So the A-level exam grades have been released and this year it’s a little more personal because my younger brother also received his results. He did better than I did in my time but unfortunately for him, it’s so much more competitive now that he definitely won’t be getting into the course of his choice if he were to apply for the big 3 (NUS, NTU and SMU). It’s little comfort that he did better than I did because just like the PSLE and O-level exams, the results are only useful for getting you to your next school of choice. Beyond that, no one cares how well or badly you did.

Anyway, the post isn’t so much about his results but more of the reaction of my mother. Although he easily qualifies for the course he is interested in for quite a few universities, my mother also looked at a few options that are willing to guarantee him a place but that he totally has no interest in. Basically, it’s like wanting to study film design but your mom wants you to study engineering just because you definitely can get a place.

The problem with this way of thinking is that this is so 20th century. In those days, getting into university was something of a rarity so graduating with a degree, regardless of the course studied, was something extraordinary. These days, graduates are dime a dozen. A much bigger proportion of each secondary school cohort goes to university and parents are much more willing and able to send their kids overseas. In short, merely going to university isn’t going to mean much.

What’s going to be more important is doing well there and a big part of doing well comes from the motivation of the student. To be honest, before I went to NUS to study economics, I had the view that every person who managed to get to a university (especially the big 3) must be really smart. After going through four years of university and meeting countless graduates who are/were colleagues, I’m not so sure.

I believe intelligence is pretty much normally distributed. The only reason why more people are got a university degree in my time versus my parents’ time is not that my generation is smarter. Rather, the opportunity for a university education increased. Similarly, I know many people from my parents’ generation and older who never got a degree but are possibly some of the most intelligent people I’ve met. My grandfather and my mother-in-law are two prime examples. The only reason why they never got a degree is that they had to enter the workforce to bring home some bacon.

While I don’t teach at a university, I’ve seen many students at my school fail to do well or even fail to complete the course due to a lack of motivation. And one of the biggest factors for a lack of motivation is that the student is only in the course because his/her parent(s) insisted that they study the course. Often, they can pass the first year because the modules are easy enough or the excitement of new friends and a new environment can pull them through. Once they go to the second or third year where the modules increase in complexity and become more specific to the course they applied for, their lack of interest becomes a chain around their ankles and they sink. It’s sad that we counsel so many students when we actually need to be counselling their parents instead. After all, if their son/daughter graduates with a lousy Grade Point Average (GPA), their future may be bleak.

To all parents out there, I know it’s fashionable in Singapore to be a doctor, or lawyer, or banker but not everyone has the aptitude nor interest to pursue those professions. It’s much better to let your child take responsibility for their own lives and be the best person he or she can be. Of course, you want to keep an eye on your child in order to make sure that they’re not going to become the best criminal but there’s no shame in being the best chef, baker or even dog groomer. They’re all decent professions that provide value to society.




Previously, I blogged about how practising mindfulness has been going for me. Today, I want to share a common issue that some people starting out, including myself, may struggle with.

Imagine starting your morning with your usual mediation. The session went great and your mind is feeling clear and you’re all ready to start the day. You get in your car and make your way to work. As you make your way, you encounter this car hogging the fast lane and causing everyone else to go much slower than they could have. Finally, that car gets out of the way and everyone starts to speed up. As you speed up to close the gap that has formed between your car and the one in front, another car from the lane left of yours cuts into your lane. At that moment, you feel your blood boil.

I have the right of way! That guy should let me pass before he tries to change lane. Anyway, all this wouldn’t have happened if that f**ker wasn’t hogging the lane.

Now, it may be traffic. Or it may be something at work. A horrible co-worker. A horrible client. Who knows? Whatever it is, you feel that sense of anger and the anger seems justified because someone or something has done something wrong. And that wrong has upset you. It feels right to be angry.

Feeling angry has an opportunity cost

I used to think this way. Sometimes, I still do. The unfortunate thing about thinking this way is how these feelings of anger begin to affect other aspects of your life as well. As you seethe with rage about that injustice, you won’t notice the taste of your lunch. how delicious it is, how fresh it tastes. Or maybe you won’t notice how blue the sky is today. You forget that the action that triggered the injustice has passed and yet you still feel it effects when there are other things surrounding you that could trigger feelings of positivity.

And the thing we forget is that just like things that make us angry, things that make us happy won’t be there forever too. While we’ve focused our attention on things that upset us, we’re letting things that make us excited and happy slip us by. We’ve also spent our willpower and energy on being upset and angry. That leaves us with a lot less time and energy on other things that make our lives better.

This is important because we cannot control how much of an asshole other people are but we can control how we react to assholes. And in the strange scheme of things, being nicer to other people makes them become nicer to you too.

Newton’s third law of motion

The one thing in physics that I remember is Newton’s Third Law of motion and it states that “For every action, there is an equal and opposite reaction.” Now, I don’t know why this works for people but it does.

I’ve found that people I’ve suddenly become nicer to start to act nice to me too. There’s a colleague that I’m not particularly close to in part because I find that she likes to give lots of instruction but never steps up to do the heavy lifting. So, one day, I find myself in the pantry with her and I decide to ask her a little bit more about her son who’s getting married soon.* She happily gives me more information about her son and then she notices the banana I’m eating and starts telling me about the banana tree she grows in her home. So I start to ask her about her banana tree which she seems proud of. Next day, she brings a whole bunch of bananas and starts to distribute to the entire section. Now, I know this is a trivial example but you have to admit that compared to the near-zero interaction I normally have with this person (and it’s been like what, 5-6 years since I’ve known her?), this is a huge step.

Be nice to others and somehow, they’ll be nice to you too.** I didn’t even do much for that colleague. All I did was ask her about recent developments in her life and she felt like she had to reciprocate in some kind.

One area I have to work on is remembering people’s names. It’s a small gesture but people’s names mean so much to them and I think I’ve got to the point where I’ve given up on remembering my students’ names because I have like 150 new faces to match names to every 6 months.

Anyway, I digress. The point here is that being mindful of things and being kind of others is more for our own benefit than it is for other. This is what some people have termed enlightened self-interest.

Whoever is reading this, may you find enlightened self-interest.


*Anyone who knows me well will attest that this is very out of character for me as (1) I hate small talk and (2), if I dislike someone, I normally avoid them like the plague. Even taking the same elevator as them puts a strain on me.

**This isn’t the same as being nice to others with an ulterior motive. Somehow, human instincts can sniff out when someone has an ulterior motive.

With one stroke of the pen, Singapore academic and occasional socio-economic commentator, Donald Low* made a substantial number of people feel poor. Donald Low’s comments (as reported in this article) were in response to an article by Singapore’s favourite has-been-tabloid turned free broadsheet about a family of five with a five-figure monthly income whose purse strings feel a little tight.

Basically, using statistics from the Singapore Department of Statistics (SingStat), Donald Low showed that a family of five with a five-figure income could indeed feel middle class. This is given the fact that the average and median household incomes in 2017 were S$12,027 and S$9,023 respectively. Given that this family had a larger than average family size**, it’s no wonder that they are considered middle-income from a statistical point of view.

I get the point about people saying that the lady interviewed needs to get her priorities right – such as not needing the private sailing classed for her kid, but the data also shows that that family is highly likely to be representative of the middle-class. And we all know that it is the middle-class that tends to have the most frivolous spending. I can just imagine how many of them spend so to show that they aren’t in the lower-income bracket and because of the aspirational lure of keeping up with their peers who may be upper middle or in the wealthy group.

By the way, those looking at solving our birthrate problem need to tackle this issue. It’s probably the biggest reason why younger couples aren’t having kids. Imagine a young couple, both working in median paying jobs that pay equally well and therefore, as a household, they are right at the median. Adding a kid to the household presents them with two scenarios: one, do they have someone to outsource the childcare to and live with a 33% fall in their per-capita household income? Or two, does one of them (usually the wife) stop or reduce the amount of work in order to take care of the child. Notice that either scenario reduces their household income on a per-capita basis. The first scenario puts them more or less at the median in terms of per-capita household income while the second puts them below the median.

That’s just having one kid. And you wonder why we have problems replacing ourselves. Having said that, my bigger concern is that many of the middle-class (with one or two kids) in Singapore are spending so much of their income on housing and the occasional affordable luxury that retirement is going to be an issue for them.***


*While there has been some controversy over the things Donald Low has said in the part, he is the kind of academic that we need in Singapore. Not many people are able to/aware of the data that’s out there, much less interpret it. Also, some of the other academics that get featured or interviewed regularly either say something that reinforces the government’s view or is trivial.

**The Average household family size for Singapore in 2017 was 3.3 members.

***I suspect the issue will be with housing more than the affordable luxury although that $300/month private co-curricular sailing class adds up to a lot once you consider the opportunity cost of not investing it. $300 a month for five years and then compounded at 5% (CPF can do this easily) for the parent’s entire working lifetime (say it’s 25 years after those 5 years) comes up to be $5613.53. Who knows what other things these people are spending on? Edit: I stand corrected. It’s only $300 per year which makes it even less of an issue.

I’m not an expert but over the course of my relatively few years so far, I’ve come to realise a few things.

Happiness comes from within.

Finding Happiness

First, let me briefly describe the conditions that have led me to that conclusion. When I was much younger, I used to think that happiness was something that external circumstances or objects brought you. For example, if I was happy, it was because my favourite show was on the television or my parents bought me a new toy. If I was unhappy, then it must have been because the helper cooked something I didn’t like (e.g. bitter gourd) or I was forced to do homework.

If you think about it, that’s an entirely valid way to see the world. After all, we humans are just like any other creature in this universe, drawn to pleasure and feeling repulsion to pain or suffering. That’s how evolution works.

Unfortunately, things aren’t so simple. After all, things like exercise are good for us but it doesn’t feel good for many of us. Even for those who get that rush of dopamine from exercise, too much exercise causes inflammation of the joints and some other negative side effects. It’s even worse for sugar where we get hit with a sugar high that causes us to crave more but sugar when taken in excess causes all sorts of health issues like diabetes and obesity. i.e. Too much of a good thing can also be a bad thing.

It took me many years to realise that and in those formative years, I basically sought happiness from video games, things, good food, alcohol but the kind of joy these things bring is fleeting and doesn’t bring lasting satisfaction.

First Hints

My first hint of what happiness might be, came when I heard about Buddhism. Unfortunately, it didn’t appeal to me with all the esoteric jargon and Dos/Don’ts. At that time, it felt like any other religion where you have to follow these set of rules and dogmas without questioning what they mean or are supposed to be. That’s blind faith and not something my rational mind could live with.

Then, I read about the happiest man on earth. And he just so happens to be a monk. This time, the appeal was that the title of ‘happiest man’ wasn’t just something some people gave to him but was a result of neuroimaging scans done on his brain while he meditated.

That kind of made sense. After all, there are plenty of people around the world that live on incomes that are poor by developed world standards but still report higher levels of happiness. There have also been studies that show that happiness levels don’t rise once you go beyond a certain level of GDP per capita. Pop psychology also shows that if you want to feel happier, you can try using your teeth to hold a pencil lengthwise. This activates the muscles involved with smiling.

Ok, so I knew I needed to meditate but how do I go about doing so? I didn’t really want to read books by monks as the description by these masters of meditation always seems very fluffy and esoteric. I guess it’s like trying to follow the steps to create a michelin-starred dish when you don’t even know how to scramble eggs. So I put it off for many years.

What helped

Then, Tan Chade Meng came out with his book, Search Inside Yourself. A former Google employee and an engineer by training. There’s probably no one more rational and systematic than an engineer right? So I bought his book. He described the steps and rationale behind each step in simple enough terms but his folksy, “isn’t-it-simple?” style of writing turned me off after a while. Too much spun sugar. So I put off meditation again for what must have months or even up to a year.

Then, last December, I came across Dan Harris’s book, 10% Happier, and this was the turning point for me. A news anchor and journalist by training, he detailed his journey of finding inner peace. Basically, if you are a skeptic and hate the esoteric fluff that sometimes comes with a lot of self-help books, Dan Harris’s book is a great starting point to convince yourself that meditation (1) works and (2) it doesn’t have to be religious.

All it takes is to be aware of your breath. Breath in. Notice the changes in your body- the chest rises, your lungs fill up with air and your diaphragm expands. Breathe out. Your stomach gets sucked back towards your spine. And repeat. If your mind wanders, just notice the sensations you felt that was associated with those thoughts. Maybe you remembered how your boss did some asshole move by piling work on you. Just notice that your ears felt hot and maybe your cheeks felt flushed. Bring the awareness back to your breath. And repeat.

My own experience

I’ve been, more-or-less, meditating for about 15 minutes every day and I can tell you that I’ve never felt better. I still get pissed at people who hog the lane in traffic. I still get pissed at colleagues who make me do more unnecessary work. But I quickly let it go.

On the other hand, when I notice something great. I hang on to it a little more. It could be the kid that waved to me and held the door open for me in the lift. It could be the sky looked a little clearer and the burst of blue that’s dotted with clouds. Whatever it is, I’m aware of it and I cherish it.

Why does it work? I think this short clip explains it very well. The guy in the middle (Jeff Warren) explains quite well from 1:09 to about the 2 min mark. Meditation gives you that mental clarity to figure out what to focus your energy on. I remember reading somewhere (could be the Dan Harris book once again) about someone asking the Dalai Lama what he would do if confronted with a robber in a bank and the robber potentially was going to shoot other people. The Dalai Lama said that he would snatch the gun from the robber and shoot him in the leg, then go and comfort him.

So, it’s not like meditation means you have to be nice and kind and icky-gooey all the time. It simply means having the ability to choose what to focus on. And if you choose to focus on what makes you happy while using your mental jiu-jitsu to deal with what makes you unhappy, life turns out to be a net positive. It’s all about gaining control over your emotions and using them to make your life better rather than letting your emotions affect you in whatever way the world chooses to.

Like Dan Harris, I’m nowhere close to being the “happiest person” alive but I think I’m ever so slightly closer.


*Sorry mom. Chinese folk tradition isn’t the same.

I tend to find extremely religious people annoying. In Singapore, there’s a particular religiosity surrounding people who have children still in primary school who believe that all married couples should have children.

The immediate boss was going around the office on the eve of the lunar new year with the usual congratulatory greetings for CNY and he wished my colleague 早生贵子. This basically translates to wishing that someone will have children soon. Said colleague then diverted the attention to me because I’ve been married for a longer period of time but I still don’t have any children. I joked and said that I have a cat so that counts.

The boss then asked if I had any plans to have children, to which I replied, “If it happens, it happens.”

Not the first time the boss has heard that from me and being the pro-family person he is, he started telling said colleague and me about the joys of having a family. His main thrust was that we have to reproduce or we’ll go extinct. By the way, he has two kids and I think his world (3/4, at least) revolves around them.

I replied that there are no worries about that because birth rates in developing countries are high enough that the world population is growing so going extinct due to a lack of kids isn’t looking like a possibility in my lifetime. Then the boss clarified that his idea of extinct was confined to Singaporeans but to be honest, I felt that he was trying to tell us that having kids is a joy that we’re missing out on and therefore we should work towards that.

I don’t deny that having kids could bring some people joy and it may be the most meaningful thing in their lives but at the same time, I think the joy of having kids is highly overstated. The problem with people who have been raising children for the last 10 years or so is that they’ve forgotten what it’s like to NOT have kids. It’s almost like believing in the dogma of one religion that you don’t realise that other religions are probably/could be just as good for you.

Personally, I don’t think adding more humans to this planet is that much of a good thing from an ecological perspective. From the perspective of the economy and, therefore, financial markets, population growth is definitely a good thing. So all in, I’m neutral from a broad macro view.

From an individual point of view, there’s definitely a lot of work in raising kids. For a good part of their life, kids are basically dependent on you for everything. And as a teacher, I’ve seen so many examples of screwed up parenting- from parents that spoil the kids to parents who neglect their kids. Either way, the kid turns out a little wonky and becomes a net negative to society because they impose a cost either through an added burden on the legal or the healthcare system.

Then, there’s the environment. Singapore’s education system is a pressure-cooker environment where parents who don’t know any better compare their kids against their friends’ kids*. Many parents won’t be enlightened enough to encourage their children to simply explore or to pursue things they may be good at if the things that they are good at areas that defy conventional wisdom. I know of more than a few people that feel like moving overseas only because it’s tough to raise kids here.

Once again, I’m not saying that having kids is bad.

All I’m saying is that the people who believe in the religion of having kids need to be aware that there are downsides to having kids and that some people could easily be happy without having kids.

The wisest parents I know are those who live their lives to their fullest and become the role model that their kids need. The kids are just one part (a big one) of the couple’s lives but certainly not the only one. The couple still has their own social life, hobbies, and interests which the kids can then emulate should they also take an interest in it.

On the other hand, some of the worst parents I know of are those where their entire day revolves around the kids – working in a job they can’t stand because they have to bring home the bacon, fetching the kids to all sorts of classes in order not to ‘lose out’ to other kids, going on holidays as a reward for kids’ performance in tests/exams. These helicopter parents are going to turn their kids into pieces of junk.

All in, horny people who don’t want/forget to use protection shouldn’t be under the illusion that having kids is always a net positive. There’s really no need to try and convince people without kids about the joys of having kids** when all you really want is some validation that your irreversible choice is right.***


*With friends like these, who needs enemies?

**We’ll figure it out on our own.

***By the way, the joke’s on these people when their kids turn into angsty, pimply teenagers who eventually fly the coop. The sweet kid you know maybe someone that you suddenly don’t understand and after a few more years, when the kid is busying with his/her own life, what are you going to do? Start doing stuff you wished you could have done instead of sending them to tuition classes?

PS: I think my parents didn’t get me when I was in my teens. But they were wise enough to let me explore and do (mildly) stupid things that didn’t kill me. I learned valuable lessons on my own and some of those lessons still serve me well to this day.


Lunar New Year or Chinese New Year (CNY) as it’s commonly known in Singapore isn’t one of my favourite holidays. As a kid, I looked forward to it because of a few reasons. One, it’s one of longest public holidays you get as a student. No other public holiday in Singapore gives you two full days off. Of course, as a kid, I always hoped that CNY would fall on a Thursday so that we had four days in a row without school.

Two, CNY as a kid means getting money. For a kid, it’s that one time of the year where you get extra cash. As an adult, the closest thing I can think of is the bonuses that companies pay out at the end of their financial year. Those, of course, are not guaranteed. Furthermore, CNY is usually a time where people gamble, so that’s an extra chance to make more cash. I was pretty good at the blackjack tables so that usually meant another week’s allowance.

Three, the snacks are awesome. In Singapore, food is generally delicious, to begin with, but the snacks at CNY are on a whole different level. From pineapple tarts to love letters to kueh bahulu to bak kwa.

However, once you get older, CNY starts to become a pain-in-the-ass. First, you keep meeting the same old people that you only meet once a year during CNY. Singapore’s a really small place so if there are people that you only see once a year, it probably means you don’t really want/have to meet them unless you really have to. Furthermore, because you only see them once a year, conversations tend to be awkward and naturally border on the mundane. Conversations get even worse with the older folk that you don’t normally meet because they only start to ask questions that annoy you. e.g. “How are your results?”, “When are you getting married?”, “Do you have a girlfriend/boyfriend?”, “When are you going to have kids?” etc.

So, it’s no surprise that many people head abroad to avoid CNY. After all, two days of public holiday means less leave you have to use. Tickets are now cheap thanks to low-cost carriers. Also, the fact that so many Chinese are celebrating CNY means that you have a lot fewer tourists to contend with in another country. All in, it’s a good time to travel.

The only positive I see in Singapore is that families are getting smaller. This means less visiting of distant relatives as celebrations are mostly within 3 generations. This also means more free time to enjoy the holidays which means more businesses that cater to the retail crowd remain open. In Singapore, most cinemas remain open throughout the period as we also have a good 30% of our population that doesn’t celebrate CNY. All in, it means that CNY is getting to be a more cosy affair with the people that really matter. And I think that’s really what CNY should be about- spending time with those you consider family.


I’ve mentioned a few times about how a senior colleague of mine has been waiting on the sidelines for almost two whole years. He’s been almost 100% in cash or some fixed-income investments that pay little to nothing, and had to experience the pain of missing out on last year’s run-up in the market. He’s also missed on the additional yield provided by equities.

I’ve also moved more from equities to cash/bonds but that’s largely a function of how markets have run up and I’m definitely nowhere near 100% in cash. As my time horizon is VERY long, I suspect my average allocation will be 80/20 cash/bonds with room to move to 100/0 or 70/30 at market extremes.

Kyith over at Investment Moats has a fantastic post on how being too cautious has costs too.* Of course, one does what one needs to do to sleep well but the costs of trying to time the market can be costly and investors will do well to recognise this cost.



*In Econ 101, this is what we call opportunity cost.

I know I run the risk of being wrong but for what it’s worth, this is my honest opinion. After all, it’s very difficult to spot bubbles except in hindsight.

Recently, I’ve been talking a lot of shit about cyrptocurrencies and I think many people have mistaken my comments about cryptos as a sign that I think they are a total scam.*

I don’t. In fact, with my cursory understanding of the technology, I think they the Blockchain technology that all cryptos are based on could fundamentally change the way some business is done. There seems to be a lot of promise in reducing the fees that many financial intermediaries earn or ensuring the integrity of the supply chain of a product.

The problem I had with cryptos is the fact that almost everyone seemed to be buying into the hype. In fact, my boss asked an innocent question, “Why was there suddenly so much attention on bitcoin when the thing itself is almost 10 years old?”

I thought the answer was simple.

The only reason why 2017 was the year of bitcoin and cryptos was that there was so much money that was made (whether the money was real or illusional is another matter altogether).

That fact in itself made the intended use of cryptos irrelevant. All that was relevant (and still is for some people) was whether the price of cryptos was going to go up or down. Now, that is something interesting to me because it is the same with any other investment. If there are too many people chasing after the same returns, they are going to bid the price up and sooner or later, no one is going to believe that the price will keep going up and that will be the beginning of the end for the inflation in prices.

The people that believe that it could be otherwise just haven’t read enough.

It was the same for financial assets and real estate (‘08/09), internet start-ups (00s), Asian real estate and stocks (‘97), Nifty Fifty stocks (60s), equities (1929), the South Sea Company, tulips and so on and on.

Stage one: nascency

People who invest in anything, in general, need to be more aware of the fact that ALL markets move in cycles. In general, any cycle starts with a small segment of investors in some new or previously unloved asset class. These investors get called all sorts of names- whackos, gamblers, speculators or what-have-you.

Stage two: some people make decent money

Eventually, these guys start making some money and people start to take notice. As more people chase after the same returns that these guys have gotten, the initial group of investors starts to make outsized returns. It doesn’t help that this initial group seem like average Joes and Janes to their neighbours. People start to think that if these people can make 1000% returns, I can too.

Stage three: envy draws everyone

Investors in other asset classes, which have returned nowhere close to the returns from this asset class, then wonder what the hell they’ve been doing, getting tiny returns while these people that they thought were whackos are proving them wrong. It doesn’t help that some “whackos” make all this money that is many multiples of what their full-time job pays in a year. Some of the investors start becoming converts.

Eventually, many people who have no business investing in anything start putting in tiny bets into this new asset class. The bets pay off. They then put their entire nest egg into this ‘sure thing’.

Stage four: beginning of the end

Then, without warning, prices start to collapse.

Entire nest-eggs and paper fortunes worth several lifetimes evaporate. Those with gains start selling furiously, desperate to hold on to whatever gains that they have. This compounds the selling. The die-hards are telling everyone else that this is just a dip. It’s a chance to buy even more they say. What they forget is that some people have already put all they have into this one thing.

Stage five: back to earth

Prices start to stablise and provide some relief. But as corporate bankruptcies due to losses in this asset start to filter, everyone starts to realise that it’s over. All they can now do is lick their wounds.

While it seems like the easy answer is get it at stage one or two, the unfortunate thing is that there’s no way to predict which asset to get into or when it’s going to take off.

Many other experts on investing have written about bubbles, market euphoria and how to spot these things. My favourite person on the topic is Howard Marks of Oaktree Capital and I understand he has a whole book devoted to market cycles coming out later this year. I’ll be sure to read it.

Revisiting the crypto craze

If you cast your mind back cryptos, very few people were talking about it prior to 2017. Only the people who kind of understood or were willing to explore the technology were invested before 2017. I dare say that prior to 2013, the people in it were mostly the people who were working on the technology itself.

Only after a certain group of people had already made outsized returns on their investments did cryptos start to attract the kind of attention it did in 2017. It probably also helped that 2015 and 2016 weren’t exactly good years for stocks. This made the gains in crypto seem all the more attractive. Everybody from South Korean students to Japanese salarymen started buying bitcoin too, thinking that they’re all bonafide investors now. My boss was also asking if we could do a presentation on the economics of bitcoin.

That’s basically when I knew that cryptos were done. I didn’t know if prices would continue to go up or not but I knew cryptos were now a major bubble.** The point here is not about cryptos per se. The point is that if we look back at the Global Financial Crisis (GFC) in ‘08/09, there was a similar story that played out in US real estate (in ‘04-’06) which led to the financial crisis.

Next time, if someone asks you for money to invest in something, you probably want to ask yourself: “Which part of the cycle are we at right now?”


*Funny enough, there’s actually one called Super Cool Awesome Money (SCAM).

**After some colleagues and I discussed how ridiculous the price increases in crypto had been, the price of bitcoin more than doubled over the next three weeks. It goes to show how difficult timing markets can be. Crazy can get crazier. Lord Keynes has been quoted to death on this but it bears repeating: “The market can stay irrational longer than you can stay solvent.”

So, equity markets around the world were hit pretty bad on Monday and Tuesday. Even the cryptocurrencies were hit pretty bad*. As I write this, the STI is down about 6.5% from its most recent peak.

However, a colleague of mine who’s been on the sidelines, and totally missed the upward march in the stock market, got really excited. His worry will be that markets don’t go down far enough for him to get completely in.

I’m not out of the markets because I believe timing it is a futile exercise but I moved more money to cash/bonds as valuations got higher. In fact, I stopped buying anything after Feb last year.

Key point now is: What would you do if the markets really present a buying opportunity?

For me, the plan would be something like this:

  1. Split the money you have to invest** into 10 portions.
  2. When the market goes down 10%, invest 1 portion into whatever’s on your watchlist. To keep things simple, I’ll assume it’s the STI ETF.***
  3. If it goes down another 10% (relative the peak), invest 2 portions.
  4. If it goes down another 10% (relative to the peak), invest 3 portions.
  5. If it goes down another 10% (relative to the peak), invest 4 portions. By this time, that sum of money you had will be fully invested.

You could swap the 10% down criteria for months. i.e. Wait 2-3 months instead of seeing whether it goes down 10%. Either way, I don’t think you’ll do very badly in the long run by following such a plan.

My main point is: You need a plan to get through a fall in the markets. Some people panic or they don’t have deep pockets and are forced to sell. This is the kind of opportunity for long-term investors to get in and have their money compound at 10% per year. If you get in when markets are expensive, it’s pretty likely you’ll end up compounding at a rate lower than the average rates.****

Plus, most bear markets don’t go down more than 50%. The times that it did, the run-up in valuations were much more extreme. Even the S&P 500’s CAPE ratio is half that of the dot-com bubble. This time, you don’t hear stories of the financial system being over-leveraged or major players being over-extended. For Singapore, you could even argue that markets were not richly valued by a long shot before Monday. Personally, my money is on a correction or a bear that is extremely short-lived.


*My joke is that cryptos fell because some colleagues and I had to give a presentation to other colleagues. When you have civil servants interested in something, you know it’s time is up.

**This sum should be something you don’t have any urgent need for. You shouldn’t be using money that you need to use to pay the bills or something that you’ll need in the foreseeable future. If you struggle to pay the bills, you shouldn’t even be investing. Get your spending in order first.

***For most people, stock picking isn’t something they should be doing anyway.

****If average rates of return for the STI are 8% a year (which they have been), then buying at low valuations should help you compound above that rate (e.g. 10-12% p.a.) while buying at high valuations will cause you to compound at a rate much lower (e.g. 4-6% p.a.).

STI Close: 3,529.82
PE10: 14.38x

The run-up in the STI has really caused valuations to jump quite a bit. With the PE10 at 14.38x, the earnings yield is now below 7%. Furthermore, a spike in the 10-yr bond means that difference in yield between the PE10 and 10-yr Singapore Bond has fallen significantly below 5% for the first time since August 2015.

Given the pullback in US and EU markets on Friday, I suspect we’ll see a much weaker STI on Monday. Anyway, at this level, things aren’t looking attractive. I’ll consider loading up on more equities if the STI goes down to 3,200 or less.

Meanwhile, sit tight and hang on for the ride!