If you want a study for a degree which is likely to see you in a bank doing Operations, you should study engineering. However, if you want to study for a degree which would land you into a job managing a hipster cafe or baking cupcakes, a Law degree is your surest bet.
If I can start my life all over again, I would still take Engineering as my first degree, the only change is that I will aggressively study software engineering, ignore electronics/hardware and try to slant my electives towards Data Analytics.
However, I would still not become an engineer. At least not an engineer in a traditional sense who looks at blueprints and direct maintenance for MRT trains. I will instead use my mathematical and programming skills towards solving problems which would make me more money. I see successful engineers programming GPUs to arbitrage financial markets.
The lack of engineers in Singapore have been on the radar lately and some folks have commented on the lack attention paid to this issue in this coming elections. This is a problem in Singapore because we will lose our competitiveness in key industries if we cannot graduate professionals who can understand and solve technical problems. The MRT breakdowns is a symptom of of this issue. Create a society which does not respect technical proficiency and underpays engineers, and you will be rewarded be frequent breakdowns and failing infrastructure.
That being said, I still think that we can incentivise more people to take up engineering in spite of low income prospects for the engineering profession. The trick is to address the hard truth that the most hardcore engineers are pragmatic people and these are guys who will choose money over passion if they cannot have both in their working lives.
Passionate people study media and the arts, pragmatic people study engineering.
Pragmatic people want to get paid - paid in a way which can command the respect of others.
Our preference is to be significantly overpaid - like lawyers and medical specialists, not like the cogs of the economic machine.
Here are some possibilities to explore to get more folks into engineering :
a) Encourage engineers to work abroad.
While this sounds counter-productive, engineers who to the US generally can get high salaries relative to even local degrees like Law or even Medicine. This requires some tinkering with the syllabus to get software elites to be able to operate as full stack engineers ( which might already be happening with the NUS Orbital programs ).
The advantage of this approach is that the problem of money disappears immediately and some engineers do come back to create jobs and startups. Engineers might face a local industry with poor prospects but with the proper skills they can come back to raise a family but continue to remotely work for US start-ups or build a start-up of their own.
Losing a few years to Silicon Valley is a small price to pay if some of these guys do return with the idea of building up the startup ecosystem.
We need to expand NUS Overseas College or maybe have a parallel program in the Engineering faculty. VCs might sponsor this program using equity tied to the salary of graduands ( This is part of a new proposal by Marco Rubio on study loans in the US. )
b) Promote engineering as a superior first degree.
When I was an undergrad in NUS, my HR professor did something which I felt was wrong.
She was about to invite an ex-HP director who retooled himself as a GIC investment manager to speak to us but changed her mind because she said that she felt that she was doing a wrong thing because fewer people would become engineers once they met this guy.
Today I am still shocked at how much the authorities want engineers to sacrifice our own personal interests for the Singapore economy. I have not seen accountants, doctors or lawyers being asked to do this.
Another counter intuitive approach which can be backed by salary information is that Engineering makes a pretty nifty bridging degree. Because life outcomes and salaries are sub-par, engineers can take on alternative professional roles. Accounting is rapidly becoming a Masters level course when SMU launched the MPA qualification, engineers can get a good raise when retool and join a big 4 company over an engineering paycheck.
A lot of folks in the finance industry get stuck at level II in their CFA preparations where multiple rounds of failed attempts are the norm. My experience with cracking the CFA is that engineers don't find level II particularly hard even though it has a reputation as killer exam. This is because we are already very quantitative and we are pretty good at statistics in the first place.
If you look carefully at the NUS engineering syllabus, every engineer studies a bit of everything. My financial accounting and statistics module helped me in CFA I. My law module taken 15 years ago made swallowing some concepts like contra-proferentum much easier. I would say that my degree is almost half of an MBA.
[[ My JD program has 3 engineers and at least so far, we are holding on our own quite well in spite of not being in our home ground and fighting the Humanities folks. ]]
[[ MBAs will be bullshit qualification in a few years once engineers start doing the Coursera specialization in their own spare time while CFA prepping. Do an MBA if you wanna network and choose a school which adopt a case approach, otherwise you should save your money. ]]
The trick of promoting engineering as a base degree which leads to bigger things is that even though some engineers do become lawyers, doctors and accountants, You will have lawyers, accountants and doctors who understand technology intimately. But more importantly, there is a likelihood that engineers will remain engineers ! ( I spent a week helping out in family courts and I don't like the negativity associated with seeing couples in conflict, I rather code ! )
[[ As a side-note, I have committed to picking up some Python maybe when General Assembly touches down in Singapore because I believe that the legal industry is ripe for disruption and many processes can be converted into software as a service solutions. I am currently struggling with issues like legal Formalities and thinking about how technologies like Bitcoin could play into the next generation of corporate transactions. Imagine a contracts registry like our Land registry, backed by an assurance fund to assist our SMEs ! Very few lawyers think like that ! ]]
Anyway, I was one of those IT guys who decided to stay in IT. After I completed my masters in Finance, I voluntarily stayed in IT because my salary has been increasing quite steadily and I already figured out how to generate another source of income, Sometimes staying put may be the wiser course of action ( preferably made with the assistance of spreadsheets ! ).
The fear of engineers leaving the industry after getting another degree is overrated.
c) Patents as source of passive income.
I learnt this only in Law School because I met a classmate who is a top-flight engineer who has an income stream from his patents.
This idea warrants deeper thought. Passive income from patents is a powerful arsenal in one's portfolio because it is not highly correlated with financial markets. If I could have found a way to unlock my intellectual property from my University days, even a simple monthly cash flow of $500 a month requires a base portfolio size of $75,000 in the markets. ( Top blogger BudgetBabe saves $20,000 a year and she's infamous because of that ! )
Local universities may want actual modules on new product development with a pragmatic focus on IP monetization. If you think about it, this will generate refreshed interest in engineering.
Monetisation should be a core module. Heck, it should have been called a Bachelor in Monetisation.
Imagine a cash flow even before you start work which stacks on top of your salary.
No way a law or medical degree can top that ?
In summary, I think the tide can be turned with the right policies and incentives in place.
Folks who do engineering want a good life. A good life requires money,power and respect. Treating engineers and software developers like digital coolies takes away both money and respect from their lives. These societies will be rewarded with infrastructure failures if this goes unchecked.
Allowing some of the top engineers to become the top earners of society will attract more people to study engineering. Many of these folks may not end up being top earners, but they would at least have the opportunity to do some engineering work and have a middle class lifestyle.
Saturday, August 29, 2015
Tuesday, August 25, 2015
What to do in this market downturn ?
Yesterday, everyone seemed to be having a reaction when the STI started on a free-fall which led it being 4% down.
Some of the folks had a "I told you so" episode, brazenly declaring that they have won because the market bear is upon us which is stupid because a savvy investor knows that bull markets don't last forever.
A least one person I know even went as far to declare that the Chinese Yuan would depreciate 10% and that this downturn was just the beginning. I checked into Yahoo finance, a 10% depreciation would mean that the USDRMB would be at the at the 6.82 territory. We are nowhere near that territory as of the moment so I would believe the markets only when I see it.
I attribute the feeling of triumph to the fact that the person probably has little skin the markets. Even a broken clock is right twice a day.
Some of the other folks are openly panicking, some were sitting on paper losses and they were thinking about the opportunity costs of these losses. I lost about $40k+ over one trading session on Black Monday. That's half my school fees for my entire JD course. Even so, I don't have much to complain about : Buffett and gang probably lost even more. The beauty of investing is not that you have money to make, but that everyone has the opportunity to make losses. Losses means that sometimes, fear will strike the market and the result is a moment of truth when true wealth can be generated by buying bargains and holding them for generations to come.
This article is written for some of calmer folks asked me whether it was time to get back into the markets.
I think these folks are on the right track : Times like these are the best times to get into the markets and start investing.
As to what the market would do next is something which is beyond me. I would advise the reader not to believe anyone who claims to be an expert. For matters involving China the only true experts are those who study the CCP. The periodical of choice is not The Edge or The Business Times. You are best off reading the Economist for hints (I've already combed the most recent copy and got none the wiser).
Here's a strategy which I think is a reasonable one based on the ignorance of all parties including myself :
a) Split your war-chest into many parts.
Since no one knows what will happen next. It would be unwise to invest all you money in one go. The wise would consider the possibility that they are very likely to catch a falling knife if they invest tomorrow. So the prudent thing to do is to buy something with 5% of your war-chest if you make the decision to enter tomorrow.
b) Know the typical duration of recessions.
Several facts would be useful to understand how long a downturn would last. The Great Recession of 2009 lasted 18 months. Other recessions lasted about 8-16 months prior to Great Recession. The duration of economic cycles tends to be getting shorter so it is reasonable to assume that whatever we are experiencing would not last longer than one and a half years.
c) Time your market plays
Once you decide to make a move, starting thinking about what frequency would you inject into the markets. For example, you can split your war-chest into 6 parts and invest tomorrow and then every 3 months thereafter. Somebody else may split the war-chest into 18 parts and invest once a month.
This is the only way to avoid being cut by a falling knife.
d) Invest based on good market fundamentals
I can't recommend which stocks to get into at the moment because if I could, I should be managing a hedge fund and not writing a financial blog.
You may refer to other financial bloggers who are much savvier investors. What I do know is that this strategy is better for fundamental investors.
You need to decide on a theme for your investments. You may determine that you want a strategy to buy blue chips, deep value stocks, or growth stocks. A beginner should buy the STI index if they do not know which stocks to buy.
As for me, I will be bargain hunting high yield counters which give at least 8%.
In summary, at least for dividends investors, this is a great time to buy stocks. I will not be surprised that in the short term, we will experience a nastier downturn but we can collect cash from our investments until the markets recover.
As I have fees to pay in October, I am committing this round of dividends to completing all payments to SMU, thereafter, I will be farming about $2,000- $3,000 into the markets until I start my training contract in 2017.
Some of the folks had a "I told you so" episode, brazenly declaring that they have won because the market bear is upon us which is stupid because a savvy investor knows that bull markets don't last forever.
A least one person I know even went as far to declare that the Chinese Yuan would depreciate 10% and that this downturn was just the beginning. I checked into Yahoo finance, a 10% depreciation would mean that the USDRMB would be at the at the 6.82 territory. We are nowhere near that territory as of the moment so I would believe the markets only when I see it.
I attribute the feeling of triumph to the fact that the person probably has little skin the markets. Even a broken clock is right twice a day.
Some of the other folks are openly panicking, some were sitting on paper losses and they were thinking about the opportunity costs of these losses. I lost about $40k+ over one trading session on Black Monday. That's half my school fees for my entire JD course. Even so, I don't have much to complain about : Buffett and gang probably lost even more. The beauty of investing is not that you have money to make, but that everyone has the opportunity to make losses. Losses means that sometimes, fear will strike the market and the result is a moment of truth when true wealth can be generated by buying bargains and holding them for generations to come.
This article is written for some of calmer folks asked me whether it was time to get back into the markets.
I think these folks are on the right track : Times like these are the best times to get into the markets and start investing.
As to what the market would do next is something which is beyond me. I would advise the reader not to believe anyone who claims to be an expert. For matters involving China the only true experts are those who study the CCP. The periodical of choice is not The Edge or The Business Times. You are best off reading the Economist for hints (I've already combed the most recent copy and got none the wiser).
Here's a strategy which I think is a reasonable one based on the ignorance of all parties including myself :
a) Split your war-chest into many parts.
Since no one knows what will happen next. It would be unwise to invest all you money in one go. The wise would consider the possibility that they are very likely to catch a falling knife if they invest tomorrow. So the prudent thing to do is to buy something with 5% of your war-chest if you make the decision to enter tomorrow.
b) Know the typical duration of recessions.
Several facts would be useful to understand how long a downturn would last. The Great Recession of 2009 lasted 18 months. Other recessions lasted about 8-16 months prior to Great Recession. The duration of economic cycles tends to be getting shorter so it is reasonable to assume that whatever we are experiencing would not last longer than one and a half years.
c) Time your market plays
Once you decide to make a move, starting thinking about what frequency would you inject into the markets. For example, you can split your war-chest into 6 parts and invest tomorrow and then every 3 months thereafter. Somebody else may split the war-chest into 18 parts and invest once a month.
This is the only way to avoid being cut by a falling knife.
d) Invest based on good market fundamentals
I can't recommend which stocks to get into at the moment because if I could, I should be managing a hedge fund and not writing a financial blog.
You may refer to other financial bloggers who are much savvier investors. What I do know is that this strategy is better for fundamental investors.
You need to decide on a theme for your investments. You may determine that you want a strategy to buy blue chips, deep value stocks, or growth stocks. A beginner should buy the STI index if they do not know which stocks to buy.
As for me, I will be bargain hunting high yield counters which give at least 8%.
In summary, at least for dividends investors, this is a great time to buy stocks. I will not be surprised that in the short term, we will experience a nastier downturn but we can collect cash from our investments until the markets recover.
As I have fees to pay in October, I am committing this round of dividends to completing all payments to SMU, thereafter, I will be farming about $2,000- $3,000 into the markets until I start my training contract in 2017.
Sunday, August 23, 2015
Technology disruption, marriage and the New Age bachelor.
I think new technology developments warrant a fresh look into marriage and bachelorhood in Singapore.
It started during the summer holidays when I was asked by my professor what is the most important app which was developed over the past 12 months. My answer was Tinder. I was unable to really come up with a strong argument for the app because I was not a user of the app and had to rely on articles from other folks who could not stop raving about it.
My only argument was that Gen-X guys in general struggled hard to get hitched 10 years ago - I had to learn multiple foreign languages and endure a few rounds of mathcmaking before I met my wife at Japanese school. It was tiring and demoralizing, Nothing beats the disappointing of heading for a matchmaking session then finally seeing the other party (Yes ! I am a visual creature !).
The Millenials have it so easy these days because all they had to do was to swipe to the right.
It wasn't until an article in Vanity Fair which spoke about the massive changes in dating behavior which confirmed my suspicion : Tinder is a revolutionary app which fundamentally alters the way we mate - Companionship as a Service ( CaaS ) or worse, Sexual Gratification as a Service ( SGaaS )
This has serious consequences for all societies.
A very articulate friend of my cousin's offered a much better argument today. In the past, dating was a complex ritual. You had to smile. She had to smile back. Then you need to have courage to ask. Then, she has to assess whether you are an axe murderer before agreeing to hang out together.
To supplement his points, I would add that the old school dating dance was slow and bureaucratic - If you end up meeting a Gen-X female battleaxe who "wants to take turns being the alpha", then maybe you need to crawl back to the pub and start again.
From the lens of the suffering of Gen X, Tinder is revolutionary. The matching was done almost real time. In the world of Tinder, there is no rejection.
I watched my lady cousins install the application just now and, within minutes, they were giggling at various male profiles and talking about how "cannot make it" they are. I can imagine women using Tinder just to make fun of guys but occasionally swiping right when they see a good looking hunk, but the guys will keep swiping just to try their luck on anything which is remotely attractive to them.
More importantly, I think it does not take a genius to figure out that Tinder plus the launch of female libidinal drug Addyi would have a serious impact on marriage and society today.
Imagine this new world where successful bachelors can get ready sexual access by simply swiping right on app. Female libidinal drugs ensure that someone would always be at the right mood. Asset securitization and finance decouples wealth from owning large pieces of land, allowing an single with $300,000 financial independence and absolute freedom to travel the world or play games forever on their PS4.
This new bachelorhood : PS4 + Dividend stocks + Tinder + Addyi will be a grave threat to the institution of marriage. The best guys now have a lot of incentive to take themselves out of the marriage market. Single men will get not just more variety and but also more action than (faithful) married men !
Who will get married then ? Policy makers will contend with a lower replacement rate, maybe reaching numbers like 0.8.
I foresee several drastic policies which can possibly ameliorate this situation which we should start debating about right now :
a) The first idea is that the government consider drastically strengthening the finance of families which consist of a couple and at least 2 children. One possibility is to allow them to purchase another flat from HDB for the purposes of renting out to foreigners.
b) The second idea from a letter to the Economist is to supplement annuity payments like CPF Life of the elderly with the income taxes generated by their working children. This is a truly fair system which rewards elderly parents for the hard work done turning their children into productive citizens.
Some advice for the younger readers :
a) If you are female, Tinder does not help you find men who are willing to commit to a long term relationship. You need to know what you want out of life and maybe decide to skip out on Tinder entirely.
b) If you are male : What the hell are you waiting for ? You can always shut it off when you ever decide to settle down.
It started during the summer holidays when I was asked by my professor what is the most important app which was developed over the past 12 months. My answer was Tinder. I was unable to really come up with a strong argument for the app because I was not a user of the app and had to rely on articles from other folks who could not stop raving about it.
My only argument was that Gen-X guys in general struggled hard to get hitched 10 years ago - I had to learn multiple foreign languages and endure a few rounds of mathcmaking before I met my wife at Japanese school. It was tiring and demoralizing, Nothing beats the disappointing of heading for a matchmaking session then finally seeing the other party (Yes ! I am a visual creature !).
The Millenials have it so easy these days because all they had to do was to swipe to the right.
It wasn't until an article in Vanity Fair which spoke about the massive changes in dating behavior which confirmed my suspicion : Tinder is a revolutionary app which fundamentally alters the way we mate - Companionship as a Service ( CaaS ) or worse, Sexual Gratification as a Service ( SGaaS )
This has serious consequences for all societies.
A very articulate friend of my cousin's offered a much better argument today. In the past, dating was a complex ritual. You had to smile. She had to smile back. Then you need to have courage to ask. Then, she has to assess whether you are an axe murderer before agreeing to hang out together.
To supplement his points, I would add that the old school dating dance was slow and bureaucratic - If you end up meeting a Gen-X female battleaxe who "wants to take turns being the alpha", then maybe you need to crawl back to the pub and start again.
From the lens of the suffering of Gen X, Tinder is revolutionary. The matching was done almost real time. In the world of Tinder, there is no rejection.
I watched my lady cousins install the application just now and, within minutes, they were giggling at various male profiles and talking about how "cannot make it" they are. I can imagine women using Tinder just to make fun of guys but occasionally swiping right when they see a good looking hunk, but the guys will keep swiping just to try their luck on anything which is remotely attractive to them.
More importantly, I think it does not take a genius to figure out that Tinder plus the launch of female libidinal drug Addyi would have a serious impact on marriage and society today.
Imagine this new world where successful bachelors can get ready sexual access by simply swiping right on app. Female libidinal drugs ensure that someone would always be at the right mood. Asset securitization and finance decouples wealth from owning large pieces of land, allowing an single with $300,000 financial independence and absolute freedom to travel the world or play games forever on their PS4.
This new bachelorhood : PS4 + Dividend stocks + Tinder + Addyi will be a grave threat to the institution of marriage. The best guys now have a lot of incentive to take themselves out of the marriage market. Single men will get not just more variety and but also more action than (faithful) married men !
Who will get married then ? Policy makers will contend with a lower replacement rate, maybe reaching numbers like 0.8.
I foresee several drastic policies which can possibly ameliorate this situation which we should start debating about right now :
a) The first idea is that the government consider drastically strengthening the finance of families which consist of a couple and at least 2 children. One possibility is to allow them to purchase another flat from HDB for the purposes of renting out to foreigners.
b) The second idea from a letter to the Economist is to supplement annuity payments like CPF Life of the elderly with the income taxes generated by their working children. This is a truly fair system which rewards elderly parents for the hard work done turning their children into productive citizens.
Some advice for the younger readers :
a) If you are female, Tinder does not help you find men who are willing to commit to a long term relationship. You need to know what you want out of life and maybe decide to skip out on Tinder entirely.
b) If you are male : What the hell are you waiting for ? You can always shut it off when you ever decide to settle down.
Saturday, August 22, 2015
Should you panic with the STI below 3000 ?
A lot of folks are talking about the crash of the STI index and started contacting me out of the blue about what I plan to do so I thought I'd write a short post on this.
First off, local markets are down. At this point of time, most investors would have a suffered massive losses. I lost the school fees of my entire JD degree over the past week. This means that I would have been better off had I sold my entire stake before going into Law School and just ate my cash holdings.
But am I worried ? Not at all.
Here are the reasons :
a) Dividend holders are by nature already defensive investors.
Will I lose more money over the next few month ?. Highly likely.
But if I sell, I lose access to my quarterly cash flow from my holdings. I don't like to eat my capital so I will stick to eating my dividends for now. While REITs and Business Trusts are taking a slightly bigger beating than the rest of the market, the overall beta of my portfolio is historically low so I expect to lose less than someone who holds the STI ETF.
b) The China situation may be over-hyped.
The biggest bugbear is China. Greece is inconsequential.
If you read the Economist, The purpose China's devaluation is to become a reserve currency of the IMF. China risks the ire of the US and Europe if devaluation was made to make their exports more competitive and this would just invite retaliation. I think the technocrats in the CCP would be smart enough to restrain themselves.
c) US will raise interest rates before year end.
The next bugbear are interest rates. While rates are likely to be up, we are looking at one rate change in 2015 so far. This has been priced into the markets ages ago.
I fail to see why investors are worried.
c) Markets really look good at the moment.
Yes, as markets are turning south, I'm not seeing a significant change in the dividends I collect. If anything, yields are spiking as we speak and I am looking at a big payout before end-September. My only disappointment is that I am not working right now as I would have been able to add quite a significant stake at 8.5-13% yields into my portfolio to make my cash flow much bigger in the future,
So instead, I 've chosen to ignore the markets and focus on my lawyer training. Startig next week, I will become a facilitator at the Family Courts to assist folks in getting a divorce. After October when my final fee installment has been paid, I might be able to push 2-4k of my dividends into the market every month so I hope that these bargains would still be around then.
But what I learnt in the 2008/2009 crisis is this : You don't succeed in becoming rich by investing during good times. You get rich when you are in the markets when times are bad. The only way to do that is to keep each positions small, diversify and refuse to use leverage.
Our markets have been expensive as of late, I remember a year ago, people will look shocked when they hear that I only buy stock which yield at least 8%. I get challenged a lot about my understanding of the markets when people hear 8%.
I was using the SMU Bloomberg Terminals and am glad to say that a decent portfolio of sustainable yields of 6% - 10% is now possible right now. I tested these portfolios over 10 year and they return 15+% with a semi-variance of around 12%.
( I even replicated the filters in the HK market and got almost similar results. )
These are fantastic numbers by my book.
First off, local markets are down. At this point of time, most investors would have a suffered massive losses. I lost the school fees of my entire JD degree over the past week. This means that I would have been better off had I sold my entire stake before going into Law School and just ate my cash holdings.
But am I worried ? Not at all.
Here are the reasons :
a) Dividend holders are by nature already defensive investors.
Will I lose more money over the next few month ?. Highly likely.
But if I sell, I lose access to my quarterly cash flow from my holdings. I don't like to eat my capital so I will stick to eating my dividends for now. While REITs and Business Trusts are taking a slightly bigger beating than the rest of the market, the overall beta of my portfolio is historically low so I expect to lose less than someone who holds the STI ETF.
b) The China situation may be over-hyped.
The biggest bugbear is China. Greece is inconsequential.
If you read the Economist, The purpose China's devaluation is to become a reserve currency of the IMF. China risks the ire of the US and Europe if devaluation was made to make their exports more competitive and this would just invite retaliation. I think the technocrats in the CCP would be smart enough to restrain themselves.
c) US will raise interest rates before year end.
The next bugbear are interest rates. While rates are likely to be up, we are looking at one rate change in 2015 so far. This has been priced into the markets ages ago.
I fail to see why investors are worried.
c) Markets really look good at the moment.
Yes, as markets are turning south, I'm not seeing a significant change in the dividends I collect. If anything, yields are spiking as we speak and I am looking at a big payout before end-September. My only disappointment is that I am not working right now as I would have been able to add quite a significant stake at 8.5-13% yields into my portfolio to make my cash flow much bigger in the future,
So instead, I 've chosen to ignore the markets and focus on my lawyer training. Startig next week, I will become a facilitator at the Family Courts to assist folks in getting a divorce. After October when my final fee installment has been paid, I might be able to push 2-4k of my dividends into the market every month so I hope that these bargains would still be around then.
But what I learnt in the 2008/2009 crisis is this : You don't succeed in becoming rich by investing during good times. You get rich when you are in the markets when times are bad. The only way to do that is to keep each positions small, diversify and refuse to use leverage.
Our markets have been expensive as of late, I remember a year ago, people will look shocked when they hear that I only buy stock which yield at least 8%. I get challenged a lot about my understanding of the markets when people hear 8%.
I was using the SMU Bloomberg Terminals and am glad to say that a decent portfolio of sustainable yields of 6% - 10% is now possible right now. I tested these portfolios over 10 year and they return 15+% with a semi-variance of around 12%.
( I even replicated the filters in the HK market and got almost similar results. )
These are fantastic numbers by my book.
Monday, August 17, 2015
Recording of my my interview on Kiss 92.
As a League of Extraordinary Financial Bloggers, the community have really come pretty far and we are now getting some informal support for each other to promote our own independent form of financial planning for the masses who cannot bring themselves to trust commissioned agents.
This gig would not have been possible if not for cheerful.egg's Lionel's introduction. Lionel is also the man of the week and has appeared in last weekend's Me and My Money.
Richard Ng of Invest Openly has managed to create a recording on my interview on Kiss 92 FM.
Clearly this is not the work of one individual and there is a very supportive community behind this event.
Try this link if the media player below does not work.
This gig would not have been possible if not for cheerful.egg's Lionel's introduction. Lionel is also the man of the week and has appeared in last weekend's Me and My Money.
Richard Ng of Invest Openly has managed to create a recording on my interview on Kiss 92 FM.
Clearly this is not the work of one individual and there is a very supportive community behind this event.
Try this link if the media player below does not work.
Thursday, August 13, 2015
Raffles is not a Bumiputra institution !
Only three courses have ever rejected me in my life.
The first institution which I applied to which dinged me was Massachusetts Institute of Technology. But who am I kidding to think that I even stood a chance. I thought a rejection letter from MIT was actually quite cool. At least they bothered to send me one.
The second program to reject me was NUS' Diploma Program in Arbitration by their faculty of Law when I attempted to sneak myself into its first intake because I thought that an IT guy who can arbitrate outsourcing disputes might put me in blue ocean territory. Turns out that the first intake for arbitrators is actually red ocean territory. After the rejection letter came, I figured out that getting into a second or subsequent intake would not be worth my time. Pioneer or bust.
The most painful rejection I ever experienced, which many Singaporeans can relate to, was a rejection by RI. I was aged 12. I got 255 for my PSLE and my neighbour who got 259 claimed that a donation allowed them to get in (this was 1986). I cried for days because my parents, who hardly understood the education system, knew only RI as one good school - every other school is a shit school.
So you can imagine that I may have a chip on my shoulder with regards to elite education in Singapore.
But as it turns out I don't.
My friends from RI has never made me feel excluded and are hardly elitist. I've always been assessed by the strength and quality of my ideas. And they make great intellectual conversation which I struggle to find anywhere else. So as I get to know more people, I actually want my RI friends to stay the same.
So the latest flavour of the day is Russell Tan Wah Jian who wrote a hilarious essay to defend the status quo of elite education. It was so entertaining that the New Nation, a troll website, was able to reproduce it without modification.
While I think that crowds are rightfully mad as Russell seems to think that Raffles has a monopoly over the future leadership in Singapore. But when I think about TT Durai, Kong Hee and Rev Ming Yi and I understand why Russell Tan deserves a cock punch from the rest of the Internet.
But the idea of keeping an institution an elite one based on academic intelligence is something which would be good for Singapore in the future. Having many smart people at one location would be a great place for educators to experiment with new and potentially game-changing ideas and benefit government schools later. The downside of risk taking in teaching is that smart folks can recover from bad initiatives. RI kids don't stay in RI forever, eventually, some come to NUS and face us Goblins champions in the battle of ideas and they don't necessary win all the time.
So I would actually want to reinforce Russell's main argument but in a much more palatable way.
I think that the root cause of the issue concerns the, Chan Poh Meng, the current principal who labelled his institution a 'middle class' institution. Mr Chan has promoted the idea that the rich can afford tuition and give their children a huge advantage during the PSLEs. As a consequence of that RI has become the stomping ground of the well heeled.
That is an unfair characterisation of students in elite institutions.
Rich kids may actually be smart kids.
Social scientists are studying a social phenomenon called assortative mating has occured in most advanced societies. When scholars marry other scholars, their children would generally have higher intelligence than average kids like me. Do this over a generation, and it is actually possible to show in studies that many smart kids may actually come from rich families. This is a common social phenomenon faced by all advanced societies. Take tuition out of the equation, and these kids would still excel, poorer kids may flounder.
The question then remains is what to do with rich but smart kids.
If we emphasise equality in our society, then there is the fear that affirmative action would take place to allow kids from poorer backgrounds to get into an elite school with lower grades.
This is a horrible idea. You are in effect, handicapping kids for being rich.
I don't think that is the way to go.
Raffles will become similar to Bumiputra institutions in Malaysia. Similar to graduates of Malaysian Universities, employers will know that some students are of the affirmative action variety and would moderate their decision making on hiring accordingly. The Raffles brand identity would be irrevocably destroyed.
( And the boys at Barker road will be laughing all the way to Goldman Sachs from their Maseratis. )
Russell Tan is, therefore, not completely wrong.
We should never sacrifice equity on the altar of equality. That is a foundation of the meritocracy that we are in.
Chan Poh Meng's concern should be reframed as follows :
a) A good school like RI should not accept a student who can, simply by being rich, hire scores of tutors to help them get into the school of their choice.
b) A student should be accepted for being smart, regardless of how rich he can be.
c) However, a smart student should not be denied a seat by virtue of being rich.
So I offer one possible solution :
PSLE is like hacked software. Tutors have found all sorts of ways to game it and can teach it for a fee. It is high time that all the top secondary schools create their own entrance examinations.
These examinations should be administered after the PSLE and be drawn from some PSLE material and some material from current affairs.
Students who score a high but reasonable PSLE score like 260 can attend a bootcamp and then take the entrance exam to determine whether he can get a seat in a top secondary school. He has one try for one school of his choice.
Different top schools administer different entrance exams with a different emphasis. Students cannot prepare for these exams.
Hwa Chong can administer a Chinese Physics paper. An RI entrance exam may expect the kids to take a bootcamp in basic chemistry in one year, and have them create a fantasy language from scratch in another year, extract logical fallacies from a blog article in a third year or write an app in a fourth year.
Exams are designed such that they are one-shot and cannot be replicated or taught by the tuition industry.
All exams test the student in applying knowledge to practical issues.
At the end of the day, there are conservatives like myself who are concerned about recent left-winged initiatives by the government.
Chan Poh Meng is just a phenomenon of the emerging political left from the PAP which has, of late, trying to enact policies which tinker with our concept of meritocracy in a way which may risk Singapore's competitiveness.
The first institution which I applied to which dinged me was Massachusetts Institute of Technology. But who am I kidding to think that I even stood a chance. I thought a rejection letter from MIT was actually quite cool. At least they bothered to send me one.
The second program to reject me was NUS' Diploma Program in Arbitration by their faculty of Law when I attempted to sneak myself into its first intake because I thought that an IT guy who can arbitrate outsourcing disputes might put me in blue ocean territory. Turns out that the first intake for arbitrators is actually red ocean territory. After the rejection letter came, I figured out that getting into a second or subsequent intake would not be worth my time. Pioneer or bust.
The most painful rejection I ever experienced, which many Singaporeans can relate to, was a rejection by RI. I was aged 12. I got 255 for my PSLE and my neighbour who got 259 claimed that a donation allowed them to get in (this was 1986). I cried for days because my parents, who hardly understood the education system, knew only RI as one good school - every other school is a shit school.
So you can imagine that I may have a chip on my shoulder with regards to elite education in Singapore.
But as it turns out I don't.
My friends from RI has never made me feel excluded and are hardly elitist. I've always been assessed by the strength and quality of my ideas. And they make great intellectual conversation which I struggle to find anywhere else. So as I get to know more people, I actually want my RI friends to stay the same.
So the latest flavour of the day is Russell Tan Wah Jian who wrote a hilarious essay to defend the status quo of elite education. It was so entertaining that the New Nation, a troll website, was able to reproduce it without modification.
While I think that crowds are rightfully mad as Russell seems to think that Raffles has a monopoly over the future leadership in Singapore. But when I think about TT Durai, Kong Hee and Rev Ming Yi and I understand why Russell Tan deserves a cock punch from the rest of the Internet.
But the idea of keeping an institution an elite one based on academic intelligence is something which would be good for Singapore in the future. Having many smart people at one location would be a great place for educators to experiment with new and potentially game-changing ideas and benefit government schools later. The downside of risk taking in teaching is that smart folks can recover from bad initiatives. RI kids don't stay in RI forever, eventually, some come to NUS and face us Goblins champions in the battle of ideas and they don't necessary win all the time.
So I would actually want to reinforce Russell's main argument but in a much more palatable way.
I think that the root cause of the issue concerns the, Chan Poh Meng, the current principal who labelled his institution a 'middle class' institution. Mr Chan has promoted the idea that the rich can afford tuition and give their children a huge advantage during the PSLEs. As a consequence of that RI has become the stomping ground of the well heeled.
That is an unfair characterisation of students in elite institutions.
Rich kids may actually be smart kids.
Social scientists are studying a social phenomenon called assortative mating has occured in most advanced societies. When scholars marry other scholars, their children would generally have higher intelligence than average kids like me. Do this over a generation, and it is actually possible to show in studies that many smart kids may actually come from rich families. This is a common social phenomenon faced by all advanced societies. Take tuition out of the equation, and these kids would still excel, poorer kids may flounder.
The question then remains is what to do with rich but smart kids.
If we emphasise equality in our society, then there is the fear that affirmative action would take place to allow kids from poorer backgrounds to get into an elite school with lower grades.
This is a horrible idea. You are in effect, handicapping kids for being rich.
I don't think that is the way to go.
Raffles will become similar to Bumiputra institutions in Malaysia. Similar to graduates of Malaysian Universities, employers will know that some students are of the affirmative action variety and would moderate their decision making on hiring accordingly. The Raffles brand identity would be irrevocably destroyed.
( And the boys at Barker road will be laughing all the way to Goldman Sachs from their Maseratis. )
Russell Tan is, therefore, not completely wrong.
We should never sacrifice equity on the altar of equality. That is a foundation of the meritocracy that we are in.
Chan Poh Meng's concern should be reframed as follows :
a) A good school like RI should not accept a student who can, simply by being rich, hire scores of tutors to help them get into the school of their choice.
b) A student should be accepted for being smart, regardless of how rich he can be.
c) However, a smart student should not be denied a seat by virtue of being rich.
So I offer one possible solution :
PSLE is like hacked software. Tutors have found all sorts of ways to game it and can teach it for a fee. It is high time that all the top secondary schools create their own entrance examinations.
These examinations should be administered after the PSLE and be drawn from some PSLE material and some material from current affairs.
Students who score a high but reasonable PSLE score like 260 can attend a bootcamp and then take the entrance exam to determine whether he can get a seat in a top secondary school. He has one try for one school of his choice.
Different top schools administer different entrance exams with a different emphasis. Students cannot prepare for these exams.
Hwa Chong can administer a Chinese Physics paper. An RI entrance exam may expect the kids to take a bootcamp in basic chemistry in one year, and have them create a fantasy language from scratch in another year, extract logical fallacies from a blog article in a third year or write an app in a fourth year.
Exams are designed such that they are one-shot and cannot be replicated or taught by the tuition industry.
All exams test the student in applying knowledge to practical issues.
At the end of the day, there are conservatives like myself who are concerned about recent left-winged initiatives by the government.
Chan Poh Meng is just a phenomenon of the emerging political left from the PAP which has, of late, trying to enact policies which tinker with our concept of meritocracy in a way which may risk Singapore's competitiveness.
Sunday, August 09, 2015
What is your money personality ?
Of late, some blogs have written some articles on a Money Personalities.
I thought I wanted to throw my hat into the ring and highlight some interesting findings from psychological research. When social scientists conduct surveys, statistical models are used to cluster answers together so that we will have a better idea of what kind of money personalities exist. The downside is that you will not have very comprehensive personality frameworks like the MBTI or DISC models.
This is based on a paper called The Love of Money, Satisfaction and the Protestant Work Ethic : Money Profiles Among University Professors in the USA and Spain by Roberto Luna-Arocas and Thomas Tang. Even though this survey was done on academics, I think it defines 4 money archetypes quite well and I expect future studies to result in similar findings.
The four personalities, in the words of the original paper, are :
a) Achieving Money Worshipper
Most financial bloggers fall into this category and it is less negative than it actually sounds.
Achieving Money Worshippers generally consider money as a a good thing. They are motivated by money and see it as a sign of success. At work, they value equity over equality and believe in merit-based pay. They also budget their money carefully.
Achieving Money Worshippers have generally quite high life satisfaction, feel a strong sense of control over their destinies and have a good work ethic. They tend to be older and at the peak of their earning potential.
b) Careless Money Admirer
The careless money admirer is an achieving money worshipper who does not have the ability to budget their money. This leads to a dire outcome. Careless money admirer's have a love-hate relationship with money and see money as moderately evil but have no qualms stretching the boundaries of ethical behaviour at work. They also tend to be younger.
Careless Money Admirer's love money but are ultimately controlled by their lack of it. They are very prone to corruption and have the lowest life satisfaction.
c) Apathetic Money Manager
A number of readers may want to aspire to be an Apathetic money manager. Apathetic money see money as a good thing and budget themselves, but generally do not see money as a sign of success and are not motivated by earning money at all. At work Apathetic Money Managers still lean towards merit-base pay.
Apathetic Money Managers have the highest life satisfaction among the four categories and have a deep sense of control over their lives.
d) Money Repellent Individual
I doubt that a Money Repellent Individual would be reading this blog. These individuals consider money evil, are not motivated to earn it and do not see it as a form of success. At work, they are typically freelancers and are attracted to jobs which have a fixed and equal pay for everyone.
In a competitive society like Singapore, MRIs may be despised as underachieving losers. The lack of interest in money results in a life of stress and MRIs have a low satisfaction as a result of this.
The study on these four personality clusters sheds some light on the notion of life satisfaction and personal happiness.
Regardless of what your current personality or view on money is, you may become more satisfied with your lives when you :
I thought I wanted to throw my hat into the ring and highlight some interesting findings from psychological research. When social scientists conduct surveys, statistical models are used to cluster answers together so that we will have a better idea of what kind of money personalities exist. The downside is that you will not have very comprehensive personality frameworks like the MBTI or DISC models.
This is based on a paper called The Love of Money, Satisfaction and the Protestant Work Ethic : Money Profiles Among University Professors in the USA and Spain by Roberto Luna-Arocas and Thomas Tang. Even though this survey was done on academics, I think it defines 4 money archetypes quite well and I expect future studies to result in similar findings.
The four personalities, in the words of the original paper, are :
a) Achieving Money Worshipper
Most financial bloggers fall into this category and it is less negative than it actually sounds.
Achieving Money Worshippers generally consider money as a a good thing. They are motivated by money and see it as a sign of success. At work, they value equity over equality and believe in merit-based pay. They also budget their money carefully.
Achieving Money Worshippers have generally quite high life satisfaction, feel a strong sense of control over their destinies and have a good work ethic. They tend to be older and at the peak of their earning potential.
b) Careless Money Admirer
The careless money admirer is an achieving money worshipper who does not have the ability to budget their money. This leads to a dire outcome. Careless money admirer's have a love-hate relationship with money and see money as moderately evil but have no qualms stretching the boundaries of ethical behaviour at work. They also tend to be younger.
Careless Money Admirer's love money but are ultimately controlled by their lack of it. They are very prone to corruption and have the lowest life satisfaction.
c) Apathetic Money Manager
A number of readers may want to aspire to be an Apathetic money manager. Apathetic money see money as a good thing and budget themselves, but generally do not see money as a sign of success and are not motivated by earning money at all. At work Apathetic Money Managers still lean towards merit-base pay.
Apathetic Money Managers have the highest life satisfaction among the four categories and have a deep sense of control over their lives.
d) Money Repellent Individual
I doubt that a Money Repellent Individual would be reading this blog. These individuals consider money evil, are not motivated to earn it and do not see it as a form of success. At work, they are typically freelancers and are attracted to jobs which have a fixed and equal pay for everyone.
In a competitive society like Singapore, MRIs may be despised as underachieving losers. The lack of interest in money results in a life of stress and MRIs have a low satisfaction as a result of this.
The study on these four personality clusters sheds some light on the notion of life satisfaction and personal happiness.
Regardless of what your current personality or view on money is, you may become more satisfied with your lives when you :
- Make peace with money and start seeing it as a tool, and not as something inherently evil. Christians need to be reminded that the actual phrase from the Bible is "For the love of money is a root of all kinds of evil." Timothy 8:10.
- You need to budget your spending. Being in control gives you more life satisfaction and you need not live in fear of what your credit card statement will say at the end of the month.
Wongamania - A new offering on my retail page.
Careful observers would have noticed that there is a new product on my retail page.
Wongamania
It's not easy to design and market a game. I tried this myself and I still have a role-playing game on sale on Amazon. Achieving a large print-run can cost tens of thousands of dollars even with the support from government agencies. Being in the gaming community, I know a friends who tried with different degrees of personal success.
Wongamania, a brainchild of Xeo Lye whose blog can be found here, is an investment game where the aim is to achieve financial independence by accumulating enough money to buy a series of trust funds, all this while you have to fend off attempts by other players to play cards to prevent this from happening.
This game is entertaining and informative, but more importantly, it is an effort from a Singaporean who tried to launch a game into the markets.
What I did notice about the game is that the artwork is also particularly evocative to little kids. I have many games placed on my shelves but my daughter would always pull out this game because the art work appeals to little children.
( Why does my daughter not pull out Squad Leader or Car Wars instead ? A gaming dad might ask. )
Wongamania is definitely a good way to teach kids about the importance of planning for their financial futures and balances the priorities of entertainment and education well.
A fair and balanced review which highlights the strengths and weaknesses of the game along with an explanation of game mechanics can be found here by famous games reviewer Tom Vasel. While the review has both positive and negative elements, I consider it quite a milestone for a Singaporean game to be reviewed by Dice Tower.
Wongamania
Wongamania, a brainchild of Xeo Lye whose blog can be found here, is an investment game where the aim is to achieve financial independence by accumulating enough money to buy a series of trust funds, all this while you have to fend off attempts by other players to play cards to prevent this from happening.
This game is entertaining and informative, but more importantly, it is an effort from a Singaporean who tried to launch a game into the markets.
What I did notice about the game is that the artwork is also particularly evocative to little kids. I have many games placed on my shelves but my daughter would always pull out this game because the art work appeals to little children.
( Why does my daughter not pull out Squad Leader or Car Wars instead ? A gaming dad might ask. )
Wongamania is definitely a good way to teach kids about the importance of planning for their financial futures and balances the priorities of entertainment and education well.
A fair and balanced review which highlights the strengths and weaknesses of the game along with an explanation of game mechanics can be found here by famous games reviewer Tom Vasel. While the review has both positive and negative elements, I consider it quite a milestone for a Singaporean game to be reviewed by Dice Tower.
Wednesday, August 05, 2015
Interview at Kiss 92 FM - Talk on Pocket Money.
All,
My interview with Kiss 92 FM was quite a blast this morning.
I was asked to talk about pocket money and parenting.
Some readers may be directed to this blog from the Kiss 92 FM Facebook page so I am sharing my research notes for those who want to get more information on what was shared today.
The only question I was not directly prepared for is whether parents should "bribe" their kids to do well in exams. My answer is that external rewards like exam bribes drive out the intrinsic motivation to be curious about the world around us so it not be the best way to motivate a child.
My interview with Kiss 92 FM was quite a blast this morning.
I was asked to talk about pocket money and parenting.
Some readers may be directed to this blog from the Kiss 92 FM Facebook page so I am sharing my research notes for those who want to get more information on what was shared today.
The only question I was not directly prepared for is whether parents should "bribe" their kids to do well in exams. My answer is that external rewards like exam bribes drive out the intrinsic motivation to be curious about the world around us so it not be the best way to motivate a child.
1. How much money is enough for primary school kids?
I took a study by Birdseye/Walls in the UK in 2000, performed currency conversion into SGD and adjusted for 4% inflation.
| Age | GBP | SGD | Inflation adjustment |
5-7 |
3.12 |
$6.71 |
$12.08 |
| 8-10 | 4.04 | $8.69 | $15.64 |
| 11-13 | 6.27 | $13.48 | $24.28 |
| 14-16 | 12.10 | $26.02 | $46.85 |
So the general advice is to give around $2 for kids in primary 1 and steadily increase this to about $5 at primary 6.
2. Is it better to give kids a monthly or daily allowance? Why?
A study conducted in 1991 (Abramovich) tested children on how familiar they are with the prices of common goods. Students who had an allowance scored higher in this experiment. This shows a monthly allowance facilitates monetary competence and is thus preferred as kids learn to plan ahead and save if they want something special like a PS4 console.
3. Should we give our kids a little less or a little more for their allowance? Will this help them to learn about savings better?
The advice from financial literature is always to give less money and more quality time.
However, money plays a big role in economic socialisation and kids as young as primary 2 understand that money comes from hard work. So parents should give more to cultivate savings as early as primary school. Opening a shared bank account can be done around that time.
Interestingly kids in Hong Kong understood how a bank makes profits at 10 which is two years earlier than kids from New Zealand.
4. Should we still be giving money to our kids who are already in Polytechnic?
Based on some infographics on the web, a polytechnic student spends 25 hours on lectures, tutorials and labs a week. This is 5 hours a day on average. Assuming that the student needs about half that time to revise at home, that would be about 7-8 hours a day making part time work not too feasible.
Parents should ideally maintain some financial support with around $250 to $350 a month.
( JC students spend a lot more time studying, so its best that they concentrate on their exams so more support is needed but for a shorter time of 2 years. )
Tuesday, August 04, 2015
Short stint with Kiss 92 FM tomorrow at 8am.
Tomorrow at 8am, I should be on Kiss 92 FM.
I will be sharing my opinions on pocket money and children.
After the session tomorrow, I will be sharing my research and materials on this blog.
I will be sharing my opinions on pocket money and children.
After the session tomorrow, I will be sharing my research and materials on this blog.
Friday, July 31, 2015
Hard truths about entrepreneurship !
A careful reader of my books will realise that I get very self-conscious when writing about entrepreneurship and starting businesses. The reason is obvious - since I do not have start-up experience, I feel unqualified to advice business people.
My confidence has grown of late. I dare say that if I every publish a fourth book, I should be able to speak quite authoritatively about running businesses. Law school has made be used to the idea of reading research journals and my previous engineering and finance studies has always allowed me to be very comfortable dealing with statistics.
I want to follow up with my previous article on entrepreneurship to dispel a lot of folk wisdom which was thrown my way when the last article on entrepreneurship was published. My materials are drawn from a working paper from the National Bureau of Economic Research by Ross Levine and Yona Rubinstein entitled Smart and Illicit : Who becomes an Entrepreneur and do they earn more ?
Here are some bitter truths :
a) Before we even start, what kind of entrepreneurship are we really talking about ?
There are actually two kinds of entrepreneurs. Entrepreneurs who incorporate private limited companies and limited liability partnerships (LLPs) are very different from entrepreneurs who run sole proprietorships and partnerships. Let's call the former type A and the latter, type B entrepreneurs.
Type A and type B entrepreneurs have very different income characteristics and tap into different skills when conducting every day businesses so they should not be discussed the same way.
The government is clearly trying to get more young people to become type A entrepreneurs because only type A's were found to be Schumpeterian in character - they can disrupt and overturn economies, make millions for investors and can potentially create thousands of jobs in the future.
b) Type A entrepreneurs have strong analytical and knowledge-based skills.
The kind of entrepreneurs behind the Facebooks and Googles are generally geeks who also can lead. They are streetwise intellectuals, not the Boh Tak Cheks that the obsolete baby boomer uncles admire.
Type A entrepreneur's primary skill set involved non-routine analytical skills and non-routine direction, control and planning skills. While these skills are non-routine, they require a certain amount of book smarts and can be cultivated in a strong liberal arts program - being street-wise is important but no longer enough. A higher-order intelligence is required such that a person who drops of of secondary school is unlikely to have (but a Harvard dropout would).
Type B entrepreneurs mainly employ non-routine manual work in their daily lives. The ability to hack and rig equipment, make minor repairs and drive trucks is more important for Type B businesses.
c) Type A entrepreneurs are way ahead of Type B when it comes to financial remuneration.
Do not read further if you have a weak heart.
Type As make a lot more money per hour than Type Bs.
Type A's typically will be paid more when they return to employee status. Type B's typically take a pay-cut to jump into business and generally earn more by working longer hours.
I see this finding as particularly important for policy makers, if Type As can get a higher pay when they exit from running businesses, more undergrads can be encouraged to build start-ups as there exists a viable exit strategy when they get older and wish to start a family.
Type A entrepreneurs even make more than their life-long employed peers when they go back to salaried sector !
( Which is great news for the wonderful folks of Block 71 ! )
( Which is great news for the wonderful folks of Block 71 ! )
d) Type As are predominantly white males who have privileged backgrounds.
While this does not directly apply to Singapore. I have said before that only privileged families can sustain this form of risk taking from their children.
Particularly interesting is that this idea is what you readers resist the most.
Singaporeans have a romantic notion that the scoundrel who drops out and starts a businesses is the ultimate winner in life, that might work in the 80s but not anymore. Baby boomers talk about the lack of hunger in generation Y when brow beating them even though they know that Gen Y is more highly educated and tech-savvy.
Some scoundrels do win, but most scoundrels don't.
Innovation and creativity requires a few more years of schooling. In the future, advanced statistics will be employed in basic marketing and citizens are getting more educated and skeptical. A smooth tongue and confident swagger will no longer be enough to start a business empire. People will google to compare prices.
Innovation and creativity requires a few more years of schooling. In the future, advanced statistics will be employed in basic marketing and citizens are getting more educated and skeptical. A smooth tongue and confident swagger will no longer be enough to start a business empire. People will google to compare prices.
There is also less arbitrage opportunities in real estate so don't expect to the next Li Kashing by buying property.
e) Successful Type As entrepreneurs are 'illicit' !
It is not "hunger" but "naughtiness" that makes a good entrepreneur.
Not only should Type A's be smart and come from privileged backgrounds, they need to have this attitude that rules simply do not apply to them. Many successful businessmen used marijuana when they were younger. Facebook was first written as an app to rate women on campus.
Thus, a good entrepreneur will know that he is suited to run a business. He has fairly good results in school but should be naughty and be quite a handful in class. Sometimes this can even lead to criminal behaviour.
In summary, research clearly shows that the folk wisdom from our well-meaning Boomer generation uncles on successful businessmen is wrong. There is no evidence that hunger drives innovation, otherwise Silicon Valley would be in Africa.
The government needs to target that special category of Singaporeans who come from wealthy families who are smart but have demonstrated a history of illicit behaviour to build the Facebooks and Googles of tomorrow.
This reinforces my proposal of locating an Entrepreneurship centre at Barker Road.
Tuesday, July 28, 2015
Treat hawker centres as incubators, not soup kitchens !
I had a reputation in the past for being hyper-frugal when I was single. When me and my missus had a date 9 years ago was to look for foodcourt food which comes in huge portions and split a portion between the two of us. Shami Banana Leaf Restaurant at Northpoint in the good old days sells a $7 dollar chicken briyani which made an adequate dinner for a dating couple. In one move, we cut dating costs and had great food along the way.
So I was mildly irritated by the recent exchange between a new age hawker and Vivian Balakrishnan even though I knew that both come from the position that they want to do good for Singapore.
Particularly upsetting to me is that the authorities was willing to go to extremes to set pricing caps on food. The disagreement was over whether fishball noodles even made sense if you cap its cost at $2.70.
Generally speaking, intervention from the government will only do ill for everyone else because business people know how to price their products to maximise revenues. A business can compromise on hygiene, the amount of fish meat, or the portions to create a negative experience for anyone who eat in hawker centres. Poorer folks who live on $2.70 fishball noodles may even develop cancer at a later stage in life because the government cannot regulate everything.
[ To understand why I hate the price cap, think about how much the government hates minimum wages ]
Even worse, where is the freedom for hawkers to innovate ? Do we categorise a plate of pasta accompanied by a medallion of fish in balsamic vinegar as a fishball noodle as well and cap the offering to $2.70 ? Should we allow civil servants to even create these food taxonomies ?
A better model would be to charge rent as a proportion of hawker sales and reduce the marginal rent as sales increase. eg. First $5,000 revenues results in 20% rental fee, subsequent sales is charged 10% rent. Every year, managers can decide not to renew the stalls with redundant food categories which underperform to maximise food diversity. This aligns the taxpayer/government with the hawker and gives the hawker the ability to manage determine the product and pricing to maximise revenues. If consumers overpay, there is certainty that a fair amount will always be returned to tax-payers.
[ As an added point, having point of sale terminals an allowing EZ-Link cards can give data scientists some insight into food habits of Singaporeans. If you want a Smart City, start here. ]
I think NTUC Foodfare is pandering to voter populism when Singaporeans actually just want a better way to preserve our food culture. The concept the government wants to adopt is that hawker centres are soup kitchens where lower income groups can have access to cheap food. What I absolutely hate the idea that the providers of the welfare are not taxpayers but the hawkers themselves, one of the hardest working people in Singapore and national treasures in their own right.
[ Can you picture this ludicrous image of senior Administrative officers being paid millions making the decision that hawkers like Douglas Ng is to subsidise for the food for lower income groups ? ]
The approach to hawker centres needs to change.
Hawker centres should be treated like incubators, not soup kitchens.
Managers of hawker stalls are not obligated to create cheap food for citizens. Like Blk 71, a hawker centre's foremost responsibility is to incubate hawkers like Douglas Ng so that he can evolve into a Damian D'Silva or a Justin Quek in the future. Hawker centres are preservers of Singapore's food culture and a magnet for tourist dollars. Rents should not be cheap but comes as a form of profit sharing between tax payer and hawker so that the younger generation can invent the cuisine of tomorrow.
Of course this goes back to the problem of lower income groups and how hawker centres may cease to be a place they can afford to eat at. I don't think that's a problem as Singaporeans have grudgingly accepted the pricing and poor quality of foodcourt food for many many years.
Maybe some Singaporeans may have to accept that sometimes cooking at home may be the best way forward.
So I was mildly irritated by the recent exchange between a new age hawker and Vivian Balakrishnan even though I knew that both come from the position that they want to do good for Singapore.
Particularly upsetting to me is that the authorities was willing to go to extremes to set pricing caps on food. The disagreement was over whether fishball noodles even made sense if you cap its cost at $2.70.
Generally speaking, intervention from the government will only do ill for everyone else because business people know how to price their products to maximise revenues. A business can compromise on hygiene, the amount of fish meat, or the portions to create a negative experience for anyone who eat in hawker centres. Poorer folks who live on $2.70 fishball noodles may even develop cancer at a later stage in life because the government cannot regulate everything.
[ To understand why I hate the price cap, think about how much the government hates minimum wages ]
Even worse, where is the freedom for hawkers to innovate ? Do we categorise a plate of pasta accompanied by a medallion of fish in balsamic vinegar as a fishball noodle as well and cap the offering to $2.70 ? Should we allow civil servants to even create these food taxonomies ?
A better model would be to charge rent as a proportion of hawker sales and reduce the marginal rent as sales increase. eg. First $5,000 revenues results in 20% rental fee, subsequent sales is charged 10% rent. Every year, managers can decide not to renew the stalls with redundant food categories which underperform to maximise food diversity. This aligns the taxpayer/government with the hawker and gives the hawker the ability to manage determine the product and pricing to maximise revenues. If consumers overpay, there is certainty that a fair amount will always be returned to tax-payers.
[ As an added point, having point of sale terminals an allowing EZ-Link cards can give data scientists some insight into food habits of Singaporeans. If you want a Smart City, start here. ]
I think NTUC Foodfare is pandering to voter populism when Singaporeans actually just want a better way to preserve our food culture. The concept the government wants to adopt is that hawker centres are soup kitchens where lower income groups can have access to cheap food. What I absolutely hate the idea that the providers of the welfare are not taxpayers but the hawkers themselves, one of the hardest working people in Singapore and national treasures in their own right.
[ Can you picture this ludicrous image of senior Administrative officers being paid millions making the decision that hawkers like Douglas Ng is to subsidise for the food for lower income groups ? ]
The approach to hawker centres needs to change.
Hawker centres should be treated like incubators, not soup kitchens.
Managers of hawker stalls are not obligated to create cheap food for citizens. Like Blk 71, a hawker centre's foremost responsibility is to incubate hawkers like Douglas Ng so that he can evolve into a Damian D'Silva or a Justin Quek in the future. Hawker centres are preservers of Singapore's food culture and a magnet for tourist dollars. Rents should not be cheap but comes as a form of profit sharing between tax payer and hawker so that the younger generation can invent the cuisine of tomorrow.
Of course this goes back to the problem of lower income groups and how hawker centres may cease to be a place they can afford to eat at. I don't think that's a problem as Singaporeans have grudgingly accepted the pricing and poor quality of foodcourt food for many many years.
Maybe some Singaporeans may have to accept that sometimes cooking at home may be the best way forward.
Monday, July 27, 2015
Why being an entrepreneur is risky business for a Singaporean !
An opinion piece has been circulated around in social media lately. The author of this piece asserts that a mindset change is required on entrepreneurship as Singapore would suffer if everyone stops taking risks.
I feel that it is important that I write a counter-opinion to this article as when it comes to risk aversion, dividends investors are many times more conservative than workers who only want to work for MNCs. This is because the ultimate aim of dividends investing is to work for anyone we want based on work which we find gratifying. In a place like Singapore where work-life balance is largely a myth, the aim of investing is to stop work entirely.
As such, we investors are the bad guys in this narrative.
The first point I would like to argue is that we should not begrudge locals for seeking a lower risk alternative. They are just protecting their own interests. When I was an IDA officer, I noticed that there was a lot of posturing in Block 71 which wanted to lionize risk-taking at the expense of prudent life planning, but some hackers I spoke to admitted of the difficulty of finding a girlfriend or spouse because of the lack of stability with their lives.
I have two studies to back me up on why normal people should avoid starting businesses :
In a study by Korteweg and Srenson of Stanford business school on outcomes for venture capital investors, most high-tech start-ups will either fail or exist in a zombie state. Specifically, 10.3% of venture capital backed companies end up going public, 23.3% get acquired, 23% get liquidated and 43.4% would exist in a zombie state. So there is a 10% chance of succeeding when you build a start-up and after you succeed in VC backing. 40% of these businessmen would neither succeed nor fail and would spend their lives pointlessly cultivating zombie businesses - a more horrible fate than failure if you ask me.
Which makes us wonder, what are the odds of someone who cannot even get this kind of VC backing ?
The second study is even more depressing. According to Adrian Furnham's New Psychology of Money, a 2012 study by Skandia on UK millionaires showed that 74% of UK millionaires made their wealth through employment with 57% admitting that investments contributed to their fortunes. Only 15% made their money from their own businesses.
Combined together, these two studies are damning to the government's efforts to promote entrepreneurship in Singapore. A reasonable fresh graduate is very likely to be turned off at the idea of starting a business after reading this.
Of course, you did not come to my blog to read an article which reinforces mainstream thinking without offering solutions.
I think that proposing a mindset change is tantamount to intellectual masturbation - chui gong lam par song ! There is too much of this in Law School and the Straits Times.
All the posturing of VCs and macho-capitalists cannot change the fact that Singapore women, being also risk averse, would think twice before marrying a start-up founder. ( Unlike their US counterparts )
My proposed solution is based on the article about why successful businessmen in silicon valley are mostly about white privilege.
If you accept that most successful business have middle and upper class upbringing, then the efforts of the government have been directed at the wrong place.
The government traditionally believes that engineers in local universities will create the enterprises of tomorrow. That belief and policy intervention is wrong and a waste of taxpayer's money. Study the social economic status of any computer science and engineering cohort and you will find that most of us come from humble families that really need to have stable jobs so that we can uplift our families.
The successful businessmen generally comes from rich families who can bear the risk of kids starting businesses. They come with the contacts and the capital to make these bets succeed. They also want prestige. This is backed by the theories of Gary Beck on human capital. The rich have enough financial capital to make risky bets on human capital possible. Society can incentivise this by giving not money, but prestige and sexy press coverage.
A good policy intervention should be two pronged :
The first policy is to choose scholars and civil servants primarily from the middle income and lower income groups leaving capable members of the upper income groups free to become entrepreneurs. This is not discrimination of the rich as the companies they build will generate more jobs for Singapore than if they were to become a Admin service mandarin.
The second policy which is more controversial is to promote entrepreneurship and build centres of excellence not in universities but in schools where the rich congregate. A entrepreneurship centre is better off being in ACS Barker road campus than in NUS.
Typically a rich scion will move from ACS onto an overseas program, so the government has to catch them earlier in secondary school.
I think that these policy interventions may unlock the mystery of the Mittelstand which is the Singaporean dream of building large specialized tech firms of Germany which are largely family owned.
Let engineers be engineers who can work for these Mittelstands and bring more social mobility to their families.
Therefore, the rich are the best people to bear the risk of start-ups.
This includes the children of successful dividends investors as well.
I feel that it is important that I write a counter-opinion to this article as when it comes to risk aversion, dividends investors are many times more conservative than workers who only want to work for MNCs. This is because the ultimate aim of dividends investing is to work for anyone we want based on work which we find gratifying. In a place like Singapore where work-life balance is largely a myth, the aim of investing is to stop work entirely.
As such, we investors are the bad guys in this narrative.
The first point I would like to argue is that we should not begrudge locals for seeking a lower risk alternative. They are just protecting their own interests. When I was an IDA officer, I noticed that there was a lot of posturing in Block 71 which wanted to lionize risk-taking at the expense of prudent life planning, but some hackers I spoke to admitted of the difficulty of finding a girlfriend or spouse because of the lack of stability with their lives.
I have two studies to back me up on why normal people should avoid starting businesses :
In a study by Korteweg and Srenson of Stanford business school on outcomes for venture capital investors, most high-tech start-ups will either fail or exist in a zombie state. Specifically, 10.3% of venture capital backed companies end up going public, 23.3% get acquired, 23% get liquidated and 43.4% would exist in a zombie state. So there is a 10% chance of succeeding when you build a start-up and after you succeed in VC backing. 40% of these businessmen would neither succeed nor fail and would spend their lives pointlessly cultivating zombie businesses - a more horrible fate than failure if you ask me.
Which makes us wonder, what are the odds of someone who cannot even get this kind of VC backing ?
The second study is even more depressing. According to Adrian Furnham's New Psychology of Money, a 2012 study by Skandia on UK millionaires showed that 74% of UK millionaires made their wealth through employment with 57% admitting that investments contributed to their fortunes. Only 15% made their money from their own businesses.
Combined together, these two studies are damning to the government's efforts to promote entrepreneurship in Singapore. A reasonable fresh graduate is very likely to be turned off at the idea of starting a business after reading this.
Of course, you did not come to my blog to read an article which reinforces mainstream thinking without offering solutions.
I think that proposing a mindset change is tantamount to intellectual masturbation - chui gong lam par song ! There is too much of this in Law School and the Straits Times.
All the posturing of VCs and macho-capitalists cannot change the fact that Singapore women, being also risk averse, would think twice before marrying a start-up founder. ( Unlike their US counterparts )
My proposed solution is based on the article about why successful businessmen in silicon valley are mostly about white privilege.
If you accept that most successful business have middle and upper class upbringing, then the efforts of the government have been directed at the wrong place.
The government traditionally believes that engineers in local universities will create the enterprises of tomorrow. That belief and policy intervention is wrong and a waste of taxpayer's money. Study the social economic status of any computer science and engineering cohort and you will find that most of us come from humble families that really need to have stable jobs so that we can uplift our families.
The successful businessmen generally comes from rich families who can bear the risk of kids starting businesses. They come with the contacts and the capital to make these bets succeed. They also want prestige. This is backed by the theories of Gary Beck on human capital. The rich have enough financial capital to make risky bets on human capital possible. Society can incentivise this by giving not money, but prestige and sexy press coverage.
A good policy intervention should be two pronged :
The first policy is to choose scholars and civil servants primarily from the middle income and lower income groups leaving capable members of the upper income groups free to become entrepreneurs. This is not discrimination of the rich as the companies they build will generate more jobs for Singapore than if they were to become a Admin service mandarin.
The second policy which is more controversial is to promote entrepreneurship and build centres of excellence not in universities but in schools where the rich congregate. A entrepreneurship centre is better off being in ACS Barker road campus than in NUS.
Typically a rich scion will move from ACS onto an overseas program, so the government has to catch them earlier in secondary school.
I think that these policy interventions may unlock the mystery of the Mittelstand which is the Singaporean dream of building large specialized tech firms of Germany which are largely family owned.
Let engineers be engineers who can work for these Mittelstands and bring more social mobility to their families.
Therefore, the rich are the best people to bear the risk of start-ups.
This includes the children of successful dividends investors as well.
Sunday, July 19, 2015
Crowdfunding : The next frontier in yield investing.
Thanks to the fact that Moolahsense makes all bids to lend money transparent, some readers should be aware that I started participating in peer-to-peer lending. In fact, for folks who have been following, I was able to lend $1,000 of my own money successfully to Leap Networks at about 8-9% interest rate about a week ago.
The decision to start investing in crowdfunding platform was not a financial one. There are higher yielding investments in the local stock-market like shipping trusts.
Getting into crowdfunding was an academic decision. I was doing a subject called Legal Issues in E-Commerce and wanted to write something which was cutting edge and novel so I chose crowdfunding as my research topic. Doing the research paper forced me to look at legal reforms in the US ( Obama JOBS Act 2012 ) as well as different equity crowdfunding models in the UK ( Crowdcube vs Seedrs ). An interesting benefit from all this research was that I was able to befriend two lawyers who are familiar with the subject matter so I will trying my luck at getting an internship and perhaps even a training contract with these law firms.
After finding out that fraud is relatively rare in the world of crowdfunding, I decided to punt $1,000 of my own capital into Moolahsense so that I can eat my cooking instead of being an ivory tower academic. So far so good, the interest rate I offered was below the finalised interest rate of the loan.
My personal opinion about crowdfunding is that it will be the next big thing in finance. I think businesses and people in general will find ways to help each other online and cut off the banking middlemen to save business costs. This potentially creates multiple markets which are risker than our stock market institutions but can potentially be more rewarding.
Here is some advise for readers keen to get into crowdfunding :
a) Keep it within 5% of your total net worth.
MAS is still in the process of finalizing how to regulate crowdfunding platforms, so it's a wild wild west out there. You should limit your exposure to 5% of your total portfolio. No one really knows what happens if a borrower defaults even though the platform has a set of steps which they can take to help you recover part of your money.
( In legal parlance, you may not have a recourse in contract against a crowdfunding platform. You may have a recourse in tort but you really don't want to go there. )
b) Bid the minimum amount so that you can diversify your crowdfunding assets.
If the lowest bid possible is $1,000, bid only $1,000. If you have $5,000 capital for crowdfunding, spread it over 5 loans to 5 different parties.
c) Go for companies with less than 5% of default probability.
The great thing about the Moolahsense platform is that they have information on probability of default. That is the chance that you will lose your pants. Bid only for companies with a default percentage below 5%.
d) Have a minimum yield that you would like that you cannot find elsewhere.
For me, I generally bid about 16% interest ( which is actually 8.88% ) after meeting the 3 criteria above. I can find decent investments in SGX for lower yields.
I cannot expect every reader to be the same as I do because I take fairly high risks in the stock-market so you may be willing to loan for 6% or 7%. But please don't offer 4% or less because CPF-SA can give you a better deal.
e) Avoid property crowdfunding.
This is the most controversial advice which may piss off some parties in Singapore.
Stick with peer to peer lending and avoid property crowdfunding for now. Based on my research, I'm not sure whether fractional property ownership will come under MAS regulation for equity crowdfunding in the future and the proposals all seem very much like land-banking to me. For the past 10 years, there has always been a a lot of advertisements on purchasing foreign property. As a natural skeptic, I always wanted to know why the locals in their own country would be uninterested in those homes.
Furthermore, I suspect that many vendors are jumping on the crowdfunding bandwagon by abusing this buzzword when the original aim of crowdfunding was to help businesses raise capital because banks were underserving them.
Finally, REITs have always been the official means to crowd-fund property and all of them pay a decent amount every year.
Anyway, just take note that I got into crowdfunding because I benefit from writing legal research papers which my lecturers find novel and refreshing. It covers areas which still lack solid regulation in Singapore and other parts of the world. My risk of loss is really law and easily less than 0.1% of my portfolio so far.
In the future, if I ever write another book on Personal Finance, Bitcoins and Crowdfunding will definitely be part of it.
The decision to start investing in crowdfunding platform was not a financial one. There are higher yielding investments in the local stock-market like shipping trusts.
Getting into crowdfunding was an academic decision. I was doing a subject called Legal Issues in E-Commerce and wanted to write something which was cutting edge and novel so I chose crowdfunding as my research topic. Doing the research paper forced me to look at legal reforms in the US ( Obama JOBS Act 2012 ) as well as different equity crowdfunding models in the UK ( Crowdcube vs Seedrs ). An interesting benefit from all this research was that I was able to befriend two lawyers who are familiar with the subject matter so I will trying my luck at getting an internship and perhaps even a training contract with these law firms.
After finding out that fraud is relatively rare in the world of crowdfunding, I decided to punt $1,000 of my own capital into Moolahsense so that I can eat my cooking instead of being an ivory tower academic. So far so good, the interest rate I offered was below the finalised interest rate of the loan.
My personal opinion about crowdfunding is that it will be the next big thing in finance. I think businesses and people in general will find ways to help each other online and cut off the banking middlemen to save business costs. This potentially creates multiple markets which are risker than our stock market institutions but can potentially be more rewarding.
Here is some advise for readers keen to get into crowdfunding :
a) Keep it within 5% of your total net worth.
MAS is still in the process of finalizing how to regulate crowdfunding platforms, so it's a wild wild west out there. You should limit your exposure to 5% of your total portfolio. No one really knows what happens if a borrower defaults even though the platform has a set of steps which they can take to help you recover part of your money.
( In legal parlance, you may not have a recourse in contract against a crowdfunding platform. You may have a recourse in tort but you really don't want to go there. )
b) Bid the minimum amount so that you can diversify your crowdfunding assets.
If the lowest bid possible is $1,000, bid only $1,000. If you have $5,000 capital for crowdfunding, spread it over 5 loans to 5 different parties.
c) Go for companies with less than 5% of default probability.
The great thing about the Moolahsense platform is that they have information on probability of default. That is the chance that you will lose your pants. Bid only for companies with a default percentage below 5%.
d) Have a minimum yield that you would like that you cannot find elsewhere.
For me, I generally bid about 16% interest ( which is actually 8.88% ) after meeting the 3 criteria above. I can find decent investments in SGX for lower yields.
I cannot expect every reader to be the same as I do because I take fairly high risks in the stock-market so you may be willing to loan for 6% or 7%. But please don't offer 4% or less because CPF-SA can give you a better deal.
e) Avoid property crowdfunding.
This is the most controversial advice which may piss off some parties in Singapore.
Stick with peer to peer lending and avoid property crowdfunding for now. Based on my research, I'm not sure whether fractional property ownership will come under MAS regulation for equity crowdfunding in the future and the proposals all seem very much like land-banking to me. For the past 10 years, there has always been a a lot of advertisements on purchasing foreign property. As a natural skeptic, I always wanted to know why the locals in their own country would be uninterested in those homes.
Furthermore, I suspect that many vendors are jumping on the crowdfunding bandwagon by abusing this buzzword when the original aim of crowdfunding was to help businesses raise capital because banks were underserving them.
Finally, REITs have always been the official means to crowd-fund property and all of them pay a decent amount every year.
Anyway, just take note that I got into crowdfunding because I benefit from writing legal research papers which my lecturers find novel and refreshing. It covers areas which still lack solid regulation in Singapore and other parts of the world. My risk of loss is really law and easily less than 0.1% of my portfolio so far.
In the future, if I ever write another book on Personal Finance, Bitcoins and Crowdfunding will definitely be part of it.
Thursday, July 16, 2015
Are you wiser than an ITE student ?
Was attending a wedding last week and was very honoured to have a conversation with an ITE Life-skills lecturer so naturally I became very curious about her work. I wanted to know what would constitute life skills because it would potentially benefit readers of this blog.
I was quite impressed when I was told that ITE employed the DISC personality profile system.
Having a knowing one's personality is quite crucial in the working world because it helps a person decide on a vocation. The ITE lecturer also shared with me that ITE uses personality profiling to detect whether a student problems with self-esteem where more intervention then becomes necessary.
Having a knowing one's personality is quite crucial in the working world because it helps a person decide on a vocation. The ITE lecturer also shared with me that ITE uses personality profiling to detect whether a student problems with self-esteem where more intervention then becomes necessary.
Naturally, having very successfully googled the Maths syllabus for Normal Academic students, I proceeded to find out what life skills really contain but I was quite disappointed to find out that detailed syllabus information was not available on the Internet.
Instead I found some references to the following :
Personal Effectiveness
Group Effectiveness
Interpersonal Skills
Communication Skills
Thinking Skills
Information Technology
Sports and Wellness
The result is humbling. I'm pretty sure that I will fail the Sports and Wellness modules and there were two modules which had to be passed.
Anyway, I am calling out readers of this blog to help me obtain details on ITE Life skills. I think that if these skills can be generalised, we could create a self-help body of knowledge that is useful to all professionals regardless of educational qualifications and could lead to future blog postings.
Catch you guys this weekend, I will write about highly-anticipated article on Crowdfunding !!!
Wednesday, July 08, 2015
If Budgetbabe can save $100,000, what's your excuse ?
Budgetbabe recently wrote a concise blog article on how easy it is to save $100,000 before age 30.
I thought I wanted to join in the fun, so I asked my FB what's their excuse for not being able to save $100,000 before age 30.
The results were quite predictable, some friend carefully crafted a life situation which was intelligently distinguished from my life situation or some other financial blogger which was well-argued even from a legal perspective.
It's all fine and good, I don't really judge my friends these days. At age 40, a balanced scorecard matters more than accumulated wealth. Hokkiens say Huar Hee Jiu Hor !
In fact, I think I want to provide on this blog a a better excuse than the one's crafted by many friends and well-meaning critics ever since I wrote about taking on the $100,000 challenge about 10 years ago in my first book. If you are my age and did not meet the target, you may have failed, but you may have succeeded in some other area of your life.
Maybe one day, a friend will ask " Chris, I am happy, drink lot's if birdsnest. I look like I am 30 but I am actually 45, what's your excuse ? " to which I can only answer "Exhaustion ? "
So, suppose you are a Gen-Xer like me, some si-geena Millenial comes up to you and says " Hahaha ! I can save $100,000 before I am thirty. what's your excuse uncle?"
For goodness sake, don't say shit like marriage and kids to a Millenial.
Because I have gone through the process myself, I know the critics will use marriage as an excuse until I had gotten married myself, and then use kids as an excuse after I get married but before I had Clio. After I had my kid, critics naturally complained that they have have two kids. Now, I just can't beat them all if they keeping having more kids than me.
( I need to pull up my pants and go to school - not keep making babies at home. )
So don't slam BudgetBabe for being single and childless.
In my opinion, I think the best reason is this....
The hard, bitter truth is $100,000 is chump change for this generation of workers !
It is worth only $63,000 in 1999 dollars when I just started work or $73,000 when was 30 years old if we just assume an inflation rate of 3%.
So good news for Gen-Xers, if you had $73,000 at age 30, you would have met Budgetbabe's challenge and you can now buy yourself a Pet Shop Boys CD as a reward if you are feeling nostalgic.
Anyway, kudos to BudgetBabe for starting this discussion. She's simply awesome for having that willpower to resist all the online marketing companies throw at us these days.
I think it's great that younger financial bloggers are stepping forward to vindicate my $100,000 challenge and meeting their financial targets at a much earlier age.
But that leaves one problem for the folks my generation...
... If you do not have $73,000 when you are 30...
...what's your excuse ?
I thought I wanted to join in the fun, so I asked my FB what's their excuse for not being able to save $100,000 before age 30.
The results were quite predictable, some friend carefully crafted a life situation which was intelligently distinguished from my life situation or some other financial blogger which was well-argued even from a legal perspective.
It's all fine and good, I don't really judge my friends these days. At age 40, a balanced scorecard matters more than accumulated wealth. Hokkiens say Huar Hee Jiu Hor !
In fact, I think I want to provide on this blog a a better excuse than the one's crafted by many friends and well-meaning critics ever since I wrote about taking on the $100,000 challenge about 10 years ago in my first book. If you are my age and did not meet the target, you may have failed, but you may have succeeded in some other area of your life.
Maybe one day, a friend will ask " Chris, I am happy, drink lot's if birdsnest. I look like I am 30 but I am actually 45, what's your excuse ? " to which I can only answer "Exhaustion ? "
So, suppose you are a Gen-Xer like me, some si-geena Millenial comes up to you and says " Hahaha ! I can save $100,000 before I am thirty. what's your excuse uncle?"
For goodness sake, don't say shit like marriage and kids to a Millenial.
Because I have gone through the process myself, I know the critics will use marriage as an excuse until I had gotten married myself, and then use kids as an excuse after I get married but before I had Clio. After I had my kid, critics naturally complained that they have have two kids. Now, I just can't beat them all if they keeping having more kids than me.
( I need to pull up my pants and go to school - not keep making babies at home. )
So don't slam BudgetBabe for being single and childless.
In my opinion, I think the best reason is this....
The hard, bitter truth is $100,000 is chump change for this generation of workers !
It is worth only $63,000 in 1999 dollars when I just started work or $73,000 when was 30 years old if we just assume an inflation rate of 3%.
So good news for Gen-Xers, if you had $73,000 at age 30, you would have met Budgetbabe's challenge and you can now buy yourself a Pet Shop Boys CD as a reward if you are feeling nostalgic.
Anyway, kudos to BudgetBabe for starting this discussion. She's simply awesome for having that willpower to resist all the online marketing companies throw at us these days.
I think it's great that younger financial bloggers are stepping forward to vindicate my $100,000 challenge and meeting their financial targets at a much earlier age.
But that leaves one problem for the folks my generation...
... If you do not have $73,000 when you are 30...
...what's your excuse ?
Sunday, July 05, 2015
Why you should support marriage equality too !
When Heather Chua came into scene some months ago and crafted a story of how much she despised her classmate for dating an ITE graduate, I had an inkling that this was a troll who was out to seek attention. After some thought, I also would not really want to find out about the truth as to whether this Heather Chua was a real or fake because, if Heather was exposed, members of the natural aristocracy would be relieved to know that one of their own was not an elitist snob. The flip side was that the story of RGS girl who dated an ITE guy would turn out be a myth as well.
That is extremely harmful for the self-esteem of Singaporean men.
Of course, the context now has changed.
In reality, some men do meet the standards of the best women Singapore has to offer. I am very relieved that we now know for sure that billionaires are good enough for the ladies of our natural aristocracy and daughters of a better age.
But that leaves another problem for our society.
It's a problem of marriage equality.
While we celebrate unions between billionaires and RGS alumni, a certain group of Singaporeans are not doing all too well in their own marriages.
Right now, blue collar worker's spouses are unable to obtain a permanent residency in Singapore. Many have to rely on the Long Term Visit Pass to stay in this country and they are unable to find jobs to support their family. In fact, their ability to stay in Singapore becomes even more doubtful when their husbands die.
I think this is a serious problem for Singapore.
Our society discriminates blue collar workers so much as they are not getting marriage equality.
Let me go further to explain the problem :
a) Some blue-collar workers are indeed born into their current circumstances.
Blue-collar workers are born like that.
Not every Singaporean gets access to a family which can nurture them into members of the natural aristocracy. some may be born into single parent families, others may not be natural inclined for academic performance.
We sometimes have to be sympathetic to people who are born into their current circumstances.
b) Children of blue collar workers and foreign brides may be considered people who come from lesser families.
If their mothers are unable to obtain at least permanent residency, the children of such unions can also face discrimination. Perhaps their mothers would have trouble staying in the country but this creates a situation which puts these children into a serious disadvantage in school and society.
c) Blue-collar unions do not threaten the marriage and family of white collar families in Singapore.
Just because the government gives blue collar spouses permanent residency this will not make normal families have more blue-collar children.
Yes, white-collar parents should not fear that their children will turn blue-collar just because government policy has changed !
But of course, children of white collar parents may choose a blue collar vocation out of personal choice. We should welcome this diversify in our economy and not view as such a bad thing.
Fortunately, the problems faced by blue-collar males is now well documented by publications like the Economist but I am sorry to say that a lot of bigotry still exists in Singapore. I have witnessed at least one well-known Singapore poet who is currently in the UK has taken to social media to claim that blue collar men who take on foreign wives are actually exploiting them.
We should condemn the words of this Singapore poet. But we should also pity him as he sees blue-collar marriages as a threat to his own bigoted and archaic personal view of gender roles and marriage today.
I'd like to share one final thing about the evolution of society.
Society has the capacity to be kind. When the workplace looked like it came out from the set of a series like Mad Men, we reformed it, added maternity leave, child-care benefits and telecommuting so that we can have more workplace diversity and create a more inclusive society for everyone.
Engineering as a discipline also became softer with less emphasis on equations and programming and more emphasis on communication skills and language.
When Silicon Valley was created to celebrate male qualities of focus, discipline and decisiveness - a safe harbor for men. It was immediately condemned for not being inclusiveness even when Asian male engineers have been working in Silicon Valley for years without facing discrimination. The accusations conveniently came about when it became profitable to be a software developer.
There are any loud voices, some reasonable, some unreasonable for different categories of minorities in all societies. Some of the fights has even been won in the US Supreme Court.
Why shouldn't we fight for our blue-collared male workers ?
Marriage equality should be upheld in Singapore.
I beseech my reader - support marriage equality !
That is the marriages between blue-collared husbands - foreign wives should be equal to that of marriages between Billionaire-Aristocrats.
That is extremely harmful for the self-esteem of Singaporean men.
Of course, the context now has changed.
In reality, some men do meet the standards of the best women Singapore has to offer. I am very relieved that we now know for sure that billionaires are good enough for the ladies of our natural aristocracy and daughters of a better age.
But that leaves another problem for our society.
It's a problem of marriage equality.
While we celebrate unions between billionaires and RGS alumni, a certain group of Singaporeans are not doing all too well in their own marriages.
Right now, blue collar worker's spouses are unable to obtain a permanent residency in Singapore. Many have to rely on the Long Term Visit Pass to stay in this country and they are unable to find jobs to support their family. In fact, their ability to stay in Singapore becomes even more doubtful when their husbands die.
I think this is a serious problem for Singapore.
Our society discriminates blue collar workers so much as they are not getting marriage equality.
Let me go further to explain the problem :
a) Some blue-collar workers are indeed born into their current circumstances.
Blue-collar workers are born like that.
Not every Singaporean gets access to a family which can nurture them into members of the natural aristocracy. some may be born into single parent families, others may not be natural inclined for academic performance.
We sometimes have to be sympathetic to people who are born into their current circumstances.
b) Children of blue collar workers and foreign brides may be considered people who come from lesser families.
If their mothers are unable to obtain at least permanent residency, the children of such unions can also face discrimination. Perhaps their mothers would have trouble staying in the country but this creates a situation which puts these children into a serious disadvantage in school and society.
c) Blue-collar unions do not threaten the marriage and family of white collar families in Singapore.
Just because the government gives blue collar spouses permanent residency this will not make normal families have more blue-collar children.
Yes, white-collar parents should not fear that their children will turn blue-collar just because government policy has changed !
But of course, children of white collar parents may choose a blue collar vocation out of personal choice. We should welcome this diversify in our economy and not view as such a bad thing.
Fortunately, the problems faced by blue-collar males is now well documented by publications like the Economist but I am sorry to say that a lot of bigotry still exists in Singapore. I have witnessed at least one well-known Singapore poet who is currently in the UK has taken to social media to claim that blue collar men who take on foreign wives are actually exploiting them.
We should condemn the words of this Singapore poet. But we should also pity him as he sees blue-collar marriages as a threat to his own bigoted and archaic personal view of gender roles and marriage today.
I'd like to share one final thing about the evolution of society.
Society has the capacity to be kind. When the workplace looked like it came out from the set of a series like Mad Men, we reformed it, added maternity leave, child-care benefits and telecommuting so that we can have more workplace diversity and create a more inclusive society for everyone.
Engineering as a discipline also became softer with less emphasis on equations and programming and more emphasis on communication skills and language.
When Silicon Valley was created to celebrate male qualities of focus, discipline and decisiveness - a safe harbor for men. It was immediately condemned for not being inclusiveness even when Asian male engineers have been working in Silicon Valley for years without facing discrimination. The accusations conveniently came about when it became profitable to be a software developer.
There are any loud voices, some reasonable, some unreasonable for different categories of minorities in all societies. Some of the fights has even been won in the US Supreme Court.
Why shouldn't we fight for our blue-collared male workers ?
Marriage equality should be upheld in Singapore.
I beseech my reader - support marriage equality !
That is the marriages between blue-collared husbands - foreign wives should be equal to that of marriages between Billionaire-Aristocrats.
Sunday, June 28, 2015
Quick and dirty mental filters when confronted with new ideas.
Just a story to set the tone for this discussion.
If you had known me 20 years ago, I was not exactly a charming specimen of the male gender.
I'm soft of like Ted, but not cute. A female undergrad once asked me to carry her bag for her. I told her no, "Because scarly I fall down how ?"
During my NUS days, I struggled to get a date, then I normally screw up my chances for a second date because I am a troll. I can't really help it - Gen X girls are so self-contradictory about marriage, relationships and career and I had a great time pointing this out to them - as a result my wife still laughs at me for getting a girlfriend so late in my life. I also never understood when I should be providing a listening ear versus giving advice. I am engineer. If you have a problem, I'll solve it for you.
But the difference between me and other guys is that I know about my problem with girls and have no illusions about how 'attractive' I was. Note that those days, my net worth was negligible. I might also be argued that I had low esteem on relationship matters.
So when I was attending an entrepreneurial seminar, a hot chick came up to me and introduced herself.
Being a cynical asshole, I reduced this to three possibilities : she's either into insurance, MLM or wants to convert me into a Charismatic Christian.
So I went with MLM and decided to troll her with a pre-emptive strike. I said "Haha ! Hot chicks don't just talk to me just like that. You must be into MLM and I'm not into MLM. Sorry !"
Man, the look on her face was priceless !
She nodded in agreement, looked a little embarrassed and sat back down.
Looking back, I think that was dumb, I was pretty sure if she was hotter, I would have pretended to be interested in MLM just to get a date, but what I did was clearly cynical, not skeptical. I crossed the line.
The last article got some people into thinking about reading a whole new set of books which demonstrate how skepticism is ideally carried out against new ideas.
A good friend then told me on FB that this may not be enough, he wanted something actionable on a much smaller scale. And after all, developing a healthy approach to a new idea takes years ( And many opportunities to date women ) to refine.
I'm just going to share three quick suggestions on how to approach a new idea. They are not a collectively exhaustive list of what you need to go through, but generally it should be helpful at the street level.
a) What's in it for the person if you accept this idea ?
The first filter is to ask, what's in it for the person who is selling the idea to you.
Everyone who was into real estate or selling housing loans was selling the idea that real estate is a sure winner in good times and bad. Why ? Because if you buy the idea, they have the possibility of earning commissions.
Contrast that with a dividends investor.
I get asked all the time which REITs are good. I can't just answer "Sabana" for it's current high yields, there's the complicated issue of expiring master leases and that horrible manuever in Chai Chee. A contextual discussion on Sabana would take investment bloggers hours.
So instead, I very reluctantly tell people that perhaps the best approach to avoid idiosyncratic risk is to simply buy up all REITs which would yield about 6.5%.
Would I make any money if these guys succeed. Hell no ! They might just go NLB to borrow my books.
But I might get cursed here if they lose money so expect my advice to be sound but reluctantly given.
b) Is the idea falsifiable ? ( impossible to disprove, tautological )
The second filter gets rid of all that detritus that common well-meaning folks will throw at you, as these are issues of faith and not science.
Take for instance the Law of Attraction, which has generated a whole new legion of fucking idiots who believe in wishful thinking.
The Law of Attraction is not falsifiable. But morons who believe in it will asset that if what you dream about comes true, the law works. If the law does not work, you do not have enough faith to make the law work for you. The believer will not accept the idea that the Law is simply not true. It is as if I can dream my way to a training contract in a law firm or a beef steak in my pockets.
Compare that with the assertion that global stock equity can defeat inflation. There is enough data in Bloomberg to show that this might not even hold true in some market conditions. You can prove this assertion wrong, but you will find out that at a horizon of over 20 years, the odds of beating inflation goes up by quite a bit.
c) Is the evidence credible ?
The third filter is that on balance of probabilities, the idea is believable based on the evidence given. You just need to assess the credibility of the evidence.
In this case, I can be a little elitist, I would peg an assertion by The Economist more accurate than a left-winged website like The Salon ( which I do read just to experience how stupid liberals and a progressives are. )
This is important as a last filter as even I was misled by self-help books which claimed that a Harvard study confirmed that business students who had personal goals were richer than those who did not - this study was entirely bogus ! It spawned a truckload of literature based on a big lie ( SMART goals anyone ?).
And, no, Einstein did not talk about making fishes climb trees either.
This also means that you have to pidgeon-hole some of your friends because they tend to draw evidence from the sources that they like.
I have developed a strong suspicion of lawyers or law students who are making an assertion even if they have a strong body of evidence to support their views. I know they are just advocating a position, and that it's not too difficult to dig out evidence to to suggest the contrary. Lawyers are aces at evidence.
As a consequence of this, I do not trust my classmates on legal matters and reasoning but I do trust them if they bring up insights from their first degrees.
Anyway, in summary, if you do not really know how to develop your skeptic muscles, just ask yourself three questions :
a) Does the context imply that someone will benefit from you believing in this idea ?
b) Is there a way to falsify the idea by referring to research or just waiting for some results to appear ?
c) Is the evidence credible ?
If you had known me 20 years ago, I was not exactly a charming specimen of the male gender.
I'm soft of like Ted, but not cute. A female undergrad once asked me to carry her bag for her. I told her no, "Because scarly I fall down how ?"
During my NUS days, I struggled to get a date, then I normally screw up my chances for a second date because I am a troll. I can't really help it - Gen X girls are so self-contradictory about marriage, relationships and career and I had a great time pointing this out to them - as a result my wife still laughs at me for getting a girlfriend so late in my life. I also never understood when I should be providing a listening ear versus giving advice. I am engineer. If you have a problem, I'll solve it for you.
But the difference between me and other guys is that I know about my problem with girls and have no illusions about how 'attractive' I was. Note that those days, my net worth was negligible. I might also be argued that I had low esteem on relationship matters.
So when I was attending an entrepreneurial seminar, a hot chick came up to me and introduced herself.
Being a cynical asshole, I reduced this to three possibilities : she's either into insurance, MLM or wants to convert me into a Charismatic Christian.
So I went with MLM and decided to troll her with a pre-emptive strike. I said "Haha ! Hot chicks don't just talk to me just like that. You must be into MLM and I'm not into MLM. Sorry !"
Man, the look on her face was priceless !
She nodded in agreement, looked a little embarrassed and sat back down.
Looking back, I think that was dumb, I was pretty sure if she was hotter, I would have pretended to be interested in MLM just to get a date, but what I did was clearly cynical, not skeptical. I crossed the line.
The last article got some people into thinking about reading a whole new set of books which demonstrate how skepticism is ideally carried out against new ideas.
A good friend then told me on FB that this may not be enough, he wanted something actionable on a much smaller scale. And after all, developing a healthy approach to a new idea takes years ( And many opportunities to date women ) to refine.
I'm just going to share three quick suggestions on how to approach a new idea. They are not a collectively exhaustive list of what you need to go through, but generally it should be helpful at the street level.
a) What's in it for the person if you accept this idea ?
The first filter is to ask, what's in it for the person who is selling the idea to you.
Everyone who was into real estate or selling housing loans was selling the idea that real estate is a sure winner in good times and bad. Why ? Because if you buy the idea, they have the possibility of earning commissions.
Contrast that with a dividends investor.
I get asked all the time which REITs are good. I can't just answer "Sabana" for it's current high yields, there's the complicated issue of expiring master leases and that horrible manuever in Chai Chee. A contextual discussion on Sabana would take investment bloggers hours.
So instead, I very reluctantly tell people that perhaps the best approach to avoid idiosyncratic risk is to simply buy up all REITs which would yield about 6.5%.
Would I make any money if these guys succeed. Hell no ! They might just go NLB to borrow my books.
But I might get cursed here if they lose money so expect my advice to be sound but reluctantly given.
b) Is the idea falsifiable ? ( impossible to disprove, tautological )
The second filter gets rid of all that detritus that common well-meaning folks will throw at you, as these are issues of faith and not science.
Take for instance the Law of Attraction, which has generated a whole new legion of fucking idiots who believe in wishful thinking.
The Law of Attraction is not falsifiable. But morons who believe in it will asset that if what you dream about comes true, the law works. If the law does not work, you do not have enough faith to make the law work for you. The believer will not accept the idea that the Law is simply not true. It is as if I can dream my way to a training contract in a law firm or a beef steak in my pockets.
Compare that with the assertion that global stock equity can defeat inflation. There is enough data in Bloomberg to show that this might not even hold true in some market conditions. You can prove this assertion wrong, but you will find out that at a horizon of over 20 years, the odds of beating inflation goes up by quite a bit.
c) Is the evidence credible ?
The third filter is that on balance of probabilities, the idea is believable based on the evidence given. You just need to assess the credibility of the evidence.
In this case, I can be a little elitist, I would peg an assertion by The Economist more accurate than a left-winged website like The Salon ( which I do read just to experience how stupid liberals and a progressives are. )
This is important as a last filter as even I was misled by self-help books which claimed that a Harvard study confirmed that business students who had personal goals were richer than those who did not - this study was entirely bogus ! It spawned a truckload of literature based on a big lie ( SMART goals anyone ?).
And, no, Einstein did not talk about making fishes climb trees either.
This also means that you have to pidgeon-hole some of your friends because they tend to draw evidence from the sources that they like.
I have developed a strong suspicion of lawyers or law students who are making an assertion even if they have a strong body of evidence to support their views. I know they are just advocating a position, and that it's not too difficult to dig out evidence to to suggest the contrary. Lawyers are aces at evidence.
As a consequence of this, I do not trust my classmates on legal matters and reasoning but I do trust them if they bring up insights from their first degrees.
Anyway, in summary, if you do not really know how to develop your skeptic muscles, just ask yourself three questions :
a) Does the context imply that someone will benefit from you believing in this idea ?
b) Is there a way to falsify the idea by referring to research or just waiting for some results to appear ?
c) Is the evidence credible ?
Wednesday, June 24, 2015
Masterclass in Skepticism.
I noticed that a large number of readers or folks who are interested in passive income or personal finance are also very susceptible to messages from self-help gurus. Some folks I have spoken to have shared personal stories of putting money into the wrong Internet Marketing programs or have been roped into MLM at a certain stage in their lives, others have paid possibly thousands attending some seminar on forex trading or real estate flipping. The older ones even went to bucket shops.
Readers and other financial bloggers have this problem :
How do we tell the difference between someone who genuinely have something to teach you about financial success versus someone who is just trying to become a financial success at your expense ?
If we were to go really deep into technical differences between a real investment specialist and a financial bullshitter, we'd probably end up with covering the entire CFA syllabus and do note that in the early 2000s, asset-backed securities and CDOs were covered in great detail in the exams at level 2 as no one could foresee that they would play such a big role the Great Recession.
The answer to resolving this problem is to develop a healthy does of skepticism. But skepticism is merely the ability not to take something at face value and critically think about what the other party is trying to tell you accounting for information asymmetries and the context of the engagement. Mastering skepticism is also quite challenging, you may need to complete a liberal arts degree to tell bullshit from the real McCoy. Be too skeptical, and you run into the problem of cynicism, where even good ideas and investments are discarded in the name of prudence.
Before I actually get into the Masterclass, I'm just going to share with everyone why Skepticism is so important.
Start with this idea : We bloggers are experts in engineering diseases of the mind !
Ideas are like viruses, sometimes an idea comes around and its not designed so much to harm you, but to make you more susceptible to other ideas. This is what I would term the immuno-deficiency of the mind. Some ideas are AIDS viruses, it opens your mind to other ideas like MLM, Pyramid marketing, land banking, internet marketing and ILPs. As an example, a book by Robert Kiyosaki would hardly harm the reader and generally have the positive effect of motivating him, but it subliminally prepares the reader for a life engaged in MLM as it keeps harping about building businesses and helping other people -themes which keep getting repeated in MLM seminars. Similarly, I can imagine self-help guru espousing the concept of "saying yes to everything" which inspired a hilarious Jim Carrey movie some years ago. Which is why I really hate stupid websites like Elite Daily and MindBodyGreen.
I think I have developed a vaccine against the immuno-deficiency of the mind.
Here are three books which, if read and processed, leads to the development of healthy skepticism.
a) The first book SHAM, exposes the key issues and flaws with the self-help movement. It is easy to read and immensely entertaining. Almost all your favourite self-help gurus are put to the torch in this book.
b) The second book is Bright-sided by Barbara Ehrenreich which replaces your Pollyannish positive thinking with a dose of gritty realism.
As a side-note, I advise you to always read this book with the works of Martin Seligman who is the father of Positive psychology. I do not find that both author's ideas are mutually exclusive.
c) The third book, which I recently read, is a true classic. Oliver Burkeman hates self-help so much, he practically read the entire body of knowledge of self-help to expose it for his readers and highlights what works and what doesn't. It's hard to imagine a person who now knows more about self-help than Oliver Burkeman.
I think Oliver Burkeman is more than qualified to start a CSHA or a Charter of Self-Help Analyst accreditation body. Life Coaching is pretty good money in the US.
d) Google "John T Reed". John T Reed was an early crusader who set up a website to debunk and expose the real-estate gurus who were his competitors, his points are well thought out and his website contains a lot of dirt on your favorite self-help guru.
A savvy reader would notice that I did not include the ancient philosophers of Skepticism like Pyrrho or Sextus Empiricuswho comes up when you wiki skepticism. The four resources mentioned actually demonstrate how to take down and process key ideas which plague our modern world and form examples on how to skeptical about new ideas.
In the process of reading them, you will also find that they all qualify as great self-help books on their own.
Perhaps in a future book, I will make Skepticism a key skill before we even consider the basic skills required to attain financial independence.
Readers and other financial bloggers have this problem :
How do we tell the difference between someone who genuinely have something to teach you about financial success versus someone who is just trying to become a financial success at your expense ?
If we were to go really deep into technical differences between a real investment specialist and a financial bullshitter, we'd probably end up with covering the entire CFA syllabus and do note that in the early 2000s, asset-backed securities and CDOs were covered in great detail in the exams at level 2 as no one could foresee that they would play such a big role the Great Recession.
The answer to resolving this problem is to develop a healthy does of skepticism. But skepticism is merely the ability not to take something at face value and critically think about what the other party is trying to tell you accounting for information asymmetries and the context of the engagement. Mastering skepticism is also quite challenging, you may need to complete a liberal arts degree to tell bullshit from the real McCoy. Be too skeptical, and you run into the problem of cynicism, where even good ideas and investments are discarded in the name of prudence.
Before I actually get into the Masterclass, I'm just going to share with everyone why Skepticism is so important.
Start with this idea : We bloggers are experts in engineering diseases of the mind !
Ideas are like viruses, sometimes an idea comes around and its not designed so much to harm you, but to make you more susceptible to other ideas. This is what I would term the immuno-deficiency of the mind. Some ideas are AIDS viruses, it opens your mind to other ideas like MLM, Pyramid marketing, land banking, internet marketing and ILPs. As an example, a book by Robert Kiyosaki would hardly harm the reader and generally have the positive effect of motivating him, but it subliminally prepares the reader for a life engaged in MLM as it keeps harping about building businesses and helping other people -themes which keep getting repeated in MLM seminars. Similarly, I can imagine self-help guru espousing the concept of "saying yes to everything" which inspired a hilarious Jim Carrey movie some years ago. Which is why I really hate stupid websites like Elite Daily and MindBodyGreen.
I think I have developed a vaccine against the immuno-deficiency of the mind.
Here are three books which, if read and processed, leads to the development of healthy skepticism.
a) The first book SHAM, exposes the key issues and flaws with the self-help movement. It is easy to read and immensely entertaining. Almost all your favourite self-help gurus are put to the torch in this book.
b) The second book is Bright-sided by Barbara Ehrenreich which replaces your Pollyannish positive thinking with a dose of gritty realism.
As a side-note, I advise you to always read this book with the works of Martin Seligman who is the father of Positive psychology. I do not find that both author's ideas are mutually exclusive.
c) The third book, which I recently read, is a true classic. Oliver Burkeman hates self-help so much, he practically read the entire body of knowledge of self-help to expose it for his readers and highlights what works and what doesn't. It's hard to imagine a person who now knows more about self-help than Oliver Burkeman.
I think Oliver Burkeman is more than qualified to start a CSHA or a Charter of Self-Help Analyst accreditation body. Life Coaching is pretty good money in the US.
d) Google "John T Reed". John T Reed was an early crusader who set up a website to debunk and expose the real-estate gurus who were his competitors, his points are well thought out and his website contains a lot of dirt on your favorite self-help guru.
A savvy reader would notice that I did not include the ancient philosophers of Skepticism like Pyrrho or Sextus Empiricuswho comes up when you wiki skepticism. The four resources mentioned actually demonstrate how to take down and process key ideas which plague our modern world and form examples on how to skeptical about new ideas.
In the process of reading them, you will also find that they all qualify as great self-help books on their own.
Perhaps in a future book, I will make Skepticism a key skill before we even consider the basic skills required to attain financial independence.
Sunday, June 21, 2015
Some thoughts on parenting on Father's Day.
Thought I'd share some thoughts on parenting.
Giving parenting advice is inherently dangerous for us bloggers because we wouldn't really know what to expect from our kids in the future. Even the children of ministers and top lawyers end up being sidelined by the education system and fathers typically end up paying to send them overseas for a "paper thosai" qualification.
I count myself lucky that my 4-year-old daughter, Clio, is a normal and healthy kid. Other than trying to issue her own currency 2 weeks ago after my mum pretended that she has no money left and trying to mimic Donald Trump's hilarious speech, Clio has not really demonstrated any real talent yet. The only thing she inherited from me so far is that she likes to sing and tries to mimic pop lyrics as she is unable to read yet.
Statistically, I believe that Clio, like most Singaporeans in her generation, will struggle with getting a seat in a local university.
I don't know very much on parenting, I have read many books on child development but I do not conscientiously apply the principles I pick up from those books. One thing I don't do is to stop my mum every-time she says that Clio is smart or pan-lai ( even though me and my wife do not do this on a regular basis as its bad for her intellectual development ).
The insight I wish today on Father's Day is the concept of capital transfer to future generations.
Parents transfer wealth in two ways which I believe should be equivalent to each other if proper planning takes place.
a) Transfer of Financial Capital
Transfer for capital assets happen upon death or on special events. Money and financial securities changes hands from parents to children when parent's die or feel that children are ready to take over some of the assets. This is dominant form of wealth transfer which presents a lot of problems ( or lucrative fees for lawyers ). Asian children are sometimes not ready to take on this amount of wealth and have a strong propensity to spend it all away.
My personal philosophy is teach my kids to manage their wealth properly. Not just in terms of learning how to save, but they also need to play with the capital markets early in life.
b) Transfer of Human Capital
The second form of transfer is the transfer of human capital. The parent makes a wealth deduction to increase the human capital of their children.
This is a huge industry in Singapore. Parents can spend thousands a month to give their kids tuition. The best tutors can be a as rich as hedge fund managers.
On a very disturbing note, there are now camps to prepare children to get into the Gifted education program. I read brochures threatening parents that if their kids are really gifted and nothing is being done to give them special training, they would get bored and would lose interest in their studies.
The first important insight is to recognise what tuition and these gifted boot-camps are, a means of transforming financial capital into your kid's human capital.
c) Balancing financial and human capital transfer is the killer app of parenting.
With the realisation that everything is just a form of capital transfer, parents should be able to move more tactically when making decisions to develop their kids.
Suppose you spend $2,000 a month on tuition and boot-camps, and you believe that if you do this from age 3 until the age of 18, you would be able to push your child into a university program. It is helpful to ask yourself whether you can invest this same $2,000 in a portfolio to generate passive income for your kid such that when he graduates from a polytechnic, the passive income and his salary would be higher than his starting pay as a fresh graduate.
As it turns out that compounded at 7%, paying $2000 for 15 years ends up with a pretty large portfolio of $650,000.
Your kid can get enough capital to build a start-up with that amount of cash.
d) Why I lean towards financial capital transfer.
It can be argued that being somewhat against tuition, I am less kiasu than other parents, but I want to argue that I am actually more kiasu.
When your kids enter an expensive Montessori program or attend an expensive play-school, is there documented evidence that these children go on to university programs after accounting for social economic factors and other variables ? Instead, if a parent were to invest a bit of his own time, he can teach his kids to use Khan Academy and Coursera to pick up skills based on the child's own personal interest.
The statistical evidence for the return of a portfolio of equities, however, is easily accessible over the web. With a time horizon of 15 to 20 years, the odds of a portfolio beating inflation is definitely higher than the odds of your kids getting into law or medical school in NUS.
Of course, to be able to balance the extent of human and capital transfer, you will need to be intimately familiar with the strengths and weaknesses of your child and make decisions accordingly. I believe that tuition should be targeted at the crucial subjects your kid is hopeless at but must pass to get into a good tertiary institution (Like EL1), or at subjects where your kid is so good at, a slight nudge from a trained coach can get your kid into the Olympiads.
It is entirely possible that your kid would not make it academically but can succeed as an entrepreneur instead and would appreciate financial capital instead.
Giving parenting advice is inherently dangerous for us bloggers because we wouldn't really know what to expect from our kids in the future. Even the children of ministers and top lawyers end up being sidelined by the education system and fathers typically end up paying to send them overseas for a "paper thosai" qualification.
I count myself lucky that my 4-year-old daughter, Clio, is a normal and healthy kid. Other than trying to issue her own currency 2 weeks ago after my mum pretended that she has no money left and trying to mimic Donald Trump's hilarious speech, Clio has not really demonstrated any real talent yet. The only thing she inherited from me so far is that she likes to sing and tries to mimic pop lyrics as she is unable to read yet.
Statistically, I believe that Clio, like most Singaporeans in her generation, will struggle with getting a seat in a local university.
I don't know very much on parenting, I have read many books on child development but I do not conscientiously apply the principles I pick up from those books. One thing I don't do is to stop my mum every-time she says that Clio is smart or pan-lai ( even though me and my wife do not do this on a regular basis as its bad for her intellectual development ).
The insight I wish today on Father's Day is the concept of capital transfer to future generations.
Parents transfer wealth in two ways which I believe should be equivalent to each other if proper planning takes place.
a) Transfer of Financial Capital
Transfer for capital assets happen upon death or on special events. Money and financial securities changes hands from parents to children when parent's die or feel that children are ready to take over some of the assets. This is dominant form of wealth transfer which presents a lot of problems ( or lucrative fees for lawyers ). Asian children are sometimes not ready to take on this amount of wealth and have a strong propensity to spend it all away.
My personal philosophy is teach my kids to manage their wealth properly. Not just in terms of learning how to save, but they also need to play with the capital markets early in life.
b) Transfer of Human Capital
The second form of transfer is the transfer of human capital. The parent makes a wealth deduction to increase the human capital of their children.
This is a huge industry in Singapore. Parents can spend thousands a month to give their kids tuition. The best tutors can be a as rich as hedge fund managers.
On a very disturbing note, there are now camps to prepare children to get into the Gifted education program. I read brochures threatening parents that if their kids are really gifted and nothing is being done to give them special training, they would get bored and would lose interest in their studies.
The first important insight is to recognise what tuition and these gifted boot-camps are, a means of transforming financial capital into your kid's human capital.
c) Balancing financial and human capital transfer is the killer app of parenting.
With the realisation that everything is just a form of capital transfer, parents should be able to move more tactically when making decisions to develop their kids.
Suppose you spend $2,000 a month on tuition and boot-camps, and you believe that if you do this from age 3 until the age of 18, you would be able to push your child into a university program. It is helpful to ask yourself whether you can invest this same $2,000 in a portfolio to generate passive income for your kid such that when he graduates from a polytechnic, the passive income and his salary would be higher than his starting pay as a fresh graduate.
As it turns out that compounded at 7%, paying $2000 for 15 years ends up with a pretty large portfolio of $650,000.
Your kid can get enough capital to build a start-up with that amount of cash.
d) Why I lean towards financial capital transfer.
It can be argued that being somewhat against tuition, I am less kiasu than other parents, but I want to argue that I am actually more kiasu.
When your kids enter an expensive Montessori program or attend an expensive play-school, is there documented evidence that these children go on to university programs after accounting for social economic factors and other variables ? Instead, if a parent were to invest a bit of his own time, he can teach his kids to use Khan Academy and Coursera to pick up skills based on the child's own personal interest.
The statistical evidence for the return of a portfolio of equities, however, is easily accessible over the web. With a time horizon of 15 to 20 years, the odds of a portfolio beating inflation is definitely higher than the odds of your kids getting into law or medical school in NUS.
Of course, to be able to balance the extent of human and capital transfer, you will need to be intimately familiar with the strengths and weaknesses of your child and make decisions accordingly. I believe that tuition should be targeted at the crucial subjects your kid is hopeless at but must pass to get into a good tertiary institution (Like EL1), or at subjects where your kid is so good at, a slight nudge from a trained coach can get your kid into the Olympiads.
It is entirely possible that your kid would not make it academically but can succeed as an entrepreneur instead and would appreciate financial capital instead.
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