Post-National Day Long Weekend edition

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How Turkish coffee destroyed an empire (The Economist)

Super interesting. No surprises but that’s why social media is the coffee shop of the 21st century.

Personal finance blogger explains why financially literate people don’t worry about 99-year HDB leases (

Not entirely right but it is a valid point. Will write a piece on property in Singapore one day.

The Economics of Home Ownership (A Wealth of Common Sense)

U.S context but probably 90% applicable to Singapore as well.

Aging Economies May Benefit Less from Fiscal Stimulus (IMF blog)

Uh oh…Singapore qualifies as aging too you know…Of course, Singapore’s probably better positioned to overturn that as we’re more open to immigration than say, Japan.

‘The biggest monster’ is spreading. And it’s not the coronavirus (TodayOnline)

Uh oh…Is 2020 the year that starts us down a Mad Max-like apocalypse?

Millennials Slammed by Second Financial Crisis Fall Even Further Behind (WSJ)

During the GFC, I remember reading about how my graduating cohort would be one of the unluckiest generations as we were graduating in the middle of a recession. Getting a job in the middle of recession was found to be detrimental to overall lifetime earnings.

Turns out we’re doubly unlucky.

However, you have to count your blessings where possible. If I didn’t graduate in the middle of a global recession, I probably wouldn’t have thought about a civil service job. If I never joined the civil service, I never would have met my wife.

By the way, if the above scenario for millennials play out globally, you can be sure that the Singapore government will become more and more left-leaning.

We’re into August! This year has been nothing short of bizarre and probably full of disappointments for many. I hope that you’ve been able to see at least some good in what seems like nothing but bad news.

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‘They’d Find Fraud, Fraud, Fraud.’ (Institutional Investor)

I’m not so surprised that many publicly-listed Chinese companies are engaged in fraud. What I’m surprised is how Chinese financial regulators seem to be part of the problem. And you wonder why China has a problem convincing more of the world to hold Chinese securities even if they allowed the world to.

Why Is Gold Rising? (A Wealth of Common Sense)

Beware the Hype on Gold (Morningstar)

Ben Carlson has a good article on some of the drivers of investment in gold while the Morningstar article takes a look at the past record of investing in gold.

You Don’t Need Alpha (Of Dollars and Data)

Nick Maggiulli makes a very convincing case that most retail investors shouldn’t be too focused on beating the market when keeping up with the market will be more of a game-changer when it comes to retirement.

Here’s how a retired dad can cover basic needs with around S$1,500 monthly payout, leaving personal savings untouched (

A terribly lousy sponsored piece from Mothership. Obviously paid to write on something that they don’t care about.

I hate how so many of these mainstream media outlets pretend to know about the product that they were paid to write about when they obviously don’t know enough to present an informed case.

In this case, they obviously neglect to mention that receiving $1,500 in 10 years’ time will fail to help the writer’s dad make the purchases listed in the table. $1,500 is a nominal amount while the prices listed for each of the expenses mentioned are in today’s prices.

It’s more likely that not that in 10 years’ time, $1,500 will buy the writer’s father much less than the writer thinks.

In short, you can’t ignore inflation.

Slow week. But there volatility seems to be picking up in the markets.

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My parents said you can never lose money buying properties in Singapore. They were wrong. (Dr. Wealth)

This is what every generation thinks of real estate—and what each has spent on it (Fortune)

Fortune article is behind a paywall but the chart there is the moneyshot. Anyway, point of those two articles is to counter the often-held belief that you can’t go wrong with property.

As with any asset class, market cycles matter.

How Millennials Can Close the Generational Wealth Gap (A Wealth of Common Sense)

Linking to this not so much because of Ben Carlson’s advice for millennials on what to do about the Generational Wealth Gap.

I’m linking to it because I think it highlights something we also see here in Singapore. A generational wealth gap that explains why those in their 40s and below feel this sense of injustice about many things.

Imagine being told that your life will turn out great if you study hard and do well in school only to find out that what used to be true no longer works and the future looks even more uncertain than before.

Intrinsic and Extrinsic Motivation (Benabou, R and Tirole, J)

I find this utterly fascinating because I have motivation problems.

No ‘Best Things I’ve Read’ last week because I was effectively hungover from GE2020. I was one of the minions on the ground. No GE2020 thoughts from me because those who have me on ig would know what I felt about this GE.

Instead, now that GE2020 is over, let’s get back to regular programming.

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Tesla and the Amazon fallacy (FT Alphville)

The Elon Musk factor is causing Tesla to rally hard. However, do not mistake Tesla for other tech giants. Remember the wise words of Keynes.

New research going back 120 years backs up Warren Buffett’s simple advice for investing (CNBC)

Buffett has fallen far off the top 3 of the billionaire charts… Either he has really lost his mojo or those that have recently climbed to the top have grown their wealth a lot.

Last I checked, Buffett’s wealth hasn’t changed that much. It’s the rest whose wealth on paper have increased a lot. And guess which is the prevalent sector that those people are in?

China’s regulators break down Xiao Jianhua’s financial empire, seizing Tomorrow Group’s insurers, trust firms and brokers (South China Morning Post)

Putting this here because this week in class, we were talking about tehe role of institutions and how no city within China is going to be the next Hong Kong. In fact, based on what’s going on in Hong Kong now, it seems like even Hong Kong will no longer be how it used to be.

This case is an example of why it’s going to be so tough for China to convince the rest of the world that it wants to be part of the global financial system.

GE 2020 campaigning weekend! This elections have been entertaining. Next friday, we’ll see if the elections will be a watershed one or just a run-of-the-mill Singapore elections

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Pandemics Leave Us Forever Altered (The Atlantic)

Great read. It’s crazy how much of our lives seem to be a fork in history. We could have easily gone down a different path if not for specific events.

Why is Gold Valuable? (Of Dollars and Data)

Great read. Especially if you’re a gold bug.

The Nifty Fifty and the Old Normal (A Wealth of Common Sense)

Another great read for those who think that the biggest companies today will continue to be the biggest and best, forever and ever.

Exhibit A

I don’t know. Maybe it’s a one-off thing but I’ve begun to notice a lot of so-called investment gurus in Singapore who have quite a following because they seem to be able to make well-reasoned arguments.

The problem with many of these so-called investment experts or gurus is that they either come from a non-investment professional background or they think that with the amount of advice that famous investment professionals on the internet, all they have to do is parrot the same thinking and things will work.

Gold! Gold! Gold!

Recently, I’ve seen some advice from Singaporean Investment experts advocating Gold as an investment in light of the times that we’re in. And they apply the usual arguments:

  • Gold is a hedge against inflation
  • Gold zigs while the markets zags
  • Gold will always be valuable

Now, while the points above may have some truth to it. Investors should also be aware of the potential pitfalls of investing in gold (see the link to the Of Dollars and Data post in tomorrow’s edition of ‘Best Things I’ve Read’.

Additional Considerations for SG Investors

While the usual pitfalls of investing in something like Gold are true for all investors, I wish to highlight another factor that many Investment Experts in Singapore often leave out.

Gold is priced in US dollars (USD).

Far too often, when recommending investments in foreign assets, many experts forget that currency matters. After all, a Singaporean investor starts off with Singapore Dollars (SGD) and therefore, all returns should be calculated in SGD terms. It probably will be the case that the investor cares about the returns in SGD as his or her purchasing power is in SGD terms.

Take a look at Exhibit A. It’s a chart of the SGD to USD exchange rate from 2003 to present day. Along the way, the USD has lost as much as 30% against the SGD and while it has climbed from the bottom, there’ no guarantee that the USD will appreciate further against the SGD*.

It’s not just gold

Now, before anyone thinks that this is a post against gold, let me throw in another example of a mistake when ignoring foreign currency flucuations.

Some years ago (roughly, 6-7 years if my memory serves me correctly), the local banks were encouraging many retail investors to take advantage of higher interest rates in countries such as Australia and New Zealand.

The basic idea was to convert your SGD to the either the Australian (AUD) or New Zealand (NZD) dollar, deposit it in a time-deposit in the banks there and earn the higher interest rates there.

Unfortunately, someone forgot to tell these investors that there is something called ‘Interest Rate Parity’. 1 AUD then used to trade for around 1.3 SGD but alas, now the almighty AUD trades for slightly less than 1 SGD. What seemed like an additional 4-5% return a year basically got negated by the 30% hit in currency terms.

It’s very basic but investors sometimes forget that (a) inflation matters, (b) transaction costs matter, and (c) local currency matters.

*In fact, the fundamentals of international economics tell us that with the US being a developed economy with a persistent trade deficit, it is more likely than not that the USD will depreciate in the long-run. More optimistic folk would do well to remember that the British Pound was once as high as 6 SGD for each GBP.

Singapore General Elections are here! Grab your popcorn, sit back and enjoy the show.

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Singapore General Elections (essential reading)

Truth or Dare: A video about online falsehoods and Singapore’s POFMA law (Musings from Singapore)

What triggered me about the upcoming elections (Growing your tree of prosperity)

Lots of drama already in this edition of Singapore’s General Elections. PM Lee’s brother has come out as a member of an opposition party; A would-be PAP candidate has already withdrawn due to allegations about his character; Many of the old guard from various political parties retiring.

In a German Tech Giant’s Fall, Charges of Lies, Spies and Missing Billions (The New York Times)

I’m still trying to figure out how EY missed this. Was there really an elaborate and sophisticated fraud or was it just a willingness to turn and look away?

Higher Ed: Enough Already (No Mercy/No Malice – Prof Scott Galloway)

I think a lot of for-profit higher education is going to go under. It’s been a long time coming and well-deserved. Too many graduates in the workforce for jobs that do not require graduate-level training and too many graduates that honestly do not quite meet the mark.

Singapore’s into Phase 2 of our circuit breaker. Essentially, we’re back to about 90% of where we were pre-COVID. There aren’t many restrictions on dining in at food establishments or meeting up with members of other households but we’re still required to have face masks on as long as we’re in public and not currently eating/drinking. At this point, the face masks seem more symbolic than anything.

There is some speculation that this is all just so that the government can quickly hold elections. After we get a spike in increase due to the numbers, we’ll probably end back up in circuit-breaker mode.

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Estimating Future Stock Returns, March 2020 Update (The Aleph Blog)

Equity returns expected to be low for the next 10 years. GMO has put out similar forecasts and the Ray Dalio has also put out a similar prognosis.

20-Year-Old Robinhood Customer Dies By Suicide After Seeing A $730,000 Negative Balance (Forbes)

So this even made the mainstream news here in Singapore. Last week, I mentioned how Dave Portnoy is the figurehead of a trend that’s not going to end well.

Well, I think we have the first high-profile victim of this trend. The worst thing is that the losses weren’t even real and the market hasn’t even blown up. What this newbie trader didn’t know is that this wasn’t even actual loss of that magnitude but more of an accounts issue which didn’t reflect the underlying economic reality of the situation.

I can’t imagine the kind of stories we’ll hear when markets actually blow up.

How to build an All-Weather Portfolio in 2020 – For Singapore investors? How to invest for Singaporeans? (Financial Horse)

The Troubles of Hedging Inflation in Retirement (The Aleph Blog)

There is good advice and there is GOOD advice. See if you differentiate the two.

What a week. And half the year’s already gone. This year is turning out to be bizarre.

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Barstool Sports’ Dave Portnoy is leading an army of day traders (MSN)

Interestingly, this week is the week I found out about a guy named Dave Portnoy because of a clip on twitter that he posted that was trending in some sub-reddit that I follow.

The clip in question was about him saying how he should be a billions dollars richer if he held on to his positions in the JETS ETF. This profile of him makes it all clear now.

By the way, despite the “crash” we had in March, I’ve been hearing stories of how many people who have never traded a day in their life has gotten into options and day trading on penny stocks. This narrative is also coupled with how institutional investors are staying on the sidelines.

Based on these bits of info and the distant stories of how Time Magazine once proclaimed ‘The death of equities” right before the 90s major bull market and newly-minted millionaires calling Buffett washed-up in late ’99…I’m inclined to bet that whatever rally we’ve seen since March won’t last.

Another leg down is coming and this time it’s these newbie traders that are going to get washed out. Dave will just be the figurehead for this group.

The Depth of Privilege (Of Dollars and Data)

Really good article to remind us that for many of us that are privileged, we often do not know just how privileged we are. I guess that’s one good thing that’s come out of the various community service modules and trips that we have in our schools here in Singapore. Many students have said that they find such experiences a good reminder of how fortunate they are in Singapore.

Is This The Most Volatile Year Ever? (A Wealth of Common Sense)

Nope. Which is a reminder that things could get worse.

Well, well, well…what a week. Amidst the chaos in the U.S and COVID-19, the stock markets have been on a tear.

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On the link between economic inequality and social injustice (The Reformed Broker)

How Big is the Racial Wealth Gap? (Of Dollars and Data)

Make no mistake, the social injustice in the United States is not just a racial one, economics also play a huge role. Money is power and the amount of resources held by a certain groups compound into huge advantages over time.

Massive Up and Down Moves in Stocks in the Same Year Are More Common Than You Think (A Wealth of Common Sense)

Many professionals have been caught on the sidelines of the massive move in the markets. But make no mistake, the returns to so many new investors may ultimately prove to be an illusion.

It’s going to hard to retool middle age PMETs (Growing your tree of prosperity)

Quite ironic that the guy making that post is doing so on blogspot but he makes good points about how, despite the government’s best intentions, that pretty much most of the retraining in high-tech areas are probably going to go to waste.

Case in point, I have a friend who spent a few thousand dollars “retraining” himself in Data Science only to find that his 3-month bootcamp is nothing more than a money-sucking opportunity for the trainer.

While unable to get a job in the area he retrained for, he eventually got a job doing the kind of admin-ish executive job that a graduate in any discipline would be well able to do in a government-linked organisation.