged down by personal inertia, they are agreeable and naive, why don't we track their movements on the web and hit them when they are most vulnerable? 

Let's show them a sportscar and make them feel bad for not having one!

I actually think it started with Procter & Gamble, where I learnt how to be a loyal employee. How to make housewives envious so they buy detergent. Hence Soap Operas! 

Now bloody copywriters are telling me to tell the angry customer that the reason they fail is that they're not diligent in following my formula. I think this disclaimer works if the customer is GREEN, the argument that they are not diligent will almost be universally true. You did not do enough qualitative research or read 10 years of financial reports, that is why you lose money.

I can't do that because my customers are smart. They know that they may lose money. But their only guarantee is that their trainer is leveraged so he stands to lose more, so he has tried his best.

So, maybe instead of listening to a copywriter ( who probably imbibed the same drivel from the 1990s Internet Marketers ), maybe you can bet on the portfolio customers have built and try to make a living out of that.  

Republic Polytechnic Talk : After-Action Review

At 4.30pm yesterday afternoon, I gave a 1-hour talk to students of Republic Polytechnic. This talk was attended by a decent number of lecturers, adult-learners and possible a smaller cohort of actual RP students, as the talk was voluntary, numbers are not big - the audience was between 30-40 attendees. If you measure that against my previews - I often get over 100 attendees every week. 

Here are my thoughts on that event :

a) On hindsight, the material should have been more technical as I had a fairly savvy crowd

I think the idea when we came up with the program was because 50% of RP students were on financial assistance, but here is what I learnt from giving out free seminars: If attendance for the talk was made voluntary, only the most self-motivated and moneyed students will volunteer to attend, and the quality of the questions asked would be of the highest quality. 

As such, I feel bad after Q&A because I should have prepared for a more technical talk. I had very good questions on robo-advisors, derivatives and one required an in-depth discussion on why standard deviation matters in measuring portfolio performance.

If I do get a gig with Singapore Polytechnic next year, I will stop pulling punches.

b) That single best martial arts manual for Singaporeans

One question that took me off guard was which book to read to get to grips with investing in the Singapore markets. I recommend several books in my preview but I struggled to recall the title that answers the question. In fact, I think I got the author wrong in my talk yesterday. I said "a book by Ben Fok" who has a few decent book, but it should have been Fong Wai Mun. 

Anyway, the book is here :

Fong Wai Mun taught my MSc cohort in 2001 and I recall my classmates saying that his exam was quite formidable. Other than that Christopher Tan book I gushed about in this blog but was seriously outdated, Fong Wai Mun and Benedict Koh's textbook is still used in local universities. 

This is the closest thing to a beginner's manual for local investors. 

c) How to become a millionaire at 30 

My favourite question came from a plucky RP student who said that he wants to become a millionaire earlier than me at age 30 and ask me what advice I would give to him. 

He does not know that as a troll myself, I love entertaining troll questions:

I told him that I was unqualified to answer as I made the first million way after that age in my late 30s. But I told him that I have a few educated guesses. 

My first answer is to join sales. Sales is a tough job that does not rely on educational qualifications and being in the top 20% of the sales pyramid can command salaries several factors that of a degree holder. I did remind the audience during my talk that 80% sales professionals earn next to nothing so they have to be outgoing and really like interacting with people to be top 20%. My second answer is to start a business and aim to IPO or exit before his desired age. 

No, I did not ask him to sell drugs.

For members of the public who are curious about the talk I gave to RP. 

On 24th November 2020 7.30pm, I will be repeating that performance to my ERM Community. 

You can sign up on this link here.