Archives for category: Best Things I’ve Read

Almost mid-August!

Highlights of my week include watching ‘Christopher Robin’ last week and it was National Day here in Singapore so there was a public holiday in the middle of the week. Sadly, there was no new issue of Shonen Jump due to it being Obon in Japan.

How was your week?

books on bookshelves

Reads of the week

How this 28-year-old built up $250,000 in savings and plans to retire by 37 (CNBC)

You may disagree with the specifics (like using the 4% rule) but you can’t deny that this guy’s getting the big picture right. I shared this article with my younger brother who’s only 19. Only time will tell if my younger brother will turn out like this guy.


Why Do Some Brilliant Students Suck At Making Money? (LIFT: Limpeh Is Foreign Talent)

Alex, a former Singaporean turned British Citizen, is someone I follow. He goes through a lot of examples in his post but I think the observation is best summed up with Warren Buffett’s quote on investing.

Investing is not a game where the guy with the 160 IQ beats the guy with a 130 IQ. Rationality is essential.” – Warren Buffett

The downside to being brilliant is that it doesn’t prepare you for things when life doesn’t go your way. After all, life isn’t something where doing A always gets you B. Sometimes, doing the right thing can still get you bad results because of chance.

The quality that is more essential for making money is grit. Grit enables you to stick with the training or the plan even when things don’t go your way. Grit also enables you to find the strength to get back up and do an honest self-assessment on where the plan went wrong so that you know what to do when similar situations arise.

This is the sad part about what many parents believe about education — education will get you somewhere. Sorry to burst their bubble but that’s where they’re totally WRONG. In this day and age, education is so prevalent that almost everyone in the working class is a university graduate. Education is no more a differentiating factor and the sooner we realise that, the better.


It’s the first weekend of August! We’re into the third quarter of the year. How’s your 2018 been going? By the way, if you haven’t already done so, check out my STI PE10 page.


What does a robot accountant look like? (Tim Harford)

So, last week we saw how robots and automation could make certain jobs redundant. This week, there’s a piece from The Undercover Economist on how the rise of technology has always made certain jobs redundant. The upside is that roles that were made redundant were then redesigned and made even more available as the technology reduced the cost of the job.

Harford uses the example of how an accountant’s role was changed by the spreadsheet. I distinctly remember reading another example of how even more bank tellers were employed in the U.S. with the invention of ATMs. It may seem counterintuitive but the use of ATMs made it cheaper to open branches. The increase in the number of bank branches made it necessary to hire even more tellers.

Personally, I hope that driverless cars become commonplace within the next 10 years. At work, I also hope that 90% of administrative tasks get fully to semi-automated.

Will the future be the same? Only time will tell.


The 3 Levels of Wealth (A Wealth of Common Sense)

Ben Carlson has a piece where he describes how Slack founder, Stewart Butterfield views different levels of wealth.

Level 1. I’m not stressed out about debt: People who no longer have to worry about their credit card debt or student loans.

Level 2. I don’t care what stuff costs in restaurants: How much you spend on a particular meal isn’t impacted by your finances.

Level 3. I don’t care what a vacation costs: People who don’t care how expensive the hotel is or which flight they go on.

It’s non-scientific but I guess it provides a nice way to gauge how comfortable you are in terms of finances. I would say that I’m definitely way past Level 1 because I don’t worry about having to pay off loans and bills.

On the other hand, I should be past Level 2 but psychologically, I don’t think I am. I can easily afford a meal at most restaurants. Even an occasional meal at a restaurant that would cost 3-figures per person should not faze me. However, I’m the sort that will consciously think about the price of the item on the menu and wonder if it’s worth it. Most times, I end up with something that’s on the cheaper end on the menu.

It could be me being cheap or maybe it’s me not wanting to fall into the situation where I regret paying S$20+ for a steak that turns out to be mediocre. I’d rather go for a S$10 piece of grilled chicken thigh that turns out good.

At some point, I think I’ll end up past Level 3 but I suspect at that point, my mental habits will be so ingrained that I still end up choosing grilled chicken.


4 things Country Garden’s hiccups tell us about developers (Property Soul)

The ‘Forest City’ project in Johor Bahru was pretty big news when it was first launched. I was pretty skeptical of it from the beginning because ‘China + Malaysia + Property’ make for odd bedfellows.

Vina Ip of Property Soul makes very good points about the whole project. The amount of research she does for each post is incredible and I think this post of hers summarises everything wrong with Country Garden as a developer.

The parts of her post about how quick they get a project off the ground and completed is scary. If a private housing project in Singapore takes something like three years to get completed, it’s very difficult to imagine it being done quicker in another country unless serious corners were being cut.

The fact that project managers were being incentivised to get projects launched quickly also shows that the emphasis was on quick turn-around rather than on other aspects like safety and quality. At a corporate level, it may also signal how desperate their cashflow needs are.

At this point in time, I’m pretty sure it’s safe to say that you shouldn’t put your money on developers that profit due to weak jurisdiction.

Welcome to the end of the week! I’ve been busy working on some personal coding projects which explain the light postings.


A $25,000 robot barista serves 120 cups of coffee an hour — and it is part of a growing ‘robot revolution’ that could kill millions of jobs (Business Insider)

Ok, you have to forgive the doomsday-esque headline but automation and robotization is probably what will drive the next industrial revolution. Just like the last one, lots of jobs will be lost and lots of new ones will be created.

If a $25,000 robot can serve 120 cups of coffee in an hour, that investment will easily pay off in something like 6 months? The human reaction will of course be to come up with something that this robot won’t be able to do and charge it for twice or three times the price. The losers will of course be the generic baristas working for minimum wage and producing a standardised product.

This situation is probably applicable across many other industries where there are larger chains who have the financial capability to be the first adopter of such technology.


The relationship between financial or real assets is at extremes – It can be exploited (Disciplined Systematic Global Macro Views)

I’m not so sure it can be exploited but it’s worth noting the chart in the post about how the price of financial assets (large-cap stocks and long-term government bonds) are much more expensive today relative to real assets (commodities, real estate, collectibles).

Main takeaway from the post:

Financial assets are at all time highs versus what is considered real assets; commodities, real estates and collectibles. Real assets usually exploded in relative value during periods of inflation and war when more resources are needed or when commodities are scarce relative to money. The flow of money has moved to financial assets especially those that are related to technologies that do not need capital. The flow of excess money to financial assets and their expected future cash flows exceed demand for real assets that do not immediately generate return but have to be transformed for consumption or usage.

I completely agree about how money has been flowing to tech and so Facebook’s massive drop this week shouldn’t have come as a surprise to anyone. Could I have predicted when it would happen? No. But no one should have been surprised that it happened.


How a Falling Australian Property Market is Creating Many Negative Equity Property Owners (Investment Moats)

Kyith over at Investment Moats posted his thoughts on an article about the Australian property market. The funny thing is I also read an article (I think it was shared on Facebook) about how regulators in Australia tightened lending and how that has lead to the poorer borrowers being unable to refinance at lower rates as their loan-to-valuation ratios have now dropped.

Basically, poorer borrowers in Australia are finding it difficult to refinance as banks can now only lend them less on the value of their home. Since poorer borrowers would have taken a higher proportion of the home value as a mortgage, they can’t switch banks or mortgages despite the lower rates because of the now lower loan-to-valuation ratio imposed by the government.

If we add the situation described in Kyith’s article, then the Australian housing market is in for some trouble. The funny thing is how this article comes after our own regulators have tightened the reins on the Singapore property market. So much for Singaporeans who believe in the myth that investing in property is a one-way street. Very often, they forget that in the short run, cycles matter and over the long run, property prices increase at the rate of inflation. Furthermore, the cost of maintenance and property taxes mean that investing in property takes some work.

Property investors have to remember that the lure of property as an investment class is in the leverage one can take. Without leverage, it only gives shitty returns.

July’s almost over! Here are some reads to make your week better.


Canada’s Secret to Escaping the ‘Liberal Doom Loop’ (The Atlantic)

Ah, Canada. We visited the Niagara Falls area, Toronto, Montreal and Quebec on our honeymoon and I have very good memories of the country.

The article provides a commentary on Canada’s much greater propensity to accept migrants. A nice overview of Canadian history as well as their approach towards multi-culturalism.

Singapore is also supposed to be a melting pot of cultures but I’m too sure about whether we’ve become more or less accepting of immigrants over time. I suspect we’ve become less welcoming towards migrants over time.

Maybe we need to take a leaf from Canada’s playbook on this.


Understanding The Yield Curve: A Prescient Economic Predictor (Financial Samurai)

The Flattening (The Irrelevant Investor)

These ones are for the economics/investing crowd.

Of late, the yield curve has been brought up a lot. This was one of those things that I struggled to understand in university but now that you know it, it’s so trivial.

Read Financial Samurai’s piece for a primer on what an inverted yield curve shows us and read Michael Batnick’s piece for some analysis done on yield curves. What’s particularly instructive is the chart from oddstats about how the S&P500 was up anywhere from 20-70% in the 500 days following where the yield curve is now.

Unfortunately, 500 days is a long time and I suspect that many people will not be able to live with the drawdown that comes with a recession. As always, you can’t react to things when a recession or a bear market comes, you already need a plan before these things happen.


The topsy turvy logic of Trump’s trade tirades (Tim Harford)

One more for the econ crowd. Tim Harford always makes current economic affairs so simple to understand. If I read his books while I was in junior college, I might not have been so bad at economics.

Anyway, go read his piece to realise how stupid Trump is with his war on trade.

The same is true for Mr Trump’s new steel and aluminium tariffs. Ostensibly an attack on perfidious foreigners, the tariffs hurt any American who directly or indirectly uses steel or aluminium, all 327m of them. And by obstructing US imports they obstruct US exports, too.

And also some American’s obsession with the trade deficit:

There is the US trade deficit. This is the result of the world’s insatiable desire to invest in US assets, coupled with the American consumer’s preference to spend rather than save. It has little to do with tariffs on milk powder or anything else.


I have to confess. I haven’t been catching up on my online reading this week. Been trying to get through “Money Changes Everything” by William Goetzmann. It’s a fascinating read as you realise how modern civilisation wouldn’t have been possible without finance. Another way of looking at it is that finance shaped modern civilisation and basically, a big part of the way we live today is because of finance.

Anyhow, here are some other things you could catch up on.


The Nine Essential Conditions to Commit Massive Fraud (The Reformed Broker)

Speaking of financial history, Joshua Brown gives a fantastic overview of how financial fraud is committed. Against the backdrop of the 1920s and using the profile of Ivar Krueger, Joshua runs through each step, illuminating it with examples from Kreuger’s life (which is detailed in a new book) and other more recent examples such as Enron, Madoff and Elizabeth Holmes.

If you read only one thing on this list, this should be it.


Bloomberg: The Good and the Bad of Retirement Saving (The Big Picture)

Joshua Brown’s colleague, Barry Ritholtz provides commentary on Vanguard’s annual review on retirement savings in America. It’s shocking to see how different the average and median amounts in defined contribution retirement plans are. Despite the positives in this year’s review, one major point he makes is that Americans are still not saving enough.

I suspect we might find the same (albeit to a lesser extent) here. CPF contribution rates are high but most Singaporeans spend a good chunk of it on housing. I’m not sure the minimum amounts in the Retirement Account (RA) provide for an average standard of living.


Policies, politics and paranoia: Singapore Democratic Party chairman Paul Tambyah goes On the Record (Channel NewsAsia)

I don’t usually like to post stuff on politics and I’m surprised that CNA even got someone from the SDP to present their views. Dr. Tambyah makes some very good points in his interview and I suppose if Dr. Chee was smart enough, he should let Dr. Tambyah take over completely. Dr. Tambyah’s image is much more appealing one than Dr. Chee’s. Having said that, being too much of a nice guy may not be useful in politics? I don’t know.


Markets in this region have been tanking and the STI has fallen below the 200-day EMA to the point that it’s about to pull the 50-day EMA below the 200-day. While this isn’t a perfectly reliable indicator in itself, this could present a good buying opportunity if this trend continues for another 6-9 months.

Anyway, if you’ve had a tough week, here are some reads to make it better.


‘Stingy’ millionaire donates S$3.35 million from S$20 million fortune to charity after his death (TODAY)

I’ve written about people like Agnes Plumb and Ronald Read. Finally, there’s an example from our local shores. Mr. Low Kum Moh was a sub-accountant who was born into a family of fishmongers. The secret to his wealth? Frugality and investing in the stock market over a long time-frame. This is pretty much the same story as the other ones I’ve featured here. The point of it all is that great fortunes can be made by people that most would consider very normal. The trick is to find a strategy that works and keep plugging away at it.

Which brings us to the second read.


In Praise of Incrementalism (Rebroadcast) (Freakonomics)

Freakonomics was the book that convinced me that economics could be interesting and that probably saved my university life.

In this episode of their podcast, they make the point that lots of progress in this world are based on incremental progress. The problem with most of us is that we tend to view great events or inventions as if they happened miraculously.

In particular, I love this example that their guest, economist David Laibson points out:

LAIBSON: One has the impression that it’s impossible to save enough for retirement — and to a certain extent, it is impossible if you start at age 50. But if you start early in life, and every year, you contribute let’s say 10 percent of your income, and maybe there’s an employer match, so now we’re up to maybe 15 percent, and you invest that savings in a diversified mutual fund, stocks and bonds, and you have low fees, and you keep going at that year in and year out, and you don’t decumulate prematurely — it’s amazing how that process produces millions of dollars of retirement savings. So it’s kind of hard to imagine how you go from what seems like a little bit of money each year to being a millionaire but that’s exactly the way it works when you work out the math.

Instead, most people often aim for that lottery ticket like buying bitcoin. Most people who do this put very little at the beginning (like a lottery ticket) and when it starts to pay out in a substantial way, they then proceed to bet the farm thinking that what has happened will go on indefinitely.

Unfortunately, this is almost always precisely the time when things start to go bad. Think of someone who bought bitcoin at $500 or $1,000. After seeing the price of bitcoin go to $10,000, they feel like a genius and proceed to place even bigger bets. Well, the bet may have paid off temporarily but look at how it’s turned out.

Which brings us to…


Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero (Bloomberg)

I’ve been writing about the problems with Cryptos since late last year (see here, here and here). To be honest, I’m not as pessimistic about crypto now as I was last year. Of course, there’s nothing fundamental to base my thoughts on but buyers are surely not as euphoric about cryptos as they were late last year.

I suppose the article compares the crash in cryptos to the crash in the tech sector during the dot-com era as prices in both situations have nothing fundamental to support them but I would argue that bitcoin is in a worse situation because, in case of the dot-com stocks, you could at least see if things were getting better based on a turn-around in cashflows and profits.

For bitcoin and cryptos, you have to track whatever these cryptos are meant to replace and see if those things are getting replaced at all.

Anyway, here’s the million-dollar picture from the article above.



Have a great week ahead!

It’s that time of the week again!

Get yourself a cup of tea and get ready to get smarter before the week starts.


Social Security benefits buy 34 percent less than in 2000, study shows (CNBC)

The World Isn’t Prepared for Retirement (Bloomberg)

This week, I wrote a post which touched on financial literacy. The sad thing is that many people around the world have very little idea about things like inflation or compound interest.

Unfortunately, these are exactly the things that you need to think about once you no longer have a source of income. Many people also think that they will have a source of income until they reach the official retirement age but a downturn in the economy or changes to the industry can easily mean that a person loses his/her job during their prime working years.

To see how you stack up on the financial literacy scale, go and take the little test included in the Bloomberg article. It’s only three simple questions and frankly, I’m surprised that anyone can get it wrong.

The CNBC article highlights the problem with our CPF. CPF works wonders in terms of forced savings and compounding that sum into something much more. The problem is that once CPF starts paying out, inflation isn’t really factored in. It’s not really that different for most insurance products. Whole life plans and annuities often don’t adjust for increases in the cost of living.

Unfortunately, as the article and even the statistics in Singapore (Table A.1 in the document) show, inflation for medical costs tend to be higher than what the CPI shows us. And if you think about it, this is precisely what retirees and seniors should be concerned with.


Bull Markets & P/E Multiple Expansion (The Big Picture)

Ritholtz has a post commenting on research done by UBS. The research shows how bull markets tend to be a function of P/E multiple expansion. The takeaway is basically how bull markets are driven by (over?) optimism as investors re-rate stocks to deliver faster than expected growth.

In other words, bull markets tend to be driven by a narrative on investor confidence due to the economy doing well while bear markets get punctuated by cycles of optimism and pessimism.

Take the finding/theory with a pinch of salt though. After all, if these things were so predictable, then we’d all be rich.


Guide to Dividend Withholding Tax for Singapore Investors (Financial Horse)

Finally! Someone has come up with information on withholding tax on dividends and this clarifies things up so much. I suppose Financial Horse’s training as a lawyer helps because all the legal jargon and heaps of information just confuses me. The table that shows the tax rates for other countries helps so much as well. Useful information to know if you invest in overseas markets.


The Story Of Agnes Plumb: Dividend Millionaire (The Compound Investor)

Another unknown millionaire story. Same themes from all the others – money compounded over long periods, frugal lifestyle but the twist in this story is that she actually inherited the stock from her father and subsequently did nothing.

Nothing! She sat on her thumbs and just waited, and waited.

You may argue about the wisdom of not spending all that money but you cannot argue about the wisdom of how compounding is a powerful force. As my wife’s favourite bear said,

“Don’t underestimate the value of Doing Nothing, of just going along, listening to all the things you can’t hear, and not bothering.”

As for Plumb, she may not have spent a lot of the money on herself but she left a lot of it to charity and if you ask me, that’s a lot of good done for the world.


I’m only a dad to my cat but my own father showed me the extent a dad would go to for his children. The best (and probably, worse) habits I developed came from observing what my dad would do and I wouldn’t have it any other way.

To all dads, Happy Father’s Day!

Now, here’s two light, but important, reads to keep you busy:



As I tell my students sometimes, “Common sense isn’t so common.”

There are things in life that are counter-intuitive and if you often fall prey to things that require counter-intuition, then perhaps the best solution is to read widely and make a list of situations that defy common sense.

Mark Manson’s post is particularly instructive on how certain situations require us to do less, NOT more, in order to achieve our desired outcome. Unfortunately, it’s a lesson that even the best and brightest often fail to understand.

Do yourself a favour and understand it.

Sometimes, less is more.


Your Risk Tolerance Is An Illusion: Wait Until You Start Losing Big Money (Financial Samurai)

It’s easy to say that you’ll remain invested even when things go south or to understand that most people can’t time the market, or that you’ll start investing in a big way when markets are down 30%.

But until you actually experience a downturn in the markets, you won’t know what you’ll actually do. I know, because I’ve also felt this way in ’08-09, 2012, and more recently, in 2015-2016.

I don’t know when or how deep the next downturn will be. All I know is I have a better process for the next time.

The post on Financial Samurai should give you some inspiration to start thinking about how you might behave during the next downturn. With that, you can start thinking about your investment process.

The Trump-Kim summit is in town! Before you get caught up with all the bread and circuses, read these:


No, Your iPhone Does Not Make You Wealthy (The Big Picture)

Barry Ritholtz makes a very good case for how having things today that people centuries ago didn’t have is not going to make a very convincing argument for people who don’t feel wealthy. Unfortunately, I don’t have a Wall Street Journal subscription so I can’t read the article that Ritholtz mentions in his post but I buy this line in Ritholtz’s post:

We have deflation in the things we want, but inflation in the things we need.

So next time if someone tells you that life is better now because you now have iPads and stuff, please tell them otherwise.


Income Growth: 1980 to 2016 (The Big Picture)

Another one from Barry Ritholtz. This one cites a study that shows how inequality has progressed through wage growth for different income groups. No surprises here. These points have been well-known and established for some time now.


Commentary: Can education fix inequality in Singapore? If not, what can? (Channel NewsAsia)

On the home front, politicians have been putting inequality at the fore in their recent speeches. I suspect this is a result of BN losing the elections in Malaysia and therefore our government leaders are all kind of worried that the populist fever will infect our shores. This gem from Channel NewsAsia highlights the main issues with inequality in Singapore and what to do about it. You may disagree with what they say but do take a look.


The Art Of The Good Life #7: The Ovarian Lottery (My 15HWW)

Last but not least, Mr. 15HWW makes a good point that those of us fortunate enough to have won the ovarian lottery need to recognise our good fortune. In the vein of a survey done on social mobility in the USA, he raises the following thought experiment:

How much of your income would you give up to be born to parents who stay in a freehold landed house?

The answer for most people is that they probably would trade quite a fair bit of their income in order to trade for the wealth that comes with parents who can afford a landed property in Singapore.

I would caution that if you wish to do the trade, you should be aware of the following:

  • Not all landed property is equal. Location matters. A lot.
  • It depends on how many siblings you have. More siblings equal more competition.
  • It also depends when you inherit the place. The longer you have to wait, the worse the trade.

Obviously, I’m joking (ok, half-joking) about the points I’ve made but the crucial thing is that being born to parents who own and stay* in a freehold landed house has a higher probability of conferring significant advantages to their children. I’ll do a post on this in time to come.


*Own and stay is important. We have a joke within our family about how my dad was ‘conned’ because he assumed that my maternal grandfather owned the house that my mother’s family stayed in when they were dating. It was only later that he realised that it was my mother’s aunt who owned the house and that my mother’s family were merely fortuitous recipients of her aunt’s charity.

Another week’s come and gone. Lots of finance/investing related reads this week. Also, a good look at Tesla and the world’s plastics problem.

How I save >$150k before 28 – updated tips (Simple Budget, Simple Life)

I like how young people living in a country with one of the highest costs of living still manage to achieve such high net worths relative to their age. She offers some tips in this post and throughout the rest of the blog. It’s a good read for those who can’t get over the mental block of saving enough money so that you have six figures in your bank account.

Having said that, this is like clearing level 1 of the video game called ‘Financial Independence’. if you stick to the same tips that the blogger provides, you’ll find yourself trapped in the hell called “work-save-spend”. Plus, tracking budgets and comparing tiny differences in savings account deposit rates are not really the smarter way of doing things.


Ignore the Millionaire Mindset; Try the Billionaire Behavior Set Instead (The Big Picture)

An awesome post. I’m going to print this out and stick it on the wall of my cubicle. There’s a saying that goes something like this, “If you reach for the stars, even if you fail, at least you’ll land on the moon.” So, if you’re trying to get wealthy, aim higher and at least if you don’t get there, you might not be too far off.

That aside, those seven points are things ANYONE should follow. I don’t know if these were the things that made billionaires their billions but I think these seven points are critical ingredients for living a good life.


Price Is What You Pay; Value Is What You Get – Nifty Fifty Edition (Fortune Financial)

This won’t come as a surprise for anyone who’s trained in the ways of fundamental investing. Having said that, it’s always nice to come across case studies of how valuation matters. The Nifty Fifty is something many new investors are probably unaware of but it goes to show that unbridled optimism pushing valuations high is an ever-lasting feature of financial markets.

My only quibble would be whether using P/E alone is a good measure of value. Also, the table seems to show that having a long holding period (see the 30- and 40-year returns in the post) mitigates the dangers of buying at high valuations. I guess the main thing would be whether most investors have that long a time horizon.


Why is Elon Musk raging at “big media”? Because he’s finally being called on his tall tales. (Vox)

Speaking of high valuations, Tesla and Elon Musk have been in the spotlight recently. Compared to a few years ago, things aren’t so positive this time. When Tesla IPO-ed, I remember reading about some investors who were planning to keep buying Tesla stock for the foreseeable future as there was so much hype surrounding Elon Must and all his various ventures.

In case you haven’t realised, Elon Musk is no Jeff Bezos who’s trying to upend something as simple as retail. Musk’s ventures are as capital intensive as it gets and if you’ve read Jeremy Siegel’s “The Future for Investors“, you’ll know that most companies with high CAPEX don’t tend to produce very good returns.

During times where credit is loose and things are rosy, companies like Tesla won’t have problems raising cash and blowing it on big dreams as they’ve done. In fact, for the last couple of years, there’s been a lot of money raised by startups.

These companies then race against time to prove themselves. It’s either they succeed in producing the outsized returns with a viable product that becomes widely adopted or investors lose patience and credit starts to tighten.

Good read all around especially if you’re a fan of Tesla and Musk.


The global plastic problem is even bigger than you think (AXIOS)

I’m no expert on the environment but I think if you’re human, then you ought to care. Recently, there’s been this fad about buying metal straws so that we can replace plastic straws and while I’m skeptical about fads, I believe the excessive use of plastics is going to a problem. After all, if plastics end up in the stomachs of the seafood that we eat, then that plastic is surely going to end up in our stomachs as well.

Singapore is a land-scarce and oil-scarce country so it makes even more sense to reduce our use of plastics so that we don’t have to find land to bury our plastic waste or contribute to the global demand for oil.