I'm really upset with Roy Ngerng.
We could spend time have a constructive discussion about creating a career path for Poly and ITE students in the public sector, but instead, the entire discussion bandwidth was hijacked by everyone trying to say something about the CPF program.
So to just go with the flow, here are some of my thoughts on the system.
Before I raise my points on CPF, I need to qualify myself - If my CPF is returned to me, my financial position would become much stronger. I have the willingness and capability to take bigger financial risks so I can achieve better returns. On my last calculation, a return of my funds would allow me to reach 5 digits a month in dividend income - more than enough to achieve my legal and start-up ambitions.
I would like to argue in this post that Singapore is better off having a CPF program.
a) Arguments need to account for the matching from tax payers.
There is a ridiculous argument that simply because the government can invest our CPF and achieve double digit returns, they can afford to do better than the 2.5% in CPF-OA and 4% in CPF-SA. Assuming this were even true, these folks forget that the government matches your contribution when you make your monthly income deduction, this goes beyond the 2.5% and 4% returns and is a substantial transfer of taxpayer funds to Singapore workers.
[ All : A friend just told me that this argument is invalid. CPF matching is solely done by employers. I'm keeping this around for you guys to appreciating that blogging in anger does not lead to great argument ! ]
This matching is substantial, how many Singaporeans can claim to more financial assets than their CPF account ?
b) Public goods cost money too.
At the end of the day, what is even wrong with the government making an investment profit on your CPF?
I acknowledge that this argument is unique as it holds only in very few countries. Our government is relatively good at investing taxpayer money relative to the average citizen.
Some things just can't be handled well by the private sector, military and civil defense, maintenance of the courts to protect your property rights, construction of roads and schools. Excess in investment may not flow into your CPF account, but to stay in power, governments will have to maintain your infrastructure and invest these funds well. This means giving soldiers and firemen a decent livelihood.
Our government has enough for a surplus almost every year, so this means that we're not leaving a pile of debts for our kids.
c) You sacrifice your freedom to use CPF to gain the freedom of not being burdened by the stupidity of others.
Another argument is that the CPF is your money, you want the right to use it anyway you want. For me, that would be awesome, I will buy more income generating assets. For some uncle, it would be even more awesome - more money to buy cigarettes, call chicken and drink more beer. Problem arises when uncle call chicken too many times, get HIV and can't pay his medical bills, then you, the tax-payer, will bear the burden.
So we don't live in an ideal world. People will call chicken and buy Toto with their spare cash, they will not plan for the future and they will inflict a cost on all taxpayers. Your taxes and GST will rise proportionately to the number of folks who will make the decision to let themselves go and have too much fun.
The burden to the taxpayer is non-trivial. Social workers need to be hired to provide help to those who drop out of the system. These social workers need to be managed - more scholars ! Call centers need to be set up. You have to pay for an entire agency to make things happen. Someone has to foot the bill. The result of this is government gets bigger, require more funds to maintain, our children become burdened by our excesses !
So for lack of a better term, CPF is protection money. Tax payers participate and give up some freedom. In return, they are protected from the flakes and losers that, unfortunately, exist in all societies. The damage these flakes inflict upon themselves is taken from their CPF first before you even get taxed ! ( How cool a system is that ? The assholes end up screwing themselves first before they get to screw you ! )
Now that being said, I do have some pet peeves with CPF - it's a system that can be fine-tuned :
a) Why separate contribution from monthly income and bonus ?
This rule baffles me, why not just allow CPF contributions to take place for $90,000 a year and not separate the bonus and monthly income pools ? An Accenture consultant who has a 12 month salary scheme contributes less than a public servant who has a 15 month scheme even though they may have the same income.
b) Do we really need a savings plan for home ownership ?
We can definitely rethink this sacred cow that Singaporeans must own their homes. In effect, we are forcing Singaporeans to save for home ownership except that with a 99-year lease, we don't really own our HDBs homes anyway. The CPF can potentially shrink if we decide to slay this sacred cow. I can definitely imagine myself buying a portfolio of stocks and REITs and using my dividends to pay my rent. I will enjoy the greater mobility and shift my family nearer to my daughter's school if I can afford to do so. I can also rent out a home in AMK to a more dynamic yuppie couple when I get older and rent a Semi-D in a rural area.
People who reach different stages in their lives may be better off living in different areas. Decoupling ownership with domicile may be good for Singaporeans.
c) Exposing Singaporeans to more market forces can make them tougher.
Singaporeans tend to be a little naive compared to Hong Kongers when it comes to investing. Yes, allowing folks to invest more of their CPF will result in more losses for many, but investing is a game where tuition fees would sometimes need to be paid. I thinking raising the CPF-IS to 50% will allow us to have more skin in the game. Having more citizens exercise their rights as capitalists will also make them more sympathetic to the efforts of the Government to manage their funds well.
It will also arrest the falling liquidity in the local stock market.
In conclusion, I think that many issues merit a more urgent debate than the CPF program. The CPF program can be improved, but it is generally sound and has served us for many years. It's purpose is not just to give us retirement income, a home or a means to send our kids to the University, it also protects us from the behavior of stupid and in incompetent people by limiting the economic burden they place on all tax payers.
Of course the intent of this article is not to let the Government off the hook.
A good citizen should always challenge the investment choices made by the custodians of tax payer money. eg. Perhaps more money can be channeled to better Poly and ITE apprenticeship programs instead of building a new University. These are all worthy points of discussion which and can be done without committing libel against anyone.
Anotherwords, many political issues are actually investment problems in disguise.
Wednesday, May 28, 2014
Thursday, May 22, 2014
Choose Yourself !
It started with my conclusion that conscientiousness is largely determined genetically so the following conversation started with the maxim that a man would need to choose a wife properly. If anything, a flaky wife, if Minister Mentor might be correct, will give you flaky kids.
I took the conversation one step further and proposed that instead of finding a better wife, why not choose a better self !
This idea seems absurd at first - my friends protest that they can't choose which family to be born to. In my opinion, I do not think that it is much more absurd than following the maxim to choose a wife properly. At the end of the day, women are choosier creatures than men. Before you can choose someone to become your wife, she probably already has an idea of why you would not make husband material.
So to all the man-children out there, good luck with a second date !
I think there is merit in the idea of "Choosing a better self" rather than "Choosing a better wife."
Let me try to construct a working action plan to accompany this philosophical idea with two other big ideas from economics and psychology :
a) Capital in the 21st Century say that (r >g)
In this reality/dimension, the return on investment will always exceed GDP growth. Folks who accumulate wealth will always grow richer than folks who rely solely on their earned income. This is a fundamental reason for wealth inequality.
b) Our willpower is a finite resource and can be depleted
Psychological tests show that people who strain themselves mentally will have trouble resisting later. Very much like Diablo III, your Willpower is like your Mana, Fury or Wrath - it is a resource that can be depleted every-time you are made to exercise it. Make a diabetic do two programming assignments, and he will succumb to a Magnum moments later.
If you can accept the previous two points, you should be able to accept some of my conclusions :
a) You need to allocate your Willpower or attention properly as it is a scarce resource
To choose yourself, you will need to decide what you want to focus on. People who like money can focus on tasks which make money. People who want happiness will have to choose concerns which make them happy. Conscientiousness may determine the amount of Willpower you have, but allocating it well to activities and hobbies which promote your personal agenda belongs to the province of personal wisdom and common sense. Have too many sports and hobbies and you will find that you will do badly in many of them. Have one or two interests and you will be able to cultivate depth even if you might not be endowed with a lot of conscientiousness or Willpower.
b) If you want money than you overwhelmingly need to grow financial capital
How do you allocate your Willpower if you want to maximize your wealth ? If (r>g), an ordinary employee will find that their salaries will approximate GDP growth or g over the long term, but if he can start to own financial assets in his early twenties, his wealth will grow at a rate of r which is larger than g.
The action is plan is thus, as simple as Ohm's Law.
If you work in an MNC and see your colleagues get 10-15% increments every year, then spending time at work and putting effort to be a good employee makes sense ( Your personal g > r ). In such a case, the MBAs which focus on management and administration are logical areas to focus your effort. You can also go karaoke with your bosses and colleagues as there is a positive long term impact in your wealth generation.
However if you work in a place where a 5% increment is an event which should be celebrated or are sufficiently senior in your job role where your increments match GDP growth, then an MBA to improve your productivity is not as good an investment as the CFA which will teach you about managing wealth. Similarly for your hobbies, you can now stop brown-nosing your bosses and instead spend your evenings reading financial blogs. Your money is coming from your financial wealth instead of paid labor.
If you work in an industry which is facing decline and see your pay getting lower for each contract renewal, then transcend money and and focus on your personal happiness. Spend as little time at work and think about what makes you happy and fulfilled. Be gen-Y, go for work-life balance. This is not a trivial exercise because if you have done well, you would have no regrets on your deathbed unlike other people. There's even a qualification you can get for that called an MFA. For some, this option is best choice.
So to end, let me talk about my experiences playing Diablo III.
I play a Lvl 70 Crusader with 45 paragon points, I joined a friend who has a Lvl 70 Witchdoctor with 150+ paragon points and decked from head to toe in legendary items. I barely struggle at Torment 1 and my friend is slowly getting comfortable at Torment 4. I undertook took one quest and got slaughtered by a pygmy in a Nephilim Quest.
It was an eminently humbling experience to party with people with better loot and better stats.
I think it's a teachable moment for real life. In that sense the Witchdoctor chose himself, he went on quests with other supremely Uber Diablo characters, accumulated paragon points, looted more gold and had more legendary drops.
Similarly in real life, some folks struggle like my Crusader in Torment 1, always working too hard for too little. Others are cruising Torment 4 like my friend's Witchdoctor, taking up more difficult assignments for bigger and better rewards.
So this is the moral of the story.
Choose yourself better.
Choose the right things to focus on.
This way the better wife will choose you !
I took the conversation one step further and proposed that instead of finding a better wife, why not choose a better self !
This idea seems absurd at first - my friends protest that they can't choose which family to be born to. In my opinion, I do not think that it is much more absurd than following the maxim to choose a wife properly. At the end of the day, women are choosier creatures than men. Before you can choose someone to become your wife, she probably already has an idea of why you would not make husband material.
So to all the man-children out there, good luck with a second date !
I think there is merit in the idea of "Choosing a better self" rather than "Choosing a better wife."
Let me try to construct a working action plan to accompany this philosophical idea with two other big ideas from economics and psychology :
a) Capital in the 21st Century say that (r >g)
In this reality/dimension, the return on investment will always exceed GDP growth. Folks who accumulate wealth will always grow richer than folks who rely solely on their earned income. This is a fundamental reason for wealth inequality.
b) Our willpower is a finite resource and can be depleted
Psychological tests show that people who strain themselves mentally will have trouble resisting later. Very much like Diablo III, your Willpower is like your Mana, Fury or Wrath - it is a resource that can be depleted every-time you are made to exercise it. Make a diabetic do two programming assignments, and he will succumb to a Magnum moments later.
If you can accept the previous two points, you should be able to accept some of my conclusions :
a) You need to allocate your Willpower or attention properly as it is a scarce resource
To choose yourself, you will need to decide what you want to focus on. People who like money can focus on tasks which make money. People who want happiness will have to choose concerns which make them happy. Conscientiousness may determine the amount of Willpower you have, but allocating it well to activities and hobbies which promote your personal agenda belongs to the province of personal wisdom and common sense. Have too many sports and hobbies and you will find that you will do badly in many of them. Have one or two interests and you will be able to cultivate depth even if you might not be endowed with a lot of conscientiousness or Willpower.
b) If you want money than you overwhelmingly need to grow financial capital
How do you allocate your Willpower if you want to maximize your wealth ? If (r>g), an ordinary employee will find that their salaries will approximate GDP growth or g over the long term, but if he can start to own financial assets in his early twenties, his wealth will grow at a rate of r which is larger than g.
The action is plan is thus, as simple as Ohm's Law.
If you work in an MNC and see your colleagues get 10-15% increments every year, then spending time at work and putting effort to be a good employee makes sense ( Your personal g > r ). In such a case, the MBAs which focus on management and administration are logical areas to focus your effort. You can also go karaoke with your bosses and colleagues as there is a positive long term impact in your wealth generation.
However if you work in a place where a 5% increment is an event which should be celebrated or are sufficiently senior in your job role where your increments match GDP growth, then an MBA to improve your productivity is not as good an investment as the CFA which will teach you about managing wealth. Similarly for your hobbies, you can now stop brown-nosing your bosses and instead spend your evenings reading financial blogs. Your money is coming from your financial wealth instead of paid labor.
If you work in an industry which is facing decline and see your pay getting lower for each contract renewal, then transcend money and and focus on your personal happiness. Spend as little time at work and think about what makes you happy and fulfilled. Be gen-Y, go for work-life balance. This is not a trivial exercise because if you have done well, you would have no regrets on your deathbed unlike other people. There's even a qualification you can get for that called an MFA. For some, this option is best choice.
So to end, let me talk about my experiences playing Diablo III.
I play a Lvl 70 Crusader with 45 paragon points, I joined a friend who has a Lvl 70 Witchdoctor with 150+ paragon points and decked from head to toe in legendary items. I barely struggle at Torment 1 and my friend is slowly getting comfortable at Torment 4. I undertook took one quest and got slaughtered by a pygmy in a Nephilim Quest.
It was an eminently humbling experience to party with people with better loot and better stats.
I think it's a teachable moment for real life. In that sense the Witchdoctor chose himself, he went on quests with other supremely Uber Diablo characters, accumulated paragon points, looted more gold and had more legendary drops.
Similarly in real life, some folks struggle like my Crusader in Torment 1, always working too hard for too little. Others are cruising Torment 4 like my friend's Witchdoctor, taking up more difficult assignments for bigger and better rewards.
So this is the moral of the story.
Choose yourself better.
Choose the right things to focus on.
This way the better wife will choose you !
Monday, May 19, 2014
How can we intrinsically motivate our kids ?
Some of my friends think I might have some magical powers to answer some of life's most perplexing problems.
Today they asked me a question about how to intrinsically motivate their kids.
While I have neither the qualifications nor the knowledge to answer such a question, I think that it may be interesting to blog about this anyway since many readers may be parents and some of you guys may have gifted kids and can share some of your insights with us.
While I am not a magical shaman who can teach you how to raise your kids or increase your penis size, I have a magical tool called Google and given my amateur interest in psychology, I might be able to get some reasonable answers for kiasu parents.
And my answer, which I will qualify later, is a BIG FAT NO !
I'm going to start with simple reason why you can't intrinsically motivate your kids - The main reason why you can't do it is because if you succeed, then your kid is not motivating himself intrinsically, your kid is being extrinsically motivated. But of course, you don't ask your friendly, neighborhood, financial blogger to just play word games with you, so here's an answer which is more interesting :
Conscientiousness is largely genetic.
Psychological studies on twins show that conscientiousness, that magical quality that makes kids delay gratification and focus on their studies, is largely based on the genes that are passed onto them from their parents. A sad conclusion from this study is that if you have been a conscientious person yourself, there is a possibility that this can rub off on your kids, but if you are a flake, always late for appointments and sabo-ing your project team, I think a vasectomy might not be a bad idea.
In previous articles, I have alluded to other studies that practicing your willpower will increase your conscientiousness. Science has not determined what kind of exercises these should be to be most effective. You might have to think of designing a life around your kids where they can practice their willpower but I am not too sure how to do that effectively. I do know that conscientious people who do sign up for muscle training and end up being more conscientious with their finances. A lot of enterprising folks have programs for children but I would challenge any provider to document their results scientifically for verification.
Psychological research is not all bad news for parents - One trait which can be affected by environmental factors is Agreeableness. Which means that raising kids to be competitive, Zerg-rush for early retirement only to get into the gladiatorial arena of law school might not be a terribly workable objective for many parents ( Besides, I would really hate the competition ! ).
It is better to create a loving environment for your kids so that they can become positive people who can make your lives better and happier when you get older.
That is almost the only thing which parents can take credit for.
So have happy kids... Their own ambitions will take care of everything else.
Today they asked me a question about how to intrinsically motivate their kids.
While I have neither the qualifications nor the knowledge to answer such a question, I think that it may be interesting to blog about this anyway since many readers may be parents and some of you guys may have gifted kids and can share some of your insights with us.
While I am not a magical shaman who can teach you how to raise your kids or increase your penis size, I have a magical tool called Google and given my amateur interest in psychology, I might be able to get some reasonable answers for kiasu parents.
And my answer, which I will qualify later, is a BIG FAT NO !
I'm going to start with simple reason why you can't intrinsically motivate your kids - The main reason why you can't do it is because if you succeed, then your kid is not motivating himself intrinsically, your kid is being extrinsically motivated. But of course, you don't ask your friendly, neighborhood, financial blogger to just play word games with you, so here's an answer which is more interesting :
Conscientiousness is largely genetic.
Psychological studies on twins show that conscientiousness, that magical quality that makes kids delay gratification and focus on their studies, is largely based on the genes that are passed onto them from their parents. A sad conclusion from this study is that if you have been a conscientious person yourself, there is a possibility that this can rub off on your kids, but if you are a flake, always late for appointments and sabo-ing your project team, I think a vasectomy might not be a bad idea.
In previous articles, I have alluded to other studies that practicing your willpower will increase your conscientiousness. Science has not determined what kind of exercises these should be to be most effective. You might have to think of designing a life around your kids where they can practice their willpower but I am not too sure how to do that effectively. I do know that conscientious people who do sign up for muscle training and end up being more conscientious with their finances. A lot of enterprising folks have programs for children but I would challenge any provider to document their results scientifically for verification.
Psychological research is not all bad news for parents - One trait which can be affected by environmental factors is Agreeableness. Which means that raising kids to be competitive, Zerg-rush for early retirement only to get into the gladiatorial arena of law school might not be a terribly workable objective for many parents ( Besides, I would really hate the competition ! ).
It is better to create a loving environment for your kids so that they can become positive people who can make your lives better and happier when you get older.
That is almost the only thing which parents can take credit for.
So have happy kids... Their own ambitions will take care of everything else.
Tuesday, May 13, 2014
Chaos is a Ladder !
The blogger for SG Wealth Builder, Gerald, has been very kind to mention me again in a book review :
http://www.sgwealthbuilder.com/2014/05/the-new-retirementality.html
To help supplement his review, I just want to say that I have not read the book The New Retirementality, it's also not very fair for me to claim credit for practicing the 4 pillars mentioned in Gerald's review. I do not know contextually what Vision, Work, Balance or Successful Aging meant from the author's POV, but judging from the dictionary definition, I actually think I practice none of the above !
This is especially so for successful aging, my biggest weakness. As a person who has serious trouble controlling my blood sugar due to my genes, part of the motivation to quit my day job is to see if I can reduce my need for diabetic medication, otherwise I expect most Type II Diabetics to age faster and have a lifespan 15 years shorter than most of you healthy readers. Maybe the right term for me is Accelerated aging - this is something I'm working on aggressively, reducing my food intake and exercising every other day so that I can live to see my daughter get married. ( Penang White Curry mee does not help ! )
But more importantly, I want to share my approach and philosophy towards Balance and Vision.
I don't subscribe to a balanced lifestyle. Never did, never would. I just think that to have audacious goals, you will need to make the right sacrifices. My financial independence could not have been achieved if not for the 4 years where I did the CFA, FRM and CAIA exams while holding a day job and maintaining all my older IT certifications. The key component is while studying I had to put some theories into practice and my dividends investing strategy originated from a Clifford Asness paper on dividend counters having superior growth rates to non-dividends yielding counters in the Financial Analysts Journal ( which you can get as a CFA associate member ). Prior to the article, I was losing from my investments in value stocks and making only a small profit from unit trusts.
Sacrifice is more important than balance. While my peers are travelling or getting distracted by computer games, I was trying to just increase my knowledge in the hopes that I can find a chink in reality's armor that can be exploited - that takes time, effort and, in these days, proficiency in statistics. I doubt very much has changed in my current life as a JD program pre-matriculant. ( I just hope that my ambition does to push me off the edge and I try to to score a CPA and JD simultaneously. ;) )
The last component I want to talk about is Vision. Some people claim I have vision, which I disagree. Instead, I do read a lot more than other people. My ideas and take on the future is hardly original but it may come from multiple books on history, economics and technology. This is not a deliberate process, all my knowledge just stews in my brain and ideas then start to pop in my mind.
People who like Vision may see Strategy as deliberate goal setting and then relentlessly attacking the goal by taking aggressive action. This means having a clear idea of what the end-point of their life means and finding ways to make it work - I admire that. I used to take that approach, but it gets tiring as you get older.
Life does not turn out your way all the time : Some people you meet at work will get that promotion that you desire because they deserve it more. The economic situation can change and make that shoe-box unit buy a bad idea.
Change is the only constant in life.
My life strategy these days is more inspired by Petyr Baelish or Tywin Lannister in Game of Thrones.
Petyr Baelish, first made Master of Coin, invested in his network of spies, then created a series of events to bloodlessly capture the Vale of Arryn. Fans who read the book are only guessing what he has planned for Sansa Stark. Tywin Lannister exploited the unravelling of the Stark-Frey alliance to enact the Red Wedding, this is in spite of losing every battle to Robb Stark prior to hatching a plot with the Freys and a the Boltons.
For the folks who read, accumulate capital and network aggressively, you can play by a different set of rules.
Capital creates capital. Perhaps a shift in political situation in Thailand can create a bargain stock in the SGX. Ask yourself how can we exploit a Modi victory in India by making adjustments to your portfolio.
Time is as good as capital. Too much time freed up after leaving the workforce, what if I can invest in gaining legal knowledge to open up new forms of arbitrage involving the prediction of stock price movements on law suit outcomes. Other readers can attempt an MBA. The possibilities are endless.
Life strategy for me today is to sit tight and exploit any situation which arises. Prepare yourself with assets, time and knowledge and some interesting options will unfold itself in time.
After all, chao is a ladder !
http://www.sgwealthbuilder.com/2014/05/the-new-retirementality.html
To help supplement his review, I just want to say that I have not read the book The New Retirementality, it's also not very fair for me to claim credit for practicing the 4 pillars mentioned in Gerald's review. I do not know contextually what Vision, Work, Balance or Successful Aging meant from the author's POV, but judging from the dictionary definition, I actually think I practice none of the above !
This is especially so for successful aging, my biggest weakness. As a person who has serious trouble controlling my blood sugar due to my genes, part of the motivation to quit my day job is to see if I can reduce my need for diabetic medication, otherwise I expect most Type II Diabetics to age faster and have a lifespan 15 years shorter than most of you healthy readers. Maybe the right term for me is Accelerated aging - this is something I'm working on aggressively, reducing my food intake and exercising every other day so that I can live to see my daughter get married. ( Penang White Curry mee does not help ! )
But more importantly, I want to share my approach and philosophy towards Balance and Vision.
I don't subscribe to a balanced lifestyle. Never did, never would. I just think that to have audacious goals, you will need to make the right sacrifices. My financial independence could not have been achieved if not for the 4 years where I did the CFA, FRM and CAIA exams while holding a day job and maintaining all my older IT certifications. The key component is while studying I had to put some theories into practice and my dividends investing strategy originated from a Clifford Asness paper on dividend counters having superior growth rates to non-dividends yielding counters in the Financial Analysts Journal ( which you can get as a CFA associate member ). Prior to the article, I was losing from my investments in value stocks and making only a small profit from unit trusts.
Sacrifice is more important than balance. While my peers are travelling or getting distracted by computer games, I was trying to just increase my knowledge in the hopes that I can find a chink in reality's armor that can be exploited - that takes time, effort and, in these days, proficiency in statistics. I doubt very much has changed in my current life as a JD program pre-matriculant. ( I just hope that my ambition does to push me off the edge and I try to to score a CPA and JD simultaneously. ;) )
The last component I want to talk about is Vision. Some people claim I have vision, which I disagree. Instead, I do read a lot more than other people. My ideas and take on the future is hardly original but it may come from multiple books on history, economics and technology. This is not a deliberate process, all my knowledge just stews in my brain and ideas then start to pop in my mind.
People who like Vision may see Strategy as deliberate goal setting and then relentlessly attacking the goal by taking aggressive action. This means having a clear idea of what the end-point of their life means and finding ways to make it work - I admire that. I used to take that approach, but it gets tiring as you get older.
Life does not turn out your way all the time : Some people you meet at work will get that promotion that you desire because they deserve it more. The economic situation can change and make that shoe-box unit buy a bad idea.
Change is the only constant in life.
My life strategy these days is more inspired by Petyr Baelish or Tywin Lannister in Game of Thrones.
Petyr Baelish, first made Master of Coin, invested in his network of spies, then created a series of events to bloodlessly capture the Vale of Arryn. Fans who read the book are only guessing what he has planned for Sansa Stark. Tywin Lannister exploited the unravelling of the Stark-Frey alliance to enact the Red Wedding, this is in spite of losing every battle to Robb Stark prior to hatching a plot with the Freys and a the Boltons.
For the folks who read, accumulate capital and network aggressively, you can play by a different set of rules.
Capital creates capital. Perhaps a shift in political situation in Thailand can create a bargain stock in the SGX. Ask yourself how can we exploit a Modi victory in India by making adjustments to your portfolio.
Time is as good as capital. Too much time freed up after leaving the workforce, what if I can invest in gaining legal knowledge to open up new forms of arbitrage involving the prediction of stock price movements on law suit outcomes. Other readers can attempt an MBA. The possibilities are endless.
Life strategy for me today is to sit tight and exploit any situation which arises. Prepare yourself with assets, time and knowledge and some interesting options will unfold itself in time.
After all, chao is a ladder !
Sunday, May 11, 2014
Who should be at the bottom of the barrel ?
Recently there has been a spate of articles criticizing Singapore's brand of meritocracy which has been gaining traction on the Internet. These articles almost always employ the same argument - they either draw an example or create a fictional character who faces many obstacles in life, and then they conclude that there is no way this character can get ahead without some sort of a push from the government or the Singaporean tax payer.
These authors are very conniving, because very often, the argument normally just stops there. The logic is that basically, that some folks can never make it in Singapore because not everyone has the same starting point, therefore tax payers are morally obligated to help them throughout their whole journey sometimes to the extent of sacrificing their own personal interest so that "we're all in it together".
Now my position on a meritocratic society is that it is not perfect, society is better served by always seeking to fine-tune the definition on what the meaning of talent is for a system to sustain itself. This is a never-ending process and winners in one generation may be losers in another. So bottom line is that no matter where we are, there will be winners and losers, but unless we take pains to paint a picture on how we want an alternative to look like, it seems to me that the anti-meritocracy camp is just as elitist as the status quo. Do these writers silently wish to create a new order in society where they become one of the privileged in Singapore society today.
What is their real agenda ? I do not know what is the secret agenda of these politically charged articles.
Instead, my post today is to confront the ugly truth by clearly stating who should be at the bottom of the barrel. This is in the hopes that by my admission, I will attempt to provide and answer that is avoided by many of these articles.
We cannot determine a fair pecking in society without coming to a consensus of who should right at the bottom of the pyramid. This is a head-headed process that all of us needs to go through. Someone has to be scrapping at the bottom of the barrel, no matter what happens. We just need to determine philosophically, who are the most appropriate folks to take on these roles.
So in my humble opinion, the stereotypical bottom-scrapper is the Flake.
A flake is a person who is at the bottom of the barrel in terms of the psychological measure of conscientiousness. He lives by the moment, never has a plan for the future. He may not show up on time in most meetings and is a dangerous asset to have in any project team.
Everybody knows who the Flake is, he comes in many names "LJ man", "Jackass". If you think Seth Rogen, the Wayan brothers, Ken Jeong or Johnny Knoxville can convincing play your buddy in a movie, he is a flake.
Flakes cannot be allowed to handle money, they have horrible marriages and drain the medical system as they can't be trusted to look after their own health. They cannot delay gratification and are very prone to addiction. Flakes probably inflict the most damage on their children, who may become subjects of anti-meritocratic articles in the future.
Now suppose, you are with me on this and actually agree that Flakes should be related to the bottom of the league.
Does the Singapore Meritocracy sufficiently address and agree to this division which I have proposed ?
I would say, to large extent, yes. We have a rigorous education which sifts out lazy and unmotivated students. A system of bursaries and scholarships are given to students who have the grit and tenacity to overcome their financial situation. Our baby bonus is a 1-1 matching system after $4,000 and not a pure handout so parents who save will be able to offload more expenses to raise their children.
But even from this point of view, our meritocracy is not perfect. Rich kids can be sent overseas for degrees even if they are useless wastrels. They also inherit 100% of their parent's hard work as there are no inheritance taxes in this country.
So in conclusion, you might be a flake and be offended by this article and disagree with me on who should be a bottom feeder. Come up with a social division of your own and defend it on the Internet. At the very least, by performing this exercise, you have a clearer perspective on what we want our meritocracy to be.
These authors are very conniving, because very often, the argument normally just stops there. The logic is that basically, that some folks can never make it in Singapore because not everyone has the same starting point, therefore tax payers are morally obligated to help them throughout their whole journey sometimes to the extent of sacrificing their own personal interest so that "we're all in it together".
Now my position on a meritocratic society is that it is not perfect, society is better served by always seeking to fine-tune the definition on what the meaning of talent is for a system to sustain itself. This is a never-ending process and winners in one generation may be losers in another. So bottom line is that no matter where we are, there will be winners and losers, but unless we take pains to paint a picture on how we want an alternative to look like, it seems to me that the anti-meritocracy camp is just as elitist as the status quo. Do these writers silently wish to create a new order in society where they become one of the privileged in Singapore society today.
What is their real agenda ? I do not know what is the secret agenda of these politically charged articles.
Instead, my post today is to confront the ugly truth by clearly stating who should be at the bottom of the barrel. This is in the hopes that by my admission, I will attempt to provide and answer that is avoided by many of these articles.
We cannot determine a fair pecking in society without coming to a consensus of who should right at the bottom of the pyramid. This is a head-headed process that all of us needs to go through. Someone has to be scrapping at the bottom of the barrel, no matter what happens. We just need to determine philosophically, who are the most appropriate folks to take on these roles.
So in my humble opinion, the stereotypical bottom-scrapper is the Flake.
A flake is a person who is at the bottom of the barrel in terms of the psychological measure of conscientiousness. He lives by the moment, never has a plan for the future. He may not show up on time in most meetings and is a dangerous asset to have in any project team.
Everybody knows who the Flake is, he comes in many names "LJ man", "Jackass". If you think Seth Rogen, the Wayan brothers, Ken Jeong or Johnny Knoxville can convincing play your buddy in a movie, he is a flake.
Flakes cannot be allowed to handle money, they have horrible marriages and drain the medical system as they can't be trusted to look after their own health. They cannot delay gratification and are very prone to addiction. Flakes probably inflict the most damage on their children, who may become subjects of anti-meritocratic articles in the future.
Now suppose, you are with me on this and actually agree that Flakes should be related to the bottom of the league.
Does the Singapore Meritocracy sufficiently address and agree to this division which I have proposed ?
I would say, to large extent, yes. We have a rigorous education which sifts out lazy and unmotivated students. A system of bursaries and scholarships are given to students who have the grit and tenacity to overcome their financial situation. Our baby bonus is a 1-1 matching system after $4,000 and not a pure handout so parents who save will be able to offload more expenses to raise their children.
But even from this point of view, our meritocracy is not perfect. Rich kids can be sent overseas for degrees even if they are useless wastrels. They also inherit 100% of their parent's hard work as there are no inheritance taxes in this country.
So in conclusion, you might be a flake and be offended by this article and disagree with me on who should be a bottom feeder. Come up with a social division of your own and defend it on the Internet. At the very least, by performing this exercise, you have a clearer perspective on what we want our meritocracy to be.
Sunday, May 04, 2014
Law school preparation, Thomas Pinketty and Capital in the 21st Century.
To a few friends who know what I've been plotting scheming for the past year, Law School was known as Plan A. Plan A was the best in a series of post-retirement outcomes after I stop work. It was designed to be high-risk, high-reward ( reward being more social status, not necessarily finance-driven ) and will give me something really intellectually challenging to do until I am very very old. I was'nt relying on Plan A to succeed and actually took a lot of pains to create three other credible alternatives, all less cool, but certainly would allow me to way richer than if Plan A would take place.
So with Plan A, a problem will be created for my financial portfolio.
Law school costs about $3,000 a month for the first two years. My dividends, which will be needed to pay for my family expenses, will now need to cover my expenses upon moving into my new EC and tuition fees. My condominium payments will be covered for the next 3 years by my CPF account, so that leaves barely $1,500 for my personal expenses and conservancy fees.
Making matters are the financial market movements. Mid-2015 interest rates will start rising, which will negatively impact my condominium loans as well the loans of the REITs I invest in. Making matters worse, industrial REITs will start facing oversupply in my first year of school. Needless to say, I've been tilting my portfolio to dividend yielding stocks slowly for the past year to maintain my current yields.
This means more than 50% probability of eating into my capital which I have been building for decades, which many push me to take a bet on the legal employment scene in 4 years time ( Which admittedly is still a good bet for legal professionals )
Of course, upon graduation, things will get better. With a renewed career, I will have options beyond tech and finance and even an entry-level role will provide adequate diversification for my future portfolio.
I'm sharing this to lead into a simple discussion on Capital in the 21st Century. French economist Thomas Pinketty wrote a fine work which rattled economists so badly that it's hard not to get something on your feed which reviews or criticizes his work.
It's not easy for a amateur to mount a credible offense on Thomas Pinketty's work, which is a difficult read. I leave the heavy lifting to the academics. I will only talk about a small part of his work.
Thomas Pinketty's basic idea is that in most economies, the rate of return of capital is higher than then GDP growth of a country. ( Expressed in equation r > g ) What this means when expressed on the ground is that the return of REITs and dividend yielding stocks (5-7 %) generally exceeds that of your annual increment or the GDP growth of the Singapore economy which is about 2-3%. This has the effect of making income inequality worse as investors make more money from investments while workers can only have a small increment on an annual basis.
I am only capable of making a small dent in Thomas Pinketty's argument based on my personal experience. And if I made a mistake in my reasoning, do feel free to correct me here for the benefit of all readers.
Everyday, someone like me applies and gets into Law School. In SIM, a polytechnic graduate may get into a private degree program. Some A-grader parent pumps $2,000 to put their kids into Montessori school thinking that it'll provide an edge in the PSLE exams. If Pinketty is right, then we're all better off cornering plots of industrial property. So why do so many Singaporeans invest their life savings into education ?
The answer is that the value of human capital often trumps financial assets :
Very often -> R_capital > r > g
Sure, GDP grows at 2-3%, but getting into the legal or medical profession gets yourself into a career which has regulatory restrictions, building a moat which makes it hard for other people to join the profession. - As is finding a job where you can dominate a small niche regardless of which profession you belong to (i.e. can you program in JCL for the AS/400 ? ). This can be way better than finding a stock with that mythical investment moat around it.
I think a better way to look at modern society from reading Pinketty is as follows :
Sometimes R_capital > r : In such a case, you go back to school, invest in a qualification like the CFA, build domain knowledge to get a better increment, get your ass back to work. Become a Super-manager. This is often the case when you are younger or in your 20s or 30s.
Sometimes r > R_capital : In such a case, you start building a portfolio of assets or create a business for yourself. Retool your life to that of a Rentier/Rent-seeker. Generally this happens in your 40s.
In summary, appealing to the authorities to seek redistribution of wealth is futile as you need to wait for consensus for that to happen.
You are better off putting in effort to benchmark the value of your human capital versus your financial capital and putting in a scheme to manage these two all-important assets.
Thursday, May 01, 2014
April Fool Portfolio : May update.
It was not a particularly good month for the April Fool's portfolio. The portfolio was down slightly while the rest of the market went up.
I think for above-average gains to be made, the portfolio would have to be expanded to be as diverse as the portfolio which I back-tested on my Bloomberg machine. That would require that I pony up enough money to buy about 50+ stocks and take on the liquidity risk associated with such counters.
For now, I would keep the portfolio as it is. If the situation does not improve in three months, I will kill this portfolio and move my money to a better investment.
I think for above-average gains to be made, the portfolio would have to be expanded to be as diverse as the portfolio which I back-tested on my Bloomberg machine. That would require that I pony up enough money to buy about 50+ stocks and take on the liquidity risk associated with such counters.
For now, I would keep the portfolio as it is. If the situation does not improve in three months, I will kill this portfolio and move my money to a better investment.
| ISIN CODE | NAME | PRICE | SHARES | Total Value | Price Paid | Original Value |
| E18 | ECS Holdings | 0.64 | 2000 | 1280 | 0.65 | 1300 |
| ON7 | Weiye | 0.067 | 14000 | 938 | 0.07 | 980 |
| H64 | HTL | 0.295 | 3000 | 885 | 0.29 | 870 |
| KI3 | Hu An Cable | 0.1 | 10000 | 1000 | 0.102 | 1020 |
| U01 | Unifoods | 0.068 | 13000 | 884 | 0.073 | 949 |
| Total | 4987 | 5119 |
Monday, April 28, 2014
So what advice can I give to a C-grader ?
In my last post which divides Singaporeans into A-graders, B-graders and C-graders, I might have done C-graders a disservice and came off sounding like a jerk when, actually, I mean no disrespect to 70% of the Singapore population. In this posting, I want to share some of my thoughts on how difficult it is to help C-graders (or everyone) succeed in Singapore.
A challenge readers threw at me in the past was to come out with a plan to help someone who makes $1,600 but has no tertiary qualifications. Now, if you asked me this question 8 years ago, I would respond like most newly, minted financial planners - I would parrot the need to start saving 10% of his income and dollar cost average into a Global Equity unit trust with the lowest possible expense ratio.
Now I'm not sure if this advice makes any sense.
For one thing, it takes a very special person to buy a personal finance book from a local author. This person is probably intelligent, motivated and possibly quite gritty to follow-through financial advice. I'm not even too sure whether I truly benefit my reader, as my reader would probably have also read The Richest Man in Babylon, The Intelligent Investor or A Random Walk Down Wall Street - all exceptional books which can give them the social mobility that they crave.
What I'm actually saying is that readers of my books and blogs are self-selected. Even if you have a C-grader self-image, I can almost guarantee that you will enjoy upward mobility in the years to come. Why ? Because you would rather read a boring finance blog than to catch-up on the latest antics of Jin Dafeng or Xu Laifa in the weekend Taiwanese drama !
The challenge, which no author or blogger can overcome, is to help the majority of folks who simply don't read.
Which brings me to the next part of this discussion.
The magic pill to help everyone succeed financially is the psychological trait known as conscientiousness.
Conscientiousness folks plan ahead, know how to delay gratification and have always plan for World Domination. Conscientious folks tend to be richer and enjoy better health. I dare to say that most financial blogs are run by people of above-average conscientiousness.
I will go on further to say that all class and social divisions will eventually settle into differences of conscientiousness instead of wealth or privilege. Another words, humanity will choose to structure itself to privilege people with long term planning and who can delay gratification regardless of starting wealth and education. Case in point, how does Chan Chun Sing become a minister ? Grit and conscientiousness such that a humble background can't stop him. If you don't like the PAP, how does Low Thia Khiang beat the odds to conquer Aljunied GRC ? Same thing - Persistence and never-say-die !
Now for the grand PHD-level insight :
Future class struggle is a weapon of those who are NOT conscientious, who need to band together to disrupt the social order. ( Mindgasm moment ! I am the new Karl Mark ! )
So, what can we do to increase our conscientiousness ?
Unfortunately, not much. There are many books that talk about Willpower. Most of these books dwell on the importance of conscientiousness, but not how to cultivate it,
If you see yourself as a C-grader, I have only one piece of useful advice for you :
Practice your willpower in one area of your life so that it will affect other areas of your life positively.
If you are the kind of student who can resist temptation to hang out when you can do your tutorials, you are exercising some that muscle to save more money and pass the CFA in the future. This willpower reserve will help you maintain a healthy diet and have a develop a happy marriage as you get older.
A challenge readers threw at me in the past was to come out with a plan to help someone who makes $1,600 but has no tertiary qualifications. Now, if you asked me this question 8 years ago, I would respond like most newly, minted financial planners - I would parrot the need to start saving 10% of his income and dollar cost average into a Global Equity unit trust with the lowest possible expense ratio.
Now I'm not sure if this advice makes any sense.
For one thing, it takes a very special person to buy a personal finance book from a local author. This person is probably intelligent, motivated and possibly quite gritty to follow-through financial advice. I'm not even too sure whether I truly benefit my reader, as my reader would probably have also read The Richest Man in Babylon, The Intelligent Investor or A Random Walk Down Wall Street - all exceptional books which can give them the social mobility that they crave.
What I'm actually saying is that readers of my books and blogs are self-selected. Even if you have a C-grader self-image, I can almost guarantee that you will enjoy upward mobility in the years to come. Why ? Because you would rather read a boring finance blog than to catch-up on the latest antics of Jin Dafeng or Xu Laifa in the weekend Taiwanese drama !
The challenge, which no author or blogger can overcome, is to help the majority of folks who simply don't read.
Which brings me to the next part of this discussion.
The magic pill to help everyone succeed financially is the psychological trait known as conscientiousness.
Conscientiousness folks plan ahead, know how to delay gratification and have always plan for World Domination. Conscientious folks tend to be richer and enjoy better health. I dare to say that most financial blogs are run by people of above-average conscientiousness.
I will go on further to say that all class and social divisions will eventually settle into differences of conscientiousness instead of wealth or privilege. Another words, humanity will choose to structure itself to privilege people with long term planning and who can delay gratification regardless of starting wealth and education. Case in point, how does Chan Chun Sing become a minister ? Grit and conscientiousness such that a humble background can't stop him. If you don't like the PAP, how does Low Thia Khiang beat the odds to conquer Aljunied GRC ? Same thing - Persistence and never-say-die !
Now for the grand PHD-level insight :
Future class struggle is a weapon of those who are NOT conscientious, who need to band together to disrupt the social order. ( Mindgasm moment ! I am the new Karl Mark ! )
So, what can we do to increase our conscientiousness ?
Unfortunately, not much. There are many books that talk about Willpower. Most of these books dwell on the importance of conscientiousness, but not how to cultivate it,
If you see yourself as a C-grader, I have only one piece of useful advice for you :
Practice your willpower in one area of your life so that it will affect other areas of your life positively.
If you are the kind of student who can resist temptation to hang out when you can do your tutorials, you are exercising some that muscle to save more money and pass the CFA in the future. This willpower reserve will help you maintain a healthy diet and have a develop a happy marriage as you get older.
Saturday, April 26, 2014
Ambition never sleeps.
For the past year, I've been scheming and plotting my possible career moves beyond retirement.
It started about 3 years ago when a good friend asked me to perform some sort of "valuation" for a Doctor of Jurisprudence qualification from SMU. I had to compute his increments and current salary and make a projection for the future and compare it with the scenario whereby he gets a legal qualification and becomes a lawyer. The exercise was interesting and I told him that he had to work till about 51 years old to break even and if I were him, it'll be worth a try. I thought that for a single guy, becoming an A-grader might be useful in a singles bar situation which can't really be quantified by a financial model.
Result : He thought he'd be better off with his current career. ( And, on hindsight he did the right thing, he has been doing well today. )
Two years later, I was struggling with my day job which is mainly ordering food for activities in Block 71 and thinking about how pathetic my engineering career turned out to be while my investments were starting to able to replace my day job without me writing a single line of code, my friend, over coffee, returned the favor and asked me to pursue the advice I gave him some time ago.
I was quite surprised at how that idea took hold of me then. Becoming a lawyer at age 43, after 14 years of engineering work and managing my own portfolio - it was ridiculous, vain, impractical, audacious, suicidal and borderline insane...
...which was exactly what I wanted to do in life !
As I have already "retired" there was almost no opportunity cost. Most engineers at my age are looking at a bill of $500,000 to attend law school, mostly from lost income. They will never recover from this financial cost and most will end up being apprenticed to someone half their age upon graduation.
I don't need my financial models to know this is the right move for me. If anything, it may resurrect my career. Furthermore, SMU's Bloomberg terminals alone makes my fees a bargain.
I am a very old candidate, the preparations to be admitted were extensive. I started casually taking writing classes in Coursera and started reading books on Rhetoric. I started networking with current students of the course. Closer to the essay and interview round, I crammed the LSATs as if I was planning for a US University so that I can catch up with the younger and more energetic dudes. I still have doctor's handwriting.
So, two days ago, SMU said yes.
Therefore, if everything works out, I will become a lawyer in 4 years.
I may not choose a traditional career path and may rope-in my lawyer friends ( all super-smart and motivated individuals ) to see if the industry can be disrupted by legal prediction tools which perform natural language processing and statistical analysis. This could mean a start-up with both programmers and lawyers ( Think about the couples that will form in my company ! )
Starting August this blog will also become a study blog to talk about how we can keep learning as a student or a working professional. I will complete the Data Science Specialization track in Coursera to ease myself into my life as a full-time student. Moreover, since my Engineering and Finance student days, we're starting to learn a lot more about cramming for exams. Scott Young completed an MIT Computer Science course in one year.
Sunday, April 20, 2014
Do the Heather Chua test !
As a further elaboration of my last post, I think that once we go beyond our anger with the Foreign Talent policy, Singaporeans will need to deal with a very socially stratified nation over the next 100 years.
After Independence, Singaporeans collectively decided on meritocracy and pragmatism as our core philosophy, inadvertently but voluntarily, we have also started a very aggressive eugenics program which was made even worse when we account for the effects of globalization.
The effects on the ground is for everybody to observe. Increasingly, we are marrying within our class divisions :
Admin Service Scholar marry Admin Service Scholar
Goldman Sachs marry McKinsey
Lawyer marry Doctor
Engineer marry Accountant
Technician marry Clerk
Hawker marry Shop Assistant
This phenomenon is called Assortative Mating and is currently taking place in all developed countries.
Within generations, children will not only inherit the parent's wealth, they will also inherit their's parent's genetic potential. In 100 years, we will become a caste-based society. You might be categorized on the geo-location where you come from, District 10 being where the 160 IQ upper caste folks who live who will attend the best schools in Singapore.
In this post, I will not debate the morality of this phenomenon.
I want to offer a mental experiment or a sociological tool to detect class differences in society, I call this the Heather Chua test :
Imagine if a troll like Heather Chua were to make a statement sharing her distaste for marriage between two people of Class A and Class B.
a) If Heather Chua's action angers you, then there is certainly a class division which already exists, but society may not want to acknowledge it based on political correctness. The division already exists but is sub-consious.
eg. The original posts is a marriage between RGS and ITE. It angered everyone. There is a class division between RGS and ITE but Singaporeans don't want to acknowledge it due to political incorrectness.
b) If Heather Chua's action does not being anger but mild amusement, then, there is no class division.
eg. If the marriage is between someone from Swiss Cottage Secondary School and Bukit Panjang Government High, then the reaction will be mild amusement as there is no class division between alumni of more or less equal status.
The Heather Chua test is a useful tool because we can detect cracks in Singapore society. The political left will use it as a weapon to destroy meritocracy. The political right may use it to form lasting family unions. Trolls in the future will find new ways to enrage readers by applying the test on racial divides or even gender.
Once we understand which caste or division we belong to, we can get into the next phase, on how we cope with the caste based society.
This I will share with you in my next blog post.
Friday, April 18, 2014
How to thrive as as a B-Grade Singaporean.
One of the things meritocracy and pragmatism has done is to inadvertedly create class divisions within Singapore. We see evidence of trolls like Heather Chua and Wee Shu Min succeeding in making many people angry simply because they were consciously aware of such divides and used it to elicit an emotional reaction from everyone.
As a realist, I will not debate class divisions in this blog. I will try my best to define it and suggest the various actions to cope with our reality today.
First let's try to define our class divisions :
You are Grade A Singaporean if you come from RI, ACS or HCI. If you study in the Ivies or MIT, you also qualify as Grade A. You might also qualify if you are GEP, lawyer, doctor or a government scholar. Income-wise, you also qualify if your income belongs to the top 10% percentile of folks in your age. If every Chinese New Year, your aunts admonish their kids and ask them why can't they be more like you, you are possibly Grade A.
I am a Grade B Singaporean like most of you readers of my blog. I was mostly schooled in government schools coming to a decent JC only after my O levels and after working really hard ( Because I was certainly not smart or gifted ). I went to a local University and managed to get a decent engineering job upon graduation. Income-wise, we are are somewhere between 70-90% percentile of our cohort. Every Chinese New, your aunts nitpick on you whenever there is a chink in your armor. For singles, you are asked why you are not married. For married couples, you are asked why you don't have kids.
Grade C and below is everybody else. Competitively societies like Singapore consider 70% of the population to be everyone else and only important during the elections where one man gets one vote. Decent education, decent jobs, full stomach and a decent shelter, but Grade Cs do struggle very hard in this society which made an infernal pact with globalization to sacrifice the middle class. If during Chinese New Year, your mum defends you vigorously and says "My child is a good person, you leave him alone", you are probably Grade C.
I want to share what it feels like to be a Grade B Singaporean and what we can do about this. ( Hopefully a better blogger can advice the 70% of Singaporeans which truly need the most help. )
a) Grade B suffers from elitism too.
When I was under employment, I had to convince senior management of why engaging the Ruby on Rails community would be great to improve participation in competitions. I was impressed with how quick it was to scaffold a working website in 5 mins after I attended a boot-camp. Senior Management was incredulous, I was interrogated my senior management who simply could not accept that a language could be that awesome. I was repeatedly under assault until a scholar stepped in and said that I was right about the language and its rising popularity and then, suddenly without hesitation, I was then allowed to proceed with my engagement activities.
14 years IT experience matters not if you are Grade B. A one sentence from a Grade A scholar ( who's a great guy BTW ) saved my presentation from oblivion.
b) Grade B Singaporeans need to find a good niche in the industry.
This is important advice to Grade B Singaporeans. You need to choose an industry where you could get to the top on your own merits. An American MNC will always favor strong performance and not school grades. One of the reasons why ex-P&G folks like me will always respect the company was that some Senior Managers have only A levels and some staff who would never be promoted may have degrees from the Ivy league. This is the mark of a true meritocracy.
( P&G has it's own entrance exam. I believe that any good company would always have one )
c) Grade B Singaporeans cannot ignore financial markets.
Quitting the workforce and subjecting myself to the mercy of the financial markets has been good to me for the past 3 months. Even Sabana REIT would not cut my dividends because I did not come from the right University or was not gifted. Sabana REIT cut dividends for everyone this quarter , the ones from Cornell, MIT or GEP who owned Sabana all got 1.88 cts this quarter. A microcosm of fairness is hard to come by in this country. We must embrace it.
I can't emphasize how important it is to supplement your Grade B income with dividends which do not discriminate based on your position in society. This can put you within striking distance from Grade A if you work hard, save and invest your funds wisely.
d) Contrary to what the political left says, Grade B has very strong social mobility.
Last, I want to share a message of hope to most of my readers who are Grade B like myself.
Even though I was not in a top JC or secondary school, I was able to participate in S Papers, Olympiads and various competitions when I was younger. When competing against average Grade A folks , a diligent B-grader can win.
A good friend calls such a person the Goblin champion - Not a real Champion like a Champion from RI, ACS or HCI but a Goblin Champion who can use the right strategy to overcome a higher-caste opponent. Case in point, having earned income and a dividend flow from the markets which exceeded my pay can result in an annual remuneration similar to an MP's allowance ( but only for last year for me, now my income would be Grade B for quite a while until I rejoin the workforce ).
When you hit 40s and get retreched, a Grade B can easily slip to Grade C if you are not careful. But Grade B always had high social mobility in Singapore, you need to be conscientious and apply the right tactics to transcend your caste boundaries.
My blog is here to help you do that.
As a realist, I will not debate class divisions in this blog. I will try my best to define it and suggest the various actions to cope with our reality today.
First let's try to define our class divisions :
You are Grade A Singaporean if you come from RI, ACS or HCI. If you study in the Ivies or MIT, you also qualify as Grade A. You might also qualify if you are GEP, lawyer, doctor or a government scholar. Income-wise, you also qualify if your income belongs to the top 10% percentile of folks in your age. If every Chinese New Year, your aunts admonish their kids and ask them why can't they be more like you, you are possibly Grade A.
I am a Grade B Singaporean like most of you readers of my blog. I was mostly schooled in government schools coming to a decent JC only after my O levels and after working really hard ( Because I was certainly not smart or gifted ). I went to a local University and managed to get a decent engineering job upon graduation. Income-wise, we are are somewhere between 70-90% percentile of our cohort. Every Chinese New, your aunts nitpick on you whenever there is a chink in your armor. For singles, you are asked why you are not married. For married couples, you are asked why you don't have kids.
Grade C and below is everybody else. Competitively societies like Singapore consider 70% of the population to be everyone else and only important during the elections where one man gets one vote. Decent education, decent jobs, full stomach and a decent shelter, but Grade Cs do struggle very hard in this society which made an infernal pact with globalization to sacrifice the middle class. If during Chinese New Year, your mum defends you vigorously and says "My child is a good person, you leave him alone", you are probably Grade C.
I want to share what it feels like to be a Grade B Singaporean and what we can do about this. ( Hopefully a better blogger can advice the 70% of Singaporeans which truly need the most help. )
a) Grade B suffers from elitism too.
When I was under employment, I had to convince senior management of why engaging the Ruby on Rails community would be great to improve participation in competitions. I was impressed with how quick it was to scaffold a working website in 5 mins after I attended a boot-camp. Senior Management was incredulous, I was interrogated my senior management who simply could not accept that a language could be that awesome. I was repeatedly under assault until a scholar stepped in and said that I was right about the language and its rising popularity and then, suddenly without hesitation, I was then allowed to proceed with my engagement activities.
14 years IT experience matters not if you are Grade B. A one sentence from a Grade A scholar ( who's a great guy BTW ) saved my presentation from oblivion.
b) Grade B Singaporeans need to find a good niche in the industry.
This is important advice to Grade B Singaporeans. You need to choose an industry where you could get to the top on your own merits. An American MNC will always favor strong performance and not school grades. One of the reasons why ex-P&G folks like me will always respect the company was that some Senior Managers have only A levels and some staff who would never be promoted may have degrees from the Ivy league. This is the mark of a true meritocracy.
( P&G has it's own entrance exam. I believe that any good company would always have one )
c) Grade B Singaporeans cannot ignore financial markets.
Quitting the workforce and subjecting myself to the mercy of the financial markets has been good to me for the past 3 months. Even Sabana REIT would not cut my dividends because I did not come from the right University or was not gifted. Sabana REIT cut dividends for everyone this quarter , the ones from Cornell, MIT or GEP who owned Sabana all got 1.88 cts this quarter. A microcosm of fairness is hard to come by in this country. We must embrace it.
I can't emphasize how important it is to supplement your Grade B income with dividends which do not discriminate based on your position in society. This can put you within striking distance from Grade A if you work hard, save and invest your funds wisely.
d) Contrary to what the political left says, Grade B has very strong social mobility.
Last, I want to share a message of hope to most of my readers who are Grade B like myself.
Even though I was not in a top JC or secondary school, I was able to participate in S Papers, Olympiads and various competitions when I was younger. When competing against average Grade A folks , a diligent B-grader can win.
A good friend calls such a person the Goblin champion - Not a real Champion like a Champion from RI, ACS or HCI but a Goblin Champion who can use the right strategy to overcome a higher-caste opponent. Case in point, having earned income and a dividend flow from the markets which exceeded my pay can result in an annual remuneration similar to an MP's allowance ( but only for last year for me, now my income would be Grade B for quite a while until I rejoin the workforce ).
When you hit 40s and get retreched, a Grade B can easily slip to Grade C if you are not careful. But Grade B always had high social mobility in Singapore, you need to be conscientious and apply the right tactics to transcend your caste boundaries.
My blog is here to help you do that.
Sunday, April 13, 2014
Retirement after 3 months.
It's been more than 3 months since leaving the working world. It's time for another update :
a) Finances are holding up better than the working days.
Judging from the 3 months of performance, it's actually more profitable to make market calls at home than to work for someone else.
Finances have been holding up quite well thanks to the rise in REITs over the past 2 weeks. To be fair, I had been struggling to push my investments out of REITs for the past year due to the tapering but found only a handful of good stock opportunities that can maintain my current yield. Those positions are, therefore, unnaturally large and are starting to pay-off in a serious manner.
My net-worth rose by more than 11 times my last drawn monthly salary in this quarter ! Of course, all this can revert to the mean very quickly since I don't ever take profits. The next three months will see me trying to move my focused bets to other market opportunities to raise my passive income further.
b) Learning goals are aggressively met.
The Coursera Data Science specialization has started and I am currently doing 3 classes simultaneously. At my current pace, I completed one full month module in 3 days so I'm on the roll. Hopeful my training in R programming will allow to create some advanced tools for managing my portfolio. Currently, my engineering expertise and financial know-how are separated by quite a wide chasm and I'm still trying to get them to work together and Bloomberg is just too useful for serious investors to want to start coding.
There is a substantial chance that I will be pushing my learning goals in a radically new direction, I still can't share this with the readers as the institution that I am pursuing has not given me a positive answer yet. I should be quite game changing for this blog if that happens.
c) Started attending my first AGM.
I started attending AGMs last Friday with the Sabana REIT AGM. I got a nice phone charger as a door gift but lost out to the other uncles on the buffet table. Ended up only with one cup of coffee. AGM buffets are worse than morning rush hours on the MRT.
Please attend the AGM only if you have valid business questions.
d) Exercise and fitness is consistent but not going so well.
While I have been running since I stopped work, I just could not increase my distance. Instead, I have been compensating with sit-ups. Now I can do 60 sit-ups after a run. Advice from a fried is to add push-ups to my exercise but I can't even do a single one at the moment so I am doing some shitty push-ups inclined.
e) Weekdays and weekends have now swapped places.
After three months, it has finally started. Weekdays are spent watching $7 movies, playing the markets, meeting friends for lunch and shopping for books. Weekends are spent with family so my mobility is reduced. Friday starts to lose it's meaning. Sometimes, you look forward to the Mondays as the stock market is open.
To think that years ago, I hated Mondays so much as I managed the team which maintained the stock market systems.
f) What books I am reading
I am clearing the backlog of books I accumulated during my work days. Currently reading a book on actual work practices of Equity Analyst to professionalize my home-run operation and trying hard to make time for Michael Lewis' Flashboys.
The only thing interesting is that I strongly recommend Brandon Sanderson's Stormlight Archives. Epic Fantasy at it's best while we're waiting for George R R Martin's "Winds of Winter".
Sunday, April 06, 2014
Which is higher : Your Charisma or your Intelligence ?
You may need some gaming experience to appreciate this article.
I hypothesize that the modern workplace is a series of Intelligence or Charisma checks to climb up the corporate ladder.
Intelligence is required to solve complicated workplace problems. Workers with higher intelligence produce more work at a better quality. Take for instance, you are given a table of figures by your boss to figure out how your department is doing. If you know how to employ pivot tables or excel macros, you are very likely to solve the problem much quicker without going overtime. I have solved at least one Windows server issue where the solution was to run an executable from a French website. In such a case, my French came in handy to resolve a work related problem.
Charisma is required to persuade other people. Whether you are making a proposal to your boss or your client, high Charisma is required to meet a sales quota or to create the impression that you deserve a raise. Most of the time clients will want to do business with you based not so much on the product you are selling but whether they like you as a person. Charisma determines whether you can establish rapport with others Medical doctors are sued mostly based on their bedside manners rather than the accuracy of their diagnostics.
Here's how you can apply this insight :
a) Know whether you are stronger in Intelligence or Charisma.
No one is perfectly balanced in both. You should be able to figure out whether you are more Intelligent or Charismatic. If you can't figure it out, ask your closer friends.
b) Choose a career which employs more checks in the attribute that you are strong in.
Some IT guys who can talk know nuts about systems administration. They can be very dangerous when they become project managers because they tend to be overconfident and may be unable to deliver on SLAs. If your Charisma is stronger than your Intelligence, you should do much better in IT sales. Similar, if you are smart and very strong in product knowledge but can't close a sale because you can't talk your way to save your life, perhaps you should have been in the R&D department.
Sales is the best career path for folks who are high in Charisma - the higher your charisma, the lower the product sophistication required for your sale to be made. Investing works for folks who have a high intelligence because of the sheer amount of microeconomic and macroeconomic understanding to decide which stocks will outperform others.
Of course, some of you think that you are so awesome you have both high Charisma and Intelligence. In such a case, you should get into a field like management consulting or even politics.
c) Overcome your weak attribute
While I believe in focusing one's strengths and not wallowing on weaknesses, there are some limited ways to deal with an attribute deficit.
Charisma can be improved by spending time doing public speaking. You can also improve your Charisma by reading magazines like Psychology Today or reading textbooks on psychology or rhetoric.
Scientists are still working on a way to consistently improve working memory, so it's not easy to increase your Intelligence. You can read trade journals on your industry or the Economist. Formal study in Philosophy and Economics may also be useful in this regard.
At this stage, D&D players will start to ask me : What about Wisdom ?
I think Wisdom is an attribute which is important over the longer term even though it's not very much respected in the workplace. Intelligent people make mistakes all the time about how to balance work and family. Wise people may not even want to make a decision to optimize their careers, they can choose to walk away. That's just how things are going to be.
If after reading this article, if you continue to work based on your poorer attribute, Wisdom is probably your biggest deficit and unlike D&D, Wisdom comes only with experience.
I hypothesize that the modern workplace is a series of Intelligence or Charisma checks to climb up the corporate ladder.
Intelligence is required to solve complicated workplace problems. Workers with higher intelligence produce more work at a better quality. Take for instance, you are given a table of figures by your boss to figure out how your department is doing. If you know how to employ pivot tables or excel macros, you are very likely to solve the problem much quicker without going overtime. I have solved at least one Windows server issue where the solution was to run an executable from a French website. In such a case, my French came in handy to resolve a work related problem.
Charisma is required to persuade other people. Whether you are making a proposal to your boss or your client, high Charisma is required to meet a sales quota or to create the impression that you deserve a raise. Most of the time clients will want to do business with you based not so much on the product you are selling but whether they like you as a person. Charisma determines whether you can establish rapport with others Medical doctors are sued mostly based on their bedside manners rather than the accuracy of their diagnostics.
Here's how you can apply this insight :
a) Know whether you are stronger in Intelligence or Charisma.
No one is perfectly balanced in both. You should be able to figure out whether you are more Intelligent or Charismatic. If you can't figure it out, ask your closer friends.
b) Choose a career which employs more checks in the attribute that you are strong in.
Some IT guys who can talk know nuts about systems administration. They can be very dangerous when they become project managers because they tend to be overconfident and may be unable to deliver on SLAs. If your Charisma is stronger than your Intelligence, you should do much better in IT sales. Similar, if you are smart and very strong in product knowledge but can't close a sale because you can't talk your way to save your life, perhaps you should have been in the R&D department.
Sales is the best career path for folks who are high in Charisma - the higher your charisma, the lower the product sophistication required for your sale to be made. Investing works for folks who have a high intelligence because of the sheer amount of microeconomic and macroeconomic understanding to decide which stocks will outperform others.
Of course, some of you think that you are so awesome you have both high Charisma and Intelligence. In such a case, you should get into a field like management consulting or even politics.
c) Overcome your weak attribute
While I believe in focusing one's strengths and not wallowing on weaknesses, there are some limited ways to deal with an attribute deficit.
Charisma can be improved by spending time doing public speaking. You can also improve your Charisma by reading magazines like Psychology Today or reading textbooks on psychology or rhetoric.
Scientists are still working on a way to consistently improve working memory, so it's not easy to increase your Intelligence. You can read trade journals on your industry or the Economist. Formal study in Philosophy and Economics may also be useful in this regard.
At this stage, D&D players will start to ask me : What about Wisdom ?
I think Wisdom is an attribute which is important over the longer term even though it's not very much respected in the workplace. Intelligent people make mistakes all the time about how to balance work and family. Wise people may not even want to make a decision to optimize their careers, they can choose to walk away. That's just how things are going to be.
If after reading this article, if you continue to work based on your poorer attribute, Wisdom is probably your biggest deficit and unlike D&D, Wisdom comes only with experience.
Tuesday, April 01, 2014
April Fool's Stock Portfolio to watch.
There is no better day than April Fool's Day to launch a non-dividend portfolio for all you readers here.
This portfolio was the result of days experimenting with the Bloomberg machine in the Central library.
What I've done is look go through the universe of Singapore stocks to find which strategies can dramatically outperform the market.
Here is how the stocks were selected :
a) We search for stocks which have a Net current asset value per share which is is higher than the price. This filter searches for value stocks with assets in the balance sheet that exceed market capitalization after deducting for all liabilities. This is a powerful value-filter inspired by Benjamin Graham.
( Current Assets - Liabilities ) / Outstanding Shares > Market price
b) Within this universe, I then back-tested the portfolio based on cherry picking the best investment ratios which result in out-performance within this set of stocks. I tried many ratios which include P/B, P/E, P/S amd dividend yields in my back-test.
It was discovered that lowest PS ratios gave me the best results over the past 10 years. So the filter only takes the lowest 25% percentile in price to sales ratio.
The resulting portfolio was found to return 75% per year ( Yeah ! ) over the past 10 years. This intuitively makes sense as we are not just buying stocks with have a value in the balance sheet way above the market prices but we are also choosing the stocks with the highest business revenues within this set.
But now I have a problem, the filters gave me a lot of China stocks which have a very wide bid-ask rate. Imagine buying a stock with a 10-20% sales charge since these stocks are so disliked by the market and the fund managers would not touch them with a ten foot pole. ( eg. China Haida was selling at 0.22 but buying only at 0.17 )
So investing in this portfolio will cause me to lose money from day 1.
So I had to make a compromise. I ranked the resulting portfolio by market capitalization and buy only 5 of the largest companies in this list, sacrificing $5,000 of hard-earned blood money for the benefit of my beloved readers.
The result is as follows :
This portfolio is less than 0.5% of my net worth. This should be misconstrued as stock advice, please do not attempt to mirror this portfolio on your own unless you really have money to lose. I am just sharing my approach of filtering the right stocks based on the proper fundamentals.
I will be updating the results every month and may add a deeper later of analysis to these 5 ultra-value stocks.
This portfolio was the result of days experimenting with the Bloomberg machine in the Central library.
What I've done is look go through the universe of Singapore stocks to find which strategies can dramatically outperform the market.
Here is how the stocks were selected :
a) We search for stocks which have a Net current asset value per share which is is higher than the price. This filter searches for value stocks with assets in the balance sheet that exceed market capitalization after deducting for all liabilities. This is a powerful value-filter inspired by Benjamin Graham.
( Current Assets - Liabilities ) / Outstanding Shares > Market price
b) Within this universe, I then back-tested the portfolio based on cherry picking the best investment ratios which result in out-performance within this set of stocks. I tried many ratios which include P/B, P/E, P/S amd dividend yields in my back-test.
It was discovered that lowest PS ratios gave me the best results over the past 10 years. So the filter only takes the lowest 25% percentile in price to sales ratio.
The resulting portfolio was found to return 75% per year ( Yeah ! ) over the past 10 years. This intuitively makes sense as we are not just buying stocks with have a value in the balance sheet way above the market prices but we are also choosing the stocks with the highest business revenues within this set.
But now I have a problem, the filters gave me a lot of China stocks which have a very wide bid-ask rate. Imagine buying a stock with a 10-20% sales charge since these stocks are so disliked by the market and the fund managers would not touch them with a ten foot pole. ( eg. China Haida was selling at 0.22 but buying only at 0.17 )
So investing in this portfolio will cause me to lose money from day 1.
So I had to make a compromise. I ranked the resulting portfolio by market capitalization and buy only 5 of the largest companies in this list, sacrificing $5,000 of hard-earned blood money for the benefit of my beloved readers.
The result is as follows :
| ISIN CODE | NAME | PRICE | SHARES | Total Value | Price Paid | Original Value |
| E18 | ECS Holdings | 0.65 | 2000 | $1,300.00 | 0.65 | $1,300.00 |
| ON7 | Weiye | 0.07 | 14000 | $980.00 | 0.07 | $980.00 |
| H64 | HTL | 0.28 | 3000 | $840.00 | 0.29 | $870.00 |
| KI3 | Hu An Cable | 0.1 | 10000 | $1,000.00 | 0.102 | $1,020.00 |
| U01 | Unifoods | 0.07 | 13000 | $910.00 | 0.073 | $949.00 |
| Total | $5,030.00 | $5,119.00 |
This portfolio is less than 0.5% of my net worth. This should be misconstrued as stock advice, please do not attempt to mirror this portfolio on your own unless you really have money to lose. I am just sharing my approach of filtering the right stocks based on the proper fundamentals.
I will be updating the results every month and may add a deeper later of analysis to these 5 ultra-value stocks.
Monday, March 24, 2014
Retired or Unemployed ?
One of the issues which really bug me these days is when I meet some acquaintances from the past and they ask me what am I currently doing.
I am always stuck with these two choices :
a) I tell them that I am retired.
When I say that I am retired, most folks will view my answer with disbelief. Some ex-classmates might find it funny and that I am just trying to cover up the fact that I was retrenched or something. What happens is that I get cornered to explain what I really do and to avoid the pain of facing a drop in "status" ( which really bothers the shit outta me even though it should'nt ), I start to get defensive after that.
To overcompensate, I start talking about dividends investing and sometimes commit the sin of hubris by saying that my investment income exceeds my last drawn pay. That gives me a momentary sense of satisfaction but I feel bad after that because I did not act with sufficient humility. It eats me as I really don't think people should inflict psychic damage to working Singaporeans by talking about using wealth not to do any work like what I do. Working folks should be honored for their contribution to the economy.
I also learned that claiming that I am a private investor sounds just as bad. Some smart alec in response will ask me if I am an accredited investor which I am not. ( Nope, sorry, no second milion... yet... ) The other point is that I don't really commit to investment analysis the way some bloggers do. I use Bloomberg to get statistical data and act on research created by someone else so I don't really qualify as an analyst.
b) I tell them I am unemployed.
I am currently in the process of learning to just say that I am currently unemployed. The drop in status really hurts especially when I meet Engineering classmates from NUS, I was not the best student but I was someone to beat during those bad old days. But people will avoid asking more questions. After all, you are openly unemployed, how much more can they hurt you ?
At the end of the day, it all boils down to ego management. If I had the mental resolve to simply accept the drop in status, I would have been able to humbly just accept working in a government bureaucracy. At the end of the day, my ego just would not let me.
Anyway, right I'm trying to distinguish between retirement and unemployment.
Right now I am working on this one distinction :
a) You are retired if, without earned income, your net worth either stays the same or goes up at every time interval.
b) You are unemployed if without earned income, your net worth drops at every time interval.
Problem is that there are many retirees with diminishing net worth in their 70s or 80s which would simply be classified as elderly unemployed by this definition.
I am always stuck with these two choices :
a) I tell them that I am retired.
When I say that I am retired, most folks will view my answer with disbelief. Some ex-classmates might find it funny and that I am just trying to cover up the fact that I was retrenched or something. What happens is that I get cornered to explain what I really do and to avoid the pain of facing a drop in "status" ( which really bothers the shit outta me even though it should'nt ), I start to get defensive after that.
To overcompensate, I start talking about dividends investing and sometimes commit the sin of hubris by saying that my investment income exceeds my last drawn pay. That gives me a momentary sense of satisfaction but I feel bad after that because I did not act with sufficient humility. It eats me as I really don't think people should inflict psychic damage to working Singaporeans by talking about using wealth not to do any work like what I do. Working folks should be honored for their contribution to the economy.
I also learned that claiming that I am a private investor sounds just as bad. Some smart alec in response will ask me if I am an accredited investor which I am not. ( Nope, sorry, no second milion... yet... ) The other point is that I don't really commit to investment analysis the way some bloggers do. I use Bloomberg to get statistical data and act on research created by someone else so I don't really qualify as an analyst.
b) I tell them I am unemployed.
I am currently in the process of learning to just say that I am currently unemployed. The drop in status really hurts especially when I meet Engineering classmates from NUS, I was not the best student but I was someone to beat during those bad old days. But people will avoid asking more questions. After all, you are openly unemployed, how much more can they hurt you ?
At the end of the day, it all boils down to ego management. If I had the mental resolve to simply accept the drop in status, I would have been able to humbly just accept working in a government bureaucracy. At the end of the day, my ego just would not let me.
Anyway, right I'm trying to distinguish between retirement and unemployment.
Right now I am working on this one distinction :
a) You are retired if, without earned income, your net worth either stays the same or goes up at every time interval.
b) You are unemployed if without earned income, your net worth drops at every time interval.
Problem is that there are many retirees with diminishing net worth in their 70s or 80s which would simply be classified as elderly unemployed by this definition.
Monday, March 17, 2014
Why Gen-X chooses Cash over Compassion ?
A good friend had a conversation with me the other day.
The conversation was about Professor Chan Heng Chee. My friend said that he's a big fan of hers because of a kind gesture she made about 20 years ago. You see, my friend represented his junior college in the Pre-U seminar and got to the microphone to make a point. The person whom the question was directed to casually dismissed my friend's question but Prof Chan stopped him, and said that the point my friend made was a valid one and deserved more consideration.
That simple act was enough to make my friend a lifelong fan and ally.
I then asked my friend a pointed question.
I asked him if he felt discriminated because he did not come from a top JC. He said, yes, he definitely felt that way and, like myself, my friend spent most of his life trying to prove himself as a result of this.
I think my friend turned out rather well, he's currently doing rather well at work after being a continuous feature in the Dean's List throughout his NUS years.
Now recently, there's been some talk about Singaporeans lacking compassion.
I want to share my hypothesis on why this is do.
You see, the folks who form the backbone of the economy today belongs to Generation X.
When Generation X was in school :
a) We did'nt have Heng Swee Keat as our education minister.
b) Not every school is a good school. In fact some schools suck, and by association, authorities will consider their students to suck as well. It affects the way authorities engage students if there is an invisible L word floating on top of their heads.
c) You can't teach less to learn more. You teach more to learn more. GP is more about developing conservative points of view and not about innovation or critical thinking. And no, there is no Google.
d) Teachers don't tell you that your exams do not define you as a person. That is a very recent phenomenon. Teachers tell you that you are relegated to a lower status if you don't do well for exams and it's your damn fault because we are a meritocratic society.
Generation X who's like me know that if our grades are good, our fart will smell like truffles and people will happily eat our diarrhoea. But we keep a constant look-out over the horizon to see what can threaten our lofty positions. Other Gen-Xers are not that lucky. They get labelled "Average", "Loser" or worse "Normal" throughout their days in school.
Now, fast forward to the mid-90s when we enter the workplace and discover this thing called Money.
Money replaces grades, GPA and t-scores in the real world. If you have it, you can buy a car or a watch. You can cut someone down with psychic damage if you can demonstrate that live in District 10 or have a Lamborghini. People always get bothered when you have more money than them, this makes relative wealth way more important than absolute wealth.
It's the grading curve all over again !
So what happens...
The Gen-X guys with the qualifications will pimp it to get more money to reinforce their positions in real life. The folks with poorer qualifications know that control of Money means that they no longer to subject to tiny acts of discrimination in Singapore society.
The hunt for Money becomes an all important Round 2 with a different set of winners.
The final link that makes Money and Compassion a trade-off are psychological studies which show that people who are "primed" with thoughts about money generally behave in a ruder and more abrupt manner.
So in summary, it's not an accident that Singaporeans lack compassion, this is a deliberate act of design as part of the education system in the 1990s. Grades were a microcosm of the real world, where Gen-X was socially engineered to fight for the best grades in preparation for a similar ranking to take place in real life. Once Gen-X joined the economy, their report cards were replaced with personal balance sheets where the ranking of their net worth can affect important things like spouse selection for men.
How do we get out of this mess ( Assuming that you think this is a mess )
My take is that one day Gen-X will retire from the workforce. Maybe Gen-Y who have different values from Gen-X will make Singapore a better place.
The conversation was about Professor Chan Heng Chee. My friend said that he's a big fan of hers because of a kind gesture she made about 20 years ago. You see, my friend represented his junior college in the Pre-U seminar and got to the microphone to make a point. The person whom the question was directed to casually dismissed my friend's question but Prof Chan stopped him, and said that the point my friend made was a valid one and deserved more consideration.
That simple act was enough to make my friend a lifelong fan and ally.
I then asked my friend a pointed question.
I asked him if he felt discriminated because he did not come from a top JC. He said, yes, he definitely felt that way and, like myself, my friend spent most of his life trying to prove himself as a result of this.
I think my friend turned out rather well, he's currently doing rather well at work after being a continuous feature in the Dean's List throughout his NUS years.
Now recently, there's been some talk about Singaporeans lacking compassion.
I want to share my hypothesis on why this is do.
You see, the folks who form the backbone of the economy today belongs to Generation X.
When Generation X was in school :
a) We did'nt have Heng Swee Keat as our education minister.
b) Not every school is a good school. In fact some schools suck, and by association, authorities will consider their students to suck as well. It affects the way authorities engage students if there is an invisible L word floating on top of their heads.
c) You can't teach less to learn more. You teach more to learn more. GP is more about developing conservative points of view and not about innovation or critical thinking. And no, there is no Google.
d) Teachers don't tell you that your exams do not define you as a person. That is a very recent phenomenon. Teachers tell you that you are relegated to a lower status if you don't do well for exams and it's your damn fault because we are a meritocratic society.
Generation X who's like me know that if our grades are good, our fart will smell like truffles and people will happily eat our diarrhoea. But we keep a constant look-out over the horizon to see what can threaten our lofty positions. Other Gen-Xers are not that lucky. They get labelled "Average", "Loser" or worse "Normal" throughout their days in school.
Now, fast forward to the mid-90s when we enter the workplace and discover this thing called Money.
Money replaces grades, GPA and t-scores in the real world. If you have it, you can buy a car or a watch. You can cut someone down with psychic damage if you can demonstrate that live in District 10 or have a Lamborghini. People always get bothered when you have more money than them, this makes relative wealth way more important than absolute wealth.
It's the grading curve all over again !
So what happens...
The Gen-X guys with the qualifications will pimp it to get more money to reinforce their positions in real life. The folks with poorer qualifications know that control of Money means that they no longer to subject to tiny acts of discrimination in Singapore society.
The hunt for Money becomes an all important Round 2 with a different set of winners.
The final link that makes Money and Compassion a trade-off are psychological studies which show that people who are "primed" with thoughts about money generally behave in a ruder and more abrupt manner.
So in summary, it's not an accident that Singaporeans lack compassion, this is a deliberate act of design as part of the education system in the 1990s. Grades were a microcosm of the real world, where Gen-X was socially engineered to fight for the best grades in preparation for a similar ranking to take place in real life. Once Gen-X joined the economy, their report cards were replaced with personal balance sheets where the ranking of their net worth can affect important things like spouse selection for men.
How do we get out of this mess ( Assuming that you think this is a mess )
My take is that one day Gen-X will retire from the workforce. Maybe Gen-Y who have different values from Gen-X will make Singapore a better place.
Friday, March 14, 2014
Usefulness of investing in career management.
Just read The Hard Thing about Hard Things by Ben Horowitz.
It talks about two kinds of leaders - "1"s and "2"s.
"1"s are highly intuitive thinkers and visionaries ( typically ENTJ Field Marshal types ) who revel in playing a game of competitive multi-dimensional chess with other business in the space. Bill Gates, Jack Welch and Steve Jobs is a "1".
"2"s are operational managers who are process driven and excel at making consistent and incremental changes ( typically ESTJ Administrator types ). Tim Cook is a "2".
You will need a combination of "1"s and "2"s to run an organization.
When managing a Tech career, you will need to understand your primary mode of thinking.
Most engineers and computer scientists are "2"s. They think empirically and like to frame problems in concrete terms. They are not very much into ivory tower theories. I think this is the main reason why many engineers don't climb very far in the corporate world. You skills to get you into middle management willl not be enough for you to get into senior management. This is why many engineers join MBA programs. But MBAs are only half the story, just because you take some marketing classes does not make you a visionary, and many engineers will probably focus on operational management or quantitative finance classes in business school.
The converse problem is rarer. A "1" in the corporate world will suffer in the initial stages in their career as they lack the experience and authority to push their ideas through. Many become rebels and heretics and subsequently leave the organization they work for. In this case, a "1" can get some industrial certifications to get the basic work done to bide their time or look for a mentor and hitch a ride to a career track where they can make a difference.
This concept also gave me some thought into how investing fits into this picture.
One of the fears upon getting my Engineering degree was getting permanently fixed at the operational track. After all, I an a textbook ESTJ when I was tested at age 18. Fortunately, my vision in the early part of my career was to build my salary in two ways. During the day, I manage systems and projects and earn a daily wage. At night, I use my quantitative skills to see if there is a way to constantly extract returns in the markets.
Using the skills of a pure "2", I have an income stream which is expected to plateau in middle age but I can begin to exploit market returns beyond my retirement.
Then something funny happened....
To do decent investments, you need a whole slew of skills in the liberal arts. Political science to assess the political risk of your stock counters. Economics to understand the moves made by the Feds. Psychology to assess herd mentality. Philosophy to ensure that you are not fooling yourself and engaging in logical fallacies. These combination of liberal arts skills are always profitable to discover the next stock which outperform the markets.
While investors start out as "2"s, ownership and management of multiple businesses can increase the "1"-ness in them.
They are also getting paid to play multi-dimensional chess against other investors and their peers in the salary game.
In summary, no matter how you manage your career, investing basically means taking ownership of multiple businesses. If you take this hobby seriously, you will be able to develop the ability to think on a broader manner and rapidly find ways to exploit your knowledge no matter how trivial it is.
( From a psychological perspective, I hypothesize that a strongly typed "S" can possibly enhance their "N" component of the MBTI by engaging in fundamental analysis. )
It talks about two kinds of leaders - "1"s and "2"s.
"1"s are highly intuitive thinkers and visionaries ( typically ENTJ Field Marshal types ) who revel in playing a game of competitive multi-dimensional chess with other business in the space. Bill Gates, Jack Welch and Steve Jobs is a "1".
"2"s are operational managers who are process driven and excel at making consistent and incremental changes ( typically ESTJ Administrator types ). Tim Cook is a "2".
You will need a combination of "1"s and "2"s to run an organization.
When managing a Tech career, you will need to understand your primary mode of thinking.
Most engineers and computer scientists are "2"s. They think empirically and like to frame problems in concrete terms. They are not very much into ivory tower theories. I think this is the main reason why many engineers don't climb very far in the corporate world. You skills to get you into middle management willl not be enough for you to get into senior management. This is why many engineers join MBA programs. But MBAs are only half the story, just because you take some marketing classes does not make you a visionary, and many engineers will probably focus on operational management or quantitative finance classes in business school.
The converse problem is rarer. A "1" in the corporate world will suffer in the initial stages in their career as they lack the experience and authority to push their ideas through. Many become rebels and heretics and subsequently leave the organization they work for. In this case, a "1" can get some industrial certifications to get the basic work done to bide their time or look for a mentor and hitch a ride to a career track where they can make a difference.
This concept also gave me some thought into how investing fits into this picture.
One of the fears upon getting my Engineering degree was getting permanently fixed at the operational track. After all, I an a textbook ESTJ when I was tested at age 18. Fortunately, my vision in the early part of my career was to build my salary in two ways. During the day, I manage systems and projects and earn a daily wage. At night, I use my quantitative skills to see if there is a way to constantly extract returns in the markets.
Using the skills of a pure "2", I have an income stream which is expected to plateau in middle age but I can begin to exploit market returns beyond my retirement.
Then something funny happened....
To do decent investments, you need a whole slew of skills in the liberal arts. Political science to assess the political risk of your stock counters. Economics to understand the moves made by the Feds. Psychology to assess herd mentality. Philosophy to ensure that you are not fooling yourself and engaging in logical fallacies. These combination of liberal arts skills are always profitable to discover the next stock which outperform the markets.
While investors start out as "2"s, ownership and management of multiple businesses can increase the "1"-ness in them.
They are also getting paid to play multi-dimensional chess against other investors and their peers in the salary game.
In summary, no matter how you manage your career, investing basically means taking ownership of multiple businesses. If you take this hobby seriously, you will be able to develop the ability to think on a broader manner and rapidly find ways to exploit your knowledge no matter how trivial it is.
( From a psychological perspective, I hypothesize that a strongly typed "S" can possibly enhance their "N" component of the MBTI by engaging in fundamental analysis. )
Monday, March 10, 2014
The Generation X lament.
I had a taxi ride one day and the driver, who is baby boomer in his late 50s, asked me if I knew what YOLO stood for. I said," Of course it stands for You Only Live Once". I was then treated to a hilarious conversation about how his philosophy in life is YOLO, and why he kept Vietnamese students as mistresses and his various sexual adventures in Thailand.
Fast forward a few months down the road, the Government instituted a one time transfer of tax proceeds from the tax paying public in 2013 to a group of seniors. This package is popularly known as the Pioneer Generation Package.
This package has been very well-received by the public, but I belong to a small minority that has issues with transferring wealth involuntarily from one generation to another.
a) Baby Boomers already benefited immensely from Singapore's growth.
Baby boomers did not need a degree to be gainfully employed. They presided over a period of time where you can buy a semi-detached home for $100,000 and sell it today for $2 million dollars. Many baby boomers still play a role in the workforce today. Many cling onto senior management roles without being proficient in English or Computing.
b) Baby Boomers were also young and foolish once.
Many baby boomers worked hard to build Singapore into what it is today. But like all generations, they were young and foolish once. Not all baby boomers took advantage of the economy to become successful in life.
Many were like Gen X and Gen Y and wasted their youth drinking and womanizing. Some subscribe to YOLO as a life philosophy.
When we use the term Pioneer, we can mislead ourselves into thinking that all of them are economic martyrs, well-deserving when some, maybe even a minority, are clearly not.
Those who lived their lives wisely can expect to spend their twilight years with loving children who can provide support in terms of money and services. This was our social compact prior to the 2011 elections - families look after themselves to create a society with low taxation and plenty of prosperity. i.e. Parents raise children well. Children then support parents at their old age with their money which was not eroded by excessive taxation when they were younger.
c) No colonial government took Baby Boomer's earnings to support their parents.
The equivalent of the Pioneer Generation Package is some colonial government taking taxes from Malaya and ensuring health care and welfare benefits for their ancestors. If such a transfer took place then perhaps it would be more comforting to accept this one time wealth transfer.
Correct me if I am wrong, the British were to busy running away from the Japanese to administer the island this way.
------------------------------------------------------------------------------------------------------------
All in all, I'm not a big fan of the Pioneer Generation Package.
If it makes uncomfortable reading for you and I sound a little ungrateful, I apologise, I voted this government into Parliament but I was unpleasantly surprised by this sudden shift towards the political left.
But do understand that I'm not coming from an angle where I am disrespectful to my seniors, I do want to look after my parents in their old age and support them. But my parents are my own responsibility, they are not your responsibility and certainly not the responsibility of other tax payers of Singapore.
Generation X did not have it as easy with the economy as the boomers. To get decent jobs we need to be very highly trained and we certainly cannot afford a car or landed property even for the best amongst us. There was some increase in asset value, it pales in comparison with what the Boomers experienced.
We are sandwiched in the workplace between Baby Boomers and Generation Y. Baby boomers are not ready to give up the throne to us and globalization is rapidly destroying the middle class making it hard for us to make ends meet. Generation X also had to fight outsourcing and deal with the influx of foreign talent.
I shall leave the critique of Generation Y to the rest of the Internet. (YOLO !)
Generation X did not get it easy, we never even asked for work life balance when we were in our 20s. We want to look after our families. Please don't take money meant for our families to feed ALL families without qualification. Most of our seniors led productive lives, saved for their future, and had a low tax regime to support them while they are at it. No one took their money and forced them to support their seniors.
We really need to rethink the way we conduct the wealth transfers.
I am not asking that you give money to us Generation X.
I am asking that you trust us to look after our parents.
I am asking that you either let us keep our hard earned money or invest the money in infrastructure, defense or even educating the future generations.
We are Generation X.
Our time never came. It probably never will.
Fast forward a few months down the road, the Government instituted a one time transfer of tax proceeds from the tax paying public in 2013 to a group of seniors. This package is popularly known as the Pioneer Generation Package.
This package has been very well-received by the public, but I belong to a small minority that has issues with transferring wealth involuntarily from one generation to another.
a) Baby Boomers already benefited immensely from Singapore's growth.
Baby boomers did not need a degree to be gainfully employed. They presided over a period of time where you can buy a semi-detached home for $100,000 and sell it today for $2 million dollars. Many baby boomers still play a role in the workforce today. Many cling onto senior management roles without being proficient in English or Computing.
b) Baby Boomers were also young and foolish once.
Many baby boomers worked hard to build Singapore into what it is today. But like all generations, they were young and foolish once. Not all baby boomers took advantage of the economy to become successful in life.
Many were like Gen X and Gen Y and wasted their youth drinking and womanizing. Some subscribe to YOLO as a life philosophy.
When we use the term Pioneer, we can mislead ourselves into thinking that all of them are economic martyrs, well-deserving when some, maybe even a minority, are clearly not.
Those who lived their lives wisely can expect to spend their twilight years with loving children who can provide support in terms of money and services. This was our social compact prior to the 2011 elections - families look after themselves to create a society with low taxation and plenty of prosperity. i.e. Parents raise children well. Children then support parents at their old age with their money which was not eroded by excessive taxation when they were younger.
c) No colonial government took Baby Boomer's earnings to support their parents.
The equivalent of the Pioneer Generation Package is some colonial government taking taxes from Malaya and ensuring health care and welfare benefits for their ancestors. If such a transfer took place then perhaps it would be more comforting to accept this one time wealth transfer.
Correct me if I am wrong, the British were to busy running away from the Japanese to administer the island this way.
------------------------------------------------------------------------------------------------------------
All in all, I'm not a big fan of the Pioneer Generation Package.
If it makes uncomfortable reading for you and I sound a little ungrateful, I apologise, I voted this government into Parliament but I was unpleasantly surprised by this sudden shift towards the political left.
But do understand that I'm not coming from an angle where I am disrespectful to my seniors, I do want to look after my parents in their old age and support them. But my parents are my own responsibility, they are not your responsibility and certainly not the responsibility of other tax payers of Singapore.
Generation X did not have it as easy with the economy as the boomers. To get decent jobs we need to be very highly trained and we certainly cannot afford a car or landed property even for the best amongst us. There was some increase in asset value, it pales in comparison with what the Boomers experienced.
We are sandwiched in the workplace between Baby Boomers and Generation Y. Baby boomers are not ready to give up the throne to us and globalization is rapidly destroying the middle class making it hard for us to make ends meet. Generation X also had to fight outsourcing and deal with the influx of foreign talent.
I shall leave the critique of Generation Y to the rest of the Internet. (YOLO !)
Generation X did not get it easy, we never even asked for work life balance when we were in our 20s. We want to look after our families. Please don't take money meant for our families to feed ALL families without qualification. Most of our seniors led productive lives, saved for their future, and had a low tax regime to support them while they are at it. No one took their money and forced them to support their seniors.
We really need to rethink the way we conduct the wealth transfers.
I am not asking that you give money to us Generation X.
I am asking that you trust us to look after our parents.
I am asking that you either let us keep our hard earned money or invest the money in infrastructure, defense or even educating the future generations.
We are Generation X.
Our time never came. It probably never will.
Thursday, March 06, 2014
Thoughts on my retiree lifestyle after two months.
Just to tide over the time, here are some random thoughts on my retiree lifestyle before I write something more substantial this week. I've been out of the work-force for two months and living the life that resembles a cross between a fund manager and a hobo. After picking up a distinction grade in a Data Science module from Coursera, I was spending time at the Central library to test out investment models at the central library.
a) Finances are holding up.
With the fresh flow of dividends cash rolling in end-February, I find that my net worth is actually higher than my last day at work not counting home equity ( otherwise it's even higher ). I'm not sure if this momentum can be maintained as a large portion of my stocks are invested in counters which would not do too well when interest rates go up.
I'm crossing my fingers that I will be able to successfully back-test a non-dividends portfolio to make this blog more interesting. Expect 1% from my portfolio to be placed in it for everyone's amusement. Hope that I can get this going sometime mid-April. ( Hint for the investment experts : Graham and Ken Fisher are right about Singapore stocks )
b) For some strange reason your consumption needs get reduced.
Maybe it's the lack of suffering in the workplace from having someone to report to, my willpower is much stronger when I am not working in an office. I no longer obsess about branded stationary (Moleskine blows a big hole in your wallet) and have held out against buying a Gundam Model kit for two months already ( It's a FA-78 Thunderbolt if you are wondering what's caught my fancy ). However, I still can't resist a good read and still paying a lot of money on books, having just completed Kevin Roose's Young Money and going to start on Ben Horowitz's The Hard Thing about Hard Things soon.
c) The 8-hour sleep part is the best.
I'm still not a good sleeper but now I have the luxury of ensuring that I get 8 hours of sleep a day. I bet most Singaporeans don't get to enjoy this very often. If you don't pick anything out from this article, you really need to try this.
d) Premium for intelligent conversation goes up a lot.
Fighting against boredom is something I struggle with everyday. Fortunately, I exercise more everyday and will begin meditation this week. What I need more of is intelligent conversation and there is'nt a lot of retirees who can engage with that once you are out of the workforce. Working folks worry about condominium payments and the financially independent may not even care about current affairs. Finding smart, intelligent people to have a chat with is plain hard if you consider that now my weekends are dedicated to family time and people are not free when I am free. ( Hint for the flaming extroverts : don't do what I do, ease into a part-time arrangement before quitting your job. You'll miss the bitching at work. )
Another words, keeping busy is a struggle but you need to build a structure around your life when no one is there to do it for you.
Right now I'm still pretty satisfied with my current arrangement, it's still not sustainable mentally because that's a part of mind that keeps telling me that I can do better if I contribute more directly to the economy and there's some residual fear of missing out.
Let's see if March will work out.
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