Archives for category: Everything under the sun

Focus on what you can control.

– Michelle Obama

In just six words, Michelle Obama reminded me of the most important thing that I’ve already come to know but constantly forget to apply.

Life constantly throws things our way. Sometimes, those are nice things like someone saying something nice about you or, someone doing you a kind deed or favour. Other time, you just get hit by something terrible like someone saying or doing something unkind to you or, some stroke of bad luck which could be minor or major.

You can’t change that.

What you can change is your perception and reaction to the event.

Someone cuts your lane in traffic. You can curse and swear, put your foot to the pedal and give him/her a taste of his/her own medicine. Or you could always take a deep breath and realise that the person behind that wheel is just a fly that happened to buzz around you and that fly is long gone. Why bother with a fly?

You find out that you have a major illness and require major surgery. You can curse the gods and question why this had to happen to you, be angry at the world for not having to experience the uncertainty and anxiety that you have to go through. Or, you could try to find out more about the procedure and think about how to best deal with the recovery from it. Perhaps the awareness of the fragility of life will make us treasure each passing moment more? With that recognition, maybe we’ll spend less time on unimportant things with unimportant people.

The stock market tanks and takes your portfolio down by 50% or more. You can panic and give in to the mania; Turn to drugs or alcohol to (temporarily) forget about the problems. Or, you can look at the evidence that manias tend to pass and be thankful that you didn’t overextend yourself and were forced to liquidate. The same is also true when you see and hear people around you with stories of wildly profitable “investments” in esoteric asset classes. You can develop a major fear of FOMO or you can breathe in and remember that all bubbles (in tulips, the South Sea Company, over-priced growth stocks, unprofitable dot-com companies, over-leveraged bets on real-estate) don’t end well.

You can choose to be angry and unkind. Or you can choose to be calm, firm, grateful and kind.

Most importantly, you can choose. This is something I have to remember. Always.

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It’s been another year and what a year it has been.

I don’t re-read what I’ve read and it appears I should. Because this is what I wrote in my birthday post last year (emphasis mine*):

Of course, life is about pushing one’s limits and in the coming year, I’m going to push those limits much more.

I can think of at least three areas – health, wealth and new skills.

I definitely need to get healthier. Recently, I’ve begun doing morning runs but that’s still pretty infrequent.  I need to get those in on a more regular basis like every other day or at least once every three days. That’s on top of my gym sessions which need to be at least once  a week.

As for wealth, I don’t want to make this an explicit goal but rather it should be a byproduct of something like picking up a new skill that I can freelance some stuff with or creating some little business that can be run in my spare time.

For skills, getting more proficient in coding would be something. Right now, I’m probably familiar enough with python to get other people’s packages to work for me. I need to get to the level where I can program enough to get it to do simple repetitive tasks for me. Also, trying to put together a machine would be awesome as I can get more bang for buck. That would also give me the chance to get more familiar with modifying systems.

I’m happy to report that I failed spectacularly on every count.

First, let’s see where I went with getting healthier. This year, for the first time ever, I hit a new high in terms of my weight. I haven’t been all that regular with my once-a-week gym routine either. Thankfully, it’s not like I had any serious health issues due to the weight gain and fortunately, I’ve gotten my weight back down to below that high but looks like it’s going to take a lot more to get my health to where I want it to be.

The upside is…I’m happy to say that after serious reflection, I’ve realised that the weight gain always comes after a deviation of my usual routine. That is to say, my usual eating habits, while not perfect, weren’t contributing to my weight gain. It was usually after a holiday or a gathering with friends when the weight gain happened. Why? Usually, because there was either a smorgasbord of food that I had to try or an increase in consumption of beer. Or both.

On the second count, wealth, I’m glad to say that the portfolio has done exceptionally well (by my standards at least) this year. Unfortunately, I didn’t end up creating some sort of side hustle because I lost sight of all my goals.

The upside is…that my system of accumulating wealth is pretty much running on autopilot and has proven that it can survive the vagaries of my horrible lack of focus. In fact, the portfolio might have worked so well because of my horrible lack of focus on things.

In late April, I shared a graph showing how much my portfolio has grown since 2011.

Here’s how it stands today.

 

navVSwealthNov2017

Basically, I have 3.5x what I had in 2011.

.

 

This isn’t really much of an update but a reminder that while your portfolio is small and tiny, it pays to have a good habit of saving and adding to that portfolio. Keep saving and keep letting your dividends and gains compound until you reach a stage that your savings can’t move the needle much on your portfolio.**

Third, I was getting better at coding but for some reason, I took a holiday and now I’m in a funk. The problem was also that I kept getting pulled in all directions with respect to learning how to code. One moment it was learning basic programming. Next, it was learning Flask. And because a website is pretty much useless without data, I started learning how to scrape and add data to a database. Then I realised that without being able to analyse the data, it was useless so I started on Data Analysis. Then sometime later, I realised the language of the web was JavaScript so that’s where I went.

In short, I went in so many different directions without having mastered any one first that I got burnt out. It’s really difficult to learn things on your own without having someone to guide you. -_-”

The upside is…I’ve managed to get a grasp on how to solve many different coding problems despite the lack of focus on a particular area. In fact, the one common thing that you keep having to do in coding is to sift through whatever lots of other people have encountered and thankfully there’s stackexchange.

Other stuff

Besides failing to do any of the above, this year has also been a year that I can only label as volatile.***

On the downside, I had a near nuclear meltdown somewhere in the middle of the year. Thankfully, it didn’t take too long to recover from it. The reason for that episode is personal and shall remain so. The irony of the whole situation is that earlier in the year, I was blogging a lot about rationality and mindfulness. (see here, here and here) yet when it came down to it, I was overcome by a flood of emotions and I actually felt the physical effects that come with being depressed. It’s a serious thing and it’s no fun.

Also, on the work front, I was supposed to leave the school. To be honest, I didn’t know why I accepted the posting at that time because right now, I love my colleagues and the environment is fantastic. I guess I was thinking that I should challenge myself and put myself in a situation where I would have to work probably 2-3x as hard as I have to right now. Anyway, things happened, and I’m not going anywhere.

Also on the work front, I screwed up big time. I made a major mistake that no one ever should. I felt really bad about it though and I hope none of my colleagues ever make the same mistake ever again.

What’s the upside to all this?

The upside is that having a year like this gives you plenty of fodder for reflection and introspection. Giving myself enough time to think about the things that happened, how I felt about each event, and whether I could have handled things differently has led to a few conclusions.

One, in order to be a better person, I need to cultivate better habits. After all, there’s a famous quote attributed to Einstein that goes like this:

Insanity is doing the same thing over and over again and expecting different results.

Your habits will definitely lead you to the same results. If you want different results, you have to change your habits. Some of my habits are downright terrible.

Two, in order to change your habits, you can’t just depend on willpower. I should have realised this sooner given how my wealth accumulation strategy was going. In fact, even with some semblance of a strategy, you need some great incentive or disincentive to stick to it. For example, I had come up with a simple rules-based strategy to lose weight. Basically, I already decided that on days where I go canteen A, I would only have the sandwich from there and if I went to canteen B, I would order the salad.

What actually happened is that whenever I had a lunch kaki**** and when classes started,  this plan would utterly fail as I didn’t have the willpower to stick to the strategy. When you’re tired and want to relax, your willpower is spent. Your mind then naturally thinks of stuff that gives you the most reward. In my case, that would be fried stuff or carb-laden dishes as most local foods are.

The only solution I can think of is to increase the stakes of committing to the plan. As discussed in an episode of the freakonomics podcast, you can do so in many ways such as having a pre-commitment to donate a painful enough sum to the person you like the least or, my favourite, hanging a jar of vomit around your neck and opening the lid to take a whiff of it whenever you feel hungry.

Three, getting majors fails and feeling really lost is not fun but there is some good that came out of it. I feel a lot more grateful for my life. I’m grateful for a family that loves me and that has confidence in me.

I’m grateful for the fact that I was part of the lucky sperm club. Just being born in the right country means that I never had to face the threat of war and that basic infrastructure has not been a concern. Being born at the right time also reinforces those notions as one or two generations before mine would have endured a lot more hardship. Being born into the right family meant that I basically only faced #firstworldproblems. And all of the above also increased the odds that I would meet the right person to spend the rest of my days with.

My wife isn’t the perfect person (show me someone who is and I’ll show you a phoney) but she’s the perfect person for me. She’s smarter than I am but she never lets me feel inferior for it. That automatically makes her more humble than me as well. When baking, she’s the one who will follow a recipe to a T while I might read the recipe to get a feel and then adjust accordingly. I don’t tell her enough but I love her.

Also, we adopted a cat! I never had a cat in the house before so it’s a whole new situation that we have. Initially, there were a lot of known unknowns. Will he scratch the furniture? Will he pee outside his litter box? Will he leave us alone when it’s time for bed? All those fears turn out to be unfounded because cats, like everyone else, can be trained to a great extent. Watch enough “My Cat from Hell”, do your research and through trial and error and you’ll see that most of the horror stories you hear about are due to bad owner behaviour. In other words, it’s not the cat. It’s you. I’m glad to say that our cat loves it here and we love having him around.

What’s next?

30 something years of life isn’t that short but yet it’s far short of a lifetime in this day and age. I’ve already decided on my goal for the next few years and it’s for me to embark on the path to being a craftsman.

In this day and age, with the threat of automation to jobs that are repetitive and mundane, I believe that there isn’t a future for those who take on a job hoping to go through the motion of passing each day while meeting the bare minimum.

Therefore, I need to hone a craft. Get the fundamentals right, repeat the fundamentals until they become second nature. Then push the boundaries and create something new.

That’s what I need to do with investing.

Notes:

*lol. who else could it be? I only realised the irony of the parentheses after I typed it. Hence this very meta-sounding comment.

**Let’s say you have an average job that pays S$4,000/month (that’s literally the average in Singapore). Saving 10% (S$400) a month easily adds about 10% of growth when your portfolio is $48,000. However, once your portfolio hits $480,000, that same savings rate only adds a percentage point a year. The solution is, two-fold, either (a) increase your savings rate over time and/or (b) increase your income. The problem is that for most people, both options are pretty difficult to do.

***I use the term as it would have been in the finance world i.e. flucuations.

****kaki is the local term for a buddy.

“Despair is the price one pays for self-awareness. Look deeply into life, and you’ll always find despair.”
Irvin D. Yalom, When Nietzsche Wept

So I woke up this morning (14 June 2017) to find the beginnings of a soap drama playing out on my Facebook feed. The entire blogosphere basically got into a frenzy about this news and the mainstream media was caught off-guard with the post released in the wee hours of the morning. This is just the beginning of the entire affair.

 

LWL_fbpost

The post that started the drama.

 

In case you missed it

 

So it appears that Lee Wei Ling (LWL) and her younger brother, Lee Hsien Yang (LHY) are not happy with PM Lee Hsien Loong (LHL) and his wife, Ho Ching’s behaviour with regards to the late Lee Kuan Yew’s residence.

The statement started off with some very serious allegations of misuse of power and harbouring political ambitions for PM Lee’s elder son. However, that part was very short on details and most of the statement centered around PM Lee and his siblings’ differences with regards to the treatment of their late father’s house at Oxley Road.

What does it all mean?

After reading the full 6-page statement and PM Lee’s response, here are my thoughts:

  • It seemed petty to be arguing over a house but I guess the larger picture here is not so much the house but LWL and LHY’s attempt to paint LHL as a power-hungry person to the extent that he is willing to go against his father’s last wishes. And in doing so, would be detrimental to the future of Singapore.
  • LWL and LHY are obviously not very good terms with LHL any longer. Going public with what is essentially a family matter is damaging to well-known personalities as all three of them are. Arguably, this is most damaging to LHL as compared to LWL or LHY.
  • The allegations of big brother being omnipresent are most probably exaggerated but if true, is a worrying sign of a paranoid personality who needs to be in control at all costs.
  • LWL seems to be the one with the least to gain or lose from this. LHL has quite a bit to lose- he can’t sue his siblings (can he?), those anti-PAP or even fence-sitters may see the allegations as somewhat truthful since it is ‘insider info’, the general public may question his ability to lead if he can’t even get his own brother and sister to back him, and most crucial, his son’s entry into politics, if at all, is now going to be tougher to push through. However, the upside is that he probably plans to step down sooner rather than later anyway.
  • LHY is the question mark here. Given that his son, Li Shengwu has also spoken out on the matter, could it have been a case of LHL not helping his nephew enter politics or is this setting the stage for Shengwu’s entry later on?
  • LWL and LHY’s naming of Lawrence Wong as a figure in all this, if true, just confirms most people’s suspicions that LHL’s cabinet has some yes-men in there. The question is who else and how many? Not the best vote of confidence for the whoever takes over from LHL.
  • In my opinion, LHL’s official response wasn’t the best. It sounded sad and defeated and although he tried to say that his siblings’ hitting the nuclear option tarnished his dad’s legacy, I’m not sure many people would connect the dots. After all, his siblings were accusing him of departing from the path his dad took and he didn’t really do much to refute what they said.
  • LWL and LHY were pretty nice actually that they didn’t bring in any personal anecdotes on Ho Ching overstepping her boundaries. Why? To help their big brother save some face? Or to not give LHL any ammo to sue them for? I guess we’ll never know.

I can sympathise with LHL because I have witnessed some drama in my own extended family. Of course, my own family is nothing like the Lees but the similarities in terms of the clash of egos and views are there. No one would ever wish that the full story gets out and to be honest, no one’s going to be interested anyway.

All in, LWL and LHY really hit the nuclear option with this one. LHY is never going to come back to Singapore after this and dropping this bombshell of a statement while LHL was away on holiday shows how much of a calculated move this was. Bringing LHL’s son into the picture also blocks his son’s entry into politics, if it was on the cards, for the short term. With the upcoming presidential election and next General Election, this release was designed to inflict maximum damage. As for LWL and LHY, I guess they don’t really have much to lose in the first place which explains why they did it in the first place.

The plot twist now would be that this was all done so that whoever manages to bring the family back together will be the next PM.

 

Maybe there really is a problem with millennials after all. So, this was making rounds on my Facebook feed. It’s a very long article but essentially it makes a few points:

  1. University education in Singapore is becoming more elitist with Minister Ong’s remark that university education is capped at 30-40% of each cohort.
  2. Singapore government spends a lot of money giving foreigners scholarships.
  3. Singapore’s high cost of living means that the rich (elite graduates) become richer and the poor (non-grads or grads from private universities) become poorer.

While the young people (mostly former students and some relatives) on my Facebook page share the same sentiments as the article, I think everyone in that group is missing the point about higher education.

Before I go on, I agree that the data shows that graduates have a higher starting salary than non-graduates. That, no one will dispute. Also, if you take a look at the advertisements for jobs, almost every white collar job ad out there states that a degree is a minimum requirement.

The problem is this fixation on starting salaries and the fallacy that starting salaries will remain the same should the number of graduates increase. Another problem is people thinking that things in the future will remain the same as they are now.

In the past, a degree was a pathway to acquire knowledge. Other than that, studying for a degree also meant making friends that may eventually end up in high places plus the added signalling effect that one gets from getting a degree or even better, a degree from a reputable institution. Today, with platforms like Google, Youtube, Cousera, Udemy and the likes, knowledge can easily be acquired for free or a low fee, from many other sources. That reduces the value of a degree as a signal to employees and the university as a place to network. Some may also argue that networking can easily be done online which further reinforces that the degree may be nothing more than a signal to employers.

Since the degree is now mostly used to signal to employers, any prospective undergrad must realise that the institution and course that they are taking matters a whole lot more than before. Unless one has proof that the better institutions don’t take in the best and the brightest, employers are going to assume that graduates from more reputable institutions are more desirable than others.

Is this elitist? Possibly. But the more important question should be whether this is fair. If the institution doesn’t take in the best and the brightest, then how can they justify the reputation that the awarded degree confers on the recipient? Furthermore, those who can’t handle the course probably would have spent their time better off doing something else rather waste all that time, energy and money on something they can’t handle.

At the same time, employers aren’t dumb. If there were more graduates in the job market, employers would simply respond, and some already have, by creating more stringent job interviews to ensure that they get the most suitable candidate for the job.

I’ve read arguments on why the proportion of each student cohort going on to university shouldn’t be capped and at the same time, I can understand where the government is coming from given the conservative mindset they’ve always had. I don’t think the government is being bold enough to face the future but that’s really not the point I’m trying to make here.

The point I’m trying to make is that so many young people agree with an article like the one in the link and that line of thinking makes it so easy for them to find someone or something else to blame rather than realise that the government is not and shouldn’t be the solution to everything.

Given what prospective undergrads or graduates are facing, I think the most important task at hand is to figure out what projects of value that one can do.For example, I have a student who is currently studying at a university overseas. She’s fortunate enough that her parents can pay for her education but more importantly, she realised that she loves baking and before she left for her studies, she ran a home bakery which basically meant that she had to do things like costing, inventory management, planning the logistics of

For example, I have a student who is currently studying at a university overseas. She’s fortunate enough that her parents can pay for her education but more importantly, she realised that she loves baking and before she left for her studies, she ran a home bakery which basically meant that she had to do things like costing, inventory management, planning the logistics of her bakes and delivery of her goods as well as marketing of her business.

I’ve also had a group of students who were studying for a diploma in business information technology and they took on extra work helping us create games in HTML5 that required minimal coding. However, that project taught them the value of managing a project from start to end, dealing with clients’ redos and other things that they wouldn’t have learned in class.

So, for people who think that life is unfair because you couldn’t get into a school of your choice or graduates who think that a job is at hand just because you have a relevant degree in the field, please remember that employers nowadays have look for more than just a piece of paper.

Some days are more special than other. 5th May is a special day for me. This year, I witnessed some students graduate which is probably one of the few days in the year where my job really means something.

This year, I witnessed some students graduate which is probably one of the few days in the year where my job really means something. For most students, I only teach them one module: microeconomics and to be honest, I don’t really care if they remember anything that I taught. After all, how many of them will go on to become economists or even study economics at a higher level? It would great if they learned how to apply some microeconomic concepts to help them make better choices but that wasn’t really what the focus of the module was. What’s more important is that I hope they see me as someone they can count on if they should ever need my help. I wish them all the best and hope that they all realise that their road ahead is long so whatever they do, enjoy the journey and take the time to smell the roses whatever their ambitions might be.

5th May is also the birthday of the future Pirate King. It’s a happy coincidence because the 5th of May also happens to be the day I got married to the most wonderful person in the world. Before getting married and having a place of our own, I never imagined that I would be washing the dishes, changing bed sheets, mopping the floor, cleaning the toilet and cooking on a regular basis. As dreary as the word ‘chores’ sound, I’ve come to realise that doing chores isn’t so bad. It’s a moment where one can just focus on the task at hand and not get lost in random thoughts or “what-ifs”. It also lets one appreciate life a little bit better and I suspect that if the day should come, I’ll be a little more resilient as well.

This year, the Mrs made a remark (in jest or was it a hint that I didn’t get?) that I thought was quite cute. She said that in the past, I’d probably plan a nice surprise, at a nice restaurant while this year, I took her to a ramen restaurant (it was good ramen though). When we’re fifty, it’s possible that we may be at a hawker centre (if they still exist then) having fish soup.

But you know what? There’s no one else I’d rather be having fish soup with.

I just read this article (Young Asian adults likely to face cash crunch in retirement) from The Straits Times and it pains me to read that the main reason for the alarming headline is due to a mortgage.

Young adults – so-called millennials – in the region are at substantial risk of a cash crunch in their later years, with many expecting to carry mortgage debts into retirement or even run out of money altogether.

I’m not against property as a form of investment but it’s pretty apparent that some young couples in Singapore are buying property that they have to take a 25 to 30-year mortgage to pay for. 20 to 30 years is essentially the entire working life of a person and if most of one’s CPF is used to pay the mortgage, CPF is going to be useless as far as retirement is concerned.

Some people may be banking on the fact that wages, in general, go up over time and hence their future increase in wages will be the solution to their retirement needs. There are two reasons why this is a terrible plan. One, saving at a later age means that money has less time to compound. Two, mortgages are typically pegged to floating rates. We have been in a low-interest rate environment for a long time. Any future increase in wages is likely to be offset by the fact that the mortgage will cost more in future too.

The most likely scenario for people who have over-stretched themselves on an expensive live-in property is to either downsize to a cheaper place or to use some sort of reverse mortgage on the property in retirement. Either way, it still means being a slave to your property for a long time.

The best thing young couples can do is to buy a home that is within their means. It’s a time-tested, age-old advice that still remains true to this day.

 

Wow, what an inspiration!

Ng Joo Seng, a businessman with a rags-to-riches-to-rags (ok, maybe not quite rags) story was featured in Goh Eng Yeow’s column in The Sunday Times. While the article is sketchy on details (The Straits Times should do a follow-up on this), I find the fact that a person, regardless of age, attempting to climb back to where he once was is a wonderful story on its own. Let’s not forget that Colonel Sanders of KFC fame was also in his 60s when he started his business so age shouldn’t be an issue.

In Mr Ng’s case, his experience of going bust during a financial crisis and his boardroom battles should be instructive in helping him build an even more resilient business and I’m hoping that the lessons he learnt will be shared with all of us.

 

So, I’ve been using the Spending Tracker for 69 days and I thought it’s time to do an update. If this is your first time hearing about the spending tracker, you may want to read this first.

First of all, my average daily spending has hovered around $50 per day. I’m not sure how major expenditures will affect this but it’ll be interesting to factor in given that I have a holiday to my favourite city in the world coming up in two months’ time.

Second, while my tracker (since it was meant for lazy people) doesn’t break down what I spend on each day, it’s become pretty apparent that days with low double-digits spending are days where I didn’t do much except go to work, have a simple lunch at the canteen or where I stayed at home. Days like these really bring the total spending down. I would imagine that 8 out of 10 days in financial freedom be like that.

Third, maybe it’s a competitive streak or something but it’s kind of irritating seeing days where I spend more than the average amount. Although I meant for the tracker to be agnostic towards spending, it’s certainly made me think twice before spending on something that I know will push the daily expenditure above the average. Of course, there are days where one big item (for example, paying the monthly parking fee of $110) will throw the entire figure above the average but such days are far and few.

That’s it from me. Do let me know if you have been using the tracker or if you experience similar feelings and thoughts when using a financial budgeting system.

So, this story turned up on my Facebook feed this morning and I thought it’s an excellent example of how life sometimes requires struggle before you see the reward. The story is about how the Philadephia 76ers basketball team is starting to see the results of a strategy that was started some years back. The strategy consisted of being deliberately bad for a few years in order to get better players that would be around for the longer haul. Unfortunately, the owners of the team couldn’t wait long enough to see the results and forced the general manager in charge of the strategy out. I’m not an expert on basketball and there might have been a less painful way to turn a team around but the one thing you can’t argue is that the strategy didn’t work because going by the 76ers current record, things are certainly much better than before.

What I think is important is that the above also applies to many areas of life. Some months back I read Paulo Coelho’s The Alchemist for the first time and the book tells a simple tale of never giving up and having faith in the journey that you have to take in order to reach your dreams. While the story doesn’t reflect the complexities of real life, the struggles that the character goes through for practically the entire tale does provide a cautionary tale for anyone who dreams of success- that the path to success is often filled with numerous false starts and it is a long and arduous journey not for the faint of heart.

Since humans develop habits by the way of a cue, routine and feedback, savings money is a pretty easy thing to do. Money that comes in from a paycheck (the cue) can be channeled to an account used for investing (the routine) and as you see that amount get bigger, you feel a sense of satisfaction (the feedback which is positive).

However, things can screw up when it comes to investing. After putting money into a carefully selected invested, the value of the investment could decrease. This leads to the investor questioning his or her ability when it may be no fault of theirs if markets tank in general. It may also not be of concern if the stock tanks in the short term due to unnecessary pessimism. The bigger question is, will the investor be able to stomach a decline in value of their holdings?

This is where I think it’s absolutely necessary to have an investment process which should be able to do a few things. One, it should help an investor enter or exit the market during periods of extreme valuation. Two, it should help investors select securities (equities or bonds) which have a more than fair chance of surviving in the long-run. Three, results should be evaluated over a period of at least 3-5 years and certainly not just over a year or two.

Having said that, sometimes we also need a little faith that we’re doing the right thing. Trust the process.