Being aware of the latest FA tricks of the trade.

 

Ever since I completed my last batch of students, I've been trying to expand my social circle through outings meeting with collaborators and students so that I can remain updated with whatever young folks do. Along the way, I've picked up new tricks that FAs are pulling to get more sales prospects so that can warn folks what these latest techniques are :

a) Selling insurance by matching folks in dating apps

So one trick in the book is to get into a dating app like Tinder, or Coffee Meets Bagels and choose to date any guy with the aim to sell insurance and financial products to them. This is actually quite frustrating for single guys who struggle to get a date and who may be anticipating the outing for a while, only to be sold ILPs in that meetup.

I think these apps actively discourage such behaviour from FAs but I'm also seeing a variant strategy where the date proceeds as per normal the first time around but selling only starts on the second date. Maybe this way, it's not a violation of the T&Cs of the dating apps because the second outing is arranged through a different medium.

The only way to prevent this from happening is to really have a clear idea of your self-worth. If you are a 5 and some girl who is an 8 or 9 accepts your date, maybe you want to find out what industry they are in before you get too excited.

( Not pertinent to this discussion is that I heard that there are a bunch of muscular guys selling gym memberships on dating apps, so women are not spared. )

b) Holding a second part-time job as a sneaky disguise to pounce on leads

It gets worse. I learnt from a student that more sophisticated techniques exist, and FAs are popping up in places you'd least expect. 

I heard that a FA actually picked up some Sommelier certificate and actually found part-time work in some wine place that organises singles events. She will ask single men out to sell them insurance. 

This is a very high-level play because the last thing you'd expect is someone with a formal job is actually an FA as well. 

When executed well, I can't think of any defence to prevent the date from becoming a waste of time. 

Fortunately, I've only seen single men fall prey to this, but if FAs can take on any part-time role, any business meeting can be weaponised for sales. I can imagine an influencer wanting to collaborate with me on a video may try to sell me stuff in that meeting - but I will ensure their reputation will not survive if they waste my time this way.

c) Hiding in "finance mastermind" groups. 

This comes from my personal experience.

A couple of ERM students and a collaborator of mine are mutual friends and we arranged to meet each other last night at Keong Saik Road. When we are arranging for the meetup, a student asked me whether I can allow an FA to show up. I was puzzled how the meeting details got leaked, apparently, my students tried to organise the meetup in a telegram group that focuses on finance discussions. It's a small group but has at least two FAs.

Once this FA heard about this, he tried to shift the meeting venue to his office!

When I heard about this incident, I got so mad, I said I would not show up if the FA comes. I can take a drug addict, a pimp, or someone that's been to jail, but no way I will allow a commissioned FA to gatecrash a drinking session with my ERM students.

It's not to protect me and my friends, it's to protect the FA! 

I explained that I probably would not be able to remain civil and I will openly rub the fact that I am a multimillionaire without ever accepting financial advice from an FA. I will brag about my cheap SAF Group insurance. I will make him question his very own existence in this universe.

I know that in the age of Telegram and Whatsapp, it's very common for folks to build discussion groups. I'm in several myself, but I also am aware that salespeople tend to hijack the discussion for their own purposes. One group I am in has real estate agents and every day it's just airy-fairy talk about condominium launches.

Sometimes I blame Napolean Hill for coming up with the idea of a mastermind group. Set a standard for your friends, if they see you as a source of revenue, you may wish to think twice before committing time and effort to a network. 

 

 

Back to the Grind

 

As I've spent the last weekend busy running my course, I spent the first few days of this week recuperating. I don't know why it's been such a tiring weekend. This week has been spent trying to get as many social engagements I can because I'm still stuck in Singapore running course previews so I can't take a trip to JB. I'm highly likely to go in by bus in May, but I intend to go when few are attempting the trip. 

I'm still dead tired but I started updating my Cryptocurrency notes this morning. I think things have changed so much I am overhauling 20% of my material :

a) Crypto.com now accepts FAST transfers from local banks, rendering my notes on a centralized exchange obsolete. Significant portions of material became optional overnight, but this should make it easier for older investors to get started in crypto. 

b) I'm now more open-minded about liquidity mining and think 1% allocation is ok, so I need to ramp up my notes in this area. Mouth watering yields over 100% is possible but so is losing your pants.

c) I suspect one of my students installed a hacked Terra Station wallet and it siphoned off his funds. The amount is small but I have to incorporate some troubleshooting notes. How do we the software we are installing is the right one? If we cannot answer these questions definitively, investing crypto will continue to be a bad idea. 

I'm slowly beginning to realize that my course material is several magnitudes more dynamic than my notes on traditional dividends investing so creating an online webinar may not be feasible and I need to continue to run my classes live and adjust the fees accordingly. 

As a business, we have go with our gut feel and learn new stuff along the way. I think there is blue ocean for trainers who can combine traditional and crypto investing in a coherent way that respects the fundamentals of finance. 

How to really get there is the problem.

 

Letter to Batch 25 of the Early Retirement Masterclass

Dear Students of Batch 25,

It’s been a great honour and privilege to conduct a 5-Day Early Retirement Workshop for you.

The current economic situation is a precarious balance between the optimism of recovery from the Omicron strain. I expect the following week to be bullish for Singapore markets as we move from DORSCON Orange to DORSCON Yellow. This will be primarily for REIT counters related to office and retail spaces.

However, there are dark clouds on the horizon. 

America is looking at PE ratios above 35 and an inverted yield curve. Interest rates are expected to rise and while this will benefit local banks, it would be detrimental to growth sectors like Tech. We are also in the middle of a conflict in Eastern Europe, and any form of escalation will not bode well for our investment portfolios. As China grapples with COVID-19 without an mRNA vaccine to call their own, we cannot rule out a technical recession in Singapore as China stubbornly adheres to the zero COVID policy. However, I would like to think that, if this happens, this should be a bargain-hunting opportunity.

Nevertheless, Batch 25 has taken a slightly higher risk in-stock selections, likely directed by the factor models we’ve built. We’ve accepted 15 counters and rejected 8 of them with a strong bias towards higher dividend yields, and the final portfolio is projected to yield 6.2%, which is not too bad for the current climate.  

I’m cautiously optimistic about the performance of this batch of students as we’re coming in at a point when the equity risk premium of the Singapore stock market has been rising for three consecutive courses I have run, but no investment strategy is fool-proof. I wish that students can take the lesson to heart that a 2-standard deviation drop from the mean can still mean a hefty 15-20% capital loss.

Lastly, I hope that Batch 25 will participate actively in the FB group. Sometime in Q2 2022, we should be meeting up for an online community webinar. At the time of writing, I have yet to determine the subject matter of this discussion, so suggestions are welcome.

Hope to see you then!

Christopher Ng Wai Chung

Too true to be good

 

The traction for the last article has been quite good and we're seeing some younger investors come up to support the idea of LPFIRE that employs liquidity mining to get over 100% to offset basic expenses. 

Viability aside, let's look at the primary opposition to the idea of Liquidity mining which is based on the idea of "Too good to be true".

A useful rule of thumb in investing is the idea of "too good to be true".  If an investment idea is "too good to be true, it is best to avoid it". If you go by this creed, then you would have avoided most scams out there which include Ponzi gold schemes, and land banking deals that are at 12% with capital guaranteed.  

The question has always been execution, to know that something is too good to be true, you need an understanding of baseline returns, equities return about 6.8% after accounting for inflation, so most claims of anything above 10% tend to involve a little bit of luck so should be avoided unless more data can be shown.  

It is therefore no surprise that many investors deem crypto yield farming as largely too good to be true. I don't see any need to dissuade these investors but note that the baseline returns for bitcoin stand at about 90% annualised. It can also be argued that no baseline exists. 

So suppose we apply Charlie Munger's idea to invert, what is the opposite of "too good to be true"?

I think the answer should be investment schemes that are "Too true to be good."

This is also a powerful mental model we need to install into our OS. Notice that the same folks who are not open-minded about new investment ideas also tend to err on the conservative side when it comes to investments. 

I did a casual google search for endowment plans sold locally and so far, there are plans that make you lose liquidity for 2-3 years and pay less than 2% a year when held to maturity. The folks who invent and hawk these products are really shameless given that our inflation rate is hitting 4% and getting into these products will guarantee a loss in real purchasing power over the next 1 year. 

It's almost like dating for BBFAs. 

Crypto yield farming is like the hot chick who rates 9/10, clearly out of your league, but for reasons unknown, enjoy hanging out with you. Naturally, you should conduct deal diligence to find out what is wrong with her, maybe she was born male, or owe loan sharks a lot of money. But still 9/10 should mean something right?

These chicks are too good to be true.

The question is whether your self-esteem is so low that you avoid this earlier chick in principle, and instead, go for a chubby, plain looking 2/10 that prefers korean drama to dining in with you. In this case, you are guaranteed no competition if you go after her. If anything, you know that the ugly, chubby kids you have in the future are definitely yours.

This second chick is too true to be good.

I think in all matters, you need both mental models to navigate the investment world and should find a fairly good portfolio that conforms to your risk appetite. 

Crypto bros will ask you to give 9/10 but maybe a tranny a shot. Commission Financial Advisors selling endowments want you to settle with ugly chick and have really BBFA kids who are guaranteed to be yours.

Which will you choose ?

  

Will this Quick and Dirty FIRE for desperate people work in practice?

 

I was contemplating whether this post should be shared in the Dr Wealth blog but thought otherwise because this idea can be very controversial and I expect a healthy round of debate around this idea I have.

One of the things I do above and beyond training and investing is to challenge myself to see whether I can invent new ways to attain financial independence. And one of the things I teach my students to be wary of is liquidity pools. The idea is that for exchanges to be run in the cryptocurrency world, some folks need to provide liquidity in the form of currency pairs, those who are willing to do so can be rewarded. For obscure pools that need liquidity, rewards can be over 100%. The catch is that yields fluctuate and you get rewards in the form of tokens which can be volatile.

Naturally, I've been playing a few pools myself and after putting about $5,000 into a mix of these random currency pairs, I'm getting about $10 UST a day.  When these pools hit about $50, I would farm it again to an attractive pool that yields over 100% and I will see a gradual increase in my daily earnings over time. 

Do note, however, that this is chump change to me and I do this for fun, much like what folks will do at blackjack tables in casinos although I think that I'm doing much better than most casino customers. Sometimes I do this because I can warn my students and tell them not to. 

I think that once you can accept that yields are not sustainable and you can even be subject to possible fraud, it may be possible to invent a new quick and dirty form of FIRE. This form of Liquidity Pool FIRE may lack the sustainability of real FIRE, but with small amounts, you can skip other forms of FIRE like CoastFIRE or Barista FIRE and "zerg rush" your way to financial independence.

The math is very simple. If you can live on $24,000 a year :

• A REIT/Bluechip portfolio yielding 6% needs to be $400,000 to sustain your lifestyle.
• A stablecoin portfolio yielding 10% needs $240,000.
• A diversified liquidity mining operation yielding 100%, needs only $24,000.

So I think a new form of lifestyle design can revolve around LPFIRE.

You save aggressively to hit $24,000 in your liquidity mining operation. Once you hit this target ( some fresh graduates can do this in 6 months ), you immediate pivot your full take-home pay into other FIRE buckets :

• The first bucket is to maintain $24,000 in your LP operations which can lose value quickly due to currency fluctuations and impermanent loss. There will be months you need to plug the leaky holes on your ship, how else can you get >100%?
• The second bucket is to start building a REIT/stablecoin portfolio to build a more stable version of FIRE. I prefer a 90/10 mix of traditional assets to stablecoins, but you can choose your own allocation. 

The benefits are largely time-based. Imagine getting some form of financial independence within 6 months of starting work and farming your entire paycheck into a more stable form of savings in your mid-20s.

The real benefit is to decouple yourself from an earned income in your mid-20s so that you can really hit your FIRE target using more stable assets. It will take 2.5 years to cover $2,000 via stablecoins if you earn $100,000 a year. After that getting that $400,000 in REIT/stocks would be easy because you have an extra $4,000 every month to build your real estate hoard. 

Of course, there is a high probability that over time some pools will fade away without making you money, you also may have to shift your funds around liquidity pools over time. 

The element of luck may still play an important role in your journey. 

I think in practice, the biggest weakness of this plan is whether any investor who gets drunk on 100%+ yields would have the willingness to buy real estate at 6%. The other issue is whether he can maintain his interest in regular employment when money can be obtained so easily. For this to work, you need to promise yourself that this is not real FIRE but merely an accelerator towards FIRE using traditional assets. 

But I think this idea sure beats putting into a 2% short-term endowment when inflation is twice that amount right now. 

 

 

 

Structure vs Agency - The Unwoke View

The Woke Salaryman has once again hit the ball out of the park with this comic strip which you can read here. It's a very classy piece that really puts these folks a cut above the other comic strips that talk about personal finance. 

I really like the sociological concept of Structure vs Agency. In our push for greater status in society, part of our results come from our personal drive and motivation, but a significant amount comes from structure, which is the environment we are born in - it can be wealthy parents, our gender or race.

What I find interesting is that Woke Salaryman has subtly lived up to it's Woke name by putting slightly more emphasis on structure, this is something I deeply disagree with. (although woke is woke lah) 

Structure does play a role in a person's success, but how much it plays is a question of how much let it play a role. Right now, I'm just happy that our next PM comes from a neighbourhood secondary school, if we keep having this chip on our shoulder about the weaknesses of the institutions we grew up in, it would horribly impair our ability to rise in this world. One of reasons I'm especially motivated when facing elite competitors in JC was because my secondary school was run so badly, the top Pure Science class did not even have a classroom - our principal housed us in the physics lab and kicked us out whenever class needed access to do experiments. My personal narrative is that there is really no choice but to climb in this world given how shitty my secondary school education was in the late 1980s. If I elevate myself further and get to speak to my juniors, this is definitely a story I will tell.  

 If you really examine younger Millenials and Gen Z, everyone has two daemons whispering in their ear. One daemon looks suspiciously like Karl Marx and he likes to remind the person that society plays a big role in their success and structure matters a lot. The other daemon looks suspiciously like Ayn Rand, and she wants to remind the person that agency matters more. 

• If someone wants to believe that he's screwed because society did not give him a leg up. He's probably right.
• If someone else wants to believe that he can use his willpower to improve his lot in life, he's right as well. 

Like what the folks of SGAG would say : Can is Can. Cannot is Cannot.

This week, I met up with an old gamer pal lately and we were updating each other about how other gamer pals are doing, and we came to the conclusion that my pal has elevated himself over the other gamers as he reached his 40s. I suspect he never saw himself as a candidate for top dog, given that he had credentials in design from a private university, and flitted like a butterfly across several service level jobs in his youth.

But as he mellowed down and grew older, he managed to land an administrative role in an office and he basically showed up every day for a decade within that same organization. Today, he was even able to make hiring decisions for his organization. 

I felt that he followed something Jordan Peterson has been telling a lot of young guys. No matter how low you are at the starting point of the totem pole, just make it a point to show up and be engaged in your work. This puts you above maybe 75% of your peers. 

The gamer circles I was in, on the other hand, had not aged well, with some local grads getting managed out and driving Grab today, others have been structurally unemployed for years, and one became a morbidly obese hikkikomori and retreated from public life. I know because his dad bitches about him to my aunt everyday.

My friend is now well established in a multinational, owns a HDB under his own name and even has a Japanese girlfriend. 

Sometimes like is a Euro Game, when you reach your 40s, you have to make a number of rerolls and some who were on top may find themselves at the bottom. I'm still in my 40s, and I'm worried that my next reroll would not be too far around the corner.

I hope that my pal's story will encourage you to listen to Karl Marx a little less and tune into Ayn Rand a little bit more.

Structure may be truth, but it's a losers game to put too much emphasis on it.

You have the agency to make a difference in your life. 

  

If Singapore women can freeze their eggs, what do we guys get ?

First of all, I just want to say that I'm in support of new initiatives for Singapore women. The execution was a little iffy because when it comes from reproduction, it is inevitable that men will be affected by the changes but this has been swept under the carpet as it is framed as primarily a women's issue.

But it's not. I think talking about this issue from men's perspective is politically incorrect, but it's not wrong.

If you think deeper. The impact of these policies on men, especially single men in the future, can be quite deep.

Basically, young women now have a choice - they can start families when their biological clock is ready, or they can freeze their eggs and start a family later after gaining some headway in their career. This will not see small-scale adoption here - I predict that corporations and multinationals will want to encourage female executives to do this and will respond with initiatives to enable generational adoption that will make egg freezing a social norm.

Where does this leave young men? For one thing, the pool of marriageable women will shrink with women in their 20-30s leaving the marriage and breeding pool. Men won't complain about this, as they can just spend more time making money to build up their own value as a mate. But there will be some men straddling the borderline of marriage eligibility who will lose out more in starting families and they will need to hold to a higher standard - freezing and preserving eggs cost money - this raises the bar for single men in Singapore.

Furthermore, even if a women is reproduction-ready in 40 thanks to modern science, we 're not too sure how susceptible single men, who are by then quite well endowed financially, will be attracted to them. If I'm a financially independent guy in the future in my 40s, I will do what Mother Nature programmed me to do - find someone in her mid-20s. So I find the argument that women who want to freeze their eggs because they can't find a Mr. Right flawed. If you can't find a guy in your 20s, what makes you able to find a guy in your 40s?

I think policymakers, in enabling egg freezing, should in another forum, recognise the difficulties of being single men. Yes, there is the Patriarchy and all that, but men are still going to be judged as a mate based on how strong they are as providers. Just because you let women freeze their eggs, they will not suddenly go after that soft-effete caring empathic beta male overnight.  A lot of borderline eligible men will join my constituency as BBFA incels. 

One idea I propose is to speed up and streamline the process for single Singaporean men to find foreign spouses and widen the pool of marriage ready women in their 20s for Singaporean men who emerge from the corporate rat race in their mid-30s. There is a serious bureaucratic snarl with some wives getting social visit passes because their husbands are discriminated based on their educational qualifications. I say we grant them citizenship once they produce Singaporean babies.

As a society we really need more babies, no matter where they come from. So if I start a political party for BBFAs, my party battle-cry in the light of egg freezing for women would be :

Every Sperm is a Good Sperm!

 

 

 

 

Shitting my way though life... A story of my food poisoning.

 

Last Friday, I ate some watermelon from the fridge and ended up getting diarrhoea and vomiting simultaneously that evening. Making matters worse, I has a class to conduct the next day as it was the first batch of students of the Cryptocurrency for Conservative Investors course which means that failure was not an option.

The last time I suffered such a nasty bout of stomach flu was when I was a trainee at law firm and it was the pivotal event that made me decide to quit legal practice because I felt aggrieved at the way some individuals treated me after missing one day of a critical hearing even though I got back to work before I fully recovered. Of course, as a trainee, SMU's reputation was in my hands, not to mention that if I acted dishonourably it would tar future mid-career types, so I sucked it all in and basically did everything I could until my last day, then I ran and never turned back. 

Today, hundreds of associates leave the legal practice. Many are even getting into the Cryptospace. 

So stomach flu is no joke. It can end careers. But if you think about it, there's a lot more at stake as a trainer due to the amount of money involved and the sheer amount of work my partners have done to make running the programme possible. 

So I practically shat my way through the course, running to the toilet to do a number 2 during the plenty of breaks I built into the schedule. ( Tea breaks in course is 5 mins ! )

I'm just lucky that it was not a face to face session. 

So on Saturday, I completed the first run of the course.

I was so tired and burnt out, I did not know what got into me, I tried reading a book on Quantum Economics and it was so theoretical and mind-boggling, but thanks to legal training, and running the program while on the runs, I forced myself to finish the book and was even more dissatisfied. Sadly, I don't think I can review the book at all on this blog.

Then I was feeling so horrible after reading so much crap, I went to look at my stash of unread books and I saw what I had in my room. 

It's just nothing but a sea of books on Finance and Economics. 

This is a different kind of diarrhoea. I have this shitload of economics books. 

I never majored in Economics but now I am familiar with their ridiculous Physics envy and guilt over the damage capitalism has done to the environment and not to mention the amount of self-loathing over inequality. 

That's all I have for you guys this weekend. 

For something more useful and substantive, sign up for my next free community event where I talk about investment and the crypto space.

You can register for the event here : 

https://us02web.zoom.us/webinar/register/2516487942700/WN_XEPZLcfuSc2F2lezBblfog

 

ERM-CCI Community Event for Q1 2022

Apologies as I've not been updating this blog, there have been quite a few article ideas but they've been translated to content on Dr. Wealth's blog and I've also decided to turn a book review into a full-scale presentation this coming Thursday evening.

On 7th April at 730pm, I will be conducting a short session to discuss some ideas in financial planning and update community members with the latest developments in cryptocurrency. This will be the first community session where I would have completed training my first batch of Cryptocurrency investing students.

I would have wanted to review Die Broke by Stephen Pollan as it was a classic and influenced some of my D&D gaming buddies in the 1990s. Sadly, as I was in my 20s and largely ignored their financial advice. It took me over 20 years to catch up on this important classic and it shows what the markets were like over two decades ago. I think there is value in shedding light on the Die Broke Philosophy and adapting it for use in Singapore, it's a refreshing change from FIRE. 

You can register for the event here : 

https://us02web.zoom.us/webinar/register/2516487942700/WN_XEPZLcfuSc2F2lezBblfog

The content is as follows :

Di  Die Broke – Rebooting an old personal finance classic
o How 1997 was like in personal finance.
o How to adapt old ideas to new markets. 
How to deal with lower yields as protocols begin to reduce them
o Coping with lower yields.
o Opportunities in liquidity mining
ERM Portfolio Update