Tuesday, May 30, 2023

New Preview Launch : All-Weather Portfolio Masterclass

Conventional wisdom probably does not support the idea of launching a new course in such a bleak economic backdrop, but I owe it to myself to grow professionally and all that coding on Python needs to be channelled into something that benefits everyone. 

So tomorrow will be the inaugural preview for my new course entitled All-Weather Portfolio Masterclass.

This is a program where I show students how to run and operate their own robo-advisors and construct well-diversified ETF portfolios that will generally do well in all different market conditions. 

I will be sharing a little bit on :

  • My views on the macroeconomy.
  • How a great investing strategy is like a good marriage and why poor profitable strategies can turn beginners off.
  • A brief summary of four uncorrelated strategies that can be built using computer code and how you can have not just one, but four robo-advisors running on your system with no coding knowledge required.
  • How we intend to teach this program, pricing details and timings.
Like all my previews, this new preview is a free mini-course that will add value to your lives even if you don't sign up with me. We've been quite good at this freemium model for a number of years.

I guess the fun part is that I am still quite raw so my presentation will not be as polished as m ERM product. 

You can sign up by following this link :

Tuesday, May 23, 2023

Actually Gen X is more cursed than Millenials.


MissFITFI has just launched our latest collaboration on differences in Generations. You can listen by following the link here

A couple of days after doing the podcast, Jean Twenge wrote possibly the most comprehensive book on the differences between entitled Generations, and this has caused me to do a double take on the material I shared and in some cases, I cannot be more wrong. I hope that more objective readers will use this article as a guide to the podcast and if actually work in education or HR, this book is mandatory reading.

The first thing I'd like to point out is that there's an easy way to analyse all generations all at once. Generations are shaped first and foremost by technological changes that impact them. Secondly, every subsequent generation is becoming more individualistic and communitarian. Finally, adulthood for every generation is delayed further as adolescence gets stretched as it takes longer to train a person to be productive in the economy.

With this framework in mind, a few things I said in the podcast is wrong.

a) Actually Millenials are doing quite ok financially

As a highly educated cohort, Millenials actually earn well compared to Gen X by pure virtue of educational levels. The problem arises if you are an American millennial who is saddled with educational loans, for these folks their net worth is 11% lower than Gen X at the same age. The good news for Singaporean millennials is that they are not struggling to pay their educational loans, so I might venture to say that the gap in net worth may not be as bad as reported in the books. 

Gen X's biggest advantage here is that they get to buy homes when homes were well cheaper, but this cannot compare to the prices Boomers get. 

b) Millenials whine a lot because of social media 

If Millenials are doing better than Gen X or Boomers, then why are they such whiners? The answer is social media. As Millenials live in the age of Facebook and Instagram, they get hit by images of people having beautiful holidays and ridiculously picturesque lifestyles so it's harder to avoid envy. 

The fact that most folks don't share the harsh reality of life creates the impression that one's life can be better. I'm still waiting for Naomi Neo to share her household bills with us so that we will know what's required to live that kind of life.

Being bombarded by images of success (many inauthentic) create a generation with weaker mental health. 

c) Millenials do mature later and take a longer time to reach life milestones

We will definitely notice that Millenials become adults much later than Gen X. This is because it takes a longer time to train them to contribute to the economy. Take, for instance, reaching the CPF FRS. I was able to hit this target before I was 30 because the target was about $80k. Then compound interest took care of everything else. I don't think it's even remotely fair to expect a millennial to do the same.

Millennials will marry later and retire later than Gen X. I suspect over time, the sheer educational training MIllenials get will have them generate more wealth than earlier generations. 

d) If Millenials are cursed, it is because they are more individualistic than Gen X

We should expect Millenials to be more individualistic than Gen X. We should also expect the gender-fluid Gen Z to be even more so.

While it means being any gender or ay belief system, it also means the ultimate decay of religiosity and with it, avenues for building social relationships. I predict Singaporeans becoming less religious and community centres in their current form would become a waste of tax payer's money.

More millennials will die single, more will be lonely, and more corpses found next to gaming consoles.

Still, I can't argue that Millenials are cursed because Gen Z will be even worse!

All this being said, there are some harsh realities that Millenials face that Gen X does not. For one thing, most of the economic benefits for Millenials accrue to degree holders, specifically those with local degrees. Private degree holders face quite a big gap with their local degree counterparts. For Gen X, degree holders are a smaller part of the population so even if such a gap exists, it will grate on us this much.

Furthermore, as a younger generation, they could not participate in Singapore's miraculous growth into a wealthy city-state. Older generations will always seem like they are sitting pretty on the best real estate.

Still, as Gen X, we should also take a good look at our own generation. We are the CECA generation. One prominent IT professor called the technical professionals the Garbage in Garbage Out generation. We weathered the dot-com crash, the great financial crisis, and the pandemic. As our numbers are quite small compared to Boomers and Gen Y ( in the US ), we will find that businesses, pop culture and political groups will tend to ignore Gen X as we don't make the numbers.


Saturday, May 20, 2023

Letter to Batch 30 of the Early Retirement Masterclass


Dear Students of Batch 30,

It’s been a great honour and privilege to conduct a 3-Day Early Retirement Workshop for you.

The 30th batch of the Early Retirement Masterclass faces a challenging financial market. China’s recovery from COVID-19 has stalled, and the US faces gridlock as Republicans and Democrats begin a political dance to raise the debt ceiling. Singapore’s GDP growth enters negative territory as inflation remains stubbornly entrenched in the 5% territory.

There’s much to fear in this market.

Consequently, we conducted the smallest class in the history of the program. The cosy atmosphere and skilful student body still allowed us to build a 17-stock portfolio despite each student doing independent research without a teammate. The portfolio we will track will also halve its size as I try to fit the 17 stocks into a tight budget of $10,000. A high yield of 6.5% helps.

But there is hope.

The equity risk premium we track is over 6%, and we have proof that students who conduct bargain hunting will be rewarded in the future. We are also seeing substantial discounts in the REIT space.

Whoever farms the most money into the markets over the next two years will reap the rewards in oversized returns when the market recovers.

The Early Retirement class will stubbornly cling to its survival. To ensure decent class sizes, we will conduct Batch 31 in October 2023 as I make way for an entirely new course in August.

Lastly, I hope Batch 30 will participate actively in the FB group. On 24 June 2023, we will meet face to face in our ERM Networking Session!

Hope to see you then!

Christopher Ng Wai Chung

Thursday, May 18, 2023

Personal Update

It's time for another personal update since I am in the middle of graduating from ERM's 30th batch of students and want to leave the heavier stuff for next week.

a) Left the Government Healthcare orbit

I've finally decided that the best option to manage my health would be to pay more and transition into private healthcare. I've since learnt that there have been many lapses in my diabetic and hyperactive thyroid management. According to records, the government system stopped monitoring my thyroid levels about 9 years ago and mixed two diabetic medications that would not ordinarily be administered together by the private sector. Consultations have also been draggy with long waits thanks to a really horrible IT system roll-out in TTSH. 

While I still respect government healthcare for being cheap and affordable, I no longer have the energy to read up and micromanage my own ailment to constantly be on the watch for lapses. At the end of the day, I'm not a medical professional and can't keep second-guessing whoever is providing medical care for me.

There are serious consequences when I make this decision because to maintain a low cost of management, I will have to spend more time getting medication from "cheaper sources". This means spending more time on bus 950. Government pharmacy dispensaries do not entertain prescriptions from the private sector. 

b) With my thyroid problems under control, I need to finish my story on regular employment

It felt weird to start legal practice feeling tired even at 9am in the morning after fighting normal traffic. I also did not do well canvassing files for my business. This will remain one of the most monumental and humiliating failures in my career, but at least I know that my energy levels were out of whack not because of middle age, but because I was ill.

But now with my thyroid hormones under control, I can take a long walk in the mornings, go for a swim in the afternoons, and then have enough energy to attend SME conferences.

While I'm going to look after my health moving forward, I should continue to pursue a full-time gig if the opportunity shows up. I was discussing with the FI telegram group that I am not like them. INTJs can just find more exotic interests and leave a trail of hobbies in their wake after financial independence. If an ENTJ like me is not working on getting more Money or more Power, we will languish. I still have an interview going on since early this year and see this as a good opportunity to finally push my CPF-SA to ERS levels. The bear market is also making it very lucrative to hold multiple gigs to stocks at a ridiculous discount.

Maybe 2023 is the year I succeed in doing well in multiple gigs.

c) ERM and the new All-Weathering Investment course is going to proceed

Even though I may entertain the idea of returning to regular employment, I am going to put in a lot of effort to launch my new course which will take place in August. We are aggressively going to push forward the new preview by the end of May. There are so many questions I want to answer about my new course as some folks are asking whether I am trying to become the next Ray Dalio. 

To make way for so many priorities, ERM Batch 31 will be delayed slightly to October for us to see whether my new ETF-based program has any legs to move. An investment course centred on computer code will be the first of its kind here. 

d) Markets will get worse before they get better

If you get a gig wearing a maid outfit but need to regularly get slapped by your mistress for $27k a month, this is the right time to do it. 

Market equity risk premiums are exceeding high and may even hit 2020 pandemic levels if China remains sluggish. This can generate a one-year discount window to just keep buying equities until recovery can be seen. The probability of Singaporeans entering a technical recession is no longer low. 

There is also the US debt ceiling wreaking havoc on Singapore portfolios right now. 

A safe factor to invest in would be to focus on value.

e) Reading and hobbies

I hope to be sharing more books I am reading as I've recently been reading fairly decent books. I have a podcast coming up talking about generational differences, but I felt it was really bantering without informed research, when the podcast arrives, I will be putting up an article to supplement it here. 

As for gaming, I no longer see myself as an active participant, but a distant observer. I will still go to games bazaars this June and will read RPG rule books as a hobby. As I enjoy training people, all my residual effort will be put into my jobs instead. In particular,  I am obsessed with all the latest playtesting documents of the D&D ruleset.

I still buy abstract board games to play with my kids.

All in all, 2023 has not been going my way, but now at least I have a handle on my health problems and can make headway to restore part of my revenues. The struggle will still go on and if I play my cards well, I can be rewarded when the economy recovers. 

f) Friends

There are times when I wish I had more friends to have a coffee with. I have regular friends but they are busy, so my newfound energy needs to be directed somewhere and I still put a huge premium on good conversation.

As I have emphasised before, Early Retirement is a networked good. It's only useful if more people around you are Early Retired. Waiting for your friends to retire is like watching the paint dry. 

But what I realise is that my students form an extended acquaintance network. Beginning next week, I will begin to promote a gathering of ERM Alumni quite aggressively, just to see how my students are doing in this nasty bear market. 

Monday, May 08, 2023

The Joy of Unsafe Rates of Withdrawals


There is a lot of talk about safe rates of withdrawal. I would venture to opine that discussions on the safe rates of withdrawal in this blogosphere are enough for more than a lifetime!

I think the problem with this train of discussion is that we don't spend enough time discussing the opposite of a safe rate of withdrawal and taking a leaf off Charlie Munger's page, I wish to invert this topic so that we can glean some insights on retirement planning.

Today I want to talk about why I prefer unsafe withdrawal rates and why most readers should agree with me more than anyone asserting a safe option.

Specifically, an unsafe withdrawal rate applies to an intermediate investor who builds a decent dividends portfolio and spends about the current yield annually. In today's market, if you successfully replace your expenses with dividends, you may withdraw about 6-6.5% of your portfolio, which would be mathematically unsustainable based on long-drawn studies by academics and my Monte Carlo simulations.

Here are the reasons why I prefer rates of withdrawal to be unsafe:

a) You need to be unsafe first before you can be safe.

One way of looking at the problem of creating a sustainable retirement is that, unless you are an inheritor like me, you won't leap from being a new entrant into the working world to having a sustainable pension. If you need $2,000 a month, with a safe rate of 3%, you need $800,000. If you live on 6.5%, you only need about $370,000. 

So regardless of what happens, you will reach the unsafe stage before you can even be safe. Consequently, you are more likely to reach the unsafe range than the safe range.   

b) Easier to convince someone to be financially independent than to be retired safely

If I propose a target of $370,000 instead of $800,000, I would have a lot of traction because it's not just about freedom from an earned income. It's actually solving a bigger problem in the Singaporean workplace. If you attend my preview, I'm not just selling dividends higher than personal expenses. 

I'm selling freedom away from a toxic work environment. 

This can get many millennials and Gen Z to sit up and listen.

I've gotten feedback from my students and readers of the blog that $300,000 is a lovely spot for them.

c) People need to anchor themselves to success

During sports day, my 7-year-old son won a medal even though his team was last in a running competition. Even though his team came last, my son bragged about his award, would wear it all day, and even wore it to his piano lessons. 

In my earlier article on my existential crisis, it's essential to have significant achievements to fall back on when you hit a mid-life crisis - medals in life matter. Generating enough investment income to cover monthly expenses is one possible anchor to your personality. It is a formidable achievement and is consequential to your life.

Most investors should not be bothered to double their portfolio targets mentally to hit a safe withdrawal rate. You work on getting there unsafely first, and $370,000 is definitely achievable for local PMETs.

So you live on your dividends first, then you find a way to secure your retirement plan.

d) So what if you are really unsafe

The weakness of promoting a dividends approach is that not everyone will continue to build up their wealth after reaching 6.5%. 

Having observed some people, I don't think it's anything that should be pinned on their "dividends mindset". They just hate working for other people. Another weakness is that addiction to current yields can lead to concentrated portfolios, which means diversification across different dividend sources do matter.

By this time, my Monte Carlo simulator can pull ETF data from Yahoo Finance and simulate what happens if you run down a SPY/AGG portfolio using high rates of withdrawals. This table lists how long the portfolio will last for the worst 5% simulations. 

This means we can sort of estimate how long your money will last if you decide to throw caution to the wind.

So for a 60/40 portfolio with a withdrawal rate of 6.5% and average inflation at 3%, we are looking at 14-15 years of fun living. 

But humanity is resilient.

People don't lie on the bed and draw down their portfolios to 0. 

People can cut back on expenses, draw from CPF Life, or join the gig economy. They can downgrade their homes.

Finally, does it mean we avoid attaining a safe withdrawal rate once dividends are high enough? 

It depends on your personality. 

As an ENTJ, my withdrawal rate is around 3%, but I still want a day job to supplement my trainer fees and hit ERS CPF-Life. Because I can't sit still and want to contribute to society. I've got training revenues and Graves Disease, and I'm still interviewing!

Most other personality types will run the risk of quitting if they hit 6.5%. Singapore's corporate culture is toxic. If someone wants to live on their dividends and see their portfolios go to hell in 15 years, maybe we should examine the kinds of workplaces they function in.

IMHO, only the INTJ strategists who dominate the finance telegram group ( and every ERM intake ), will precisely quit when they reach the target rate. This is about 2% of the male population and 1.5% of the female population.

Finally, if I had not done some unsafe acts in the past,  I would not be a proud dad of two kids today. 

One just won a medal.

Wednesday, May 03, 2023

Money is Sexual Energy !

A week ago, I was invited to have a friendly banter with young podcasters. The colourful parts of the discussion did not go into the podcast, because I don't want to get censored, but came when I got everyone coffee later. As there is no need for self-censorship anymore, everyone's guard was down.

One of the coordinators was a young man who just got out of a relationship, he's at this stage where he does not really give a damn anymore and wants to focus on his work. Being an older guy, I began to congratulate him - I told him that in making the decision to move on in a relationship and focus on himself, he has put himself in a position of great power - he can now sublimate his sexual energies on.. well... whatever he gives a damn about. 

Maybe it's my accidental choice of words, but folks found this hilarious, so perhaps I want to talk about the idea of sublimation. Sublimation is basically directing your energy into doing something creative. It is a solution to resolve the existential crisis we face. I did an article on this before. 

You can follow this link to learn more about mid-life crisis and sublimation.

Recently, there's been very deep discussions on the use of first principles, but there is insufficient discussion on what these first principles are. For dividend investors, compounding is often the first principle quoted. For the ETF asset allocation folks, the first principle is diversification as a free lunch.

Podcasters who worked with me for a while have noticed that I have this habit of always relating money and finance to mate acquisition from the male perspective. So I think the first principles to me are not finance related. In fact, my first principle is this:

Money is Sexual Energy

When a guy is looking for a mate, he has a certain amount of energy at his disposal and can invest it to make himself more attractive to women. If a woman, in most online dating surveys, unanimously reveals their preferences for educational qualifications and income, then this sexual energy will be invested in the accumulation of economic resources. This is not right or wrong, this has evolutionary origins. 

Civilisation will not exist if women are not choosy.

I find two very useful applications of this theory :

The first phenomenon is when crypto was at its peak, bros were bragging about their crypto trades during Tinder dates. Even when the risk that they can be engaging in a Ponzi scheme is high, crypto was a good way to signal economic resourcefulness, often this is the only way to show it if the crypto bro did not have a local degree. If you understand that crypto schemes reinforce the mate-worthiness of a segment of the male population, then you will conclude that crypto will never be destroyed and folks will come up with more insane schemes in the near future. Only coordinated worldwide regulation can kill crypto.

The second phenomenon is the large number of single financial influencers who attained FIRE. When I first appeared in the Sunday Times, I attracted a lot of hateful posts on EDMW and many critics said that I was able to FIRE because I was a single guy. I think that's not a sufficiently nuanced criticism because many single guys never attain FIRE ( Instead, many Gen X single guys go Fire disco ). 

It takes the ability to make a decision to channel the sexual energy somewhere else ( in my case, dividends ) to meet the FIRE objective. 

Once you understand that money is sexual energy as a guy, then there are some self-help ideas for you.

a) Giving up on relationships is a power move

As a guy, you need to realise that your bargaining power increases with time. In your 20s, you might be just a small engineer in a server room. This same engineer can become a landlord in his 40s. 

We guys are like Pokemon, we evolve into a higher form! Of course, we have different evolutionary paths.

Where your bargaining power is weak, you have the option of just giving up - becoming a Sigma male. A dude who does not give a damn and just wants to focus on your work and hobbies.

This frees up a lot of sexual energy for you to pick up investing, climb the corporate ladder, start a side hustle, and of course, attend investment courses. 

Do this when the women are the most emotionally demanding. 

b) Financial independence is the first step to returning to the dating game

Now, if you are pursuing a dividends strategy, you can start to replace your bachelor expenses at a withdrawal rate of about 6.5%. That's way more unsafe than what a retiree can accept. But you are not a retiree, you are a single dude happily living on your dividends.

At this stage, the FIRE movement can become a crutch. Because dividends are so seductive, you will keep trying to reduce your SWR and ignore the dating pool of eligible women. When you don't need your salary, you would be able to project your confidence as a mature and worldly man,

So take the plunge and start dating casually. Further advances in the financial front can come later. Most of the younger guys and the unsavvy ones your age cannot match up to your sexual power!

c) Continue the accumulation of investment income as your family grows

It is not realistic to try to get investment income equivalent to median family expenses when you are single, but with the right spouse, you can do it together as a couple. This stage of wealth accumulation is very important because being married unlocks the BTO option that can supercharge your wealth at a later stage of your life.

I found that journey to allow another person to FI in the family much easier than getting FI as an individual. 

With that, I have thrown my hat into the ring to introduce a new first principle in finance. 

I look forward to defending this idea publicly and rigorously.