Wednesday, October 12, 2022

Market Assessment #1 : Why Elites hate Landlords


These few days have been interesting, I'm seeing a lot of hate for landlords, with some academics calling landlord parasites etc. Some points may be well argued, so I don't really see a need to rebutt these arguments. Instead I just want to try to understand why elites hate landlords and maybe highlight the hypocrisy of these folks while we're at it.

Not everyone will agree with my worldview about living in Singapore. 

Imagine a wheel with elite schools like RI, ACS and Chinese High. 

As this wheel spins, it crushes the non-elite and neighbourhood schools beneath it as these schools go on to put alumni into positions of power. Some of these powerful folk end up in jobs that are almost sinecures in Singapore, cushy professorships, or senior civil servants on the correct side of the "scholar-farmer" divide. Some even then go on to establish powerful gangs, not unlike the Paypal mafia, to entrench their power in some professional fields. On reddit, I even read about students complaining that their job offers were rescinded because of this "mafia" action although I was not able to verify this. 

If you are nobility ensconced comfortably on the wheel, you have unparalleled access to wealth and power.

Faced with this arrangement in society, what is there left for us farmers to do? 

We desire to break the wheel, but we know this is hard. I hope PM Lawrence Wong will be the Prince that was Promised. He's someone from a neighborhood secondary school who can break this wheel forever, but I am entitled to dream and hope.

So I know a revolution will not make any sense, so I take a different route. I discover that if you buy REITs, the dividends you receive are blind to position on the wheel. 

Dividends do not check your gender, sexual orientation, university grades, the schools you attend or your current estimate potential. 

Dividends pay an equal amount to all shareholders.

Elites hate this.

Over the years, I farmed my meagre farmer paycheck to buy industrial property, land, and when I was in a really bad place in my career after leaving the private sector, I lowered my pay so much, I was able to buy one executive condominium. The capital gains from my home, now has equity nine times my annual salary when I was working for the shithole.

What is there not to love about rising home prices?

After years of studying the financial markets, getting financial certifications, I built a system to invest for dividends, it's not rocket science, but it favors folks who really know how to save money. 

If it is any injustice, I have to admit that I also did inherit money. 

My father started what is today the most successful pet shop franchise in Singapore if not South East Asia, I deployed my father's capital to give my parents comfortable twilight years using rental payouts. While I've yet to directly enjoy the money from my forefathers, I do have a measure of control over it, preferring an ascetic lifestyle so as not to corrupt my kids.

1) The question is this : Am I a parasite ?

If the answer is yes, then elites have a lot to answer for. I never had a sinecure, much less one powered by tax payer's money. I built my own sinecure with dividends payouts, and when it is time to face off a scholar centric work culture, my financial freedom allowed me to say no and enter law school for four years without pay. 

So the Elite can have there sinecure, but landlords can't synthetically build their own ?

2) Does inheriting wealth and land make me a parasite? 

If the answer is this yes, then I suggest as a society we account for items you can inherit beyond what written in your will. Intelligent people inherit a high IQ and possibly high conscientiousness. In law school, I might be able to read 8-12 cases a day, I have classmates that can do 20-30. I cannot accept that this has nothing to do with inherited genes. We are products of both nature and nurture.  

As the Strategic Retreat phase is over, we will now hunker down to observe the markets to find a good timing to get our war-chest back into the markets.
  • On 13th October, US will be releasing inflation figures, I suspect while inflation is down, it would not be enough for the Fed to stop raising rates.
  • On 14th October, MAS will release their actions on the $NEER. AS inflation will not be tamed sufficiently, it's not unreasonable to bet that MAS will steepen and recenter the $NEER
  • This should lead to 75 bps increase in interest on 2nd November.
  • Markets will see a bottom yet.
The economist has some really bad news for policy wonks. To push inflation down to close to 2%, unemployment in the US may need to reach 7%+. 

The US is still creating new jobs today.

Maybe this is the time to think about Communist revolutions and what will happen if there is peasant uprising in Singapore.

For sure, if an uprising occurs, capitalists, landlord and rent-seekers will be murdered or have their wealth confiscated. 

But history says that intellectuals will not have easy time as well. 

Can ask Xi Jinping's dad if you want the details. 

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