Are FInancial Advisors playing their own Squid Game in Singapore ?

 

A few days ago, Ivann Fok of Pyinvesting.com beeped me on Messenger and told me that I should watch the Squid Game, he thinks there's at least one blog article that I can write based on this show. 

Turns out he is right. 

If you have not watched the Squid Game on Netflix, do it ASAP. If you can't afford Netflix, maybe skip the next 2-3 years of drinking bubble tea to build a self-sustaining Netflix subscription with local stock dividends.   

The Squid Game will mean different things to different people but primarily people will resonate with it's very gloomy critique of capitalism. 

I'm going to do my own spin on the Squid game and you are free to decide where it is a commentary about financial advisors in Singapore. 

This article assumes that you have watched the entire series.

To me, Squid Game answers the question as to what happens to folks who are (1) unlucky or (2) lack intelligence and conscientiousness. Every society has such folks - folks who may not be able to survive the academic grind or, somehow, met the wrong people at the wrong time. The result of this is a precariat - folks with zero financial, social or cultural capital.

In Singapore, a sales role exists to allow the precariat to turn their lives around. This is usually in real estate sales, entrepreneurs or in insurance sales where non-degree holders can end up living in a GCB. 

For now, I'm going to zoom in on insurance sales for this article because, well, a lot of my haters are in this industry. A similar argument can be made for all sales and entrepreneur lifestyles. 

Insurance is a second chance industry with, in my opinion, fairly lax academic pre-requisites. The minimum requirement is an 'A' level certification, polytechnic diploma or an IB cert. For a wider perspective, note that about 56% of 25-29-year-old Singaporeans have a degree today. You don't even need to meet the median academic proficiency level to sign up to be a financial advisor Singapore.

So with this example in mind, let's compare the experiences of an FA with various courses of the Squid Game.

a) Slapping game

The first encounter with a recruiter results in a slapping game. I think that is one of the key skills of being a successful FA or any salesman. Can you deal with rejection? I find it really accurate that you need to get slapped a few times before you get a cash payout. Imagine calling countless pals to meet up for lunch but getting asked whether you are FA and then getting rejected by someone whom you knew for decades. 

But most of the folk who carry on are those who can swallow these few rounds of rejection so they can move on to the next round of the game.

b) The Squid Games

The Squid Games have six-rounds, all of which has brutal consequences. I will quickly run through each round and which areas, in my opinion, are similar to financial sales work.

• The first game is Red Light, Green Light. 

To me, this is a game of compliance with local laws. Non-compliance is fatal. When you take on client's money, there are established steps that are not negotiable. Especially if funds come from overseas. 

• The second game is using a needle to remove a pattern from a honey-combed sweet. 

This is a test of speed and precision. Conscientious folks are better at this and every shape is a triangle for them. Those who are not born to be precise will see every shape like an umbrella. This could mean keeping up meetings with prospective clients and making the right recommendations for them. The complexity of products that are being sold can be high.  

• The third game is tug of war. 

This is a pure test of strength. Insurance and investment products often have to deal with substitutes. Previously, for FAs it was a fight to the death against Buy Term and Invest the Rest. Now Financial Advisors right now seem very concerned about Robo-advisors. Almost every day, a salesperson needs to deal with objections, very often from products that levy a fraction of the expense. 

• The fourth game is a game whereby you find ways to divide marbles between yourselves

This is a test of conscience and the most heart-wrenching test I my view. I teared when Ali died after being tricked by Sang Woo. 

I will illustrate this with only one data point as I think a story is better. A very competent and ethical FA once told me that he sold a long-dated lock-in product to uniformed personnel who seemed to have an iron rice-bowl job. A few years later, he was dishonourably discharged and had to surrender his policy. The guilt from making the sale made him switch to primarily AUM career. 

There will always be a conflict of interest in the FA industry. Commissions are fixed but outcomes are not. Someone will always lose their marbles when a transaction is being made.

• The fifth game of crossing the glass bridge with random panels made to collapse. 

This is simply about luck and timing. Maybe you started in a pandemic and got a few friends to buy a policy but you get MDRT because the threshold was lower in 2020. Others entered at a bad time and had to quit. 

• The final game is a Squid Game which is just a game of tag played by two guys. 

At the end of the day, the FA industry, like real estate sales, is a Tournament. The large number of folks at the bottom can barely eke an existence but there is very little room at the top. This is why only one person can win the Squid games.

c) Old man and VIPS

 If you are good enough to be a VIP, then it means that you've joined the directors of these FA companies that essentially get to bet on rookie agents like horses. Get the right kind of agent and you can profit from the sales commissions. VIPs are portrayed very negatively in the series.

But the real winner is the Old Man or player 001. He's free enough to play the game and yet exit in safety no matter what the outcome is. To me, any one of us can be the Old Man if we own shares in Insurance companies. As of now, I'm still holding onto my China Pacific Insurance and Suncorp shares.

The overarching question

Finally, I think Squid Game as a series does pose the question for policymakers. 

To reduce the financial burden of the middle class, it is very easy for a policymaker to press a button and ban commissioned sales and enforce fees for financial advice, and raise academic standards at the same time. 

This will mean the end of the Squid Game.

But why do people continue playing the Squid Game even when the police have all the evidence that such a game exists?

The show answered that question and the answer should scare you. 

For the folks who are drawn into the Squid Game, the game is a rare moment of personal agency and fair play that has been denied to them by society at large.   

As such, I leave you with no answers as to what the policy intervention from MAS should look like. 

You should prepare for your professional decline

I spent the greater part of my morning adding Fractal Market Analysis into my Early Retirement Masterclass Web App. Even as I've automated the process of rolling out new code into the cloud, half of the time I was trying to cope with some fundamental changes in the way we do software engineering - for example, today I learned the hard way that Github now requires two-factor authentication. 

On the other hand, today is a special day for local dividends investors. 28th September 2021 marks the end of dividends season for Q3 2021. If you've been playing the same game as I do, 4.30pm is a great time to look at your bank account, after which you will not see much moolah for the next 6-8 weeks.

The question I want readers to ask themselves is: how long can you do your shit until you start feeling the effects of professional decline? 

This is inspired by an article on the Altantic (link).

The gist of the article is that there are two kinds of intelligence.

Your fluid intelligence determines how open you are to new ideas and how quickly you can grasp concepts and manipulate symbols. I suppose getting work done on a web application depends more heavily on fluid intelligence. As time goes by, not only does my productivity drop, until I find a way to hardcode my password into my batch operations, I find myself using authentication tools twice every time I pus my code into the cloud. 

The bad news is this: Fluid intelligence also begins its decline when you hit your 50s. It's actually quite scary if you map this to local data as it mirrors a Singaporean's salary decline as well as shown in this super recent Dollars and Sense article here.

Fortunately, there is a way out.

There is another kind of intelligence called crystallized intelligence that continues to grow and develop as you age. If you play a lot of D&D, this is Wisdom rather than Intelligence. Developing crystallized intelligence is like building a dividends portfolio - it pays regardless of your age. Sometimes the older you are, the larger your pay-outs.

The trick in managing your career is to pivot from a high-paying fluid intelligence career before your 50s into an area where you can depend more reliably on crystallised intelligence.  Right now I am really curious about Quantum computing, but the paradigm shift is really drastic, I need to move from bits and bytes to the realm of qubits, Hilbert spaces and Bloch Spheres. It's not a game I can play when I hit my 50s. So instead, I'm better off refining my training program, figure out how to present my materials better to rookie investors, and developing a broader helicopter view on personal finances.

This realization about life shows that most PMET folks here are doing well by virtue of their fluid intelligence, to survive deep into your personal Autumn, somehow you will need to monetise your organizational savvy and wisdom which means you need to take on a more mentorship or trainer kind of role. Alternatively, you may need to build up your social networks.

Otherwise, your professional decline is inevitable. 

 

 

 

Why guys with Cultural Capital can be extremely dangerous

I was going about my business when drama finally arrived in the Singapore Literature space. For folks in the Financial Wu Lin who may not understand what has been going on, the literati in Singapore are almost fully dependant on just a few venues to come together to conduct events. One of these venues was a bookstore called BooksActually. 

The best way to catch up on the latest happenings is to read this expose by Rice Media.  

I'm one of those dads who have a very artistically-inclined daughter. My daughter just passed Grade 3 ABRSM piano and her drawings are often feted by her school. One of my favourite places to bring my daughter was Basheer Graphics which I also visit very often these days on my own. One of my biggest fears is that after she grows up she begins to dally around boys who are also "artistic". If the guy can shake off his artistic inclination and end up being a lawyer, that's fine by me. But not all guys do. 

What happened to BooksActually elves is a nightmare for dad's with artistic daughters. 

In my last article, I wrote about the kind of woman to avoid and I used the example of Whitney Duan as the kind of ENTJ Queen Bee to avoid unless you really enjoy being emasculated in a relationship. 

It looks Rice Media has answered the question for men.

Ok, let's talk about the operating system (OS) that runs on most of us straight men. 

When we men meet, after short pleasantries, the first thing we do is to setup hierarchies. This often arrives after the we execute the API function call "So, what do you do?" and receive the reply. Once all replies are received, we men begin to silently rank each other to the totem pole. The wealthier guys become senpai and may be saddles with responsibility to pay for drinks. They also get more leeway to spread worldly wisdom, like being the Jack Ma of the Kopitiam. The less wealthy have to settle with being more deferrent but hey, at least there is male company. If you are a guy amongst women, regardless of your position, you may end up playing Sebastian the Black Butler. 

But there is a complication. Capital comes in multiple forms. That hierarchy I described is about financial capital. It's a simple matter of who got the biggest dick will win.There is also social capital. Social capital in China can trump financial capital because you've seen how obsequious business can be when facing civil servants.

If you are an Ah Beng and do not come from privilege, the only way to play the game is through the cultivation of cultural capital. 

Who has loads of cultural capital ? Poets and Writers.

Now, what if you do not have the talent to create literary works?

Simple. 

Learn a thing or two from landlords, become a gatekeeper. Become a rentier in the creative economy.

Once you are the only source of income from Poets and Writers, folks will begin to surrender their cultural capital to you.

The power of having a monopoly at play means that if you commit an atrocity against your own staff. The poets and writers who benefitted from you financially have a dilemma. If they keep an eye closed, then they are hypocrites because they are part of a culture of progressive value of the left. If they cancel you, you can stop ordering their books and substantially hurt their bottom line. 

The financial blogosphere will never have such a problem because there is no monopoly and FIRE folks are hard to cancel unless you can convince CDP not to pay out their dividends. 

So I'm going to summarise the lessons for female readers on how to avoid becoming someone's else's Elf. 

When meeting a potential date with a male, assess what is his strongest capital.

Tech workers these days have very strong financial capital but very little of everything else. These guys are safe and reliable and will benefit from the contacts and fun you bring into the relationship. 

Hippies or the Bohemian Bourgeois are the opposite. They go no cash to back themselves up, but they can make your life living hell because he knows a lot of people and have a lot of access to cultural events. You may mistake him as an easy catch and can even control his wallet, but he can make your life living hell. 

No prizes for guessing which guy I prefer for my daughter. 

Dating Lessons from Red Roulette

 

The books shown above was strongly recommended to me to my pals on the finance chat groups. However, I initially wanted to restrain myself from reading Desmond Shum’s Red Roulette before presenting my materials on China investing because I was sure that it would bias my thoughts negatively against China.

My suspicion turns out to be right because if I had read this book before I invested in some counters in the Hang Seng Chinese Enterprises index, I would definitely deploy my capital elsewhere. 

This is a wonderful guide for investors who really want to know how the underbelly of Chinese corruption works. It is also a careful illustration of how guanxi really works.  Although the author had an axe to grind against China, he was fully prepared to name names and I’m pretty sure that China will take revenge on him one day. Of the parts that are valuable to the reader, the understanding of factions within the Communist Party is particularly enlightening. It should also answer the question as to whether China is still being led by a reformer. An important considering if you read this article against my Dr Wealth article on China that will see publication pretty soon.

As this blog is where I talk about more leisurely stuff, I feel that the real value of Red Roulette is for single guys to know what kind of woman to avoid in the dating market. As it is a novel where there are no real good guys, I think the character of Whitney Duan is the true star of the show that makes the story shine. Her antics make the book a page turner and the final product reads like Crazy Rich Asians, except that this is a true story and it is 10x worse than any piece of fiction by any Singaporean author. 

Here are some lessons that a single guy can learn from this book:

A) A purely logical and transactional relationship is an epic disaster

Whitney Duan probably had the worse way to get a relationship going. She told her hapless husband that a relationship can be cultivated over time provided that there is a logical basis for the union. Desmond represented the West and had impeccable skills to attract foreign investors and do the sum. Whitney takes the cultivation of Chinese politicians to the level of an art form. She surmises that they can make a lot of money together as a couple and love and grow out of this. 

Folks who read my blog know how logical I am at meeting and dating women. But the bottom line is that I’m still a guy so I’m quite visual and my final decision is no different from what most guys will make. Whitney’s idea makes my blood run cold and I thank the lucky stars I did not meet someone like this in my 20s - I might actually fall for this logic.

B)  Control over money can destroy a relationship

Of course, after courtship, the relationship goes straight to hell. Whitney’s idea of controlling her husband is done by controlling all the money. Even though Desmond plays his part well and is in charge of executing projects, Whitney controls all the money. It got so bad, Whitney formally approves all of Desmond’s expenses. Her strategy for divorce follows the same pattern - she tried to turn Desmond into a pauper and even tried to shift the divorce proceedings to China where she can exert influence over the judge. Desmond had to threaten publication of his story to gain a small settlement.

Fundamentally, Whitney is the kind of woman who was driven by her insecurity. Her idea is that all she can do is to cultivate guanxi and she is worried about becoming a fifth wheel when the operations go international and function in a less corrupt environment. Her desire for control ultimately destroyed the relationship.

C) Lies cannot be the foundation of the relationship

The part which affected me the most was the point of time when Desmond actually found out after years of marriage that Whitney was actually older than him by 2 years. When confronted with this, Whitney reasoned that she cannot afford to have her age affect such a strategic union. So the entire marriage was built on a foundation of lies. Age is something so fundamental that this should be sorted out way before parties sign on the dotted line. 

One funny effect of reading this book is that I ultimately have much more respect for the Chinese Communist Party, women like Whitney Duan needs to be kept under lock and key and never be allowed to endanger the rest of the male gender. 

How can we apply this learning at the street level? My pals have constantly warned me against ENTJ women, ladies with the same MBTI profile as myself. ENTJ is not a bad personality trait for a guy because we take control and can cut through a lot of bullshit to get a lot of stuff done. The problem happens when women are ENTJ and have to live in a patriarchal Asian society that has expectations on them. So these ENTJ women start to scheme and play the queen bee, as they get older they still need men in their lives so they lie and scheme to manipulate everyone around them. Often the biggest victims are the women who end up working with them.

Anyway, I doubt I will lose ENTJ female readership from writing so directly about them on this blog. A true ENTJ woman will read Red Roulette and find better ways to hide their personality profiles.

I really hope Red Roulette becomes a movie one day, it will be a big hit.

  

Machine-Age Humanities

 

With the closure of Yale-NUS, we managed to witness a round of whining from liberal arts majors from that institution. Even though I was a fan of having a liberal arts college in Singapore, I support the closure of Yale-NUS because it does not make sense to use my tax money to subsidize foreigners to study here, turn woke, and cross-dress on campus. Also, the pandemic employment rate of Yale-NUS is a joke - you can see this for yourself, the employment rate of these academic bluebloods is lower than our vulgar and provincial business school. 

There is a looming crisis in the field of Humanities. 

A part of the problem in the field is so specialised, there are very few jobs that specifically will require someone with a particular humanities major. The best jobs are in government and teaching, but our government can't absorb all humanities graduates into every ministry that we have. 

The second and bigger problem is that the humanities colleges in the West have been subverted by the political left. A student is not so much learning how to think critically and to develop a skill-set but to subvert capitalism and major institutions in Singapore. This is probably the other reason why the liberal arts have to go - let it fester and it will incubate a capitalist-hating fifth column in Singapore. 

Without a doubt, people want a new way of looking at the humanities. 

• What kind of critical thinking skills will allow us to compete in the age of machines? 
• What kind of training can allow us to remain relevant when algorithms begin to run our lives?

Kevin Roose in his book Futureproof : 9 Rules for Humans in the Age of Automaton attempts to figure out what these Machine-age humanities will look like. I'm going to briefly list them here and I strongly recommend that readers take a quick look at this nascent attempt at machine-age humanities :

a) You must be able to guard your attention and invest your focus like an asset. 

b) You should be able to read a room and modulate your behaviour according to what you read.

c) You should have a system to rest and recover from a strenuous work cycle.

d) You should have skills in digital discernment and be able to figure out whether there are commercial interests behind an article or whether the author is advocating for a cause and is thus biased.

e) You should develop social and emotional skills. What the author calls analogue ethics. The ability to act like a human being is becoming rarer as folks ghost each other on Tinder and prefer looking at their phones rather than having a conversation. 

f) You should understand the consequences of new forms of technology. When a new technology is rolled out, it will instantly divide the population into haves and have-nots. 

This list is likely incomplete. Right now I can imagine a software engineer levelling up with these skills and getting ahead of his peers, but I cannot imagine someone getting hired solely on developing expertise in this.

 

Some highlights from presentation to RI Sec 4 students

This is the second time I am presenting to RI secondary 4 students who are taking a gap semester with a finance specialisation. 

Before you start levelling allegations that I am an elitist, know that this is a good business move because if my material is good enough for RI it's good enough for any other school. I actually have a different set of slides for neighbourhood schools (which I spent a lot more time on because it can make such a big difference to kids from lower-income families).  My RI material has gone through two iterations and generally can demonstrate financial concepts by reference similarities with MOBA games. 

RI's strength is not that it has more resources from the government, its strength is that it can cut through the bureaucratic red tape that will allow the private sector trainers access to their students. This is a valuable testbed for new ideas - if someone from RI does not understand your slide, you should quit the training business. In my presentation today, I actually struggled to explain the 4% safe rate of withdrawal to them so I had to do it twice, which means that there's plenty of room for improvement when I conduct training elsewhere.

As usual, I did not earn a single cent from my effort - in fact, I donated two books to the winner of my quizzes so this is more like a pro-bono project I do when I am not conducting classes. 

I'm sharing some useful data I collected anonymously today. 

Here's a breakdown of the weekly pocket money they get, this can be a useful guide for parents to follow. Like every institution, most the kids have a fairly normal stipend but one of them does draw a bigger allowance. 

I also polled the method their parents wire the money to them, and was actually surprised that cash is still king. I'm still not seeing major fintech adoption here. 

As for my experience, RI definitely has a particular signature style quite unique to them that I don't see when I present to other schools or polytechnics. RI boys start out really hesitant, like solving a H3 level Physics problem, but once they establish a steady tempo, the really smart questions start to arise.  

Some caught me completely off guard.  

I was asked by a student what's the best way to use one's time after exams to which I replied that for kids my generation, we really played throughout our holidays and doing something "useful" was out of the question. Then I started feeling really shitty about the quality of my answers, so I did an entire discussion on mental models and why they are best off learning about how to find models to cope with ambiguous situations that they will encounter in real life. This led to an entire discourse on parents, tuition and why this is actually a prisoner's dilemma. Not satisfied with that, I told them, mental models from Literature can be useful in finance too, so I told them about Jane Austen's Mr Darcy and why Victorian women value their spouses from their income from their estates.

In summary, these are really intense kids who are not really just book smart. I have a question that I did not cover in my lecture notes and most of them got it right.

The question was keyed off the idea that your success in life is largely determined by how you invest your time outside work. 

Whoever taught these kids obviously did something right.

Of course, I could not resist making a quip about recent political events, I told them to believe in themselves even though someone in the Cabinet called their school a lousy school. 

  

Understanding Elitism in Singapore

This is supposed to be a busy pro-bono month for me as I ramp up my schedule to do some non-profit work and have been busy working on my next presentation to Raffles Institution. Next Monday, I will be rehashing a presentation I made some time ago on The Richest Man in Babylon but this time round, I took some steps to donate some books to quiz winners I intend to conduct as part of the program. 

Make no mistake, RI is a great brand that I want to associate my training programs with. The students are bound to have parents who will be listening in via Zoom and conversion is a definite possibility. But I’ve decided to donate some books because, as elite RI is, some students are on financial assistance, and I hope they get to win some of the stuff I have planned for them.

I am not as angry about Vivian Balakrishnan’s quip about Raffles Institution because this is not a signal of disregard for ordinary peasants but an expression of the rivalry between ACS and RI. It’s like Harry Potter and the rivalry between Gryffindor and Slytherin, it does not reflect VB’s views on ordinary folks like us. 

If anything, I would jump at the chance to speak to students from ACS, RI or HCI. 

What I find interesting is the media’s immediate reaction to sell Tan See Leng as an alumni of Monk’s Hill Secondary School because PAP is actually very self-conscious of their elite branding as a liability. The fact that PM Lee, Tan See Leng, Vivian Balakrishnan and myself are all NJC alumni, is not something that needs to be mentioned to the public right now. But two years in an elite JC is not long enough to build strong alumni bonds, I was drinking $1.50 kopi at Toast Box yesterday with my two NJC buddies and none of us were invited to any Illuminati meeting that can determine the fate of Singaporeans for years to come. 

( I think we spent more time complaining about PSLE math problems, one requiring some advance skills in tesselation or  Eight Queens recursion algorithm to solve properly. )

Elitism and classist inclinations will take a generation to cleanse from our society, and that’s only when it is in our interests to do so. 

I have my own personal model about our elite secondary schools. I call it the Great Wheel as it is inspired by the Game of Thrones.

I imagine Singapore education system like a wheel with RI, ACS and HCI on top and it rolls forward over all time but with us peasants at the bottom. You might be fixated with the school on top and get upset about a top secondary school, but the issue is really the wheel that keeps rolling on and on, there will always be a top secondary school as one displaces the other. You can evade the wheel, seek FIRE, or buy some shitcoin to avoid facing this kind of labelling at work or you can use the political process or 50 years of your life to attempt to Break the Wheel.

If an ACS boy inherited a lot of wealth, we can argue that he got lucky in life. But if an RI boy inherited a higher intelligence and conscientiousness, we have to accept that the genetic lottery played a big role in this as well.

Anyway, until I realised how elitist the government sector was, Breaking the Wheel was my personal fantasy. 

But these days, I suspect the PAP wants to Break the Wheel a lot more than I do. Alumni bonds are way too strong and can even threaten party coherence and loyalty to the nation state. 

Come for my ERM Community Event Q32021 on 16th September 2021

Ok, as I'm 95% done with my slides, I should be able to share details on the next ERM community event. 

Date/Time : 16th September 2021 / 730pm

You can register for the event here : 

https://us02web.zoom.us/webinar/register/4216003897172/WN_NpZR1TGWTbqQHcTF0nfc1g

The theme is employing the ERM framework on overseas markets. A large proportion of my program focuses on investing in the local markets and this creates the impression that I only teach investing in the local markets. Recently, I managed to enrol a student from Australia who has applied the same framework to the ASX and I've been piggybacking on his stock screens to make my first move into Australia. 

If the framework works Down Under, why not apply it to the most divisive markets today which is China?   

The community event will be divided into about three parts :

a) International Investing: Australia

I will be running through the entire ERM framework applied to Australian stocks. Students can treat this as an extension of the ERM programme that discusses how to build an Australian portfolio.

c) International Investing: China

The next topic is a hot one. One signal that markets have bottomed out is when a Dr Wealth instructor gets flak from random folks on the web for no rhyme or reason. 

I've independently done some work on explaining how a retail investor can think about China which should be interesting as I'm not really tainted by the talking heads in the media on investing in China. I try to read a popular book on international politics and then I will apply it to what I know about a country to form a conclusion.

At the end of the session, I will also be applying the ERM framework on making my first series of Chinese stocks. 

d) Update on the ERM portfolio

I will update everyone on how the consolidated portfolio is doing so far. It's not too bad and my students continue to make fairly smart moves in the market.

e) Fractal Market Analysis

From now on, I will begin to stretch the boundaries on what is possible in investment training, so I will pick really hard topics on Finance, topics that I barely understand, and I will try to teach them in a short public lecture. At this level, my task is to actually find a way to deepen my own understanding of the subject matter and this is largely inspired by Richard Feynman's technique where he would teach a topic to deepen his understanding of it.

I will be covering Fractals Market Hypothesis (FMH) which claims to address issues raised by the Efficient Markets Hypothesis. I will also demonstrate how these concepts actually work when applied to the local stock market. 

f) Alumni referral program

Finally, I have a fairly strong community of 565 alumni and I've made arrangements for them to earn their next cup of Starbucks Coffee with a referral program. 

Anyway, if you have nothing on Thursday evening, why not just pop in to see whether you understand what I spoke about. It should be challenging unless you are already part of my community. If it's all greek to you, at least you can debate with me whether my stance on China makes sense. 

Does Singapore feel cheap ?

 

I've been busy preparing for the next community session where I will do some thinking about China, so I've been using the book The 10 Rules of Successful Nations by Ruchir Sharma to come up with a few pointers on how to think about China. The aim is not to be the final word on China, as I'm sure there are better investors out there on this topic, but a guide on how to interpret the news in a better way.

There is one point of analysis that I will not include in my presentation which I think I can share on this blog. 

One of the rules of a successful nation is that it must feel cheap at least to foreign visitors. 

This is a strange criterion because it is a subjective feeling of a country. Another criterion is that this is from a foreign perspective, so Singaporeans can't be arbiters as to how cheap we are. For me, Kuala Lumpur definitely feels cheap but the Gold Coast in Australia, with its $3 doughnuts feels quite expensive.

If I were to venture a guess as to whether Singapore feels cheap, I would venture to guess that foreigners should find Singapore expensive. The price of vehicles is enough to prove the point. Another rude shock is probably the price of beef that can be expensive compared to back home. but on the other hand, if the foreigner lives like a local, our hawker centre fare is way cheaper than many other countries. And let's not even think about the cost of domestic help.  Up until recently, you can even get Michelin star fare for less than $10 here.  

The author speculates that having a currency that feels expensive can be a powder keg if this is combined with an increase in the current account deficit.  When this happens, it is normally the locals who will flee the local markets and send their capital elsewhere. 

Thankfully when I checked our numbers out we are still on a surplus. 

The author suggests looking for cases where the country feels expensive followed by ballooning current account deficit to predict a crash. When the balance of payments gets restored to a surplus, investors should be able to earn a fortune from the market recovery. 

I still haven't figured out where to make out this game plan but I suspect a few of our neighbours might make great candidates.  

ERM Community Event for Q32021 - this time it’s all about China

The time is ripe for ERM to take a clear objective stand on China. 

One sign that is unmistakeable is that I was having lunch with another Dr. Wealth trainer and he was telling me that old “friends” who have been observing him are coming out from the woodworks to show some “care and concern” about his China positions. This is very familiar to me as it reminded me of March 2020 when I was having my own dark moment with S-REITs. 

So in my opinion, this is very much like the Marvel Cinematic Universe, a split will occur in your timeline and a lot of wealth will be either made or lost depending on which stand you will take. ERM is a slightly more advantageous stage as our portfolios are doing ok and can farm some winnings into the beaten counters in China.  

So there is no better time for thinking about China in a community event. 

I have not decided to take a bullish or bearish stance in my next community event yet, there is still plenty of research to do, but I intend to apply the ERM framework and start enumerating the key issues investors need to think about when they decide to put money in China stocks. If they do invest in the HSCEI, which factors will likely apply to give them the greatest chance of success.

Our next community event will be divided into three parts :

• We will begin with short introduction on transplanting the ERM approach to an International market with Australia as a worked example.
• We will then try to bring the same approach to China, but with some emphasis on the political situation there. 
• Finally, we will also reveal ERM’s first referral program where alumni can refer friends and family to attend my courses. 

Members of the public may register for the event here, but 40% of the material does assume knowledge on the ERM approach. Like all community events materials will only be available within our closed groups :

https://us02web.zoom.us/webinar/register/4216003897172/WN_NpZR1TGWTbqQHcTF0nfc1g

The moral dilemma of educating Mr. Shitcoin

 

I’ve finally found an interesting puzzle for readers to solve. 

Mr. Shitcoin is a friend of a friend, and his case study is very interesting and challenges the boundaries of what we mostly know about financial education and the morality of financial knowledge. According to a friend, Mr. Shitcoin was an ex-uniformed services personnel who is so gormless, well after age 55 he actually forgot or was wilfully blind to the idea that that he had money left in his CPF. 

So I started having a theoretical discussion with my friend and discovered two unresolvable dilemmas. 

( NB: As neither me or my friend is at age 55, we are still not clear administratively what happens when CPF knows that someone reaches that age. Nevertheless, I think it is still fun to think about these two moral issues. )

A) Whether Mr. Shitcoin should buy a high-end sports bike to reward himself.

The first point of friendly disagreement is whether Mr. Shitcoin should buy a high-end competitive bike to reward himself as a mid-life crisis reward. In our discussion, we agreed that Mr. Shitcoin is a nice agreeable fellow who lacks conscientiousness. 

My friend, who is more knowledgeable about bikes,  argued that this is a mid-life crisis so Mr Shitcoin should not buy a bike. High end bikes might also be faster and present a bigger danger to him. 

I argued otherwise.

I reasoned that a bike as a dream reward is nowhere near a European car, a divorce,  or, worse, a law degree which cost me $500,000 in opportunity costs. I reasoned that Shitcoin needs to buy a bike to get it out of his system so that he will feel that his life in public service was worthwhile. I explained that I cannot change my own position because my mid-life crisis was way more extravagant and my JD cost me $500,000 and I would replay the process of studying law all over again even if i knew that it would result in no career after that. I just need to get it out of the system much like a trip round the world.

B) Whether Mr. Shitcoin needs to know about pledging home equity to draw more money from his CPF 

Before I continue, none of us knows whether CPF would automatically allow the drawing of the maximum amount accounting for the home equity pledge when you reach 55 years of age. So I am unclear as to whether I need to explicitly pledge my property to withdraw an extra $90k from my CPF account. In my case, I hope to put ERS or $270k+into my CPF-RA, so this is not even an issue for me.

My friend reasoned that it is better not to inform Mr. Shitcoin of this option because he can’t handle his money on his own and this knowledge may destroy him as he will proceed to distribute his CPF to needy friends and relatives.

I took the opposing position that it’s our god given right to destroy ourselves with our own money and that this is not a loophole like the CPF Shielding hack. Home earners like Shitcoin earned the right to withdraw what is rightfully theirs so it is morally wrong to keep Mr Shitcoin in the dark. 

What do you readers think ? I think my friend has a point as equally valid as mine but we both agreed that he was Neutral Good and I am Lawful Evil in outlook hence the disagreement. 

Apologies to folks who thought this were a cryptocurrency post.

Letter to Batch 22 of the Early Retirement Masterclass

Dear Students of Batch 22,

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

This is a period where many investors in Chinese Tech stocks are feeling edgy with the intervention of the Communist government on the workings of their most innovative companies. While local income investors have primarily been shielded from significant losses so far, I’m reminded of what the ERM program went through in March 2020. This is a reminder to stay humble when you invest and don’t laugh at folks experiencing a downturn.

The Ghost Month has also seen most of the ERM portfolios lose a little bit of their value, making it a good time for the students to engage in some bargain hunting. I hope you will see this as a golden opportunity to build your first portfolio if you have not done so yet.

As I tried to provide more practice for the class this year to review each stock pick qualitatively, you will find that our portfolio is quite extensive compared with earlier batches. We have a portfolio of 20 stocks for this run which will stretch the size of the portfolio I will build for this batch of students. This batch has also decided to be more adventurous with local tech counters.

Hopefully, Singapore’s COVID containment strategy will succeed. We will benefit from more travel receipts and tourists within the country, which will have a knock-on effect on some of our investments. This portfolio is also more aggressive given the more significant number of local tech stocks that were reviewed and approved for portfolio inclusion.

Lastly, I hope that Batch 22 would participate actively in the FB group.  In end-September, we will be conducting a community event where we will consider the ERM approach to investing in Chinese stocks for yourselves and members of the public to showcase material from the ERM course.

Hope to see you then!

Christopher Ng Wai Chung

Should internet marketers behave with more class ?

I'm in the middle of conducting my class, so I don't expect to be blogging, but a very large financial education provider which is almost a household name today was suspected to use my partner's keywords to do their internet marketing. This created a small scramble when I started to consult some of my pals on whether my business partner has a civil case and what steps we need to take to deal with future occurrences. 

Balancing a little bit of legal research along with some feedback from my friends in the SME sector, I have to accept that the use of keywords to push up rankings to get views is a common practice, likely because most victims are rational and will not risk more capital to stem the small amount of fianncial damage that is not easy to quantify. 

Ultimately it falls to internet marketers to determine how they want the public to view them. 

I've worked with great marketers but I also worked with quite a number of scumbags. Sometimes you can't tell them apart because the brand perception comes months after the campaign ends after a lot of goodwill is lost after spamming the public.

Some of the lousier marketers just want to attract eyeballs and they don't really care what happens to the brand going forward. I've seen the way how some truths become bent just to attract a larger crowd. 

The differentiating factor between a good marketer and a bad one is class. 

Those with class will spend more time understanding the brand and will focus on end-to-end conversion rates. Those without will ring-fence their responsibilities and wash their hands clean once the ad achieves a requisite number of hits, regardless of the final sales outcome. 

To me, if this were deliberate action, this large education provider has reached a new low in hiring this kind of marketer.

I think it takes a really low-class marketer to use someone else's brand to hijack eyeballs from another. Although I think we can take the higher road for this incident, I doubt this will be an isolated event. 

I'm grateful that my business is not affected by this, because if the victim were my business, I will take legal action once I have just 51% chance of success. 

A nice public open court hearing will expose these internet marketing practices to the world at large and we can let Singaporeans decide whether they want to associate themselves with the offending brand.  

 

Robo-Advisors versus Financial Advisors

 

I was thinking about the panel I had with The Artist Formerly Known as Money Maverick or Luke Ho, and he mentioned an interesting tidbit about how much concern robos have been causing to FAs. I was also able to read an entertaining tirade from an angry financial advisor who wrote a nasty FB message against the Syfe product offering ( If I were Syfe legal counsel, I would act against that clown ).  

These two events have caused me to spend the past few days thinking about whether investment trainers can work with robo-advisors closer in the future.  

As of now, I'm not convinced that we should do so. 

Robo are still quite mum about their algorithms and in a place like Singapore, the biggest strength of using a robo to do tax-loss harvesting cannot be realised in our tax regime. Furthermore, my guess is that robos are running on VC funding right now, and would either have to consolidate or raise fees in the future.  

The only reason I like robos is that they make FAs nervous and can potentially wreak havoc with middlemen commissions should they become more mainstream here. 

Here are some random points from my thinking aloud:

• It is theoretically possible for DIY investment trainers to work with robo-advisors. Not all investors have the time to build a portfolio of their own, and the risk of cannibalization is very small. 
• DIY investors still make plenty of qualitative decisions that robo-advisors will never be able to replicate. This is important because qualitative differences may drive future alpha generation for either side. Robos will not be able to win over the best retail investors anyway.
• DIY investment trainers with any backbone would seek more information on the way the robos function. For me, I need to understand it to the point until I can code the program myself. Otherwise, it would be hard to entertain questions from students on how robos work. I got one data point on a S-REIT based robo and for the life of me, I can't even explain why it underperformed so much compared to a REIT portfolio built by my students, almost all beginners. 
• It would also be useful to know how much will a robo need to charge existing clientele to break even. Surviving on VC burn rate is not sustainable. 
• My ideal scenario is multiple robos will need to provide algorithmic transparency so that a trainer can explain the differences between each product offering and can show students how to pick a robo without conflict of interest. 
• The unpleasant alternative is for one robo to sponsor the cost of running a training program, but I won't do it even if they paid me and I won't recommend anyone attend a course like this. You pay me with more transparency and not cash. 

As it stands, anything that makes financial advisors nervous is a good opportunity for the training industry because we know that there is still quite a lot of fat to trim and middle-class Singaporeans cannot continue to always sponsor a caste of commissioned salesmen and pay for their Audis when they also have to sponsor expensive tuition agencies as well.  

If robo-advisors band together to build an association to standardise the rules on transparency, I am open-minded to an alliance if it means more Singaporeans are educated on personal finance. 

Because even America has to get out of Afghanistan after 20 years.

The Great Resignation

While China is busy contending with the "Lying Flat" movement, where young people are rebelling against their work culture, the US is also facing a different work phenomenon. Apparently, the number of folks resigning from their jobs reached the peak in April 2021 and managers are struggling to keep their employees. 

I've only read a few articles on this phenomenon and I can't wait to see what social scientists can say about this. 

Here are some of the reasons that can possibly be a driver for The Great Resignation :

a) Folks stuck to their jobs during the pandemic now think that it is time to resign 

One explanation is that a lot of folks were stuck with jobs they don't necessarily like during the pandemic but they could not resign then because it's hard to find a new job then. When the vaccines started getting deployed, the economy opened up and it's time to move onto something new. 

The workers who are affected the most by a more negative workplace are workers in the hospitality, F&B and leisure sectors.

b) Folks can see a life beyond the standard daily commute to the office

Another explanation is that the pandemic forced a lot of companies to make it easier to work from home and employees have gotten used to this arrangement. As the economy reopens, middle managers are pushing to get their employees back to the workplace, so employees are looking for a new company that is willing to make work from home the norm. 

This explains the number of professionals who are quitting the workplace. 

c) Generous welfare cheques reduces the motivation to carry on working.

The third reason is that during the pandemic Biden was generous with welfare cheques to help Americans get through their lives. Some Americans may have been able to squeeze the welfare cheques for a much longer time than others so may be able to go without work for a longer period of time. 

I like this explanation because it explains why Singapore is not experiencing our version of the Great Resignation here yet.

The long term repercussions of any recessions are always very interesting. 

In the last Great Recession, labour economists found that some single men got so discouraged, they basically left the workforce and never returned to having a regular income. Surveys on personal happiness were kept up because of video games, social media and streaming. This led to the birth of the Incel subculture. During this pandemic, the labour participation of women was hit much harder than men, and it would be interesting to see what happens over the next few years. 

Singapore as the Kryptonian Red Sun Theory

 

One day idea shared with me in the Lothlorien chat group is the idea that Singaporeans are like Kryptonians who are constantly under the Red Sun. 

This idea originally came from Superman comics. It is known that the Green Kryptonite can kill Superman, but Red Kryptonite can render him powerless and ordinary. Before Krypton was destroyed, the entire planet existed under the Red Sun, so Kryptonians are just ordinary people on their home planet. When Krypton was about to be destroyed, Superman's scientist parents sent him to Earth where he came under the influence of the Earth's Yellow Sun which gave him godlike powers. 

There are two useful applications of this theory :

a) Mediocre Singaporeans will do much better academically in a Western country like Australia

The original idea was a comment about just how brutal our education system is. Even when I was cramming for a 3-year Law School programme, I realised that somehow, my daughter has to study almost as much as I do. And it's always CL2. My daughter even had to maintain a diary with drawings during the last holidays. The questions posed in primary is already quite difficult and this has caused a buildup of a very profitable tuition sector for ex-teachers. 

As a child of the 80s, I can attest to how my fellow Singaporeans had such a good time when studying in Australia. An Australian does not have the same pressures as a Singaporean, if they are not academically inclined, they can do very well as a miner. Even their minimum wages were one of the highest in the world. Singaporeans who come back from Australian universities always developed a more exuberant personality while abroad, whereas those who stayed put always lose a bit of their individuality back home. Some even go batshit insane studying in a pressure cooker like NUS. 

This is why I doubt that Singaporeans will choose to Lie Flat and pull out of society. Why not emigrate to Australia where you, too, can become an academic Kal-El?

Interestingly, no parent has considered the geo-arbitrage possibility where they save up the fees that should have gone into a tuition centre into an Australian degree. 

I leave someone else to do the maths.

b) Singaporeans who save and invest aggressively here can look to a better lifestyle somewhere else

This Singapore Red Sun idea can also be applied to personal finances. Because of frugal roots, we find that Singaporeans save 20% off their take-home pay in our CPF. Beyond that, savings into REITs and blue-chips do not attract capital gains and dividends taxes. This means that most Singaporeans with about 10 years of working experience in Singapore would have accumulated more assets beyond most Westerners in the same income band.

If a Singaporean emigrates to another country, he can pull out all his savings and should comfortably be able to buy up landed property and a car in another country. As savings were accumulated tax-free, it is theoretically possible to pull put an investment in a foreign country and begin to supplement your income with dividends from day one, and this time your CPF money would be fully under your control. 

The only weakness is that you'll be paying more punishing taxes in your new home. 

If any Singaporean wishes to move to a Westernised country, based on the work my students have done, they need to supplement their lifestyle with some work, but it can be very chill and relaxed compared to Singapore. But if the Singaporean moves to another country in Asia, retirement is definitely possible on $500,000 SGD. 

I think as we celebrate National Day this week, we should appreciate the fact that we've grown to be disciplined people that can turn our personal struggles to be something meaningful. If anything, networks of ex-Singaporeans have sprouted up in many overseas countries allowing us to have a taste of what it's like to live and play away from the Kryptonian Red Sun.

I will stay because my investment income has already broken free from the gravity on Planet Singapore. 

But the question for readers is this :

Will you stay or will you go?

 

  

The Future of Finance is Female !

 

One area I'm focused on is to make my program more diverse and gender-inclusive. But I can see how hard it is given that my program does not stint on numbers and it focuses on making hardcore financial decisions. Currently three-quarters of my student population is male and there is more room to expand by making the program more appealing to women.

To overcome this hurdle, I've been doing more pro-bono work focused on feminine finance to see how I can do better.

There are two very interesting projects coming up :

a) Podcast on Gendered Finance with MissFITFI

The recording for this segment is complete and MissFITFI's powerful army will spend the next few weeks heavily editing the material. I've been pushing for the idea of a serious discussion of women's issues in Finance but I can't seem to find a good platform to discuss this intelligently because of the "sausage problem" in the financial blogosphere. Most financial bloggers are guys.

Naturally, I wanted a more controversial discussion so I asked MissFITFI whether she wants to talk about whether specific forums for women on the topic of investing make any sense. In this case, I volunteered to take the more untenable position, so I tried to argue that financial forums specifically for women are not necessary and that forums that invite both men and women are good enough to assist women even for issues very specific to them. 

Regardless of whether I successfully defended that idea, I think all of us doing the podcast had a lot of fun. 

When the podcast comes out I will point you guys to it. 

Should be fun.

b) Presentation to a women's network for P&G

I'm taking this project super seriously because it's an alumni homecoming for me. I will be speaking for 45 minutes next week on the mechanics of Early Retirement.

I might be tooting my horn for my first company, but I dare to say that if there is a talented Type-A female graduate, P&G will go all out to recruit them into the organization. As expected P&G did not beat around the bush and they were very direct and even gave me examples of presentations that did not meet their standards in the past.

An amazingly some of the stuff that's revealed to me is pertinent to the podcast I have just done. I was telling MissFITFI that money forum's that exclusively cater to women would go overboard with emotional stories and narratives. These stories take up so much bandwidth, there's very little room for actionable items. Worse, to make meaningful financial decisions, a numerical discussion is often unavoidable.

As it turns out, if you are a commissioned salesperson and you choose to adopt more style at the expense of substance, some really smart women will bite you pretty hard and they won't let go. 

For my P&G talk, I made no attempts to retrofit my material specifically for women. I did the opposite and pitched it much higher level - at the MBA level if possible. From my experience, P&G women are not expecting to be saved - I am at best a Steve Trevor like personality in this story. 

So this is what I think I missed out on talking about in the MissFITFI podcast. A veritable truth in marketing is that packaging something for women can be very profitable. Some self-improvement guides can double the volumes sold simply by colouring the book pink and marketing it from a woman's angle. 

But if you take it too far, I think some people  (especially female FAs)  can be seen as insulting a woman's intelligence. A friend, after hearing my story, even remarked whether the financial talks need to pass a Bechdel Test.

Anyway, if I wanted to hijack a woman's emotions, it's not too hard. I helped out in divorce cases before, I can speak with authority about the ways some nasty men can hide their assets and make life difficult for ex-wives. Getting women to focus on their personal finances by displaying some of the worst traits of men is not taking the high road.  

I prefer to use facts - Women live longer than men, they probably pay more for annuities, so financial security and retirement is not a soft fuzzy matter to them. 

In fact, it can be way harsher given the salary gap they have in the workplace. 

Maybe we will be better off with a more authoritarian regime

Ok, something more interesting to share on National Day week. 

Maybe I’m slowly becoming a cranky uncle, but I’m beginning to miss the old days where Lee Kuan Yew would meet you at the cul-de-sac to resolve any political differences with him. 

One of the reasons is that I live in Woodlands and for more than a year, Marsiling Mall hawker centre had that policy of charging an extra $0.50 to use a tray and then, to get back your money, you needed to return the trays to the conveyer belt. Execution was expensive and muddled, I had grassroots folks or “ambassadors”  basically staring at me while I ate my food. I even scolded them for trying to take picture of me. The truth is that these ambassadors are facing a rebellious lot in the North. I’ve seen some old Chinese uncles would buy the food from the stalls, make a mess on the table and then return just the tray to get their money back, they’ll do anything to stick it to the government. 

It was then that I realise that Jackie Chan was right, Chinese people need to be governed. When the government started to impose fines for not returning trays, hawker centres became a lot more pleasant to hang out in. 

I don’t know what is wrong with policy makers, maybe they are infected by the Left as in many Western countries. A lot of money can be saved if we moved towards a fine immediately. By shuffling their feet and focusing on consensus and experimentation, the government makes itself seem weak and effete.   

As of now, we’re not dealing with recalcitrant tray non-returners anymore, there is a tribe of anti-vaxxer’s trying to frustrate our efforts to vaccinate a large part of our population so that businesses can resume. This movement is gaining traction and I can see some really unscrupulous individuals trying to monetise and sell products to these group of people. Over the past few days, friends who infiltrate these anti-vax groups have started sharing with me stuff that’s off the charts, from some religious fundamentalist claiming that a vaccine marking is the Mark of Beast to some new age spiritualist who think that spiritual purity will protect them from the virus. 

I think by now, we should know that the gloves are off. Our vaccination numbers are large enough for us to provide a firm differentiation between those who are vaxxed and those who are not. 

But that is only the beginning. 

Both PAP and WP support the vaccination efforts. I fail to see what political capital can be sacrificed if we pass some laws to deal anti-vaxxers. If we don’t do anything about these folks, they may evolve into a kind of 5th Column in Singapore. The government will have it’s hands full with the Leftists and Anti-Vaxxers in time to come. 

Human nature is like this. 

A percentage of the Singapore population is too disagreeable and non-conscientious to support policies that benefit everyone. If anything, they just want to watch the world burn. Social media enables them to form groups and even find corporate sponsors at the same time.

I hope before out National Day celebrations, the government can take firm action against anti-vaxxers in Singapore. 

If we can’t take them all down, taking down their leaders should set some kind of example for the rest of the country.

Happy National Day everyone !

 

Happy National Day Readers.

I was initially planning an article on retiring overseas but Seedly beat me to the punch. You can read their excellent article here. 

While I'm not really burnt out, I've been reading a lot but do not have a lot of insights recently. 

Maybe if I get some inspiration this week or if readers want me to write about something, you'll get something entertaining. 

In the meantime, enjoy your holidays! 

Philosophers who inspire the FIRE movement

Something short for this weekend, with the Lying Flat movement gaining traction and possibly fuelling the FIRE movement, it is time to review three philosophers that can be said to be basis of both movements.

a) Diogenes

Diogenes was part of the Cynic movement and can be said to be somewhat like an Ancient Troll. He was banished for the debasement of the currency and exiled from his city. 

Reviewing his life, it is no wonder that he animates the Lying flat movement. He lived in a clay wine jar that belonged to the temple and was said to throw his only clay bowl away when he saw a peasant drink by cupping his own hands. What is not mentioned by proponents of the Lying Flat movement was that Diogenes also masturbated in public and defecated in the public theatre. 

His philosophy is quite regressive if viewed from a modern lens, the central tenet that artificial societal growth is antithetical to personal happiness. 

I can imagine the Chinese Communist Party is very defensive if modern-day Diogenes arose in Chinese society. 

b) Heraclitus

It is not clear how Heraclitus the “Obscure” can inspire the Lying Flat movement. He is a metaphysician who proposes the idea of the unity of opposites. The opposite of justice is strife, and consequently, we can only know justice from understanding what strife is. His other idea is that we’re constantly changing. 

I suspect the movement just wanted to say that Lying Flat allows people to think about life the same way Heraclitus does. Still, I can imagine this might take some effort in ancient times as empiricism is not even invented yet. 

Heraclitus may be more beneficial for the FIRE movement as he was a precursor to the Stoics. 

c) Thales

Thales of Miletus is not part of the Lying Flat movement but, combined with Diogenes and Heraclitus, and they form an exciting triad for further research. 

Thales is more of a mathematician who pioneered the idea that everything was water. His contribution to geometry was quite extensive, but it is what he did with this life that makes him an icon of the FIRE movement. 

Thales was the first person who understood how to setup a monopoly. He was able to predict that olives would have a good harvest at a particular year and cornered the supply of olive presses. The resulting boost in demand for the presses made him a rich man. 

Hopefully I’ll have something better on National Day.