Letter to Batch 16 of the Early Retirement Masterclass

Dear Students of Batch 16,

It’s been a great honour and privilege to be able to conduct a 2-Day Early Retirement Workshop for you.

We see a gradual downsizing in ERM classes as the effects of the pandemic bite. Further, this has allowed us to expand our offering, and the course is inching ever closer to becoming a three-day program. Batch 16 is also the first time we are officially making Pyinvesting.com and the use of Interactive Brokers part of our training program that allows students the opportunity to do back-testing on Singapore markets on their own without the need for Bloomberg terminal.

Having four consecutive days of webinars also allows students to digest material at their own pace. The ERM can highly rigorous for the first two days, but breaking the material down into four digestible parts is seeing a marked improvement in Batch 16’s quiz performance relative to previous batches.

One area I am contemplating is the introduction of Dark Horse investment for every batch, but this has a mixed record. Our first Dark Horse counter was Accordia Golf Trust for Batch 14, and it gained 26%. Our second Dark Horse for Batch 15 was First Shipping Lease which inflicted a 15% loss when dividends failed to materialise this quarter.

Batch 16 did not have a Dark Horse stock, but I am glad that we were able to have an in-depth discussion on HPH Trust which is currently yielding over 11%. A student in the port industry was able to provide her two cents worth on this counter. Eventually, HPH Trust did not make it into the final portfolio.

Finally, I’m glad that some students were able to share their insights on hiring help for start-ups in Singapore. An HR practitioner told me that UX and Design specialists are quite hard to find in this job market and if I am willing to get interns a more pragmatic move would be to hire fine arts graduates and then train them for whatever tasks that lie ahead of them. In almost every batch I taught, I was both a trainer as well as a student.

Moving forward, I hope that Batch 16 would participate actively in the FB group. We should be able to see each other again soon as I am preparing for a webinar for all ERM graduates in September.

Christopher Ng Wai Chung

YEFI - Yes to Entrepreneurship and Financial Independence

I'm still in the middle of conducting Batch 16 of my ERM course so I thought I may write a short note on some developments on the professional front. 

I am fairly close to entering a new stage in my professional life. After graduating about 16 batches of students, being very conservative, I think that it is time to start scaling up to run a small business to assume the bulk of work conducting my financial training.

My program is evolving in a different way than many training programs you will find out there. 

Just this week, I launched an online tool on Heroku for my community just to see what happens when analytical tools are made freely available. Because I opted for free cloud hosting, the website was sometimes slow, but it showed me that one amateur Python developer can build something useful for a community without an expensive army of software developers. 

The experience of doing this has shown me that reporting taxes as an individual may not make sense any longer in 2021. Even at a small scale, hosting fees for a startup will reach $200 a month. Taking into account the potential of hiring interns ( I desperately need a good entry-level designer to help me with my slides and UX ), incorporating a Pte Ltd company is now a no brainer. 

Incorporating will take some time as I've also signed up to participate in an SMU incubator. Even though I have ready revenue coming in, the problem is I want ideas to push my business further, would a low-cost webinar for Millenials be a solution or something for all Singaporeans under Skills Future? A good start-up will pivot several times before finding an interesting business problem to solve. 

Personally, I am taking the development of my coding skills up a few notches. I am learning Django on Coursera. I think this is the time to move away from Data Science to build lasting web applications. After that, I hope to fool around with GPT-3 - I strongly believe that a Python amateur can train the AI to draft a few simple clauses in a business contract.  

It's amazing how far my journey has come and I probably did everything in the wrong order. 

I became financially independent early so that I can run a business whereas most Singaporeans become businessmen solely to become financially independent. 

Even so, going YEFI has several advantages:

• Successful businesses tended to be started up by rich kids with a trust fund. If you FIRE, you effectively have your own trust fund to back you up in case you failed.
• Most successful businesses are started by folks in their mid-40s. 

The final question I need to address is why even bother?

I've been reading this really disturbing experiment called the Calhoun Rodent Utopia experiment. Someone discovered that giving a rodent colony free access to unlimited food, water and space caused an eventual collapse because rats starting forming hierarchies and acted cruelly to each other. 

The experiment was very prescient because it predicted the rise of BBFA in Singapore society. A group of rats, frustrated with society, withdrawn themselves from the mating pool, and society became full of "beautiful males" who groomed themselves and refused to mate and "isolated females", who became feral and kept mostly to themselves. 

You see this amount of hierarchy building in financial communities. Someone builds useful tool that can potentially improve investment performance but ends up getting attacked for no reason by a few salty forummers. I was guessing that this is probably a remisier or FA who feel threatened by new investment platforms. 

One possible interpretation of the experiment is that even if all basic needs are being met, living things need to be challenged and find meaning in life. 

Imagine the FIRE community in Singapore as rodents who are living on food and water provided by dividends payouts. 

What happens when they come together?

• Hierarchies will form. Some FI blogger will be elevated to guru status, another is a stupid noob. No one questions the validity of the guru's ideas. The noob gets ragged. 
• Jockeying for position will take place. Sooner or later, someone on social media will brag about his investment on Tesla. 
•  People with unusual ideas will be attacked. Like those who love talking up leverage.

Once you understand the dissolution and impossibilities of utopias, you think of a way to get out.

I think the solution is always to transcend your boundaries. Level up, build new capabilities, and never allow the community or anyone to define you. 

When you YEFI, the problems you are interested in will change. Someone earning from Tesla will stop bothering you if you have to decide what kind of Tesla your company will eventually be. 

Five years ago, I took the plunge and made a whole lot of new friends, all decent lawyers today. 

I hope that in a few months, I can meet more young people who are betting the farm on their start-ups.

 

The Useless class, UBIBBFAMMORPG and anime dating

With retrenchments at an all-time high and trending even higher, NAS daily has put up a video on the useless. The idea is that with AI and technology being able to replace an entire swath of workers in society, a totally useless caste of citizens will arise and they would not be able to contribute to society in any way. At this stage,  NAS Daily begins to paint a positive picture on the useless class, arguing that they would be able to have the free time to engage in art and creative pursuits. 

I agree with the first part of NAS' analysis. For the past few days, I've been watching tutorial videos on GPT-3, OpenAI's latest algorithm and the products are extremely creepy. You can issue a text-based command in English and the AI can generate computer code to perform your objectives. With some work, it's not fetched that an AI can draft simple legal contracts when issued instructions in English and reduce billing hours aggressively, this will crimp the demand for legal associates.

The second part of NAS argument is iffy. We will not know whether these technologies will create a utopia or a dystopia. An unemployed population can happily create more memes on the Internet, or they can spew hate against minorities/women and commit crimes. The tax burden on the much smaller workforce will also be extremely high.

What I do know is that human males love to form rigid hierarchies whenever they come together in groups. In anime, a tradition is to have a "senpai/kohai" relationship drive a story. Masses of useless males with a lot of free time seems like a recipe for trouble as they start finding ways to one-up each other by generating chaos. 

One possible solution I can think of is for society and policymakers to "drug" human males with computer games, create a real opiate for the urban unemployed masses. I think many of my friends are highly attracted to the UBIBBFAMMORPG concept - swaths of economically defeated males retreating into the next generation MMORPG so that they can be the protagonist of a heroic story, all this while living on a minimum wage from society.  

UBIBBFAMMORPG has three components :

• Universal Basic Income - a super-small stipend given to the entire population to support a barebones existence. 
• Bui Bui Forever Alone - a celibate lifestyle that eschews family life with the bonus effect that does not overburden the taxpayer from supporting your family. Makes UBI possible.
• MMORPG - A heroic and entertaining existence in an alternate virtual world.

I think the concept of a male retreat from marriage and reproduction is now more real than before. When a male can't put food on the table, his ego gets threatened. He can fight by protesting against the government/society, or he can retreat. 

Nothing shows how difficult dating like can be than the hilarious blind date episode in Black Clover ep 27-28. 

In this episode, a "chee-hong" guy wants to meet women, struggles to get his BBFA friends along only to have them sabo his attempts to look good. Worse, the women keep to themselves and were unresponsive throughout most of the engagement. This is one of those ridiculous real anime episodes BBFAs consume on a regular basis. 

It may be tempting to project the macroeconomic impact of the COVID virus, there is still some uncertainty on how to tilt a portfolio.

But I think the idea that a large swath of under-employed males will stop participating in mainstream society, marriage and family formation is something I have a lot more confidence in. This is because I know folks who are beyond the possibility of employment and enjoying this kind of life. 

I also carry "associate membership" in the BBFA club, watching anime, painting miniature and taking afternoon naps and can see how fun this life can be.

If you agree with me and want to invest in this theme, look no further than gaming companies in the US and China. 

Personal Update

 Ok, it is time for another personal update. 

a) Business

There are quite a few exciting developments on the business front. Business is going to be slow over the next few months, so I've started taking my first steps towards creating a new business as a place-holder for all my activities. As there is likely to be coding and tech component to it, I am thinking about positioning it as a start-up within an incubator. We've come quite far disrupting the training business and it is time to build more powerful and exclusive analytical tools for my students to disrupt the industry even further. 

Within a month or so, this blog will begin to discuss what it is like for a rookie to get into a start-up situation. I think the time to do this is right as the manpower situation may be shifting towards an employer's market in the future and I really help on the design, marketing and aesthetic front from young interns.

A couple of personal projects have the potential for new business offerings. I hope to work with secondary schools over the next few weeks and something will likely bear fruit on the publishing front in October. 

b) Coding

After doing so much to work to analyse Yahoo price data, I finally got the book that shows me how real traders program in Python to do backtesting and I really don't like what I see. A lot of these backtesting frameworks require the coder to get used to a framework that may or may not see proper support in the future. Also using the code of other programmers lead to the frustrating virtual environment issues that take hours to resolve, I use Python 38, library works only with Python 3,5. Finally, some frameworks may not work with other - I spent a day trying to get fastquant to output to streamlit to no avail.

The modern developer faces a lot of dilemmas. Most of the time it's getting disparate code to work and it may have to keep happening when code gets updated. It may be wiser to develop the capabilities in house.

I managed to get MA cross-overs into my personal tool without any special libraries. 

I'm quite determined to be my own CTO if I start a business.

c) Books and Leisure

It's not been good for reading lately. Got a small book on behavioural finance but not useful after one reading. Tried to relax by reading Kazuo Ishiguro's The Buried Giant and it was somnambulistic. I think the literary greats will lose out on the modern crowd who need action and violence in their fantasy stories. An old couple visiting a Saxon village nearby is not a story a young anime or RPG fan can endure. 

Speaking of anime...

I am binge-watching Black Clover that is anime's take on a Harry Potter-like fantasy.  Now, this is a satisfying series about magic and class struggle within a magical society. 

I came dangerously close to picking a miniature game this week. I've avoided miniature games in the past because I don't want to spend weeks painting my miniatures before I get to play them. Now, for business reasons, the wargames have started to scale down and you can run a game with 20 miniatures for $100. 

Right now, I am reviewing the obvious Warhammer 40,000 against Corvus Belli. Warhammer has a large fan base but Corvus Belli requires a smaller army and has a system with more moving parts.

Frankly, I'd rather not get into the miniatures wargaming madness but RPG sections in game-shops are shrinking and in a few years, I might not have a reason to go there anymore without something else to look forward to.

Crazy Python experiments on Moving Average Crossovers

I've spent the greater part of the past 2 days fooling around with Python-based back-testers. Specifically, I was playing with the Quantopian Zipline tool and this really powerful library called fastquant. The development work was frustrating as I had to debug the code from other developers while resolving Python versioning issues on my own PC. I am having second thoughts of being my own CTO if I incorporate later this year.   

After working for a day, I don't have a full-fledged article for a larger readership from Dr. Wealth, but I can share what I am experimenting with on this blog. One of the questions that repeatedly gets asked by my students is when can they exit their investments. As I focus on dividend yields and retirement planning, I don't have a straight-forward answer as I like to hold onto my investments as long as possible.

But times change. 

We're entering the Interactive Brokers era and I have started making margin trades at $2.50 a trade and pay 1.6% for margin financing. Trainers need to react to maintain thought leadership in their respective fields. 

( Do you want to be the kind of Visual Basic or .NET instructor in this modern age when open-sourced Python libraries are being churned out at a break-neck pace? )

One possibility of timing an exit is to employ two moving averages. A fast-moving average that mirrors short term price movements and a slow-moving average that mirrors a long term price movement. So for TA specialists, a sell signal occurs when the faster MA moves below the slower MA. 

But I've never been comfortable with TA because:

• Who gets to decide on the fast and slow MA parameters? 
• What evidence is there to show that setting the parameters can mitigate losses?

Fortunately, I have now developed a tool to run back-tests over a range of fast and slow MAs and I can now display everything on a heatmap. 

Here are the MA cross-over results for the Lion Philip SREIT ETF based on three years of trade data. 

When interpreting the heatmap, we want to focus on green patches - where the cells are green, the potential for positive returns when using this cross-over strategy exists in historical data.

So by inspecting the heatmap, a good time to sell the Lion Philip SREIT ETF would be when the 10-day moving average dips below the 180-day moving average for the counter. 

I don't think this insight is ready for deployment yet because like many TA approaches this smacks a little of data mining - interrogating data sets until you find some trading nugget that can make you money had you invested in the past. You can lose a lot of money in the future if you don't play this right.

If I pursue this path, I would need to test the trading approach on an out-of-sample dataset. I also need to convince myself that green patches don't shift too much across time. 

What I did learn today is that different stock counters require different moving average timings and one sure sign of a fixed prescribed MA crossover parameter in an investment course notes ma be enough for me to call bullshit on the guru in question.

 

[Die with Zero] Distributing your wealth before you die

 

For years, the dominant logic on the financial blogosphere is that children need to be taught the value of resilience and hard work. Therefore children should be given very little wealth transfers and made to fend for themselves. I always felt that there is a sense of hypocrisy when parents say this because most Singaporean parents prefer to transfer wealth to complete strangers - tutors and enrichment schools to prepare their children for the future!

Die With Zero has an extremely logical reason for folks to consider gifting to children prior to death. This makes sense for folks who have already become financially independent and have secure annuity payments at later age.

• Most of your children would be too old when they receive funds through inheritance. Singaporeans live till 85, so if you have a child at age 30, he/she expects to receive the proceeds at age 55. At this age, most would not benefit too much at this age. For some unfortunate souls, they could be living in poverty until this time.
• As you grow older, you will need less money for leisure. Most of your expenses are focused on medical needs. You children may need the money to maybe raise children of their own. 
• Young people who are raised well can bring energy and a newfound discipline in money management. I know because I brought my father's portfolio into REITs. My mother now has enough income to sustain all of her expenses. She's also become extremely savvy at local equities.
• You can distribute most of your wealth before you need to rely on lawyers and the courts to distribute your wealth.
• It can improve relationships within your family. Money is a source of personal development and improvement.

For my case, it is a bit too early to decide whether to go with early wealth distribution. A lot of my current wealth right now (since my dad is gone) is not earned within my own generation so I am inclined to give it to my kids early, but I want to ensure that they live responsibly. 

One idea is to tie getting a useful local degree to an early payout. I won't be baited to declare what degree is useful in 2040 because I won't know right now, but I expect my kids to study a skill society needs before I distribute something to them. Alternatively, is there are no jobs in the future, I may inject capital for them to start a business. The most successful businesses are set up by wealthy kids with trust fund support. 

At the end of the day, which approach is correct?

It is about corruption.

We need to understand whether a wealth injection can corrupt a person and remove their motivation to work. From what I know about folks who gain financial independence, some will indeed become more laid back, but others will use this freedom to make a bigger dent in the universe. For my own experience, I experienced a drastic reduction to work for others but an overwhelming desire to run my own show.  

I believe that parents do know whether having more money will corrupt their kids. Odds are kinda hard for my family because we did not adopt middle-class values. My kids take public transport and don't see parents wearing pretty clothes.

But I better observe my own tykes before I form my conclusion. 

 

 

[Die with Zero] Peak Net Worth and Decumulation with CPF Life

 

One uncomfortable idea shared by Die with Zero is the idea that if we really believe in consumption smoothing, we would have to entertain the idea that a certain period of our life, we would hit our peak net worth. It means decreasing net-worth thereafter. 

The reasoning is actually quite sound - at an older age, we will not need so much money anymore. We should also take the time to enjoy what we have already earned. 

The year by which we attain peak net worth, however, is subjective. Any time in your 40s is fine but I think that in Singapore, the peak should not arrive earlier than 55 when you can extract your CPF money. It is also affected by the age by which your kids start being able to hold down a job and fend for themselves. 

The second aspect of peak net worth is that we need to now find the way to decumulate our wealth or to spend a proportion of it every year until we end up with a net worth of $0 on our last day on earth.

At this point, I will try to solve the problem for a Singaporean at the boundary conditions. 

The solution at the end of life is not that hard - we know that CPF Life can be deferred until 70.  To make decumulation possible, it is best to have the maximum amount possible in your CPF-RA pegged to an escalating plan and deferring payment for the longest time. I entered my age into the CPF calculator and using the Escalating Plan, setting the amount to $271,000, I should be able to extract a minimum of $2,147 from CPF Life. This even escalates to keep pace with inflation. 

So we've solved the Die with Zero problem by getting enough annuities to support us after age 70. Anyway, at age 70, you would not be going anywhere so more money beyond $2,100 might even be pointless.

Now we have a guarantee of monthly payouts to start providing income support from age 70, all that is left to do is to decumulate until age 70. Simply ear-mark a percentage of your liquid net-worth to be spent in the upcoming year. 

Suppose you are now 55 years old. You will have 15 years until you are 70 years old. You can spend 1/15 of your net-worth or 6.66% plus your income that year. If you have $2,000,000 and earned $100,000 that year, you need to spend $233,333 to decumulate by year-end. The idea is that excess unspent wealth can be gifted to your children so that they will not need to wait for you to die to have money to spend. At age 56, you can spend 1/14 of your liquid net worth.

I think the difficult part of this mental exercise would be to accept that after a certain point in your life, your net worth will start dropping moving forward. 

It is unthinkable for me. 

But there is wisdom not holding onto your wealth and giving it to your children instead while they are in their career forming years. As they are young, they can bring a certain dynamism and energy into portfolio management. 

If the money is kept with older folks it would be too tempting to keep it rotting in bonds investments all day. 

 

 

[Die with Zero] Buckets Lists are so passe ! Use this instead.

 

The book Die with Zero has also put the traditional notion of the Bucket List to death, and this makes sense whether you are a believer of the FIRE movement or a subscriber to the conventional ideas of a commissioned financial advisor. 

For the older generation, there is this idea that retirement is a reward for a life well-lived, so most of Gen X engaged in their careers believing that by delaying gratification and working hard, they will be rewarded with a life of casual travel with their teenaged children after being able to take out their CPF money.

But this form of delay of gratification can be risky :

• A Gen-X career no longer lasts until you can get your money out at 55. A cynic once said that an engineer's career is basically doing MNC work in his 30s, working for a government agency in his 40s, driving Grab above his 50s, and selling cardboard in his 60s.
• If you raise children and if they find creative ways to disappoint you by being unable to enrol in a local degree program, a significant drain on your CPF may result in you not making a proper withdrawal from your CPF at age 55. 
• You may not have the stamina to go through the bucket list you came up with while in your 20s and 30s.

My life is actually not oriented toward personal happiness as I see achievements as my primary reason for existence. But there are some things I regret that I was unable to do when I was younger. The Cranberries came twice into Singapore to give a concert and I missed both events, figuring out that the Cranberries would still be around when I am in better financial footing. A few years ago, the lead singer of the band Dolores O'Riordan passed away, taking this possibility off the table. 

When it comes to travel, I initially wanted to see the Aurora Borealis but struck it off my list after a friend paid thousands of dollars but did not see it due to stroke of bad luck. My fear is that I may no longer be able to visit Lhasa Tibet because it is located at high-altitude and I may develop breathing problems going there.

For women, regardless of the reproductive technologies available, it is generally unwise to defer having a family beyond her 40s. ( Ask yourselves, what kind of guy would be willing to help? )

 

The solution to the problem is to do away with bucket lists all together in favour of Time Buckets.

Divide your working life into different 5-year periods and create one or two items for each life period.

An example for my BBFA readership might look like this:

25-30:  Backpack for 20 days in Europe. Have sex with 100 different prostitutes in Geylang and Prague.

30-35: Go to Fanxipan in Vietnam. Settle down, marry someone, and start a family.  

35-40: Visit US for Gen Con. Visit Japan for an Anime festival. 

40-45: Start a small business. Visit Australia to see if can emigrate there. Hire a sugar baby.

45-50: Start assembling all your spare Gunpla. Start a photography hobby. Visit Switzerland

50-55: Participate in a senior citizen singing competition. Write a book about having sex with 100 different prostitutes.

55+: Watch Netflix anime and play MMORPGS all day. 

Have fun figuring out which ones actually do belong to me!

Distributing key bucket list objectives to different 5-year period of your life can effectively balance your life and allow you to take on objectives that require a lot more energy of youth. This can minimise the regret that you will have at the end of your life and raises the number of memory dividends that you will be able to get throughout your life.

 

 

Kuji... Kuji...Kuji your head ah! This is Tikam!

Just the other day I was buying a Russian-Hainanese dinner at the Shashlik for my friends who helped me out with the last community webinar last quarter and came along this famous computer game shop called Qisahn. The shop is in the gradual process of diversifying away from their traditional business of selling console games and I saw some unusual Gundam miniatures on their shelves. 

After some enquiries, I was told that the Gundam figurines are not for sale. Instead, I have to pay for a ticket that would give me a chance to win the figurine. Thanks to the prodding of my friend, I decided to pay $14 for a ticket for a chance at a draw.

The outcome turned out to be a huge disappointment - easily one of my worst bets since adding Eagle Hospitality Trusts into my portfolio. For $14, I became the owner of three plastic Gundam clear folders as shown above.

Lucky draw gimmicks are not a new thing. When I was growing up in Senai, I used to play a lot of Tikam, but the stakes were very small. I would pay 20 sen to get four attempts and for some strange reason, I would consistently win more money at the local toy shop across the main road.

The new version of Tikam is what the Japanese call Kuji and it's quite a big deal. 

The latest Kuji series for Demonslayer costs almost $17 for a random bet features miniatures from this hit series that my kids are really crazy about. When I checked a game shop out at Bugis+, they were all apparently sold out. 

I will probably avoid playing Kuji from now on. God knows how many annoying Zenitsu key chains I will wind up getting before I can get my hands on a proper Nezuko statue. I have spent so much of my income on Magic the Gathering cards in my younger days.

Of course, there is a way to procure the goods with less risk and you might even be able to come out ahead. You can pay $300-$400 to buy a batch of random tickets and then sell off a complete set of minis at a price 80%-90% of what you pay for and earn a raw profit from the rest of your random knick-knacks. I went into Carousell and I can see some folks are doing exactly that.

The lesson is simple - Capitalism is not limited to only the well-heeled. 

I think an enterprising kid can be a Kuji merchant on Carousell with a capital of about $1,000. 

It's almost like structuring your own CDO and selling it to the masses. 

[Die with Zero] Simisai also produce dividends

We continue a series of articles from key ideas found in Die with Zero by Bill Perkins.

In the 1990s, beyond the concept of Intelligence Quotient or IQ, there was a proliferation of quotients by authors that include  Emotional Quotient / EQ, Adversity Quotient / AQ and, soon enough, Spiritual Quotient or SQ. This led to the popular behaviour of labelling anyone who has a better argument or scholastic achievements someone with "High IQ, Low EQ".

More recently, this phenomenon has shifted to the word Capital with popular works channelling ideas like Human Capital, Psychological Capital, Social Capital and Cultural Capital. 

I believe it is time a new age to arise where everything and anything can be said to produce dividends. 

We are now entering the Age of  "Simisai to also produce Dividends!". in the case of MMORPG players, dividends are basically "damage over time". 

Another brilliant idea from the book is the concept of Memory Dividends. 

The author reminds readers that investments are not the only thing in life that generates dividends, memories and experiences can also perform the same function. Suppose you take a one-month-long trip back-packing to Europe, the memory of such a trip pays a dividend every time you recall it. You can even be telling your grandchildren about it many years later. This is supported by academic studies that show that experiential goods are superior to material ones. The author reminds readers not to neglect the accumulation of happy memories in our drive to reach financial independence.

I think the author makes a whole lot of sense. One weakness of the FIRE movement in Singapore is that the most respectable FI blogs in Singapore do not seem to even of a life worth living (this blog is guilty of that as well as I mostly watch anime when I am not looking at financial markets). Young folks might think dividends are accumulated to live a BBFA existence playing computer games the whole day!

There are three areas where I think the memory dividends analogy may reflect the same attributes of a financial dividend.

The first point is that positive memories may not require a trade-off with money. You get more dividends proportional to the stocks you buy. Your experiences do not get better or more life-changing based on the money that you invest in it. Just the other day, I found a large grasshopper in my condo car park that day and managed to bring it to my kids (unharmed), it triggered memories of my own childhood in Senai Johor when my uncle brought me to catch insects. On the other hand, my friend brought me to a fairly atas coffee outlet in town. The music was loud and anachronistic. Imagine Singapore XinYao music being piped to a lavish eatery with Morrocan decoration. The price was also quite high although the coffee is really quite good. The loud, anachronistic music selection negated the positive ambience of the place made possible by the high price point. 

The second point is that we can reinvest dividends for yourself but it's much harder to do so in practice for your memories. The best I can do is recount a memory to someone else so that they can benefit from it at a later time but generally speaking, memories cannot be used to generate new memories. 

The final point is that unlike financial dividends, memory dividends can be negative. Imagine if you hire Bon Jovi to perform a concert at a private event so that you can propose to your girlfriend but she says no and breaks up with you instead. Next time you hear Living on a Prayer, it would make you feel sad, angry or both.

On balance, the analogy of memory dividends is a decent one as I suspect no one on his death-bed would have wanted more legendary drops from an MMORPG. It is also a useful reminder for the top-FIRE practitioners to consider building up an enjoyable pool of personal experiences to complement their now immense wealth. 

  

Die with Zero - The Perfect Anti-FIRE book

I've been searching for an ANTI-FIRE manual for quite a while because I firmly believe that the FIRE community should not be an echo chamber. Also, there are strong commercial reasons for commissioned Financial advisors to launch subtle attacks on FIRE - you can see if whenever someone decides to become an apologist to YOLO Singaporeans who fail to hit their retirement targets or writes about how the REITs strategy is doomed. The truth is that attacks on the FIRE movement in Singapore are somewhat unsophisticated, slightly alarmist and somewhat funny because of the call to action often embedded in these articles. 

Die with Zero by Bill Perkins is a powerful anti-thesis to the FIRE movement. 

This masterful piece of work is made better as Bill was an engineer who worked for many years in the finance industry and sees himself as part of the FIRE movement earlier in his professional life. The book is chockful of data and analysis to support his view that for some folks who are avid FIRErs, the objective is not to die with the most money but to die with $0. 

I will be channelling the best ideas from the book for the next few articles but I will start with just the simplest one for readers of this blog - consumption smoothing.

I've known for a while that financial planners in the US fervently believe in consumption smoothing. If a savvy commissioned financial advisor were to propose consumption smoothing as the ultimate goal in personal finance, a FIRE fanatic might become as offended as a commissioned FA who is presented with an idea like Buy Term and Invest the Rest. 

The idea is simple - instead of trying to accumulate as much money as possible when we die or save more money in our 20s, it is better to smooth out personal consumption to achieve balance throughout our lifetimes. This has a dramatic effect on a person's life - Folks in their 20s can even afford to have negative savings - someone can justify borrowing money to take a trip to the Himalayas. When he gets older, this is the kind of trip that he is not likely to have the stamina to endure. The idea that some forms of leisure and recreation can only be done when a person is young is the most persuasive argument for consumption smoothing.

Perhaps not incidentally, the idea of consumption smoothing also unlocks a lot of commission bearing sales possibilities for the FA, such as making annuities part of the retirement asset mix later on.

This concept is not new to me. 

Many years ago, having been exposed to the idea, I see it as a selfish construct of the Western liberal lifestyle that puts the self on the pedestal. For Asians, some of us like myself are living well based on the goodwill of my ancestors, it is only fair that we pass it down to future generations. Ideally, I prefer every new generation of Singaporeans to have better lives than before. 

Also, savers are not really suffering in a capitalistic society. Even as I spend only a small fraction of my dividend income these days, my life is certainly not bad - I take afternoon naps and can go to Lavender to get butter kopi anytime I want. 

Expect this book to influence my writings for the next few articles. I think it's compulsory reading for folks in the FIRE movement who want a more balanced view on personal finance. 

Unethical FAs will also find some ideas to torpedo the FIRE movement that is more sophisticated and well supported than the usual pathetic fare found in local blogs. 

 

Just survived two health scares...

This has been a painful weekend for me...

First, for reasons I can't fathom I went for a short 3km night run on Thursday night. The run was easy peasy and I did not even sweat. The next morning I felt a sharp pain on my left knee-cap. The following day the pain became almost as bad as a gout attack so I suspected that my gout came back. After limping to see the doctor, I was told that there is no way this can be gout and I tore something on my kneecap during my run. I was given pain-killers and sent my way home.

That turned out to be a smaller problem over the weekend.

My wife who had back pain for the past few weeks went for an x-ray and the results came back over the same weekend. The GP just said it was serious and she has to consult a specialist. The x-ray had a lot of arcane medical terms like "lumbar spondylosis". Googling the terms made us even more worried because some website claimed that it can shorten my wife's like by a decade.

I did two things - I made an appointment with the government hospital and then in desperation, I contacted an ERM  student who worked in the private healthcare sector and asked for a few good names to help with my problem. Before the government hospital could even get back with an email, I secured an appointment at a private hospital first thing Monday morning at 10am.

Paying for an expert is well worth the money.

It saved us time and the doctor was able to explain very clearly what the x-ray meant. As it turned out, the folks who did the X-Ray was too thorough and exaggerated the problem ( keyword spam ). All the expert need to do was to examine the x-ray directly himself. My wife needs to do more physical exercises to strengthen her core muscles so that she does not end up with a slipped disc. The specialist also explained the various scenarios where we would need to see him again. After the session, I was so eager to close the case.

The session was probably more expensive than the government hospital, but early closure and peace of mind are probably worth more than the savings made. I imagine the weekly delays that can come about if we opted for the government hospitals which were probably too busy fighting COVID-19.

I think we got off lucky over the weekend. Health problems in middle age are rarely solved with a combination of physical exercise and money. As a middle-aged couple, the possibility of losing our quality of life and time through a painful surgery is a real possibility.

I am starting to have second thoughts about my own diabetic treatment under government hospitals.

Maybe I should just pay more for more regular sessions and find a doctor who is open-minded about the latest treatments. My current doctor is really great, but he's fighting COVID-19, and my appointments have already been postponed twice.

This is a first-world problem. I never use my hard-earned income for my health expenses preferring to use my investment income to handle my health issues. 

I think the lesson for readers is to better spend some time to focus on health when younger so that you won't end up with chronic problems later like me. The distant second-best approach is to make enough money to pay your out if your health does take a bad turn.

Still on holiday mood...

I'm not ready to write about anything particularly hardcore yet.

My short self imposed holiday just ended yesterday with possibly the best Transformers series since the 1980s movie that murdered Optimus Prime and the Generation 1 robots. This reboot is hardcore and catered to Transformers fans who are now parents.

The storyline is very dark.

What I really like the world-building in Cybertron is that it now hints that Decepticons were working-class robots revolting against inequality while under the thumb of a brutal police regime.  Also casting Ultra Magnus as some sort of Neville Chamberlain loser makes the story a lot grittier since Megatron has always been a Hitler like-leader with propaganda machine and mad scientist.

 I strongly recommend that those with a Netflix account watch it ASAP.



Otherwise, I am still stuck reading a history text on Erwin Rommel. History is fascinating and I see the first-hand dangers of being led by someone who is ENTJ - which is incidentally my MBTI profile.

As a war leader, Rommel is without peer. As a manager and strategist. his record is a lot spottier - he's just not good at handling logistics. I can recognise his need to lead from the front and always have skin in the game, this is something I channel in my work these days. I am too familiar with his insubordination to his leaders. If the Nazi regime were not looking so hard for a poster boy, he would probably be hanged.

Reading the account of Rommel's Afrika Corps run stung me a little because I felt that I met my own Torbruk when I did government procurement. Sometimes, for paper-work reasons, you just need to run.

The idea of us ENTJ's being defeated by a bunch of eunuch-like, bureaucrat ISTJ generals like the crop of British war leaders is very real and uncomfortable to me and I am determined not to end up like Rommel. Fortunately, wielding the right data science tools can harness the power of the most anal data wonk in the hands of a visionary leader. 

A lot of MBA CEO types are ENTJs like Erwin Rommel, I strongly recommend understanding his rise and fall because it will have parallels with your own career. While a lot of ENTJS command the highest incomes in the industry, I suspect survivorship bias may cover-up the more dramatic and painful falls of our kind - I strongly suspect Ellen Degeneres to be the latest one.

Looks like someone else has offered to write something for the Dr Wealth Blog.

I will do something the following week.

Personal Update - Taking a breather.

With the end of Batch 15 and no previews this week, I decided to take a short break from doing any work. This includes a short moratorium on Python coding. Instead, I focused mainly on arranging meetings with partners and allies.

a) Cori super masks may be the best mask for teaching.

Wearing a mask to conduct a full day of investment lectures was a really smelly affair, I have been testing several masks and, so far for me, Cori Supermasks provides the most comfortable option. They are not cheap coming at around $9 and they break easily. Another good candidate is KN95 which I hope to trial in August.

b) Working on Interactive Brokers

I am working with my community to iron out the basic of trading with Interactive Brokers and hopefully coming up with a short guide on it in the future.  Getting basic trades for Singapore stocks was a breeze, but I can't seem to trade local retail bonds.

Also, I am sorting out the margin financing options which can be a big gamechanger in Singapore but no luck so far.

c) Reading about Erwin Rommel



I suddenly developed an interest in WWII German Field Marshal Erwin Rommel and picked up a book to read. Sadly, Daniel Butler's book reads like a history text and felt more like a recount of WWII than a discussion of Rommel's personality and tactics.

Fortunately, there are things to learn from this account. I think in life, you can't wait for things to be perfect to execute your moves, to win in financial markets, sometimes you need to double down when you taste blood. Rommel had an eerie sense of understanding of when the morale of his enemy breaks and won many battles where he was numerically inferior. Sadly, it took too long for him to see HItler's true colours and he died a tragic death.

I imagine Rommel to be the inspiration of some characters in Pop Culture. Thrawn of Star Wars probably was inspired by this great Field Marshal.

Otherwise, I am buying manga for my daughter and reading ahead for Demonslayer.

d) Shows I am watching 



I completed all of Kono Suba's episodes and now watching That Time I got Reincarnated as a Slime. 

I am holding out on anime until tomorrow when the latest Transformers:War for Cybertron cartoons launches on Netflix.

This is going to be big for Transformers fans and I watch it with my son who is a big fan.

That's it for now. I am still figuring out what I need to do to enjoy my short holiday that ends on coming Saturday. A more serious investing article on Dr Wealth should be out over the weekend or early next week.

Letter to Batch 15 of the Early Retirement Masterclass

Dear Students of Batch 15,

It’s been a great honour and privilege to be able to conduct a 2-Day Early Retirement Workshop for you.

As Phase 2 begins, with some folks returning to work, we are beginning to see a gradual reduction in our class sizes which is good as it allows me to provide every member of Batch 15 more attention to their needs. We have also expanded the program to 2.5 days so that we will have more time to discuss and debate potential investment choices.

With Batch 15 there is also a lot more discretion in the construction of your respective portfolios. I look forward to investing in the blended portfolio you have constructed; the final yield is relatively modest at 6%. Beyond getting each group to decide whether to buy or not to buy a stock, we conduct one more vote to buy only six counters from the bluechip and REIT categories. So some stocks chosen by the teams may not be included in the final portfolio. Students who can afford larger portfolios can buy the three counters selected by the groups but were rejected through the democratic voting process. The side effect of doing this is that you will wind up with higher dividend yields over the longer term.

For this batch of students, we’ve also introduced a “dark horse” business trust in our collection that constitutes a calculated bet that can either result in massive gains or losses over the next few months. For more conservative members of the class, you may swap it out with a safer investment like Ascendas REITs.

The class discussions were also impressive with savvy students providing some fascinating insights into the tankers business. In the finale where we performed the emigration exercise, Thailand won again as a favoured destination for emigration.

Moving forward, I hope that Batch 15 would participate actively in the FB group. We should be able to see each other again soon as I am preparing for a webinar for all ERM graduates in September.

Christopher Ng Wai Chung

How Millenials can save themselves when it comes to their Personal Finances

I was quite appalled when I read the latest article that features the latest sensations in personal finance blogs. What triggered me was the casual statement that a lot of millennials who identified themselves as "creatives" find Seedly too dry for their tastes. For the past few days, I wanted to troll the heck out of millennial readers on this blog, but I stopped myself because there are plenty of losers in my own generations too.

It's so easy for Gen-X to caricature Millenials as avocado-toast-eating, bubble-tea-drinking people who get offended easily when you do not support their pet causes like alternative lifestyles, inequality and environmental awareness. I should not forget that it was my own generation that read BigO magazine, attended tea parties at Fire disco,  sniffed glue at void decks, and fapped to the pages FHM. (I'm at least responsible for one of those things mentioned)

But I also need to light the candle instead of cursing the darkness. Taking a page from the Worker's Party, I've decided to take the high road and see whether there are ways for Millenials to save themselves on the financial front.

I think the secret for Millenials ( as well as slowpokes in Gen-X) is that developing financial knowledge is like muscle training. You need to start slow and ease yourself into successively more difficult mediums of instruction, if you jump immediately to read Seedly, you will be demoralised and will lose faith in your ability to build up your financial muscle.

So here's what I think a good glide-path would look like:

a) Start with The Woke Salaryman

I think the Woke Salaryman is probably the best thing that evolved out of the web in recent days. Missing in the blogosphere is a nice webcomic that is a little bit like The Oatmeal that makes financial knowledge easily digestible. Starting out by reading this comic is the easier thing to do because the comic is even easier to understand than following, say, DC Comic's Doomsday Clock.

I predict the founders will make a lot of money if they aren't already raking in cash, thus vindicating essential value creatives have to provide in Singapore.

b) Read The Richest Man in Babylon by George Clason

I see only one weakness in following The Woke Salaryman - that deeper ideas in finance are hard to express in comic form. So you can't just stop there, you need to develop your skills further.

So the second step in your journey in to read The Richest Man in Babylon by George Clason that is the simplest personal finance book to read that takes away all the bullshit such as those found in the purple series of popular finance book on the shelves.

I admit this is a hard stage to pass as most young folks these days are easily distracted and may not be able to digest a long-form medium like a book, but you need to try if you wish to level up further.

c) Read Christopher Tan's Money Wisdom: Simple Truths for Financial Wisdom

Suppose you have taken these two steps, you still have a problem because all the concepts you have picked up so far cannot be put in a local context. Christopher Tan's Money Wisdom allows you to contextualise all your financial know-how into actual products you can find in Singapore. Christopher Tan is not alone in this genre, books by Lorna Tan can also be read for the same reasons.

d) FB forums like Seedly

After reading Christopher Tan, I think you are ready to delve into Seedly as a portal for financial knowledge.

Like many portals, Seedly is still a hunting ground for many financial advisors, so I have deliberately selected Christopher Tan's book as a vaccine against paid commissioned advisors before jumping into a portal like Seedly. At least when you face a financial advisor, you have the means of self-defense against their financial sophistry.

e) The more accessible blogs like SG Budget Babe and Jeraldine Pneah

At this stage, you will also find that reading the more accessible blogs will start paying dividends to you. I might be a little biased, but the better beginner blogs are helmed by female bloggers. You can start with Budget Babe and Jeraldine Pneah.

Both blogs feature some amount of investing but they mostly discuss career and lifestyle issues faced my Millenial audiences. I placed blogs after Seedly because you need some savviness to navigate the occasional sponsored article.

f) The contents of this blog and even my investment training programs are still quite far away even if you complete all earlier stages

I maintain this blog for my own pleasure and indulgence so the stuff contained within can be hard-core. Even my course may not be suitable for many Millenials as they are intended for folks who want to begin their evolution into a serious retail investor.

To push yourself further along the glide path, you may reach an important milestone and even be able to enjoy Investment Moats by Kyith Ng. At this stage, you might also be ready to tackle a book like Intelligent Investor by Benjamin Graham. Just make sure you have a brokerage account set up by this stage.

As Millenials do not face the kind of youth unemployment in the West, I strongly believe that they are not doomed to a life of living with their parents, getting triggered, putting up online petitions, playing console games and fapping to non-English versions of Pornhub.  I think there is ample room to participate and benefit from Capitalism in Singapore.

Maybe instead of getting triggered or offended by others on the web, you can channel your angst into developing money management skills with this glide-path.

Hopefully, if I am still alive in about 20 years and when you grow old, I wouldn't use you as a negative example to browbeat my own kids.

Glimpse of the investment training program of the future.

Right now am pretty hard at work trying to imagine how my program will look like in the future.

I do know that I have a very successful collaboration with Stocks Cafe and my challenge moving forward is to scale this form of collaboration across the industry with like-minded individuals - folks like Dr Wealth's Alvin Chow and Stocks Cafe's Evan Koh.

The folks who work well with me have a few common traits: a strong engineering/computing background, a strong desire to build solid products that consistently deliver more value than it's cost. While marketing an UX is not the strongest suit of folks I partner with - I do constantly get angst from my more marketing-oriented friends about the usability of some products I support, I believe that focusing on substance will always mean more profits long term and a comfortable growth rate. Because let's face it, we're in the business of delivering results.

I am currently working with Ivann Fok of pyinvesting.com in building backtesting tools to provide the means for local retail investors to backtest fundamental strategies. You can follow the link to get a free subscription and even access a simple video I created here where I show my students how to use the tool.

A screenshot of pyinvesting.com is as follows:

The back-end program logic is starting to shape up really well and I am beginning to able to get some of the simpler backtesting to work on my next class without burning hours queuing for a Bloomberg terminal in the libraries. Our challenge is to simplify the UI to improve on usability. Until then, I will be creating video tutorials for my students to use the tools in a way that is consistent with what is taught in my program.

I expect to have a close collaboration with Ivann over the next few months and I even invited him to be a guest student for my next ERM run which is this weekend. If you want to attend a course to run elbows with an ex-quant and developer, now's your chance to do this. The last preview for this weekend's course is tomorrow. 

Naturally, I take my collaborations with my partners seriously and I have to imagine how I would want a backtesting tool to look like on the web to collaborate with partners better in the future. We're brainstorming ways to simplify the webpage UI and the best way to do it is to build alternatives and share the code. 

I have been transferring my own Python code using Streamlit to build a personal web-app tool to analyse stocks and build lecture slides for future ERM course runs. This exposes me to the newer UI components that can be used to improve the appearance of web-based investment tools. My struggle now is to use unfamiliar tools like Docker to push these web-apps to be hosted in the cloud, so my learning curve is kinda steep as well. Hope by September 2020,  I will be demonstrating my training concepts using web-apps that I write myself. 

In the world of investment training, I think a new battleground will open for bespoke investing tools to supplement lecture notes on how to invest. My final aim is to have ERM students have a ecosystem of affordable investment tools to give the quants in the market a run for their money. They've got expensive tools like Bloomberg but I have an army of trained amateurs to back me up in this fight. 

Future tools look like this:

• Tools for portfolio management and dividends tracking to be done on Stocks Cafe
• Tools for backtesting and stock selection via pyinvesting.com
• A set of free and bespoke tools that utilise deep learning, clustering readily accessible by ERM students to do deep exploration to join my community in crowdsourcing investment ideas that I will write.