Archives for category: Everything under the sun

Postings have been light because I’ve been away on holiday.

The upside of it all is that I managed to get through two really great books and I highly recommend both of them if you’re looking to get smarter about the world.

Book 1 – The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik

In the book, Harvard economist Dani Rodrik provides a compelling argument of how the conventional mantra of freer trade, financial liberalisation, and lower trade barriers may not be the best solution for all economies.

In my opinion, this book is a great counter-balance to the theories that every economics student learns at university. It’s also a great insight into how the economics profession seems to go through fads and that this latest fad hasn’t worked out all that well (cue the global financial crisis as well as crises in Argentina in the 1990s).

Anyone interested in world trade issues, the World Bank, IMF, globalisation, free trade, and politics should read this.

Book 2 – Billion Dollar Whale by Tom Wright and Bradley Hope

This amazing account of the 1MDB scandal focuses on Jho Low’s role in the whole affair. It’s a tale of how the immense greed fueled the actions of a few individuals. They siphoned billions of dollars from a state fund to their personal accounts and went on a spending spree that few individuals would ever experience in several lifetimes.

It’s also a tale of how Hollywood, the global banking system, and corrupt political systems endorse or enable such shenanigans to take place. After reading the book, I would be really, really disappointed in myself if I were Leonardo DiCaprio.

Despite Bill Gates recommending the book, Billion Dollar Whale has its flaws. For one, it focuses too much on Jho Low’s role in the affair which kind of diminishes the role played by other actors in the story. Second, it leaves out more technical details on how rules were circumvented or how Low managed to hoodwink supposedly smart people into carrying out the transactions. I would have loved to know more about how Low, or others, managed to concoct and execute the schemes that they did but I suppose that the authors did so to keep the main narrative going without having readers bogged down by more technical aspects of the various deals.

I’m currently making my way through ‘The Sarawak Report‘ which is the other exposé on 1MDB that focuses more on rot in the Malaysian political system. That should also be interesting.


First quarter 2019 is over! The yield curve has inverted, the economy looks like it’s slowing down but hey, the markets have recovered swiftly from last December’s sharp drop. So who knows what’s going to happen?

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Why happiness is easy to venerate, hard to generate (The Undercover Economist)

Tim Harford highlights the biggest problem for social justice warriors and all the positive thinking people. It’s one thing to come up with a nice-sounding, politically-correct paradigm that you can hardly find anyone to disagree with. However, it’s another thing to actually produce scientifically reproducible results to justify the claim. Read the article for some points made about Bhutan’s oft-lauded ideal of Gross National Happiness.


Another one for the annals of obscure research turned important. Who knew that virtual worlds could be a useful way to model how economies in the real world work?

Is home ownership for everyone? (Property Soul)

Great read because it challenges the commonly-held assumption that home ownership is a must.

The Singapore Government loves to sell this line of thinking but you must remember that the original thinking behind this idea is that home ownership gives a sense of belonging and therefore ties people to the country for a longer period of time. No doubt, this is important for nation-building but remember that’s good for the government. What’s good for the government is not necessarily good for you.

Home ownership has its pros in that that you are not subject to the mercy of landlords when housing is in short supply and that since, in the long-run, home prices tend to increase, you’ll be relatively protected from an increase in rents over time. Furthermore, homes are an asset that can be monetised (think: home-equity loans, reverse mortgages etc.),

However, home ownership comes with some costs as well. The biggest one would be the opportunity cost of not being exposed to other asset classes. By paying for a house, your main asset class resides in the housing market. In Singapore, most people use their CPF monies to pay for housing, which means that you give up the opportunity to compound at interest that CPF pays you. It also means that you have to be prepared to monetise your house in the event you need to cash out. Buying too much house also means having the albatross of a mortgage hanging around your neck for a good two decades or so.

The article doesn’t cover all the pros and cons but it’s a good start to bust the myth that home ownership is a must for everyone. In fact, some people take it too far by buying too much house.

The yield curve has inverted!

So what’s next? Why does this even matter? Where do I go from here?

What’s the Yield Curve?

The yield curve is simply two-dimensional chart showing the relationship between the yields paid (on the Y-axis) on bonds of different maturities (on the X-axis). The bonds here are U.S. government securities and hence, the only difference is the length of the maturity (i.e. how long investors have to keep their money invested in the bond until maturity)

By Ldecola – Own work, CC BY-SA 4.0,

So what you can see is that for bonds with longer maturities, the yield paid is higher. For example, a 2-year bond might pay 2.5% p.a. while a 10-year bond pays 3% p.a.

In a normal world, this makes sense. After all, to entice investors to keep their money invested in a bond for a longer period, borrowers need to pay more interest.

Why Does the Yield Curve Invert?

That’s all good and fine but if that’s the case, then why does the yield curve invert? Well, as it turns out, if you hold a bond (which is an asset) but you need cash, you can always sell the bond on the secondary market. However, you’ll will have to accept whatever the market is willing to pay for your bond.

Let’s work through an example.

So, the way bonds work is that bonds pay investors a coupon (i.e. the interest) based on the Face Value of the bond. This Face Value is the principal amount that the investor receives upon the maturity of the bond. So for example, if a bond pays a coupon of 5% on a bond with maturity of 5 years and a face value of 100, then the investor receives $5/year for 5 years and $100 at the end of the fifth year.

So far so good?

However, if you have to sell the bond on the secondary market before it matures, the price that buyers are willing to pay may be less than the face value. This happens because would-be bond investors are weighing their other options given the environment at the time you, the bond seller, are trying to sell your bonds.

If there are more attractive investments out there or there is pessimism in the air, would-be buyers would offer a lower price for your bonds and vice versa if things seem to go swimmingly well.

So using the same example of a bond as above. If the market is willing to pay only $80 for your bond, the yield on this bond is now $5/80 which is 6.25% which is higher than the coupon yield.

This is exactly how and why yields change.

So, what is the inversion? And why it matters

An inversion happens when short-term yields are higher than long-term yields.

The short end of the curve is easy to explain because the Fed rate hikes have most influence on short-term rates and given the fact that the Fed has been raising rates since late 2015 and somewhat accelerated the hikes last year, the short end of the curve must have increased.

But what about the longer-term rates? Going by the logic in the previous section, this means that prices of bonds at the long end are much higher which is why yields at the long end have fallen.

This basically means that bond investors don’t mind getting less return for longer maturities since they expect things to get worse in the short-term and therefore, it’s a good return to “lock in” for the next X number of years. Furthermore, if a recession hits, the Fed will be forced to lower rates to ease monetary policy and when interest rates fall, bonds at the long end see greater capital gains as their Duration is longer*

The inverted yield curve has also freaked people out because the inversion of the yield curve has historically been a good leading indicator of recessions.

Final Thoughts

So while a recession may be imminent, I think we need to keep an eye on other indicators such as unemployment and payroll numbers etc. Singapore will obviously be hit bad in the event of a global recession since we count many of the major economies as our trading partners.

However, I think a recession and slowdown has been long overdue and maybe markets have already priced the worst in (or maybe, they haven’t) but we haven’t seen over-extended markets or exuberance like we have in the dot-com or GFC eras.

Personally, I’ve been on the defensive for some years and if the downturn comes, I’ll be one happy camper because it’s probably one of those moments that I’ll be able to deploy some cash.

*Duration is a finance thing. Basically, it shows how many percent a bond price will change for a one percent change in interest rates.

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Neo-Nazis Bet Big on Bitcoin (And Lost) (Foreign Policy)

What do Neo-Nazis and Bitcoin fans have in common? A common sense of anarchy and distrust in the institutions that run the world today. Great read.

STAT FIGHT! want to have money when you’re old? Don’t have kids! (The Basis Point)

Chart says it all. But notice that Couples with children have more money socked away up until the point where they turn 65? Probably the drop in savings after 65 is because these couples help their children fund their marriage, starter home, or education.

Paul Krugman’s latest opinion piece is a must-read for those who think that robots are coming for your jobs. He was absolutely right about the Asian Miracle in the late 90s and I sense he’s right about this one too. In short, it’s not the robots killing the lower income class. It’s politics.

Diversification Isn’t Sexy (The Belle Curve)

A back to basics article on the definition of diversification as it applies to investing.

Sorry, there wasn’t a post last week because I was busy over the weekend. Regular programming resumes and my heart goes out to the victims of the terror attack on the mosque in Christchurch, New Zealand.

Photo by Mikes Photos on

Total compliance in financial reporting, but was it misleading? (The Edge Singapore)

Seriously good article on the Hyflux saga. Not one of those that pretends that it could have seen the future but more of a reflection on how accounting principles could have caused blindspots in the analysis of many analysts. Focusing on earnings would have painted a much more rosy picture than how economic reality eventually played out. By focusing on cashflows, one could see that betting on Hyflux was basically a bet that its plans go off without a hitch.

Buy, Hold… Profit? (The Big Picture)

The money shot is the animation that shows how longer timeframes provide positive returns even after accounting for inflation. The problem is: how many people are wired to wait that long? I’m willing to bet ‘not many’.

On Japan Sea coast, small firm shows scars of China’s economic woes (Channel NewsAsia)

A story about how trade woes are affecting a small firm in Japan that makes precision parts for auto-makers. Is it really due to trade wars or is it due to ‘peak car‘? Hmm…warrants more investigation.

Why inflation is good for us (The Undercover Economist)

Many people that worry about the national debt don’t really understand economics. Many people that worry about runaway inflation don’t understand economics either. Do yourself a favour and read this article.

The ‘Hidden Mechanisms’ That Help Those Born Rich to Excel in Elite Jobs (The Atlantic)

Really interesting read for those interested in the issue of inequality and class privilege. No surprises that these things happen but nice to see some academic work that explains how and why these things happen.

I really hate doing posts on politics but there are a few things I needed to share my thoughts on. I’m not particularly for or against the government or for any of these issues (except the cats. I have a cat).

I guess Cynical Investor (CI) may be right when he says “Double confirm, ground not sweet for PAP” and that there may be some truth to the rumours online that the General Elections may not be held this year after all.

However, CI’s point was based on the property market. The points I make here are going to a highlight reel of some of the latest self-inflicted wounds PAP members have made.

Lee Bee Wah losing the cat lovers’ vote

MP for Nee Soon GRC, Lee Bee Wah basically singled out cat feeders as the cause of rat problems in certain HDB estates. This didn’t go down well with cat lovers across the country and it didn’t help that Lee Bee Wah, perhaps because of her background as an engineer or perhaps because she was trying to present the case as if it were to a layperson, explained things as if it were a simple matter of cause-and-effect.

Basically, her explanation came across as:
There are rats in the neighbourhood. Rats are attracted to food left in common areas. Cat feeders leave food in common areas. Therefore, cat feeders are the problem.

To be fair, I agree that there are irresponsible or ignorant cat feeders who leave food out for community cats and that the food may attract insects and rats. However, her narrative means that other probable causes aren’t highlighted.

For example, People who leave offerings on the ground after prayers during certain times of the month; Kids that carelessly drops scraps of their snacks that they buy; People who spills their drinks at the common rest areas at the void decks.

In short, there’s plenty of other people who drop food on the floor in the common areas all the time. So why is it just the fault of the cat feeders?

Lee Bee Wah again

And if losing the cat lovers’ vote wasn’t enough, LBW* helped the PAP lose even more votes by calling out a large proportion of Singaporeans who wished the government did more during the most recent budget announcement.

You can read the details yourself but her little made-up folk tale where she portrayed the government as a thrifty, kind grandfather who gave his grandson (read: citizens) some money for all the important stages of his life is flawed.

For one, I would be grateful to my grandfather for giving me ANY amount of money because it is a gift. In other words, if my grandfather gave me money, it was something that HE earned, saved, didn’t spend on himself, in order to give it to me.

You can’t compare the government to a kind, thrifty grandfather because the money raised by the government comes from taxpayers in the first place. Even the money earned from the investment returns of GIC and Temasek is built on the capital provided by the taxes collected from citizens, other members of the labour force, and corporations.

I guess we could thank the government for giving you back some of what you paid them instead of siphoning it all away but I think they lost that right when they argued that they should be well-paid in order to attract the best and brightest to do the job.

In order words, we can thank the government for doing their job but we shouldn’t compare any handouts from the budget as a ‘gift’. You can’t really take something from me, then give some part of it back and call that a gift.

The Watain farce

And if LBW’s gaffes weren’t enough, the anchor minister in her GRC** who is also the Minister for Home Affairs decided to weigh in after some conservative Christians complained about a Death Metal band being allowed to play a concert in Singapore. Their complaint was that the band’s song had satanic and anti-christian elements and influences and were therefore, offensive to Christians.

The concert was only supposed to be attended by some 200 people and funnily enough, had been given prior approval by the appropriate licensing bodies. Then somehow, hours before the concert, they were told they couldn’t perform.

The official explanation is that the Ministry of Home Affairs (MHA) asked IMDA (the licensing body) to consider cancelling the performance due to “new and serious concerns about public order, and ground reactions relating to social and religious harmony”.

If I read that right, it basically means that just because a select group of people made some noise which somehow got the attention of the powers that be, MHA was asked to advise IMDA to overturn a decision that was based on the execution of prior rules and regulations.

Now, I’m not sure about you but that’s worrying to me. It means that if I somehow had access to the powers that be, and that if I could justify how offended I might feel about certain people or groups of people on the grounds of public order, then what was once permissible could suddenly become not permissible.

Anyway, the irony is that easily-offended Christians lost this one because now almost everyone in Singapore knows who or what Watain is and for a moment in history, more people in Singapore were listening to their music on Spotify than anywhere else in the world.

The Minister might have been legally right (after all, he’s law trained) on all counts for this one but I think it’s a worrying sign for those concerned about potential abuses of the system.

Final Thoughts

It’s not just an Yishun thing***. There are lots of other things to say about some of the other PAP MPs but the saving grace for the PAP is that the majority of the opposition isn’t much more impressive.

*Abbreviating her name because I don’t really want to keep typing it out.

**Voting for MPs in Singapore can be quite funny in some constituencies because you have to vote for a whole team of them rather than just one of them.

***Inside joke for Singaporeans. LBW and the MHA minister are from the GRC that oversees Yishun.

Edges That Won’t Go Away (A Wealth of Common Sense)

Great piece. The best edges are the ones that depend on human emotion and behaviour. The exchange between Bezos and Buffett explains it all.

Hyflux is warning of investing in high dividend yield stocks ( Thoughts of a Cynical Investor )

High dividend yields have always been a flag. Plenty of other great ratios to use when determining if the yields are likely to hold. I probably should do a whole post one day for my own sake.

Great read of the geopolitics of the world and why the Yuan or Euro is unlikely to dethrone the USD any time soon.

Once hailed as unhackable, blockchains are now getting hacked (MIT Technology Review)

Oh no.

In a moment of metacognition, I realised that the events that happened yesterday demonstrate that meditation may be helping me deal with stress better than I thought.

It’s going to be a personal and reflective post so forgive me if this post doesn’t bring anything of value to you.

Why was yesterday stressful?

Well, firstly, it’s the exam marking period for us. Exam marking and the subsequent processing of results is a stressful affair because the school makes such a big deal of it and any errors that may get picked up during this period.

Second, we’re given this unnaturally short period to mark (think hundreds of scripts within 4-5 days) which cannot be extended when your exam paper comes in at the end of the examination schedule. That’s exactly the scenario I’m faced with this semester.

On top of that, I have administrative duties as the coordinator for Year One modules. This means that I am the recipient of the exam documents of all these modules. No thanks to the lateness of my paper, all these documents are being submitted to me right when I have to start marking.

Throw in the fact that I’m the class advisor for a student who missed all her exams due to medical reasons and I have the school asking me if she’ll be able to take the make-up papers.

On top of that, the cheap ballpoint pen that my school provides leaked and stained my shirt pocket and my subsequent attempts to remove the ink left a stain on my bedroom door. At this point, I felt like a loser.

How I dealt with it

Amazingly, between dealing with all of the above, I found the time to have a delicious phad thai at a neighbourhood hawker centre and buy some hope in the form of two lottery tickets (In case you’re wondering, I didn’t win a thing or even if I did, I wouldn’t be stating it publicly, would I?).

I also met my quota for marking. Marking 300+ scripts distributed across 14 stacks is like eating an elephant; You don’t do it all at once. You set a target, say 4-5 stacks a day and when you hit it, you don’t do any more even if you could.

Rest is as important as doing the task.

The other things beyond my control were things like people looking for me at all the times I was planning to do something else. A colleague wanted to submit her documents just when I was preparing to leave. And she had queries that eventually made me fire up my computer just to send an email.

I could have gotten angry. I could have gotten frustrated. But I didn’t. I felt irritation building up but I didn’t get irritated. I think this is what it means to recognise that yes, external circumstances or people can be irritating or annoying but whether we get irritated or annoyed eventually comes down to a choice that we can make.

I cannot control the actions of others but I certainly can control mine. And if I can control myself, then I’m in charge and if I’m in charge, I can change direction so that things go the right way.

Intractable Problems

That’s exactly what I did with the ink stain. I wasn’t going to get it out without a whole bottle of rubbing alcohol. Furthermore, the ink stain wasn’t so obvious since my shirt was dark-coloured.

Was it worth it to get annoyed with an ink-stained shirt or door?

So I left it alone.

And after leaving it alone, I could focus my attention on the things that mattered – my wife, my cat, the latest chapters of manga.

After all, my wife has been deliberating over very important matters for some days now. I’m not sure if she’s arrived at an answer but I hope my inputs have made sense.


I’m beginning to think why meditation helps is because the practice is helping to make deep, slow breathing second nature. When external stressors hit us, the body’s typical response is to make our breathing quicker and our field of vision more narrow.

That made sense millennia ago when the external stressor was a threat to your life but in this day and age, the external stressor isn’t usually life-threatening.

In fact, the body’s natural response is probably counter-productive when you might need to assess things calmly and take a view of the big picture. You don’t want to win the battle but lose the war.

I think meditation’s helping to make me less reactive to external stressors. I should caution though. It’s not a miracle cure for everything. It’s not a magic pill. It takes practice and very conscious mental effort to make it work.

On hindsight, I think yesterday went fairly well.

How to Wreck a Pension Plan in 3 Easy Steps (A Wealth of Common Sense)

No, not about CPF. This is about how the Omaha Public Schools’ (OPS) pension fund screwed up badly by going into “diversifying” into alternative investments.

The irony is that, rather than being diversified, they concentrated their assets into alternative assets in order not to be subject to the fluctuations that come with the stock markets.

If I were them, I might have just asked their Omaha native, Warren Buffett what to do with the money. But speaking about CPF…

CPFLife: PAP govt cares for u, really they do (Thoughts of a Cynical Investor)

Cynical Investor shares an article from The Star which talks about how Malaysians who have withdrawn their EPF ran out of money within 3-5 years. A fair amount who withdrew 70% of their monies spent it all within 30 days.

People just suck at managing their finances.

One Big Thing (Of Dollars and Data)

Various stories about how being able to identify the one variable that matters will get you most of the results you need. Nothing new in terms of insight but a good reminder that if you want to meet your goals, you have to identify the one thing that will help you get most of the way there. Once you have that, the rest of the journey is merely a series of tweaks to optimise the journey.

The Proper Geoarbitrage Strategy: First Your City, Then Your Country, Then The World (Financial Samurai)

The idea isn’t something new. I must have heard of this at least 2-3 years ago from those people who call themselves “Digital Nomads”. Basically, the idea is to take advantage of the fact that some jobs can be done remotely and that some places are far cheaper to live in than others.

What many of these people end up doing is living in a place like Chiang Mai while doing remote, freelance digital skills-based jobs that allow them to charge US dollars for.

In short, arbitrage by earning USD and having expenses in THB. I like Financial Samurai, Sam Dogen’s idea of doing the same arbitrage in your own city.

I certainly think this is doable in Singapore, certain neighbourhoods are much cheaper to live in than others. Housing is much cheaper in estates like Woodlands and food costs tend to be cheaper in older estates with a large proportion of older folks.

Unfortunately, Singaporeans are a snobbish bunch. They sneer when they hear you live in Yishun. Also, some think the sky of going to brand-name primary schools and therefore try to live within 1km of those schools to gain priority for entry.

If Self-Discipline Feels Difficult, Then You’re Doing It Wrong (Mark Manson)

Totally agree with this. I used to think that people who achieved great feats must have great self-discipline to put in the practice. Then I read James Clears’ Atomic Habits and I learned that it’s far easier to go on auto-pilot.

Simple vs. Complex (A Wealth of Common Sense)

Not posting this for the gist of the post but because of some points made in the post. One, money managers also fall for the Fallacy of Composition and Two, yeah, I totally agree that some portfolios ought to be 90/10 (equity/bond). Having an infinitely long time horizon means that you should not have to worry about drawdowns so much.

The Idea that EC Condo Sure Makes Money. We Explore a Case Study (Investment Moats)

I saw the original rant too and wanted to give my take on it but I think Kyith’s post suffices. Just wanted to add that the property market also moves in cycles and this fella (even though he was buying an EC) was buying at the top of a particularly exuberant cycle.

So, what did he expect?