Archives for category: Best Things I’ve Read

I guess this should be titled “Best Things I’ve Read All (Two) Weeks” because I didn’t post last week due to reservist. Reservist is a pain but…No buts. It’s a pain.

 

books on bookshelves

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Why The Best Predictor of Future Stock Market Returns is Useless (Of Dollars and Data)

I was quite excited to learn about this indicator. The indicator in question is the American Association of Individual Investors’ Asset Allocation Survey. Apparently, selling out of stocks to get into 5-year treasuries brings about better returns with less drawdown. The problem, as highlighted in the article is lack of outperformance over a period of easily 2-4 years.

However, I’m adding it to my list of things to watch because, while I believe market timing is futile, it’s a good psychological indicator to know when investors are optimistic (i.e. they move a higher proportion of their portfolio into equities) and when they are pessimistic.

How To Stay in the Game (A Wealth of Common Sense)

A good reminder that it doesn’t matter even if you have the best strategy if the strategy includes the risk that you get wiped out. I can’t even count the number of wise people I’ve read that have cautioned against the use of excessive leverage because of the double-edged nature of leverage.

Here are two of the best:

“The market can stay irrational longer than you can stay solvent” – John Maynard Keynes

“My partner Charlie says there is only three ways a smart person can go broke: liquor, ladies and leverage,” he said. “Now the truth is — the first two he just added because they started with L — it’s leverage.” – Warren Buffett

Corporate debt growth has exploded – The added macro shock sensitivity creates real risks (Disciplined Systematic Global Macro Views)

I’ve been reading Dalio’s and Marks’ latest books and their description of credit cycles are probably as clear and accurate as it gets. Guess what happens in the late part of the credit cycle?

Anyway, head on over to the link for more details on U.S. corporates.

5 REASONS MY PARENTS ESCAPED THE LOWER CLASS (AND NO, IT’S NOT HARD WORK) (THE GIVE AND GET: FOR FINANCIALLY FEARLESS SINGLETONS)

I read this via Minimalist In the City. I think most of the points made are extremely sensible and should be instructive for most people who want to live a reasonably good life.

My only gripe is whether the point about “being entitled” is accurate. I’ve seen people who don’t have much who hustle hard too. Maybe even harder than people who have more. Could it be a case where the people that hustle have a greater chance at social mobility and therefore, we sometimes confuse the cause and effect – that middle-class people hustle more?

 

Column: This is what happens when you take Ayn Rand seriously (PBS)

I must confess that in my undergraduate days, I believed strongly in the all-powerful nature of the free market. In recent years, I’m not so sure. After all, the free market can produce imbalances in market and political power that eventually cause itself to function less effectively than what is described in economics textbooks.

The Global Financial Crisis was a good example of how free-market ideals led to an asset bubble in the housing and banking sector which eventually imploded unto itself. The eventual salvation was a massive intervention that free-marketers would scoff at.

I’m not saying that the free market doesn’t work. What I’m saying is that we need to be careful in prescribing the free-market as a cure for everything. What’s important is making sure that market participants have the right incentives and are subject to the right checks and balances in order to ensure outcomes that are conducive for society.

I know. Easier said than done.

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What a difference a week makes! Markets have rallied strongly to end September on a positive note. To think that just one week ago, we were hovering somewhere near lows for the year.

This shows us how fickle markets can be.

books on bookshelves

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Undervalued Financial Advice (A Wealth of Common Sense)

The advice in the post above may not seem like financial advice but it is. Coming off the back of the whole “monk vs. warrior” thing that had been the focus on the Singapore financial blogging community last week, the advice in the post above seems particularly relevant.

 

Uber drivers and other gig economy workers are earning half what they did five years ago (recode)

No surprises here.

What’s reported in the article is also happening on our sunny shores. The only reason why so many people signed up to be Grab and Uber drivers at the beginning was because of the money they could make.

Unfortunately, the money that drivers could make was not just coming from the fares that they earned but it was partially subsidised by the respective companies blowing through the money that they had raised from investors. At one point, I remember reading about how Uber burned through $330m in one quarter.

Now that funding’s getting tighter (remember when the Fed started accelerating their rate hikes?), guess all these so-called unicorns are going to find it harder to find cash to burn through.

So, little wonder those working for them are going to feel the brunt of it.

 

BBRG: Iceland Found Another Way to Clean Up a Financial Crisis (The Big Picture)

Full story on the Bloomberg page in the link above but go read it to understand how an economy works through a financial crisis. Alternatively, you can go check out Ray Dalio’s new book (Psst…It’s free!) which gives a good framework for understanding these crises and how to deal with them.

 

FOMO in China is a $7 billion industry (Marketplace)

Finally, we come to China.

This is insane. I never knew podcasting was an actual business in China. If you see what’s happening in the western world, podcasting is merely an avenue for someone with an online presence to make his/her presence felt even more greatly. There’s already so many people giving away what is essential advice for nothing.

I guess this is what happens when you have less competition. After all, many people in China don’t speak English well enough to listen to podcasts. Furthermore, cultural differences might be great enough to exploit as a niche market.

I’m pretty sure if enough people speak good enough Mandarin, Chinese people won’t be paying for podcasts.

We’ve made it through another week!

September’s almost over which means we’ll be heading into 4Q soon.

books on bookshelves

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The Housing Bubble Burst All Over Reality TV (The New York Times)

This is interesting because what we see on television reflects what’s going on with the world. This article shows how HGTV’s programmes (which I happened to watch a lot of while it was still on Starhub) changed as the housing bubble inflated and then popped.

The same could be said of how many crypto-related seminars and talks were being promoted last year as compared to this year. Lately, what I’ve been seeing is a lot of ads on Stock Trading which is probably a reflection of the U.S markets doing so well since last year.

 

Growth and well-being: policy should not be based on GDP alone (Microeconomic Insights)

Very economics-heavy post on the relationship between GDP per capita and ‘Welfare’. ‘Welfare’, in the article, encompasses many factors such as inequality, leisure, and consumption.

Singapore gets a few mentions in the article. From the mentions, it seems that Singapore’s growth model has remained the same since the 90s — lots of growth through investment and this comes at the expenses of leisure and consumption.

 

Paul Krugman’s latest opinion piece spells out what everyone’s been feeling about the markets — most of us can’t see any particular sector blowing up to the point of crippling the world economy.

Krugman also shows us why it’s important to study history because the recession of the early 90s was one that didn’t have a proximate cause but rather, it had many small causes.

I also like how Krugman cites Minsky as a source for his hypothesis. Minksy was overlooked by almost everyone until the Global Financial Crisis hit. I tend to agree with Krugman’s views. The world today is awash in cash that is flowing towards moonshots and we know that most moonshots don’t work out.

In other words, much of the money going into all the fancy new ventures won’t pay off. Fortunately, it doesn’t seem that people are using borrowed money to bet on moonshots. Much of the moonshots are funded by people who have money to lose. The question right now is whether the money that they can lose is due to a booming stock market and economy? And if so, then what happens when the economy starts to slow down?

Hold on, hand tight, and stay around for the ride.

 

The Psychology of Playing the Lottery (A Wealth of Common Sense)

An excellent piece by Ben Carlson that explains why poor people make poor choices. From the Bloomberg piece cited in the article, it shows that poor people spend more on the lottery than rich people. Gambling is a big thing in Singapore but I’m not sure if there are statistics that show whether poorer people spend more on the lottery than the rich in Singapore.

The good news, cited in Carlson’s article, is that someone’s set up a lottery to help poor people save more. Saving money in the account leads to a participation in a lottery. Unfortunately, the return on savings in almost zero for those that don’t get the huge payoff but I suppose it’s better than having them spend money on something that is statistically going to return less than zero in the long-run.

Maybe this will be the new model for Singapore Pools?

We’re into mid-September! It’s been raining a lot here in Singapore and the region’s experiencing a host of natural calamities (earthquakes in Japan, Super Typhoon in the Philippines and Hong Kong). Let’s hope we get better weather in the weeks ahead.

Meanwhile, here are some reads to start your week.

books on bookshelves

 

 

For Low-SES Students, Not Focusing on Grades is an Impossible Dream (ricemedia.co)

It’s PSLE (Primary School Leaving Examination) season here in Singapore and this is an annual affair that parents and students both love to hate. The PSLEs are a nationwide examination that primary school students in Singapore take when they reach Primary 6 (usually at age 12) and the score they achieve on this exam, for most students, determines the school that they will be able to attend for their secondary education.

Many people hate it because doing badly on these exams usually mean getting placed in a school that steers you towards a vocational kind of course at the Institute of Technical Education (ITE).

So, the biggest bugbear for most parents is that one exam at the age of 12 pretty much determines whether you become an accountant or an electrician. Of course, there are ways to go from the technical stream to the academic stream but imagine the sort of associated stigma you have from doing much worse than your primary school classmates or relatives in the same comparison group.

It’s because of this that a group of parents has come up with a movement called “#lifebeyondgrades” which is trying to show that what you end up doing as an adult doesn’t really depend on your PSLE score.

Unfortunately, as the ricemedia article argues, being able to do what you like with your life is a privilege of the middle-class or well-to-do. In Singapore, the way out of poverty for most people still lies in education. After all, that’s why the government likes to highlight the fact that some of our 4G ministers came from relatively humble backgrounds.

I’m torn on this.

On one hand, as a teacher, I can understand why parents want there to be less emphasis on grades and more on learning. In an ideal world, I hope for the same thing as well. On the other, I come from precisely the sort of background that the article calls “privileged”. I didn’t have to worry about not doing so well in school precisely because I had the family safety net to depend upon. I eventually did well in school but that’s another story.

Read and reflect.

 

A lady vanishes – In China, a movie star disappears amid culture crackdown (Channel NewsAsia)

In other news, Fan Bing Bing is rumoured to have been held captive by the Chinese Government for tax evasion.

I have absolutely no problem with governments going after their own citizens and charging them in the court of law for committing crimes but to have someone disappear is the stuff of dystopian regimes.

The Chinese government is even framing this as “cultural clean-up” with the Beijing Trade Association for Performances saying this:

the body would “purify” the city’s entertainment and performance sector and guide artists towards “core socialist values”.

Of course, China is no stranger to suppressing political dissent but of late, they seem to be a little more heavy-handed than usual. I’m pretty sure there are macroeconomic reasons like the trade war with the U.S. and the U.S. raising interest rates that are causing the slump in Chinese markets but doing things like this also hurt the image of China as a place that’s open for business.

Right now, China seems to be a place where investors better beware because the government (or is it just President Xi?) can easily come down hard on you at the turn of the hat.

 

The real Goldfinger: the London banker who broke the world (The Guardian)

Some financial history.

This is fascinating because the Gold Standard is from a bygone era and to many students of modern economics, the thinking is that the Gold Standard, just like communism, was abandoned because it didn’t work.

I’m not saying that we should return to the Gold Standard but if you think about it, some things were abandoned because they worked well until they didn’t. If that’s true, then there must also be some things that we do today that are a relic of the past and maybe it’s time to examine whether their time is up.

After all, some practices are a product of history. For example, the QWERTY keyboard layout came about because it actually makes typing slower and that was necessary when we used mechanical typewriters so that the keys wouldn’t get jammed.

What other things are there today that we should rethink?

Off the top of my head, I can think of a few:

  • The 42-hour workweek
  • Welfare being a dirty word
  • Mandatory retirement age
  • The PSLE

Let me know your thoughts in the comments below.

It’s another week! Markets were generally weaker this week and for the STI, we reached a PE10 earnings yield of 8% (intraday, at least) which is making me salivate a little. I managed to pick up Rutger Berman’s “Utopia for Realists” (see the general idea in his TED talk) and Dr Pippa Malmgren’s “Signals”. Both have been fascinating reads.

 

books on bookshelves

Read, read and read some more.

 

 

Soaring bankruptcy rates signal a ‘coming storm of broke elderly,’ study finds (abc News)

This is in the U.S. but we should expect similar economic forces to come our way as the boomer generation starts to retire.

However, PAP is as PAP does. Expect healthcare spending to increase and that no elderly folk will be left behind due to medical bills. It’s not good for politics to appear uncaring, especially to the first post-independence generation of the country.

Of course, the next generation must be prepared to shoulder the burden of greater taxes on healthcare spending. Either that or the folks at Temasek and GIC better work much harder.

 

GLCs and patronage: Understanding Mahathir’s position on HSR and ECRL  (TODAY)

It should be no secret for those who have been following Malaysian politics but I suspect that for many other people, they fail to see the connection between personas and the intricate links between them and various businesses.

Of course, it also helps Mahathir to have Singapore be a distraction for his own political purposes. To those that see Mahathir leading Pakatan to victory over BN as a good thing, I’m afraid they may have counted their chickens before they’ve hatched.

To the Singaporeans that wish for the same…lmao. It’s practically like how a big enough majority in the U.S. voted Trump in because they felt Hilary Clinton was more of the old order. The problem is that Trump’s not necessarily going to do a good job.

In some ways, I fear the opposition in Singapore is fairly inadequate to operate on the bigger stage. Despite what Low Thia Kiang said in 2017, my opinion is that there is currently no alternative to the PAP.

 

How to retire in your 30s with S$1.37 million in the bank (TODAY)

Ok, enough of the political links. I’m pretty surprised that a local paper chose to publish an article like this. It’s a U.S. story but it looks like the local FIRE movement may gain some more traction with this.

I’m pretty excited to see if more and more stories of Singaporeans retiring early will start surfacing. After all, Singapore is one of the most expensive places in the world to live in so we have that handicap against us.

However, if retiring rich and early is doable in a place like Singapore, then it can be anywhere else in the world. The math behind this is simple and well-documented so it’s a matter of picking your target and executing well.

The biggest thing I’m looking forward to when I quit my job is doing the things that matter most to one’s well-being. I would bake more bread, cook more, maybe try growing my own food, work out more and sharing the message that there’s more to life than doing mundane things.

Don’t get me wrong. At least my job isn’t a bullshit job but more than a few aspects of it is definitely bullshit which is done in order to satisfy auditors and to help senior management cover their asses when things go wrong. And you can’t blame them because all it takes is one person to make a mistake (real or perceived) and senior management gets questioned about their processes. And senior management, like the rest of us, have (bigger?) mortgages to pay and mouths to feed. It’s much simpler to make everyone do some bullshit work than risk their five-figure pay.

We’re into September! We don’t have seasons here in Singapore but September is always a special month for personal reasons.

Hope your week’s been good!

books on bookshelves

Read! Read! And read some more!

 

Why 35 to 50 Year Old Singaporeans Should Value Financial Peace More (Plus 6 Tips to Achieve More Financial Peace) (Investment Moats)

Fresh from the oven, Kyith over at Investment Moats has a piece that I think will resonate with many Singaporeans. It talks about how Singaporeans in their late 30s to 40s tend to find themselves in a precarious position if they get laid off in the private sector.

To be honest, it’s difficult for me to imagine the kind of uncertainty about job security that people in the private sector face. Job security in the public sector is such that I have colleagues who have stay with the organisation for 30-odd years. Those that choose to leave normally do so because greener pastures lie elsewhere.

With that sort of job security in the public sector, it’s very easy to plan for investments and the growth in net worth tends to be fairly predictable over time. Any of my colleagues that fail to retire wealthier than the average Singaporean must have either had some sort of huge burden due to medical costs or due to profligate spending*. Once again, this is the beauty of accounting for human capital in your investment plan.

 

Nose breathing in yoga may calm the mind by slowing brainwaves (NewScientist)

Full article hidden behind a paywall but first two paras provides the gist of it:

Take a deep breath. In some forms of yoga and meditation, people are supposed to breathe in slowly through their nose. Now we may know why it’s helpful: nerves inside the nose start firing in a similar slow rhythm, prompting parts of the brain to do the same.

And in a test, people who did yoga with slow nasal breathing seemed to enter a deeper meditative state than when they did so breathing at the same rate through their mouths.

No secret here but breathing through your nose supposedly has many other benefits. A book that’s been cited quite often on the supposed benefits of this is “The Oxygen Advantage” by Patrick McKeown. I haven’t read the book but I’ve been trying to consciously breathe in through my nose whenever I can.

What’s Your Type? The Myers-Briggs Test and the Rise of the Personality Quiz (The Ringer)

A review of the book that looks at the history of the Myers-Briggs test and how the test is mostly useless in terms of determining one’s personality.

I found this interesting not because of the test itself but that the education system is paying lots of money to hire consultants that base their training on some version of this personality test.

If it’s all so bogus, then what the hell are we paying them good money for?

 

Show me the incentives and I will show you the outcome (The Reformed Broker)

Josh Brown has a post that builds on how perverse incentives leads to perverse outcomes. There’s an example buried in the post about how a financial advisor in the U.S. ‘churned’ a client’s account to generate commissions (presumably also under the pressure to meet the sales quota) but the post is mostly about how Mao led a country towards the largest man-made famine in modern history. I have “Mao’s Great Famine” on my reading list after I’m done with “Utopia for Realists”.

I have more to say about financial advisors here in Singapore but that’s something for another time.

 

Notes:

*Profligate spending doesn’t just mean buying bigger houses or cars than they can afford. It could also mean the unnecessary spending on things kids’ tuitions, enrichment classes and so on. IMHO, those things are really unnecessary.

It’s the weekend! There was a public holiday, mid-week, in Singapore so this feels like déjà vu. Anyhow, here are my picks for the week.

 

coffee magazine

Some great reads to start your Sunday

After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors (New York Times)

I hate to say I told you so but…I told you so. (here, here and here for example. For a complete list, see here.)

It’s not surprise that some people have been burnt quite badly by the Crypto boom last year. Also not surprisingly, the ones hurt bad (i.e. relative to their income or net worth) are the ones who can least afford it. These are usually the least informed people in investing and when these people come onto the bandwagon, please get off.

That aside, I’ve noticed how many people are writing about their portfolios these days. It’s a trend that Financial Horse (whom I’ve never actually heard of until a few months ago but is pretty famous) has written this. I’ve been investing and writing about these things for almost 11 years now so I don’t think I qualify as new blood.

Of course, most of them write more about Financial Independence rather than investing per se so I don’t think that qualifies as a sign that we’re at the top. Valuation-wise, the STI is nowhere near exuberant levels.

 

A VISIT TO THE LAND OF A MILLION SHOKUNINS (The Food Canon)

While the subject of the article is about food, the idea of craftsmanship applies to all professions. I’m probably the worse person to tell you about craftsmanship because I’m impatient and lazy.

However, craftsmanship is probably going to be more and more important in the future. Why? Because machines are getting much better at doing the tasks that are routine and mundane. This isn’t a new phenomenon. Mechanization started with the industrial revolution and now, with A.I, I suspect it’s going to move into the realm of white collar jobs.

All the routine and mundane administrative jobs can (and should) go. I love the people in the admin department in my school but seriously, most of their job revolve around filing paper and “copying and pasting” stuff in emails.

The good education Minister actually has a point about emphasizing skills over paper qualifications. The problem is that most parents still have this mindset that qualifications matter. I suspect that that will change quite soon because we now have more and more people who are graduates (thanks SUTD, SIT, SUSS, and all the other private education providers!) but will not be able to find jobs that (1) pay well and/or (2) are interesting to do over a long period of time. It’s not really the fault of anyone but that’s what the world’s going to be like.

If I were a graduate today, I would make sure that I’m also a craftsperson of some sort. I might make good food, good beer, woodworking, an artist, photographer etc. Just make sure you’re really, really good at something that few people are good at. Just like this guy — The Secret Instagram Account Selling Black Metal–Inspired Biryani.

That said, damn…I need to make a trip to Hokkaido.

 

Steve Einhorn’s Bear Market Checklist (The Big Picture)

Recently, I wrote about having an investment plan. Part of the plan is having criteria to know when you should buy or sell. Howard Marks has also written about this before and I can’t wait for his new book to drop in October. Steve Einhorn, an investor and hedge fund manager, has this version which looks nice and simple to follow.

Long story short, it doesn’t look like we’re anywhere near a recession in the U.S. And I guess by now, we all know what that means for Singapore.

Been busy this week. I wish I had more commitment to code more. I’m trying to work on a property index data page for the local markets. This is based on my posts (here, and here) from some time back.

Anyway, here are the best things I’ve read all week.

 

 700 more days to FI (Minimalist in the city)

I chanced upon this blog from my google recommendations (thanks google!) and it’s nice to know how other Singaporeans are trying to achieve Financial Independence. I like how they’ve tracked and categorised every single expenditure (not something I would ever do because I’m just not that sort) and that’s given them a timer that they can countdown to.

The only flaw I see in their plan so far is this:

The objective is to have enough dividends generated from our stock portfolio to cover our annual expenses in 10 years time so that we could get out of the rat race and live on our own terms.

While dividends are much more stable than earnings, dividends are by no means constant. Companies can be forced to cut dividends or the tax code may change such that companies reduce the dividends paid. On the other hand, especially when you’ve already pared down to the bare minimum, expenses are pretty much fixed in the short-run.

We basically will be drawing on our savings account for our annual expenses and will get yearly top up from our stock portfolio returns dependent on the market returns and dividends for that particular year. The longest bear market for S&P 500 as illustrated below lasted about 2.8 years and the average bear market lasted between 3 months to 2 years. That’s the reason why we kept almost 3 years of expenses in savings and bonds to ride through any future bear market. This is to mitigate the possibility of force selling any of our stocks.

At the same time, most of our stocks are mainly in REITs and strong dividend paying blue chips which provides us with dividends even in a bear market like the one we personally experience during the 2008 financial crisis.

We could easily scale down our expenses with our minimalist lifestyle should there be prolonged bear market.

Lastly, we did not rule out going back to the workforce as we are highly employable working professionals. (I doubt we will reach this stage but just in case)

While I don’t dispute how long bear markets can last, I question the wisdom of depending solely on distributions from REITs and dividends from Blue-Chip stocks. Remember, distributions can get diluted and dividends can get cut.

No comment about point 2 but I suspect point 3 is a tad optimistic. Mid-career professionals who have been out of work for a while tend to find it hard to get re-employed. There’s always the choice of joining the gig economy (like being a Grab/Uber driver or a freelancer if their former professions allow for it.)

But otherwise, I think this couple is doing great! I hope the day will come when I share my own story as well. I’m not ready to share it yet but let’s hope that day will come sooner rather than later.

 

The Peter Principle is a joke taken seriously. Is it true? (Tim Harford)

What started out as a joke seems to have become truth in the business community.

The Peter principle states that “every employee tends to rise to his level of incompetence”. If someone is good at her job, she’ll be promoted into a job that demands different skills. If she’s good at the new job too, she’ll be promoted again, requiring yet another set of skills. One day, she will arrive at a job for which she is wholly unsuited, and there she will stick. Since when did a manager ever get sacked for anything?

Sadly, the Peter Principle seems to be born out by the research:

The authors of the paper discovered that the best salespeople were more likely to be promoted, and that they were then terrible managers. The better they had been in sales, the worse their teams performed once they arrived in a managerial role.

It’s pretty funny but real life seems to present lots of examples of this. My wife has been complaining about the management of her company and the Peter Principle seems to ring true for many of them. They may have been great at their previous roles but they certainly suck at their current ones.

Maybe the same’s true for the former SAF people at SMRT? =D

 

This Is How To Make Your Life Awesome: 6 Secrets From Research (Barking Up The Wrong Tree)

I’m pretty sure these findings are from same TED talk that I’ve seen before.

Anyway, a short summary of the 6 tips:

Avoid smoking and alcohol: Duh.

Years of education = good: Education seems to increase good habits (and being surrounded by smart, ambitious people never hurts).

Have a happy childhood: It’s huge. And surrounding yourself later in life with people who love you can help repair a difficult youth.

Relationships are everything: “Happiness is love. Full stop.”

Mature coping skills: Stop projecting and stop being passive-aggressive. Use mature defenses like humor when life gets hard. (Yes, immature humor is still mature coping. You’re welcome.)

Generativity: Build a good life, a well-rounded self and then give back.

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.