Learning how to learn.

I enrolled into the course Learning How to Learn: Powerful mental tools to help you master tough subjects by Dr. Terrence Sejnowski and Dr. Barbara Oakley as part of my personal preparation to go back to law school. If you are an adult learner, I strongly recommend that you signed up for the course because there has been many new developments in field of adult learning since the last time I was at school.

This blog post is part of the project submission of this online course.

As part of the course requirement, I will talk about three major things I picked up from this course and how I am in the process of trying to apply myself in law school.

a) Focused and Diffused modes of learning.

The first key learning of learning that there are two modes of learning. When you are aggressively studying, like in my case, when I am trying to read a legal case or a text-book, what I am doing is focused learning. This is the hardest part about law school. Particularly alien to most engineers are Latin terms like Ejusdem Generis, Stare Decisis and Oribter Dictum. I would even go further to say that event he English terms are alien to most readers. What does it mean when something was based on a demurrer ? What happens during a promulgation ?

Prior to this online course, I was very old school when it comes to learning. Learning is rigorously attacking problems and solving sample test questions.

Fortunately for us, there is an alternative form of learning: Diffused learning is allowing your mind to rest. It occurs when you are taking a stroll and having a walk. This allows all the work that I've done during focused learning to settle down in my brain. With diffused learning, my mind is relaxed and allows me to form Eureka moments to link ideas together holistically.

My primary form of diffused learning is to play Dungeons & Dragons with my friends. In a tabletop RPG game, I play the role of a Dungeon Master (DM) , someone who referees a game and ensures that it runs smoothly. A role of Dungeon Master is very similar to that of a judge, except a whole lot more fun. Players will make up all sorts of rulings where an ambiguity takes places, it is up to the DM to arbitrate disputes.

One example in my game are the rules of a spell ( In D&D 1st Edition ) called Firetrap.

The rules state that:

You can cast a Firetrap at at any closeable item. Eg. A chest, a cover or a lid.

A mischievous player, reasoning that his mouth is closeable,  wanted to cast Firetrap spell on his mouth and bite a fellow player character.

In ordinary cases, most DMs would not have a sufficient to cover strange rule anachronisms in the game, unless this DM is also legally trained.

To resolve the issue, I was able to determine that a purposive interpretation of the rules mean that the spell was meant to be cast on inanimate objects. Using the concept of Ejusdem Generis, a reasonable ruling would be that a mouth is a living organ and is not the same category as a chest, cover or lid.

This is classic diffused thinking at work. I get to play part of a judge in a stress-free situation and my players constantly come up with crazy game rulings to test my powers of adjudication which reinforces my understanding of legal theory.

b) Metaphor, Visualization and Storytelling

The other concept I learnt in this class is the power of metaphor, visualization and storytelling. I have employed this concept to assist me in memorizing legal cases.

I noticed that a few classmates actually used Mind Maps to reinforce their recall of materials. I thought, how could I take this step further and turn the crunching of legal cases into a game. At the same time, I was playing with my daughter and noticed that my wife was having a hard time trying to get her to draw anything on a piece of paper.

Then I had an eureka moment - What if I could play Pictionary with legal professionals ?

I would draw a graphical depiction of the cases and get lawyers to guess what they are. The above diagram shows the various pre-Donoghue cases which leads to formation of the Law of Torts. From top to bottom they are as follows :  Winterbottom v Wright, Heaven v Pender, George v Skivington and the famous case of Donoghue v Stevenson.

As I move towards exam preparation, I will of course create mindmaps but I will also use pictionary to test my understanding of cases.

c) Life-long learning and broadening of one's passions.

The final point I would like to make is that is that the journey of learning never stops. Having done engineering and finance, many people would think that this is enough for a more than a lifetime.

I choose not to think that I have invested my time in three disparate fields but instead see my legal training as extensions to what I have learnt in engineering and finance school.

Ultimately, this can lead to interesting questions and developing new capabilities :

a) Can a random forest algorithm operate on a data-frame of key legal terms used by a prosecutor to predict the chances of a favorable verdict ?
b) How would a verdict of negligence affect the next dividend cash flow for a business trust ?
c) If you wish to draft a regulation to prevent the use of machine learning in a financial market, how would you word the regulation ?

Knowledge comes before Wealth.
Wealth comes before Power.
With power, you can have all the toys and fun you aspire to in your life.








 

What does ASPIRE, plunging legal starting salaries and the ACS-LTA fracas have in common ?

As it turns out three recent events have something in common.

ASPIRE is government's much welcomed attempt to officially acknowledge the importance of Polytechnic and ITE graduates in our economy. I think investors will be very happy with this development because if executed correctly, Singapore will have a prosperous and vibrant middle-class and they won't feel very strongly about delaying their entrance into the working world just to get a piece of paper. My only caution is that for this to work, the foreign labor participation must be curbed. No sane employer will take on our Poly and ITE grads if Masters degree graduate from other parts of the world will cost half the price.

The second issue is that now we law students have been asked to keep our expectations low as the supply of incoming law graduates outstrip demand. Contrary to what you might think, I actually welcome this development. The over-supply is not due to foreigners but locals with overseas law degrees and we should not begrudge our fellow citizens. Singaporeans deserve a fair fight for a training contract. Imagine the kind of competition we engineers were made to face for the past 15 years : Foreign competition has been so relentless, engineering salaries have made technology one of the worse sectors to get into in this country.Compared to what engineers faced, what's happening to lawyers is nothing.

The third event is very interesting.

ACS gets their first Wee Shu Min incident !

There is a lot of public anger over ACS's booking of six MRT trains to get to a stadium. To ACS' credit, the transport was well thought-out and public inconvenience was minimized. But I doubt this issue is about public inconvenience. As my lecturer would have said, " How dare you ! " The public's concern is whether can a group perceived to be well-to-do, marshal state resources for their benefit simply because they can and have the funds to do so. I predict a very public rebuke directed at MRT to appease the masses, but I also expect private censure to be very minimal. LTA needs to play their cards well to handle this incident: The optimal move is public censure and private indifference.

To help you think about this issue further, let me ask you this :

a) If RI or HCI books the trains, how would react to this incident ?
b) If ITE booked the trains, how would you react differently ?
c) What if lawyers or the Adminsitrative Service booked an MRT train to attend a dinner and dance ?

I believe the reactions would all be very different.

There is a central thread in what policy makers are trying to do - That central thread in all these events is Game Balance.

Imagine Singapore as a Diablo III game, would it make sense to design a country like this :

a) If you are ACS, RI, doctor or a lawyer, you play the game at Easy Mode.
b) Other graduates play the game at Normal Mode.
c) If you are Poly, you play the game at Hard mode.
d) If you are ITE, you play at Torment 6.
e) If your are a scholar, you play at God mode.

It won't make sense to do this to people. You can only push us this far.

Good games require great game balance. That's why Diablo III repeatedly patches itself.

After 2011, to reduce social and economic inequality, the government has to do two things:

The first is to generate a better career path for ITE and Poly graduates with a better quality of life. I urge the investor community to welcome this change because our economy can benefit from a vibrant middle class. More money for middle class, more revenue, and for me, higher rents to collect. Support this out of self-interest.

The second and harder consequence to bear is that the strong will be nerfed or brought down. As the inequalities need to be addressed before the next elections, some people need to be brought to the average watermark.

It begins with lawyers, but it won't end there.

I predict the following :

a) Doctors will increasingly face foreign competition if only to keep medical costs down.
b) Regulation will make banking sector less attractive then the high tech sector.
c) Investors will face higher interest rates and lower tax breaks, but Singapore will only levy capital gains and dividend taxes as a last resort.
d) There is one Phd driving a cab. We have yet to see a lawyer or doctor do this.

In 2011, Singaporeans have started becoming very vocal against social inequality. In fact, I would want to believe that once we resolve our transport woes, that is the only thing Singaporeans have to gripe about.

What we are seeing is the beginnings of a resolution of this unhappiness.

This is only the tip of the ice-berg.

I leave you to decide if the second consequence is something that is fair to some Singaporeans. I am undecided for now.

[ A friend informed me that my article is very similar to this one : http://whatever.scalzi.com/2012/05/15/straight-white-male-the-lowest-difficulty-setting-there-is/

But hey, let's not go there. In the Singaporean context it can be seditious.]

Beyond second skilling...

Thought I should share with everyone my view on NTUC PME's drive to promote second skilling amongst PMEs in Singapore.

Second-skilling is a straight forward concept. It encourages Singaporeans to develop hobbies which can be monetized. A manager in manufacturing plant can develop a hobby in photography and eventually gains a degree of protection against job loss when he starts taking professional photographs.

In the absence of actual data of folks monetizing their interests, I would like to share my personal experience.

My biggest success with second-skilling came with teaching myself how to invest. Investing is a great secondary skill to develop although the results can vary. What I felt worked for me was that I was willing to go all the way to become a competent investor. I was eager and happy to study all the qualifications out there using my leisure time because I wanted to become my own private banker and financial advisor. Of course, this success was also fueled by my willingness to pump capital into my portfolio.

However, not all of my hobbies end up earning a profit, I would consider my foray into writing a lukewarm success, or even a financial failure. Out of the three physical books I published, only one broke even. My e-book sales are very minimal, earning about $1.50 on a good month from Amazon. When I started writing,  I was mainly trying to crystallize my thoughts and investment ideas with the secondary objective of building up my personal brand, but my investment of time and money was small - only about $15,000 for all three books.

The jury is out on whether my third-skilling attempt of getting into Law School would pay-off over the long term. There are a lot of concerns on where the legal industry is heading over the next 10 years. But for reasons I will share later, I'm still optimistic that I can find a humble role in spite of the oversupply of lawyers in Singapore.

Ok, now the really theoretical part of this discussion.

I believe that a model on second skilling can be derived from Solow's Growth Model in economics.

Without getting into the gory details, imagine growth to be a function of three inputs Capital, Labor and Innovation.

In Solow's Growth model, under early phases of growth, you can keep injecting capital and labor into the effort and an economy will grow fairly quickly for a decade or so,  after which it will plateau unless you find ways to innovate and differentiate the economy from its peers.

If we apply this model to second skilling, here are some useful insights.

For second skilling to work, you need to put in time and money to get to this point when people will pay you to indulge in your hobby. If you are a photographer, you may need to practice your skills in shooting and composition. You may also need to constantly upgrade your gear and it can cost you loads of money. This  explains why some of my efforts bear fruit while other attempts fail. This also provides me with some optimistic feelings due to my substantial time and money commitments to crack legal cases in SMU.

The next insight is that hobbies are fun and a lot of people would drop their current day jobs if they can make money from what they perceive as fun : this limits how far you can go with your hobby. Monetizing a hobby can be Red Ocean territory.

The remedy for reaching a plateau to how much you can extract from your hobby is innovation. You need to apply your hobby in a novel or niche way. Example, folks who love painting Warhammer miniatures can differentiate from other by winning the Golden Daemon Award and even get into giving painting classes to secondary school kids. You can create a new product or seminar from your love of miniatures painting.

I'm not spared from the innovation requirement. Before I graduate, I will need to find a niche within the legal industry which would have to combine my technical skills, investment know-how and new found legal analysis skills to convince someone to take me in.

So in summary, do proceed to monetize your hobbies as recommended by NTUC, a secondary source of income is always a good thing :

a) You need to pour in money and time for your hobby to bear fruit, but there are physical limits to how far you can go with this. eg. Once you get the top of the line camera, paid for the Photoshop license, everything else is based on your skill.
b) If the hobby is especially common, you need to make your attempts unique and distinguish your product offering to the market.

Pushing the Delay of Gratification to its logical extreme.

I'll start with a personal update.

I'm almost with my first week of school in SMU's Doctor of Jurisprudence or JD program.

This is, by far, the hardest course I've ever taken in my life considering that I have done NUS engineering school, NUS's Masters in Applied Finance and passed all three CFA exams.

Prior to the start of the semester, we would have already completed reading about 30 cases, done two online quizzes, and even attempted to tackle a few problems. SMU places a large emphasis on classroom participation, this means that going to a seminar with a vague understanding is not enough - I have to ensure that I make at least one intelligent ( high quality/ mind-blowing ) contribution every seminar or it will affect my grades. Every seminar is a mini-exam.

The differences in the way Universities conduct lessons has caused me and my friends to come up with this joke...

NUS students can think.
NTU students can do.
SMU students can... talk.

( For political correctness sake, I can't complete this joke. A philosopher friend added a fourth line which made the joke highly elitist.  )

In my past life as an Engineering undergrad, the joke was as follow:

Electrical engineers design the circuits.
Mechanical engineers design the casing.
Civil engineers carry it to the site.

Anyway I digress, I was so caught up, I could'nt blog for a while.

Ok, onto my main topic.

There exist a problem with the delay of gratification.

I call this the "What if you die?" problem.

I started re-examining the problem after a gruesome week in Law School. My life schedule is like clockwork, I wake up at 7am, crunched cases and read textbooks for the upcoming week, then attend school. After that, I spend about 2 hours with my daughter, swim and then I go home to do even more mugging.

This is also an issue faced by many investors. If all you do is keep saving, when would you actually enjoy the fruits of your labor? If you are dividends investor, the answer is obvious - you enjoy spending your dividend income so you are not completely delaying gratification if you buy stuff or travel with dividend income.

But that's not really a comfortable answer for me because I reinvest all excess dividends and spend only what is necessary to upkeep my family and living expenses. Spending my savings is my wife and daughter's problem long after I am gone.

Yes, I do get a kick when I get to study cases involving some of my investments or current affairs. My motivation is knowledge beyond what other engineer-investors have. Nothing feels better than when I read about a landlord who takes his tenant to court. These are issues which can potentially affect me. At least now I know how the local courts view such cases.

So why does a financially independent guy subject himself to an almost 15 hour-day just for the sake of knowledge and another roll of a die to have significant career ?

Now I have a possible answer.

When an investor farms his assets into a dividend yielding portfolio, he might not feel that cashing out to buy something is the reward. The reward is the security and confidence of having an asset which generates income for you.

A start-up founder enjoys building his company beyond the need for a secure income. If he cashes out, he will continue to support or build more companies. This is not delay of gratification. This is gratification.

The only way to delay gratification indefinitely is to enjoy it and view the act itself as an act of gratification.

There are interesting applications of this insight.

When you do something something unexpectedly heroic, like plunge into a risky business venture or engage in a new relationship or take on a new direction in your career, you will inevitably experience some pain. What if there is a way to reframe this as a pleasurable thing?

Anyway, that's all I have for the reader today.

Hope that I can do an update again over the weekend.

Is there a marriage strike going on right now ?

As I'm swamped with legal cases to process, I can't really do an in-depth analysis of this question. What we do know is that marriage rates have gone down quite drastically this year so it's time to ask ourselves this question :

Is there a marriage strike going on right now ?

Based on my cursory knowledge, I don't think women are responsible for this sudden dip. Marriages in Singapore are largely stable and with domestic help, Singapore is one of the best places in the world to raise kids. Could it be because women are performing better at work and have more financial autonomy ? I think not likely, as even if local men do not meet the expectations of women, foreign men do.

I am inclined to think that the problem lies with us men. More and more Singaporean men are not meeting women's expectations in pay and educational standards but suppose we take that out of the equation, I think we're entering this golden age where we guys can replicate an aspect of a good marriage without actually getting into ROM. Sex with prostitutes is legal here, and entertainment is one Steam download away from being fulfilled. The government has now given up and allows singles to obtain a BTO flat.

Effectively, we need to look at the problem of marriage rates differently from the past. In the past men and women want to get married, that was the only way to get sex and entertainment beyond TV. These days, singles are essentially married to themselves. Policy needs to give them reasons to divorce themselves and marry someone nice who comes by.

Singles give up autonomy when they go into ROM.

Sadly, I don't have a policy solution to the problem of marriage rates. Married couples have enough benefits from the tax-payer, it's the singles who have plenty of entertainment and no longer need marriage in their lives. One drastic possibility would be to reduce the work-week so that singles may get bored and marry out of boredom. ( Hypothetical, because the dudes can just play more computer games and spend more time at Geylang )

So thinking about this issue has largely been unproductive without a major breakthrough.

But I did achieve one single insight.

We married folks have a very irritating tendency to work this way : When we see two people who might have  similar flaws, we automatically think that potentially they might be soul-mates and so we try to introduce them to each other. The logic is that the pairing of the lowest denominator will take place once all options have been exhausted.

This almost never works.

Consider the decision tree from party A's perspective. Even though I have flaw, I am essentially giving up this fantastic relationship I have with myself to hook up with this other flawed individual.

In conclusion, A will stick with himself or herself, thank you.

The Problem of Envy.

A key concept which I should have explored more in my books is the Problem of Envy.

A friend recently shared a personal problem with me. He has a very successful ex-classmate who works in Oil & Gas who enjoys rubbing his success in my friend's face. I think this is a common problem in Singapore: It is not our absolute wealth that determines our life satisfaction, but our wealth relative to the folks around us.

As our education system does not really teach us Philosophy, we fall prey to the notion that being Singaporean is, in essence, waging a psychic war against each other by displaying our ownership of increasingly expensive material goods. I bet the Oil & Gas dude loves to show off his large car, branded watches and mistresses to my poor engineer friend.

Before I come out with a solution, I want to avoid talking about two common answers which most readers can come up with :

a) Get yourself new friends who are not assholes.

Easy solution, right ? Just drop the jerk and asshole from your life ! I think that's not a great solution because we will always need to deal with folks richer and more successful than we do. The other reason is that some jerks and asshole may be useful as we keep them pidgeon-holed in our weak network links. Sometimes, listening to him brag for an hour and you might come ahead with a better job offer.

b) Change your mindset about envy.

Another bad answer. Mindset change is actually really hard if you do not really have the means to think about your personal identity and how it fits into your actual behavior. This may even require years of therapy. Asking for a mindset change is also not too different from being an expert who is abdicating control over the situation.

Instead I will present the two following solutions:

a) Diversify your achievements

The first possible defense is diversify your achievements. Benefits of this approach is two-fold.

This comes from the notion that brain is a machine which secretes dopamine which is some kind of reward when you achieve something which is personally meaningful to you. By taking on more hobbies and making progress with them, your brain fires off dopamine more frequently and give you more personal happiness.

Furthermore, as you have developed more varied interests and hobbies, you never have to kowtow to your more successful friend because he will never be able to do well in all the things which you have focused on.

My friend was an editor in Chinese magazine during his University days. He can read books on Chinese poetry. Perhaps he can spend more time to read up on Chinese culture and make himself an expert in it and occasionally write letters to the Chinese press. An expert in Chinese poems is infinitely more fun than an Oil and Gas executive who fucks PRCs in Geylang.

I doubt the asshole is going to challenge his authority on that.

b) Focus on experiential goods instead of material ones.

The second solution follows the psychology discovery that experiential goods are better than material goods, but it has a subtle element which can be used as a countermeasure against the Great War of Envy.

Yes, experiential goods provide memories which can be summoned to make you feel good. But the secret power of experiential goods is that they take time. You can build a portfolio of experiences which can be hard to replicate. Eg. Not everyone can see the Aurora Borealis in Finland, I know friends who failed to do that although failing is itself a cool experience in my book. My law school is a 3 year experiential good which i bet Mr. Oil and Gas would not want to pay the opportunity cost to attend.

My second advice is that my friend needs to catalog a set of interesting experiences to shift topic whenever Mr. Oil and Gas shows off his latest Rolex Watch, share some of his personal experience which are UNIQUE to himself. Some experiences like coaching his kid to win Weiqi class may be a unique experience that only a successful dad can have.

c) Focus on ideas instead of things.

 My final advice is much harder to follow and may even require a mindset change.

I think that the folks who focus on branded good consumption are, in general terms, academically and intellectually the bottom feeders in the food chain. It takes a special idiot to have a hang-up on the brand of his wallet when it's actually the contents of the wallet which counts.

I normally when people talk about stuff. I tune in only when people talk about ideas.

People who focus on ideas, generally speaking, have less time to compare against each other. Ideas cannot be measured ( Unless you IPO ). Their merits have to be assessed by critical thought. Rich people don't have a monopoly on great ideas.

My third advice is to, of course, to read voraciously. But some amount of verbal aikido can be employed when engaging Mr. Oil and Gas. My friend needs to keep changing the battlefield from a pissing contest to a war of ideas. I would pretend to flatter his his friend and then ask him what is his definition of success and then slowly deconstruct his definition to see if he is truly successful by his own definition.

This is something Socrates would agree on.

I think the Problem of Envy is not likely to get any better in Singapore. We have more millionaires minted here but people don't really make an effort to think critically about living in this society.

Hope that this will be useful the next time you meet your more wealthy Nemesis for a pissing competition.

Decision making in postgraduate education.

Unlike the past, when a degree is required to get ahead, a lot of professionals are faced with the question on what kind of post-graduate qualifications to obtain.

As I've gone through this process twice, here's my two cents worth based on what I've gone through :

i)  CFA or MBA ?

An MBA is especially attractive if you have only 2 years of experience in the working world. For technical professionals, am MBA gives you the chance to make another attempt at a fresh career as a management associate if you dislike engineering or do not see yourself doing technical work.

When I was faced with a choice of CFA or MBA, it was not such a straightforward choice for me. I don't have a problem being technical for a the rest of my life - there was too little coding in my life and I wouldn't mind doing more R&D ! In fact,  I hated politics, bureaucracy and processes. My real problem was that I don't really understand how money works which can be lethal because I don't see a lot of 40-something IT professionals in my workplace in those days.

The CFA program gave me a chance to really study exclusively about how capital is accumulatated. I really don't have to waste any time on marketing, organizational behaviour or operations management. All I studied was accounting, economics, statistics and various asset classes. The Masters of Applied Finance I applied for was also cheap at about $11,000 in 2001. The CFA exams were just examination fees, like all the MCSE, CGEIT and PMP exams I took.

What eventually broke the tie and made me decide on investments was the simple notion that the CFA program is hard. It had a ridiculously low pass rate and the program did not hesitate to maintain high standards when the test takers from China and India started figuring that this may change their life. I saw the rigorous standards as some sort of a moat. The fact that I passed will stand out even if I never obtained the charter.

Was it a good decision on hindsight ? You be the judge.

I never jumped to banking and finance. My salary stagnated the longer I stayed in IT outsourcing but I just kept getting less sleep everyday.  I just did more and more IT work as an operations manager, compliance, audit and finally as a project manager in the government which make me swear off IT for good.

The knowledge, however, came in useful in a time when there isn't any books on investing in local stocks. My income flow from my investments eventually exceeded my earned income which bought me enough time for a more drastic career re-roll.

ii) EMBA or JD ?

The second time round things were a lot easier. if I were to take the EMBA, half of my fees would have been wasted as I would have already done most of  the quantitative modules. The only thing I liked about MBA programs like the one at Harvard's is their case approach which was basically real-world problem solving. I used to devour books on the Case method as I loved the way MBAs dissect a very ephemeral problem and come out with a reasonable plan of action.

Eventually I chose the JD program because it was something which I was not naturally inclined to excel in. Every module was sufficiently alien to me that I would probably learn a great deal even if I were to scrape through every semester. The fact that it's possible to get more philosophical during class discussions was also something I look forward to when analyzing cases.

As for how good this gig will be for my career, only time will tell. There is a very strong and firm moat surrounding legal work in Singapore - this is a public knowledge. But I must be able to convince someone to offer a training contract to a 42 year old.

The biggest opportunity cost is that I would not have been able to network had I signed up for an EMBA program, that might actually be more relevant and would build on my 14 years of experience in IT.

In summary, these are the criteria which I think would be relevant to anyone choosing a postgraduate qualification :

a) Program that you qualify for must be hard and as exclusive as possible. 

The program must exclude as many people as reasonably possible ( But still take you in ). The CFA excludes by having ridiculously low pass rate. The JD program admits only about 40 a year and sets you back $80k once you factor in the textbooks.

This goes back to the notion that we invest based on economic moats. A postgraduate qualification is an expensive investment.

b) Program must teach you something completely new.

You need to benefit from the program and not just develop incremental skills. If I  just want to pick up Python or Big Data , I have Coursera and Udacity to make it happen for me.

c) The Program must be useful and respected in society.

I chose Engineering over Science, Finance over Economics, Law over Humanities. Yeah, it's a pattern.

In a difference society, I may choose otherwise We still live in paper and money conscious Singapore. Education in local institutions is expensive, if you want to part with some dough, you need to convince yourself that this is going to give you new skills and capabilities that companies will want to pay for.

c) The Program must change you in a fundamental way.

This is perhaps the most important. Take away all the skills and knowledge, each discipline confers a certain attitude which should change you for the better.

Engineering made me very comfortable with numbers and grounded me as a concrete thinker. When I am on the job, I try to cut through the bullshit and figure out what needs to be done to get things to work.

Finance gave me the tools to appraise the value in all things. When folks with me dubious numbers, I know the fundamental limits of all asset classes. I know that no one will provide you a free lunch and there's something in it for everyone. There's a little game theory in that.

I have yet to figure how Law will change me, I suspect that I will learn to respect the context a lot more after my course and there are no straightforward answers to issues concerning fellow human beings. I hope to become a lot more strategic and big picture in all my dealings. Hopefully, getting into an argument with me will be a lot nastier ( Oh yes, I will ensure that with my choice of CCA ! ).

At the end of the day, Financial Independence should be meaningful.

If my passive income does not allow me to make a couple of bad, foolish or sub-optimal moves just for the heck of it, then it would not be worthwhile. Crazier folks have quit the workforce on a portfolio of a smaller size.

Calm before the Storm - Countdown to formal classes.

Ok, just because I stop updating my retirement does not mean that this blog is dead. I will keep posting but my new academic life will undeniably affect this blog.

Here is what's going on in my life :

Yesterday I got my matriculation card, this grants me full access to university facilities.

My first priorities are to ensure that my lifestyle can comfortably match an undergraduate in SMU. This means getting a really awesome transport concession at $85 and discounted Kopitiam card to pay for future meals as my number one priority. Subsequently, I will move my exercise routine to my university gym, hope the sight on uncle on a treadmill will not scare the undergrads away.

My friends and ex-colleagues also seem to think that I will live out my next three years as a frat-boy in campus. Some asked me whether I will participate in Orientation or live in a hostel so that I can make young girls do push-ups. I can definitely do that - in my dreams. I see myself as an old uncle who lives vicariously through the lives of my much younger and more handsome classmates. If I hear about an interesting sexcapade, I will be sure to share it in this blog.

More seriously, it's been many years since I studied for a formal degree, there's been a lot of progress in the field of exam performance.

I will commit to three things right now based on the latest scientific findings on academic performance:

a) I will study my materials consistently and study materials in 2-3 day intervals to maximize my recall. This means the ground work for studies begins 2 weeks before class begins. I will begin to start summarizing some key cases since we actually studied legal research as part of orientation. ( Only in SMU, orientation is examinable ! )

b) I will exercise and sleep well everyday. Gone are the days when i can afford to sacrifice my health for my studies - these days, folks my age can actually die before graduation. Kinda bummed out that two JC school-mates have already passed away. At this age, I no longer feel invincible. Exercising will sharpen my mind to take on my classmates.

c) I will introduce variation in my studies to make things interesting. This also means keeping my fiction reading and RPG gaming throughout my three years. This actual makes recall more effective.

So far, I really like  my classmates and instructors. Coming from two quantitative disciplines, it's great to have professors who speak clearly and with regal authority. My classmates are more similar to the Toastmasters pals I hung out with because I had difficulties making friends among the introverts in engineering school.

My insight so far is this - In engineering, students have to hit the books after the lectures because they have difficulties comprehending their lecturers. From what was explained to me, law students may experience the opposite - they need to hit the books before class, or be overwhelmed by the discussions which come later.

On the investment front, as the SMU Library is on renovation, I have yet to use their Bloomberg terminals. I will also be trying to join their Investment Club as soon as I can.

Can't wait to share the investment styles of undergrads in SMU on this blog.

Last Retirement Post !

It's been 7 months since I retired from active work.

This is my last update on my mini-retirement because it will be all over next Monday. Next week, I will be going over to SMU to get my matriculation card, and for the next three years I will be busy getting Law qualification.

Here is my update :

a) Financial Performance was relatively good.

Even if you account for the Argentinian default and 7th month, my portfolio did fairly ok, I paid off one semester of fees of $17k+ and the capital gains made up for it within the same month. I hope to be able to execute this a few more times until the end of the year, as my next payment will be due in December 2014.

One of my objectives is to scrimp and save enough for the next two years so as not to graduate poorer than I was before graduation, this will be a hard act to follow considering that I have to pay my mortgages, move into my new place, start paying off the utility bills, and still pony enough cash every month to pay my fees and still eat.

b) We are now officially a zero-earned-income family.

To top it all up, I guess I was having too much fun for the past six months - so my wife also joined me by quitting her job ! I could not give her more money but she figured that it's possible to keep expenses low and pick up some spare earnings helping my brother in law out.This is a pretty insane development, but I'm very curious to see how having a portfolio could take care of a family with members participating in the economy.

We've jointly decided not to apply for any welfare benefits which can help with my daughter's school fees. Other Singaporeans need it more than I do. Same principle why I did not apply for needs based scholarships in SMU. I will only stick to merit based scholarships.

I think at the rate we are going, we should be able to make it but I think I'll return to work and let my wife retire in my stead after graduation.

c) Coursera classes are complete.

As I will soon have real offline classes, I've ended all involvement with Coursera for now. It's been a pretty fantastic year, and Coursera has given me a chance to make my days meaningful and productive even without employment.

I clocked 8 out of 9 distinctions for the Data Science Specialization only to realize that my old team is now giving out money for Singaporeans who can complete it.
Completed all lectures for the Model Thinking course which I think is possible the best course available in the Coursera system. Too bad the course is still not open yet.

More interestingly is that I completed a class in British Common Law offered by University of London. This is very cool as I have completed all the quizzes which includes a round of case and statute interpretation. This gives me enough foundation to actually start mugging for my upcoming classes. The advantage this will give me is unknown but I will be reporting my results on this blog.

I've signed up for some courses on How to Study to complement my journey in SMU and will take on any introductory course to legal systems from around the world.

d) Exercise and health

I don't have good news on this front, I have increased the frequency of exercise but I am back sliding on my food intake. Seems that a non-carb diet is hard to sustain in Singapore. Fortunately, exercise has become less tiring and I have made it a point to integrate some gym time with my mugging time while in school.

e) Books I am reading

I've been reading my preparatory texts and must say that I'm getting used to hardcore study mode. The past few days have been productive, I learnt what a Humean Guillotine, Legal Positivism and Natural Law is. I've added words like "Promulgaton" into my sad engineer's vocabulary.

For leisure, I read geek classic The Brief Wondrous life of Oscar Wao by Junot Diaz. It's a story about a fat, Hispanic D&D player. I am in the middle of Michael Lewis' Flash Boys since I signed up for Kindle Unlimited.

It's probably not productive to stop reading after starting school, so I am likely to continue to read widely and that means the occasional fictional piece. Right now, I'm eagerly The Magician's Land by Lev Grossman.

So we've come to a close of my short "retirement", my next earned paycheck is going to be possibly 3 years away and I'm pretty excited about my next journey into SMU as a law student at a really ripe old age of 39.

Of course, I do have some anxieties about Law school, what if this turns out to be the stupidest move I've ever made - the fees may exhaust my finances and I may forced to eat into my capital during the next 3 years, something which I have not done since graduation from Engineering School in 1999. It's also a big unknown as to whether the law firms will give training contract for a 42 year old uncle in 2017. There is a possibility that I will end up project manager for service delivery manager for an IT firm after 3 years of law school - this will give me ample nightmares in the months to come.

But I think that's life. I can "declare victory" right now, live on my dividends and have spare cash to reinvest into my portfolio, but in truth, such a life can be boring. There are only this number of folks I can have kopi with day in and day out to get an intelligent conversation. if I choose this path,  in a few months, I will stop empathizing with working folks, I may start to belittle their problems at work and stop building up my technical and financial skills.

If it's anything the reader can learn from my short, failed "retirement",  it is this - As human beings, we need to constantly grow, our accomplishments are an important source of our happiness. Stop striving and it could mean an early death. A life of meaning is superior to a life of pleasure.

I achieved financial independence a little too early to ride into the sunset.

It's now time to press Ctrl-Alt-Delete and start all over again.

See u guys in SMU !

Cultural Inequality : The other problem in Singapore.

We are all obsessed with Income Inequality. Hardly a day goes by without some mention of the GINI index on the Internet.

But I think that technocracies engender a different kind of inequality.

Imagine a society where everyone aspires towards money-making professions. Most kids want to become doctors, lawyers, engineers or accountants. No one aspires to a profession in the Arts or Culture.

The concentration of smart students in Cultural or Aesthetic classes start to dwindle over the years as people start chasing the money.

The role of the promotion of Arts and Culture eventually becomes concentrated into the hand of the few remaining smart guys who chose a Cultural based profession or field of study.

I think we can employ some analogical reasoning to determine what happens when a 1% of the population control 30-40% of the production and dissemination of culture. We have hints from societies with too much wealth inequality.

It's not as easy to regulate billionaires. In the same way, NLB learned that pissing off a few writers and authors risk pissing off all authors who provide cultural assistance for their future projects. Even the Obama administration will eventually back down if they declare war big business and the rich.

If some cultural folks are good, they will become like Bill Gates. Bill Gates used his culture to fight hunger and poverty. A cultural capitalist can enlighten the masses with his products and cultural platform, promote more harmony and progress.

If some of these folks are evil, they will be just like Bernard Madoff. Cultural capital can label groups of people where none exist in the past, they can determine what's cool and what is not. If left unchecked, they can arbitrate your morals, bully you into submission, even control your thoughts because they understand teh power of words and media.

The solution to resolving the problem of cultural inequality can be derived from some solutions for wealth inequality.

Balanced education allows everyone to participate in a discussion without looking unsophisticated or stupid. Spread the cultural capital across larger sections of the population. Do not use the same old groups of people to promote your Arts and Culture, take risks with the younger and newer upstarts.

I also don't mean educating Singaporeans to take sides against each other in this stupid war.

Singaporeans need to know that it's dumb to import a Cultural War which comes primarily from Western countries. Ignoring the religious fundamentalist does not make you an immoral STD-laden hippie. Ignoring their Rainbow coalition does not make you a heartless bigot.

Taking a position for things to just stay the same and move on is not copping out.

Neutrality and apathy can be a valid position

Suppose you do not agree with me, I am fine with that.

At the end of the day, let's agree on this - Financial capital can potentially be a blunt instrument to bludgeon your adversaries, so can Cultural capital.

Singapore's emphasis on professional qualifications has concentrated Cultural capital in the hands of a few, some are social liberals, others are religious zealots. The price we pay is the deluge of propaganda that is bombarding your social media to take a side.

Is English Literature a conspiracy to keep non-elites poor in Singapore ?

While it seems that this blog is veering off topic again, I want to emphasize that a good investor is a fox rather than a hedgehog. Good investors employs multiple modes of thinking to extract extraordinary profit from the financial markets.

Keeping off the employment grid and being focused on the markets has somewhat changed me to date. I'm less inclined to adopt exclusively formal models and mathematics to manage my portfolio. A few very good bets of late have been largely driven by my view on political elections, which also led me to care a lot more about culture -  My bet on Germany for this year's World Cup as evidence by a few article ago ( although I'm nowhere as sharp as Andy's dad ), is a result of finding out that Germany is the most linear-active of cultures around the world and conclude that the combination of Gesundlichkeit (thoroughness), statistics and software will allow them to trump any multi-active team like Argentina or Brazil. 

Impending law school also made me interested in local history the first time in my life. I think that you cannot divorce the analysis and interpretation of laws from historical context.

This sea-change in my personality and approach to making money has also made me more bothered about things which may not have anything to do with finance. 

Right now, I'm bothered by English Literature and the Literati in Singapore. Of course, being a writer myself, these guys are folks I really respect privately and count all of them as good friends. My grouse is the general of a class of people - not individuals. 

It started  with an appeal from a newspaper reader  to introduce Higher English into the syllabus which mirrors the Higher Chinese syllabus taught in SAP schools. On my Facebook, the prominent Literati never really gave this idea much thought. Intellectual arrogance was rife and the Literati, in an orgy of mutual back-patting and intellectual masturbation, declared that Higher English is not necessary because English Literature plays that role within our education today. For the first time in my life, I realized that English Literature was not just a subject taught in schools, but a religion and one with plenty of fundamentalist adherents. 

This intellectual arrogance and dismissive attitude can be forgiven if it was merely  confined to an ivory tower, but recent events involving NLB has shown that writers and Literati have cultural and political clout. In a rare public scuffle, NLB was beaten to a pulp and forced to back-peddle from pulping a few children's books. In the end, the outcome was not any better - the loudest guys won. 

The moral of the story is that advantage went to those who are better with words.

Coming back to English Literature, I always thought that we were deliberately taught badly in a Government school so that we will develop a hatred for the humanities and take up technocratic careers. In Secondary 1, Swiss Cottage had Great Expectations by Charles Dickens. Was Great Expectations strategically chosen to keep us Government kids from living out our potential ?

Poor Pip, the protagonist was about our age, when we read the story. When he develops a crush on Estella, he gets friend-zoned because she is actually some emotional weapon wielded by Miss Havisham who has a grouse against men because she was dumped on the altar. When Pip finally gets financial support (Yes ! A scholarship ! ), it had to come from a criminal element in society like Magwitch. 

Because of English Literature, we kids of Swiss Cottage can never realize our ambitions, the poverty mindset on non-elite kids must be ingrained so that we will not rise to take on the status quo. All MacBeth wanted was to be king, but it was prophesied that he will suffer a horrible fate, telling us that ambition leads to tragedy (and don't even listen to that horrible wife of yours). Even reaching the pinnacle of one's career could mean being assassinated, just like Julius Caesar. Don't even think of rebellion - you do not wish to suffer the fate of Brutus !

If English Literature was right, we of Swiss Cottage - government schools with no distinction in the late 1980s, should just accept our lot as ordinary citizens !

Anyway, rant aside, I belong firmly in the school of Higher English as a replacement for English Literature. Engineering and Computer Science colleges completely reinvent themselves every few years to stay relevant, it is unjust and not mention a waste of tax-payer's money to maintain English Literature in its current state for 9% of the exam-taking student population.

A Higher English subject should ideally, be a full H2 A level subject. It should be more technical and cover the latest use of media like blogging and employ modern word processing tools. Project-wise, we should creation more content like write works of flash fiction, op-eds. There should be more emphasis on the ancient art of Rhetoric and assessment should have a public speaking component. Instead of reading a few great books, Higher English should read snippets of good examples of classic and modern fiction. Why read a select number of works from Shakespeare when you can read smaller snippets from Austen, Balzac or George R R Martin ?

[ A friend mentioned a return to grammar - I think this needs to be resurrected in Basic Vanilla  English. ]

In conclusion, Words are Power. 

In my next life journey, I will be trying to unlock the full potential of words. Condemning our kids to outmoded forms of instruction without teaching them how to unleash the full power of the written word is not sustainable for our culture and economy. 

Policy makers and government, in building a technocracy, have made the power of words out of reach from the general population. If we relinquish the power of words to just a handful of Religious Zealots, Writers or Literati, we have only ourselves to blame they start proselytizing for an extremist cause in the cultural wars of Singapore.

We the silent majority would become impotent against their persuasive talents.

Then, the Tail will truly Wag the Dog, in Singapore.

Tackling the root cause of the Cultural Wars in Singapore does not lie in categorizing books or yet more protests in Hong Lim Park.

It is equipping everyone with the power of words and denying exclusive access to the powers of persuasion, rhetoric and demagoguery to a select few liberal elites.

Start with English Literature.

End with Higher English.

  

Hedgehog or the Fox ?

If you are a hedgehog, you know one thing really well. If you are a fox, you know many little things.

This question has many many applications in the area of career management, after you stabilize career, do you take steps to specialize in something or do you pick up more skills as a generalist ?

I asked this question on FB and  observed that most tech professionals would rather be a hedgehogs. This makes sense since hedgehogs who specialize in one platform can make a lot of money out of it. The 1990s and 2000s IT landscape belonged to SAP consultants who were specialists. They were known to be able to bill for time and materials and led lives with a high standard of living. Data Science is the current flavor of the month.

Most guys who are into investments prefer to be foxes. Assessing the viability of an investment goes way beyond applying financial models. Many investments come with political risks and a person who has many models and perspectives tend to do better in managing money than someone armed with a single equation.

The dichotomy between being a fox or a hedgehog is represented by two conflicting models.

In Six Sigma, the biggest rewards goes to processes with a smallest amount of variation. The biggest rewards got to people produce something with the least amount of defects.This model is opposed by Fisher's theorem, where it was theorized that higher variance leads to faster adaptation ( As in evolution ). If you adopt this theorem then you will introduce as much variance as possible so that adaptation to the environment can be done in the shortest time possible. 

I think the insight on one's choice of models has implications on career management. 

If the environment is static and unchanging, then Six Sigma would be a useful model. If you work in an industry which is static where folks are stubborn to change, it makes sense to specialize and find a niche which you know would be rewarded in your environment. In the public sector, I noticed that the folks who get promoted are mostly predictable hedgehogs. You can also have lifelong employment if you are a master of an arcane process like procurement. 

If the environment is dynamic and fast-changing like Tech, it may be wiser to be a fox and introduce variation in your skills. In the past, software engineers face a lot of paradigm shifts. There's currently one going on involving functional programming. The Microsoft lay-offs has also made people question the value of putting your entire career into one .NET platform. 

So in summary, I think there is an objective answer to this question of whether to be a hedgehog or a fox. 

It depends on the degree by which how dynamic your work environment is. 

People in tech may have chosen wrongly when they become hedgehogs, they are better off being foxes. Combining some technical skills with domain knowledge, but maintaining writing skills and maintaining curiosity in strange new platforms is vital to maintaining their currency in a ridiculous crazy industry. 

Just remember, we aare now in a world where Microsoft is laying off thousands of people - no one is safe.

Using models to explain life, success and the assholes around you.

This article might be a little "cheem" since I have just completed all 20 lectures of the Model Thinking course conducted by the University of Michigan, I think that of all the courses taught, this is probably the best one so far.

The central thesis of this lesson is that when it comes to prediction, we are much better having more models so that we have more tools to explain a certain phenomenon.

This article demonstrates a model  known as Colonel Blotto. This simple model had a deep impact on the way I think.

Imagine you have 100 unit of soldiers and plan to deploy them across three fronts. To win a war, you pit yourself against an opponent who also have 100 units of soldiers to be deployed against you. The winner of this game is the player who can deploy more soldiers than the enemy on 2 out of 3 fronts.

Some findings Colonel Blotto are as follows :

a) If you have advanced knowledge on how your opponent deploys, you can always deploy your soldiers to win 2 in out of 3 fronts ( Your opponent deploys 34/33/33. You can react by deploying 0/50/50.)
b) If no advanced information can be gained, your best strategy is to be as random and unpredictable as possible so that your opponent can't guess your next move.
c) If you can get advanced information, you can have a smaller army and still win 2/3 fronts.
d) If you have a numerical advantage against your opponent, you should try to limit the total number of fronts as much as possible to secure a majority victory.
e) Against an opponent with a stronger army, you need to fight a war on multiple fronts so that you can blunt his numerical advantage.

Of all the models taught to me, this one really blew my mind. It almost explains all the phenomenon which I have experienced in my study and working life. ( Note : I am an eccentric. It does not take a genius to figure out that I'm by nature, bizarrely competitive and approach my work and studies as a gamer and strategist. )

Here's how this model explains what I observed in my life:

a) Top-JC party animal stereotype

When us B-Grade Singaporeans meet up for drinks we always talk about campus life which involve a certain amount of hostel stay, many of us meet a particular hostelite which I would term the Top JC party animal.

Some folks will claim that this guy is from my JC. In my case, i always claim that the dude is from RJC or HCJC. It does'nt really matter, as the faces, JCs and names change, but the stories are the same.

This dude's hostel strategy is to get you to drink and party with him until late at night, then using some combination of  Red Bull and Coffee, he stays up late and studies until the next morning. After the exam, if he gets into the Dean's List, he will act as if he put in little effort ( a power move called sprezzatura ), if he fails, he's a party animal anyway so no loss of face there.

I was warned that I would meet friends like this in campus, so I devised a counter-strategy against them. I refused to party and did consistent work, so even though I was dumber than these guys, I would retain more information for the exams. I don't really care about being labelled a mugger-toad because if I really had any natural intelligence, I would have been in the gifted program and would probably be in MIT anyway.

This is Classic Blotto in action, expanding the new front on Partying to get you into investing your troops while keeping strong troop detachment on Academic performance.

Well played !

b) Latently Competitive Family Man

I really hate the LCFM, the engineering faculty is full of these fuckers and I don't seem to be able to develop a counter strategy until much later in my life when I became much more mellow and mature. The LCFM had shit grades and shit ECA, he can't even do engineering work, so he goes to a secondary school to teach Physics ( or E Math if he's truly hopeless ). He marries his University sweetheart 1 year after graduation and invites you his housewarming party, then he smugly plays a family card against the hard-charging yuppy, spouting Chinese philosophy on work-life balance and mocking you with his balanced approach to life.

Well, Confucius hates you and so do I !

Another Classic Blotto, opening a new front on Family while the rest of the world is focused on Making Money to win one front first, then applying psychological pressure to get you to reduce your initial deployment.

c) Involuntary Dilettante

I would like to propose that there is a third stereotype I would term the Involuntary Dilettante. You may meet a lot of folks like this at work or in school, but in my opinion, this stereotype is to be pitied.

Imagine a successful woman who has it all - work, family, children and a good marriage. Most real woman are not Marissa Mayer and have to compete on more fronts against each other, as they are judged on many more dimensions than men (If you're a guy with gold coming out of your arse, only Thomas Piketty will judge you).

If you are normal career woman with average looks and average qualifications, trying trying to juggle everything and losing out on every front is a possible reality. The Colonel Blotto game predicts that you will try to attack every front at the same time so that you can luck out on your career or your husband. As in all things in life, very few actually "make it".

While it's only a mental construct, Colonel Blotto has given me some insights on life :

a) Society values some things more than others. It's your choice to determine how to deploy your troops. My deployment is Financial Independence and not Material Pleasures. I also have a large deployment in Inter-disciplinary Knowledge. I'm betting that society rewards both.
b) If you choose a front not valued by society, then enjoy your private victory and don't gripe about being under-appreciated. Singapore is not very open-minded to alternative forms of success anyway.
c) If you are competitive by nature and want to kick ass. Then you need to have a large deployment in as few fronts as possible. This a classic Alpha Male maneuver. Focus on the shit you are good at but having something around so you can pivot.
d) If you feel disadvantaged because of your own circumstances, then have many varying fronts and hope to luck out. ( Multiple hobbies and interests may lead to serendipitous financial rewards or prestige.)

I think I'm going to toy with the models from the Coursera class to predict the behavior of the people I meet.

Having this toolbox really has the ability to predict and explain the behaviour of the folks around you.

Who knows, maybe one day, I can even apply this into investing.

When Insurance Agents attack...

Sometimes, when I get a great day, a friend who believes in insurance writes a passionate message to me to take issue with my ideas on insurance planning. This inevitably strengthens my position, since insurance agents seldom want to talk to me anymore, it updates me on their various tactics which I share with there readers.

Let me summarize my idea on insurance.

I believe in "Buy term and Invest the Rest". This means not only maxing up your term life insurance, it means saving up what you would have spent on insurance on an investment portfolio of your choice. My personal choice of investments are high yielding stocks, REITs and business trusts. Some folks told me that insurance companies invest in the same things to meet their liabilities.

Here are some of the resistances to my idea :

a) Term Life does not last forever. 

We all know that term life does not last forever. Term life insurance like NTUC i-Term covers you until age 84. SAF Group Life only covers up till age 65. In fact, I want to say that all of us prefer not to get a pay-out on term life, we want to live long prosperous lives.

The aim of term life is to transfer risk of early death to protect your human capital or future cash flow. If I die early, my family will not have benefit from my income, the term life insurance provides a cash outlay so that my family would not have to suffer. Beyond age 65, I have no more income anyway, so there is nothing to protect.

Using this similar argument, your child is a dependent and if you are not relying on your child's future cash flow, it is not necessary to buy term life for you child, but your child can sign up for a term life insurance to protect you when your child finds work after graduation.

b) What about hospitalization and critical illness ?

In all of my previous books, I recommend H&S insurance. Personally, I don't have any because I was diagnosed with thyroid and diabetes early in my life and I was rejected by NTUC before when I made my application.

These days, I am mixed about H&S plans. Recently in Business Times, journalists have shed light on the pricing of these policies. H&S insurance plans are cheap in your 20s and 30s - this is an active strategy to gain market share, after which H&S expenses ramp up drastically.

Agents are also notoriously silent on how much Integrated Shield Plans protect above and beyond the latest changes to the mandatory Medishield plans. We are all already effectively insured by the government, the insurance agent needs to convince me as to why government protection is insufficient and why I need a room which is better than B2 wards.

For folks who cannot get a hospitalization plan like me, my portfolio covers the shortfall. I have many layers of protection, Medishield, my maxed-out Medisave account, dividends from my stocks to pay if medisave overruns, capital gains and finally my savings.

c) My cousin contracted Ebola from his goldfish ! My father-in-law has hair cancer ! You need protection from such situations, right ?

This is a poorly constructed argument designed to spread fear.

The "Invest the Rest" component protects your family from these situations and covers other situations like job loss, having a new kid, home renovations, getting sued by neighbours, etc which no insurance agent can cover. My portfolio can even pay for my daughter's plastic surgery if she wants to start a K-POP band.

Your agent needs to paint the scenario whereby someone relies on Medishield versus someone who relies on the IP policy and what the different in costs will be. If your portfolio can handle the difference, it still means that the risk does not need to be transferred.

c) What if the customer is an average investor ?

This line of argument genuinely makes me mad.

People are bad investors because money management is not taught in schools. Instead, the government allows an 'O' level graduate to qualify to sell insurance. These people then go on to call themselves financial planners. Now the industry argues that most people are dumb and should listen to them instead. Many insurance agents also do not know how to invest and are largely responsible for the ignorance in the first place.

I am willing to concede that if you are an average investor, you are better off listening to a financial planner. The same argument can be used to convince someone to buy 4D, if you keep losing money on investments, maybe buying 4D can give you better odds.

But I'm going to offer you an alternative - why not listen to a fee-only advisor ?

This advisor will not have an incentive to push products down your throat and may be able to structure a decent portfolio based on ETF to ensure sufficient diversification.  Many fee-only advisors have come out to support a variant of my "Buy Term and Invest the rest" scheme.

The whole point of this blog is cater to folk who want to be above average when managing their finances. This means that you need to optimize your costs.

And taking a second look at how much you are subsidizing the lifestyle of your agent is a great way to be more frugal with your finances.

Not everyone can win in Singapore society - if you do not educate yourself in the ways of money management, there are a lot of predators out there who would want a chunk of your savings.

Some change in my thoughts regarding the $100,000 challenge.

There has been some calls to poll my opinion on what should someone do with $100,000. There has also been queries as to whether some of the things I wrote on Growing Your Tree of Prosperity is still valid with the market today.

Growing Your Tree of Prosperity is a lot more than just about investing in unit trusts, it puts readers in their first attempt to pony up $100,000 - something which is attainable by almost anyone. It's special to me as it also captured some issues which bothered me 9 years ago. These days, I find that cynical tone in my first book quite amusing even though it shaped my behavior as an investor.

I will first address some of the changes in my mindset here :

a) These days, ETFs may indeed be superior to unit trusts.

Close to a decade ago, ETFs were not as ubiquitous as they are today.

In my first book, I placed a lot of emphasis in selecting unit trusts which are global in scope with a low expense ratio for higher long term returns. These days SGX is full of ETFs which have a much lower expense ratio, negligible sales charges and gives you access to a range of global investments at your fingertips, so if you have a brokerage account, you may want to go through the ETFs page in the SGX website to build your portfolio. I think $15,000 - $30,000 is enough to get you started as you will need several ETFs to build a diversified global portfolio of different asset classes.

If you have barely have less than $15,000, it may still be prudent to find a unit trust dollar cost averaging scheme to build your capital up to $30,000, but in this case, you might as well use this as a cash reserve before jumping into ETFs directly.

b) If I had the knowledge I had today, I'd jump straight into investing for dividends.

Most of us who were investing since our 20s had to pay our tuition fees the hard way. When I graduated, there were not REITs in the stockmarket. A fresh graduate is very well read these days, many already know value investing and understand how to filter stocks based on dividend yields. If I had all this information, I would jump into building a portfolio of dividend stocks immediately using manufacturing and telco blue chips at about 5% yield a year before starting to push my yields upwards with REITs and business trusts.

This approach will allow me to start supplementing my transport expenses and meals perhaps upon my 3rd or 4th year of work.

The second part of this post is a section which I would not really like to provide easy answers. A lot folks ask me what to do if they have such-and-such amount of money. The answer to such a question is closer to a legal problem than an engineering problem. The best answer depends very much on your personal context.

Instead, I will try to give you some points for your consideration :

a) Have you covered all your emergency situations ?

Before the discussion takes place, you should have 3-6 months in emergency expenses. This should preferably be in cash. You should also have a maxed out term life insurance to protect your loved ones in case anything should happen to you.

b) Have you enhanced your human capital yet ?

Contrary to what a lot of people say, you get rich from working. Working provides the earnings you save which is then farmed into your investments.

Unlike financial assets, human capital can be enhanced at a significantly low investment. My Masters in Applied Finance which was offered in NUS 11 years ago only cost me $11,000, that was where I learnt about investing my money. These days you can enroll in SMU by paying 5-6x the amount, I think it's worth every cent. Some engineers can jump into the business development line with a good MBA from INSEAD.

This is an important consideration as the enhancement to your income was exceeds the cost. ROI can well exceed that of equity counters. The downside is that it's better to do this before you are 35 as you still have your best career days ahead of you.

Of course, there are more tactical ways to grow your human capital. A short course on computer software ( If you can get certified on Internet of Things ) can make a significant difference in your career.

c) Invest only after earlier points have been considered.

Investing should only be considered after (a) and (b) have been taken into consideration. Once you arrive at this point, many other financial bloggers can give you better advice than I do, here are your possible options available for someone with $100,000 to invest :

i) Permanent Portfolio 

An ETF which covers all asset classes with regular re-balancing can achieve decent results with minimal draw down. This is probable the best option for a beginner.

ii) Yields Portfolio 

This is what I do personally, hunt for yield stocks to offset my living expenses. I generally ignore capital gains or losses and avoid portfolio turnover.

iii) Value Investing 

Look for low Price to Book value stock bargains and focus on total returns and minimizing your downside. Benjamin Graham focuses on this approach and some folks make a lot of money with this method.

No need to be suicidal if your girlfriend is materialistic !

Sometime ago, the trolls in TheRealSingapore put up this hilarious post :

http://therealsingapore.com/content/young-sporean-suicidal-because-all-girls-he-loved-are-too-materialistic

The writer has become depressed because his girlfriends keep leaving him for richer guys. As a result of this, he has asked the folks of TRS on whether he should end his life. 

Let me share a personal story.

Before I met my wife, my parents were worried that I was single. Worried that I might not be able to perpetuate my genetic material, they conspired with my neighbors to match-make me. Those days, I had only one condition, that condition is that she must be really hot for me to be interested. In the past, my aunt has made attempts to introduce me to girls when I was in KL, but they are always overweight and over-educated. ( Actually, I shouldn't even mention that they are over-educated because if they were hot, I wouldn't be complaining on this blog. )

Ok, back to my matchmaking...

Turns out that this girl my family found was really hot. She is tall, tan and comes straight from some Citibank advertisement. She serves institutional clients in a bank.

 So, what more can a dude want right ? 

I quickly arranged for a meet-up then tried to line up for a few dates. 

Then I notice strange things about my date.

She brought her girlfriend to my neighbors house to ogle at their fleet of Ferraris. 

She's always playing golf in Bintan so some dates need to be rescheduled.

We were both doing the CFA II exams. She didn't show up a the exam hall. ( Low conscientiousness )

On my second date, she was late and she was in a horrible mood, complaining that her futures were out of the money. I missed the first 20 minutes of Matrix because of her, I even offered to buy tickets for a later show. 

I guess the lesson I learned from this episode is that looks can only take you that far. 

Just like a bad futures investment which hit stop loss, I quickly cut my losses and ran for the exit.

Of course my dating luck turned positive after this event. 

At the end of the day, single guys need to understand the term "milieu" or environment when they are hunting for a spouse or even a great investment. 

If you hunt for a spouse in a singles bar, you get young girls who want to have fun, are open to new experiences, you might need to check if you are the real father of your child in the future - this comes with the dating territory. The singles bar or disco basically filters the serious and good girls who can make good spouses. Setting up a filter for growth stock practically guarantees a portfolio with a higher volatility. ( Generally speaking, of course, there are exceptions to the rule. Kingsmen Creative is a growth stock with great value. Some readers would have met their wives in Zouk would hate me if I didn't put in this disclaimer )

So my advice is that  this young man needs to take up activities where materialistic girls do not hang out. I suggest several good avenues which almost guarantee good wife material, one is to participate in a church, temple, Charity or NGO movement, you are almost guaranteed to find someone decent and non-materialistic there.

Of course, in such case, the guy needs to solve the other problem. 

Someone who writes such a stupid post in TRS would need to find a girl equally stupid to want to date him ! 

While she may not reject him because she's out for someone richer, she might dump him because he is an idiot !

Should I invest in my excess cash into my start-up or use it build up my stock portfolio ?

A friend who attended my talk was having a discussion with me yesterday, he mentioned in passing that one of the Zopim founders actually attended my session and actually interacted with me on my talk. And I was going WOW ! It was such a great honour that someone who is part of an exit of such historical scale would be able to attend my session.

Anyway, my friend also expressed disappointment that in the Temple of Startup Capitalism, no one asked me a challenging question which we sort of "prepared" in case someone were to raise it during my talk.

And the question is : If I had money, should I invest in my start-up to make it grow or should I invest it into a portfolio different asset classes ?

I'm going to present, in my view, an answer to this question. 

To answer this question, we will need to look at the notion of human capital as proposed by Economics Nobel Prize winner Gary Becker. Human capital can be seen as a sum total of your unearned income. This is contrasted with your financial capital, capital which has already been earned, which is an asset in your bank, real estate or CDP account.  

Human capital is a vital part of your wealth. It explains why venture capitalists have faith in you - they see you as a potential future profit. Your total wealth is, therefore, a sum total of your human capital and financial capital.

In light of this insight, we also realise that your human capital also has characteristics similar to stocks, bonds and commodities. A salesman or marketing professional with a salary tied to company performance can be said to have human capital which behaves like stock equity. It goes up and down based on company profits. A civil servant has a salary very much like a bond. It is predictable with not much upside or downside.

So let's examine what happens when you found a start-up company. Assuming it has only had seed funding, your start-up has yet to produce any profit. Your profits are in the far future, it has to receive more funding and complete product development before profits will only start rolling. i.e. The closest asset class your human capital will look like is an equity option ! Your human capital provides you a minimal profit but can potentially give you a huge upside. 

Now let's move on to another insight this time from Moshe Milevsky. Moshe proposes that diversification of assets should also account for human capital. Another words, a salesman with human capital which behaves like an equity should look to a higher proportion of bonds in his financial portfolio. A civil servant can buy more equities to improve his upside.

So let's get back to our founder who wants to determine where he should invest his money. 

If your human capital acts as a derivative instrument like a stock option, the answer is clear, the prudent option would be to invest your money in a more conservative asset like bonds or various income yielding instruments. 

Of course, a host of non-finance related concerns if you accept my suggestions without question. If a founder refuses to invest their cash in their own businesses, would it signal the lack of commitment to their ideas ? Would their motivation be reduced if that occurs ? What if the funding is crucial for the company to complete their first product just to start turning into a profit ?

I don't have an answer to these concerns. 

The existence of VCs in an ecosystem is to rally high net worth investors to take on such risks. Private equity has historically performed well for investors even though many business fail on an individual basis. 

A savvy founder should trust the VC to fund his business to make it work. If it means loss of some equity, so be it. Therefore, I still think it prudent to look after own welfare by prudent diversification of human and financial capital assets. 

What games can tell us about success ?

Recently, psychologists have dealt a resounding blow against Malcolm Gladwell's idea that in order to succeed in a field, you will need 10,000 hours of deliberate practice. Of course, the scientific evidence cannot deal a killing blow to the theory because it's very hard to suss out practice that is actually deliberate in nature. Practice that is deliberate means that its difficulty is designed to always match the capability of the person, something which is harder to establish in a research experiment. All Malcolm Gladwell has to do is to say that most practice is not deliberate in nature, then his theory still holds, I bet it wasn't really meant to be falsifiable anyway.

We are always trying to explain how and why we are successful. Prior to WWII, success was largely due to genetic factors. The US Army designed IQ tests to determine which citizens make the best soldiers. Recently the pendulum has shifted to success being part of environment and practice, I've always felt that this was more like wishful thinking on Humanity's part. If success is correlated to hard-work and depended less on things beyond one's control, people would feel comfortable enough to work harder.

The flaw in the idea of deliberate practice is that it seems more like wishful thinking rather than one grounded in cold, hard facts. The second flaw that we are trying to put a narrative around success without acknowledging that luck often plays an overly large role in our lives. The third flaw is that we really don't know what was sacrificed to attain public success - Steve Jobs was celebrated publicly but privately was a huge asshole based on the folks who used to work with him.

One thing which cannot be denied - domains with strict rules like Chess are domains where deliberate practice can have an impact on success. Similar to chess are games like Magic:The Gathering and Legend of 5 Rings, where a fixed set of rules and card base allow players with more exposure and time to triumph of players with less practice.

Very different from chess are games like Tabletop RPGs and investing. There are no fixed rules, conflict in a region like Ukraine can affect markets in Singapore. CEOs can suddenly signal a downturn by selling their stock.  In D&D, Players can find obscure use for magical items to mess up the best laid plans of the Dungeon Master, or simply behave irrationally because they think that it reflects the behaviour of their PCs better. Sometimes, one is simply better off with no plans and instead have a series of contingencies to deal with black swan incidents.

This insight may be useful in answering a question which has been bugging me for more than decade :

Why do the best gamers fail to apply their strategies in real life and lead a mediocre existence ?

Initially my thoughts that is the best strategy gamers tend to think in concrete terms and stick to the victory conditions that are published within the ruleset, this required that many gamers have a Sensing thinking mode rather than a Intuition mode. Then, I became obsessed with the idea of the growth mindset, I observed giftedness as a common trait of the top gamers and concluded that they stuck to games with rules because they are afraid of living a life where there are often no rules of engagement  ( many gifted children are cursed with a fixed mindset. ) Now the third of piece of the puzzle is in place - card games and chess games allow practice to be instantly rewarded with improve performance.

Anyway, I don't have a conclusive answer to what leads to success or the final word on why top gamers do not outperform at the game of real life.

Of interest to gamers is the evolution of RPGs which reflect the popular opinion of what constitutes success.

In the 3rd Edition of D&D, unbounded modifiers were crafted such that most of your bonuses are due to your level and the magical items which you have on you. In such games, experience and equipment largely determine success in any endeavour. Epic characters had better attack rolls, saving throws and hit points. In such games, success is long term gameplay and careful management of resources.

In Diablo III, experience matters less, all epic characters above Level 70 with hundreds of paragon points rely primarily on loot. Players with better equipment gets to get more equipment by going into the higher Torment levels. Cooperating in groups exponentially rewards players with more loot. That's almost like a world which the Wolf Of Wall-street belongs to.

Striking a careful balance is the recent 5th Edition D&D game. Nature plays a major role in the game with attributes accounting for a third of bonuses ( A strength of 20 grants a +5 bonus ) . Your experience now only plays another third of the dice roll modifier ( +2 at level 1 and caps at +6 at level 20 ). A major component which determines your bonus is how you role-play. Points of inspiration grant an additional dice-roll which is the equivalent to a +5 bonus within the game.

Maybe 5th Edition gets it closer to the real deal in life, your success is largely :

a) What you are born with.  
b) How much hard work you put into achieving your goals.
c) Your personality, attitude and character.

Dungeons and Dragons 5th Edition Rocks !

First of all, this blog has been given a new template. Many friends and readers have commented on how horrible the old design was, so I thought I'd apply a new template to see if you readers prefer this new look.

Of course, mirroring the change in my blog was no accident.

I made the changes to celebrate the launch of a new edition of Dungeons & Dragons.

This game, already on it's 5th Edition, can be downloaded here for free :

http://wizards.com/DnD/Article.aspx?x=dnd%2Fbasicrules

New generation of gamers will need to know this is not a computer game, but an old school paper and pencil RPG which I have been playing since I was 10 years old.

As there are at least 2 other financial bloggers who are old school RPGers, I will not explain how much D&D shaped my life and personal philosophy, the fact that a few fairly popular bloggers had a background playing D&D speaks volumes of its ability to spark a person's imagination and analytical ability.

Today we have just concluded my first game of D&D since quitting over the poorly designed and fairly mechanical 4th Edition rules.  Here are my findings :

a) The game is super simple and elegant.

Paper and Pencil RPGs are notorious hard to setup. This time, we could create a fresh new character within 15 minutes and start running the game. The Fighter and Rogue were relatively easier to create. The wizard and cleric took about 30 minutes as players wanted to select a list of spells to prepare for the adventure.

b) The game really encourages role-playing

TRPGs were hurt quite badly by the success of games like World of Warcraft. Designers first thought that RPGs should emulate their electronic cousins so made gameplay very mechanistic. They forgot that TRPGers are the folks who game to avoid the limited options of computer RPG gaming.

D&D5E resolves the issue by employing a mechanic called Inspiration, The Dungeon Master (DM) awards inspiration points when players allow their personality to determine their actions within the game. Inspiration points are mechanically powerful and allows players to roll two dice and take the better value in their dice-rolls, drastically increasing the odds of getting something done.

In my game today, a player who seldom role-plays took on a role of a war veteran with PTSD once he discovered that I will give a point whenever someone made their characters more believable. He "loses it" when he hears the cries of a small child and charged towards an ambush set up by a monster to get that inspiration point.

In another situation, the rogue who had a background of a folk hero, wanted to lay a murdered farmer and his family to rest by charging the farmers-turned-zombies to play up his feelings for his commoners were also awarded a point of inspiration.    

c) The game is challenging and can be quite lethal.

I sent four skeletons to attack a party of four. The fighter went down in 3 rounds and we could almost had a TPK situation. This will never happen in a 4th Edition game ( or Diablo III for that matter )

This was very similar to older editions. At lower levels, you can die from a tactical mistake or an unlucky dice roll.

d) Leveling up takes 5 minutes

The game has been very much simplified, to level up a fighter, I added 11 hit points and gave him a new Action Surge ability which allows him an additional action once every fight.

e) Playing D&D as someone preparing to go into Law School is very interesting

As I am the only guy who is crazy enough to DM an incomplete game, I can see that some of my early law school preparation has impacted the way I look at adjudicating an RPG game. In many situations, the gaming rules did not cover the situation which occurs on a gaming table.

A wizards familiar was escaping with someone's amulet. The wizard used a Mage Hand spell to grab the amulet back. I had to rule that it's an Intelligence check versus a Strength check.  It was an a situation which opposed spell-power versus muscle-power which also has to account for the weight of the amulet and the fair power for a cantrip spell - this is very similar to a legal concept like ratio decidendi which I read about a few weeks ago. This ruling would have an impact in future gaming sessions until the publication of the Player's handbook (Which reads almost like a set if statutes).

Some other rulings are not so straight-forward, the PTSD great-weapon fighter guy wanted to trigger a war flashback in every battle to get Inspiration points ( He thinks he's Rambo ). I ruled that every award of Inspiration has to entertain everyone and is given on a case by case basis. If you get Inspiration once, it does not mean that a similar situation would warrant another reward. This is eerily similar to a ruling that is orbiter dictum, does not bind the DM in future situations even if they are similar.

So I guess even if I don't get a job after graduation, the stuff I pick in Law School would make me a better DM !

Sadly, the Basic game is incomplete. I had to source for free adventures on the web and have about 4 kinds of monsters to deploy on my game next week.

On to the Level 2 game where I had to build  a manor by scratch and populate it with only 4 monsters published for the game...