Archives for category: Economics

We’re heading into the second half of the year and here in Singapore, we’re finally going to see the Circuit Breaker (CB) measures being gradually relaxed. Fingers crossed that there won’t be another wave of infections so that we have to go back into CB.

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Don’t Expect A Quick Recovery. Our Survey Of Economists Says It Will Likely Take Years. (FiveThirtyEight)

Maybe we should be happy that a bunch of economists are predicting this since we all know that joke and weathermen, economists, and predictions.

This is the thing the bears hate most (The Reformed Broker)

I’m hardly the most optimistic person but Josh Brown has a point. If the market is all about the expectations game, then the bar for expectations right now are being lowered, making it much easier to beat expectations in the coming quarters.

Thinking About Investing and the Economy Post-Pandemic (Joshua Kennon)

I’ve followed Joshua Kennon’s blog for many years now and he is clearly a very smart person. These are his thoughts on the post-pandemic economy and the types of assets to own in this environment.

Forbes article on Kylie Jenner doing a Trump (Forbes)

It’s a super good read into the whole business of fashion and being an influencer. In the social media space, it’s a chicken-and-egg kind of thing if you want to get rich quick- one doesn’t get rich without being famous and one doesn’t get famous without being rich.

Hence, the only game in town is to pretend to be rich or richer than you are, ride on the publicity and make some dough.

By the way, this doesn’t just apply to celebrities. Lots of people in Singapore also doing this in the “I’ll teach you to get rich by XX” training course space.

Matt Levine’s comments on Luckin’ Coffee (link is to a WSJ article on Luckin’)

Matt Levine’s Bloomberg newsletter, Money Stuff, is awesome. I really like his commentary on Luckin’ Coffee which details the basic model that startups sell to investors as well as how Luckin’ perpetuated the fraud that it was growing so fast.

Apparently, it was selling coffee to itself.

If you have a Wall Street Journal subscription, you can check out the link to see how it was done.

It’s Mother’s Day! Happy Mother’s Day to all Moms out there.

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A “New Deal” for Informal Workers in Asia (IMF Blog)

The pandemic has really exposed class differences in societies. And I’m not optimistic that the spread will narrow. If anything, the recovery in the markets versus the real economy is already widening the difference.

As a good friend put it, I think the Fed is beginning to worry that their rescue of financial markets is not exactly making its way into the real economy. After all, if businesses have to remain shut, it doesn’t matter if they get loans or not.

MiB: Betting Against Fraud and China (The Big Picture)

I really enjoyed this interview. I tend to think of short sellers as bullshit detectives. They call out the suspect business models and especially the outright fraud that somehow gets through due to blind optimism. Chanos has been a particularly adept detective.

As Hospitals Lose Revenue, More Than A Million Health Care Workers Lose Jobs (NPR)

So much for defensive sectors.

Which Portfolio is Right for You? (Of Dollars and Data)

Great piece. It’s not great because of the conclusions but it’s great because of the analysis. Go read it.

Sadly, many investment bloggers in Singapore aren’t at this level. I saw a piece from a relatively unknown blogger who did a piece about the “Sell in May and Go Away” effect on the STI.

Analysis was total trash.

Yikes, it’s already May?

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Now is the Time to Retire (The Wealthy Accountant)

Well obviously not for all of us but good point on how if you’re planning to retire, then this period of time is the biggest acid test of your ability to do so. Conversely, those planning to retire because their fortunes soared (on paper) during the stock market boom years may have to rethink their retirement plans.

“Deaths of despair”: The deadly epidemic that predated coronavirus (Vox)

While Covid-19 is on everyone’s minds now, it makes sense to think about other underlying structural problems in society and the economy. I’ve always marvelled at economists who look at the data, realise something is afoot, and then go on to solve the mystery. This is one of those mysteries.

Vanguard and Fidelity investors didn’t flinch as the market tanked (Yahoo Finance)

Which is precisely why I believe that as bad as March felt, it wasn’t the worst. The worst has yet to come.

How Boeing Lost Its Way (The Big Picture)

Nice 20 minute video on how corporate culture is shaped by incentives and how short-term thinking can lead to long-term losses.

CPF: Imitate Oz? (Thoughts of a Cynical Investor)

Why Not Give Us Access to Our Own CPF Special Account in these Special Times? (Investment Moats)

Interesting points and maybe I will dig into the data to see what’s feasible but given the Singaporean mentality behind CPF, I suspect many will withdraw everything if they could.

If they are allowed to only take out a token sum (say $500 each month) they’ll complain that it’s too little.

Plus we don’t really want a run on CPF right because all those CPF monies aren’t exactly sitting around in CPF’s accounts and liquidating assets right now is exactly the worse possible time to do so.

Markets have been rallying hard. It’s crazy how much markets have rallied. Almost makes investors feel like March never happened at all…

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How the Worst Pandemics in History Finally Ended (The Vintage News)

Some pandemic history. Goes way, way back.

Economy-related links

How COVID-19 Is Wreaking Havoc On Our Ability To Make Things — Including Vaccines (FiveThirtyEight)

The Next Leg Down Will Involve Credit Cards (The Reformed Broker)

Why the Economy Will Struggle to Restart (The Wealthy Accountant)

Market-related links

What Could Cause Another Leg Down in the Stock Market? (A Wealth of Common Sense)

Why the Stock Market Hasn’t Even Gotten Cheap Yet (The Reformed Broker)

The Softbank Clause (Howard Lindzon)

I’ve said before that SoftBank was a disaster waiting to happen. Basically, it was the dot-com boom concentrated in one company. Check out the link for a list of its duds.

Basically, Masayoshi Son thinks that economics doesn’t matter.

Happy Easter Sunday! It’s a long weekend here in Singapore but it doesn’t really matter much for those on us that are working from home because we’re not considered essential services.

Sorry for not reads last week as it was a little bit of a mad rush getting ready (mentally!) to be cooped up at home for April.

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Words of Wisdom From William Bernstein (A Wealth of Common Sense)

Great interview with a legend. I read Bernstein’s book “The Investor’s Manifesto” and it is one of the better books on investing out there. Check out Ben Carlson’s interview with him.

When Dollar Cost Averaging Matters the Most (A Wealth of Common Sense)

I’ve always said that DCA is a fad that many people (even those that purport to be personal finance experts) get wrong. However, there is one situation where DCA works and that is when the market is heading south. This is one of those times.

Otherwise, most people are better off investing a lump sum and having a read on valuations.

The S&P 500 is mostly concerned with duration (chart) (The Reformed Broker)

Good point.

Economic Policies for the COVID-19 War (IMF Blog)

Quite interesting to see how IMF thinks of the current state of the economy. Basically, it seems like they are preparing for war.

Are we on the brink of a global pandemic or is the virus under control? Only time will tell. Meanwhile, your job as an investor is to ignore the noise and focus on what matters.

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The Actual Dividend Millionaires Of America (The Compound Investor)

Good example of when correlation doesn’t equal causation. However, the correlation between lack of dependents and getting rich isn’t exactly zero.

Income inequality in Singapore at lowest in almost two decades: SingStat (CNA)

Of course the stats don’t lie but the I don’t know why anyone hasn’t pointed out the biggest elephant in the room.

The median monthly household income which is close to $10,000 per month is high relative to many other countries, but at what cost? How many households would be able to reach the median if there was only one person working in the household?

No wonder Singaporeans aren’t reproducing.

The Biggest Problem in Finance? (A Wealth of Common Sense)

US example but broader points apply to Singapore as well.

Covid-19 is all the rage here in Singapore right now. But obviously the markets have been pretty much treating this as a non-event. I have quite a few more links this week if you have to stay home because of the virus.

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Great to Gone (Humble Dollar)

Great story. You may or may not agree with the diagnosis but you can most certainly feel for this guy. How many people can count their ancestors a few generations before as one of the wealthiest people in their country?

I personally witnessed this in my own life as the small business that my grandfather started has gone from start-up to stagnant to dead under the hands of the second generation.

Dollarisation would not save Argentina (Financial Times)

Great read for those into macroeconomic and monetary policy. It’s a subject very few appreciate and even fewer understand well. Unfortunately, it’s something that also affects many lives.

The Biggest Wealth Levers (A Wealth of Common Sense)

A great breakdown of what leads to wealth creation for individuals and households. The Millionaire Next Door is a classic and goes into too much detail (like the brand of cars and watches that most millionaires own) which can cause a loss of relevance in today’s context but the principles you can learn from there are timeless.

The Biggest Risk in Crypto Today (A Wealth of Common Sense)

Good points overall. And just like every financial scam out there, it preys on asymmetric information between those who understand finance and those who don’t.

However, finance isn’t rocket science. More people should be able to figure it out.

Why my purchase choices have the kiss of death (Tim Harford)

Really entertaining and funny read. I particularly like the phrase “harbinger of doom”. I must confess that I might be one of these people as well.

Be fearful when others are greedy, and be greedy when others are fearful.

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Retirement savings may best real estate returns in Singapore (The Straits Times)

A great reminder that, unlike the myths that some evil people out there are spreading, real estate returns are cyclical and dependent on leverage.

In Private Markets, Red Is the New Black (Enterprising Investor)

A good commentary on the current state of markets. VC money is banking on these startups becoming monopolies. However, as the post notes:

Theory teaches that monopolies eventually deliver what economists call supernormal profit. Yet, this new genre of entrepreneurial venture takes an awfully long time to become profitable. Years after their VC backers have exited, today’s start-ups are often still heavily loss-making. It took 12 years for Twitter to generate a net income. A decade after launching, Uber incurred an $8.5-billion loss in 2019 — the year of its IPO.

Earn Money Reading Financial Statements (The Wealthy Accountant)

I suspect the ability to read and analyse financial statements will become much more important in the future with the increased use of software to trawl through reported financials.

And the ability to read and analyse financial statements comes from a strong foundation in understanding how accounting works.

We’re into February! 2020 hasn’t been off to a good start. Let’s hope that the rest of the year fares a little better.

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Putting the Next Market Downturn into Perspective (A Wealth of Common Sense)

Good read on trying to time the market. BUT having said that, I feel that it’s a disservice to tell people to buy no matter what the conditions are. Those who have been in the markets long enough know that valuations can get expensive and markets can get irrationally exuberant. The trick is being able to tell when we’re in that situation.

Will the 2020s be the decade that the robots finally come for our jobs? (Tim Harford)

It’s the economic question of the times. Routine tasks are REALLY being automated away. The “admin”* colleagues in the office aren’t being replaced as the older ones retire. The younger ones are being trained in RPA so that they can set up routine data-entry tasks.

*Admin being the term for public servants who do the supporting grunt work like filing the paperwork amongst other routine tasks.

8.88% FD Interest! – This is how your parents came home from a bank with an unexpected investment (Investment Moats)

Fresh off Investment Moats. If this true, then POSB is really doing some false advertising. Offering interest rates of 8.88% is very different from the returns in a regular premium savings plan.

I planned to do a post on function over form and looks like that day has to come sooner rather than later.

Happy Lunar New Year!

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Age-Invariant Asset Allocation
(The Aleph Blog)

Asset allocation is probably one of the most important factors for any investor. A good take on what the equity to bond allocation should be. In Singapore, IF you have money in your CPF, you should count it as part of your fixed income/bond part of your portfolio too.

Based on joint salaries, what properties available
(Thoughts of Cynical Investor)

Table’s actually from AsiaOne (who’s probably syndicated it from somewhere) but really goes to show that it’s no wonder that Singaporeans aren’t having kids. With median monthly income of $4,563 in 2019, half of Singapore residents will be stretching it when paying for a 4-room HDB resale flat. For dual income households, your best bet is go for HDB.

Owning a Home is Not For Everyone
(A Wealth of Common Sense)

U.S. examples but some points still apply. I would argue that the odds get better the longer you stay in a certain locale and if property prices continue to track the inflation rate. Therefore, buying property to stay in a hedge against rent inflation.

Having said that, don’t be one of those people that buy a property to stay in, thinking that it’s going to be your pot of gold when you retire. You can’t always have your cake and eat it.