Archives for category: Investing

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.

Photo by Mikes Photos on

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.

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?

I mopped the floor, made a pretty decent instant noodle dish, cleared tons of stuff with wife, dropped a load of books off at the library for them to find new owners, and of course, I had to clean my cat’s litter box.

It’s so domestic, so routine and yet, there’s something blissfully peaceful about it.

Oddly satisfied with how this turned out

Juxtaposed against the story told in the Fyre Festival documentary on Netflix and it’s crazy to me how some people keep chasing the novel and the new, unaware that the promise of excitement could be the peak of the experience. When the actual experience arrives, it may just let you down, and more.

The documentary is a fantastic insight into how people buy into all sorts of hype and how some people can spin something from nothing. It’s also an instructive lesson on fraud as well as a cautionary tale on investing in pipe dreams.

The Fyre Festival

I’m a little slow on these things so when all the bad press surrounding the Frye Festival hit the news in May 2017, I didn’t really pay much attention to it except that it was some hyped-up party that never happened.

The Frye Festival was supposed to be some luxury music festival that many celebrities and (cringe word alert) influencers were supposed to attend. Of course, the celebrity and hype around that made it THE party to go to and people were actually shelling out hundreds to thousands of dollars for tickets and tens of thousands for a “VIP package”.

What eventually happened was that due to the inexperience of the main people in charge, the festival never really happened and was cancelled on the first night itself, having disappointed guests with subpar food, inadequate housing arrangements and barely any music.

Investing in pipe dreams

In the Fyre story, what’s really interesting to me is how the CEO, Billy McFarland managed to convince people to invest millions of dollars into his ideas which, from the footage, seemed to be just that – ideas.

At the end of the documentary, it also turns out that he had defrauded investors by inflating revenue numbers to convince investors to invest more and more money. And it was also this lack of cash that forced the company to cancel the festival.

The funny this is, Frye was supposed to be an app. It had nothing to do with organising music festivals until the founders thought it would be good publicity for the app since the app was supposed to be about allowing users to book artistes directly without having to go through any middlemen.

In the end, I guess the founders got too caught up trying to live the high life and be popular rather than concentrate on actually building an actual business that earns money.

And the investors? I guess it was a sign of the times. 2017 was the year that the markets were doing well. This was especially so in the U.S. Investors were probably flushed with cash that they could invest in what was essentially a hyped-up party with little projection of realistic returns.

Young People Just Want it Fast

Which brings me to the sad conclusion that the world today just wants things fast. Very few people below the age of 30 play the long game.

Maybe it’s seeing how people around them can raise money to fund pipe dreams. Maybe it’s seeing how some of their peers seem to afford the good things so easily. Maybe, just like the Frye Festival, social media has helped put blinders on kids that they think if so many people are able to live the good life, then they must be able to do so too. Otherwise, it’s a sign of weakness or being inept.

I’m saying this because I’ve seen too many students, former and current, behave this way. I see some of it in my younger brother too. Heck, I even see some of it in my friends, and we’re in our 30s.

Maybe I was lucky in that I got my way too often when I was younger. Now that I’m older, I’ve gone past the stage of reacting like Pavlov’s dogs when something new and novel comes about. I also find it silly when people talk about how good something is without regards to cost.

Am I one of the rare few? Is the continuous chase of the new and novel a human condition or it is more a manifestation of how the world works nowadays?

The Biggest Valuation Spread in 40 Years? (Meb Faber)

A spark of hope for those invested outside the U.S.

Shifting Risks in the Bond Market (A Wealth of Common Sense)

Yield curve flattening. ‘Nuff said.

The Rise of Netflix Competitors Has Pushed Consumers Back Toward Piracy (Vice)

Consumer behaviour is strange, isn’t it? Not really if you’ve studied econ 101. Basically, having to subscribe to other services means more cost for the consumer. Naturally, the consumer will turn to a cheaper (free!) option which is piracy. Content providers and creators can bitch all they want about piracy and the intellectual property rights but it’s their competitive behaviour that’s pushing consumers to the free option.

BBRG: Labor Market Is Doing Fine With Higher Minimum Wages (The Big Picture)

Another one for the Econ folk. Time to shut down the people who have only studied econ 101 and keep saying that a minimum wage will definitely cause an increase in unemployment.

It’s not so simple.

Sorry for the light links this week. I haven’t found much worth sharing. Besides, I’ve been too busy binge-watching “Bodyguard” on Netflix.

Delay paying off your Mortgage Early, Build Liquid Assets till Your Debt is Less than All your Liquid Assets (Investment Moats)

Right after I post about how Investment Moats is one of the best Singapore-based financial bloggers to follow, he writes this gem. It’s a topic that many Singaporeans would find useful and I’m sure the broad principles apply to non-Singaporean readers as well.

Dividend Investing Is Bizarre (Fat-Tailed and Happy)

Saw this off Financial Horse’s curated links for the week. US-based reasons so remember that in Singapore, investors don’t pay taxes on dividends since those are taxed at the corporate level.

While the writer is correct in pointing out that investing for dividends means taking on equity risk and that dividends can get cut, the writer fails to point out that dividends can increase over time and the share price can appreciate.

The use of free cashflow to pay dividends instead of reinvesting in the business is also not necessarily a bad thing. There have been many cases of management, flooded with cash, going into areas of business that they otherwise would never venture into.

Financial literacy (FinLit) in Singapore is going to be a thing. After all, sometime late last year, it was announced that all Polytechnic and ITE students would be made to undergo some FinLit module.

I really hope that this programme pays off because there are too many old folks who are quite clueless about basic finance concepts and there are too many wannabe financial bloggers out there who offer shitty advice and they really don’t know any better.

Old Folks Getting Scammed

I read this in the news the other day about how an elderly petrol station attendant got conned of almost $130,000 over a period of 10 years. Now, this elderly man may be an extreme example because of how he fell for such an obviously fake story but how many folks do you know of that trust every single word their financial advisor tells them?

I find that among older folks, it’s only those that have been running their own businesses for some time that are more savvy of when the professional advice they get is dodgy. So, for the majority of folks that fall in the average, they wouldn’t question the advice from a financial advisor regarding what kind of financial products are suitable for them, and which are not.

The oft-used analogy is that if you’re sick, you would get professional advice from a doctor. Similarly, if you have problems with your finances, you should get advice from a financial advisor. To a certain extent, this is true. However, also consider the fact that the barriers to becoming a financial advisor in Singapore are much lower than that for doctors. Even more importantly, is the fact that most of them work for commissions. In other words, the more money you put into their products, the more they earn. To me, that’s why you can’t compare financial advisors to doctors.

And it’s not just older folks

Maybe it’s just me. Or maybe Google’s algorithm is getting too good. But lately, I’ve noticed a proliferation of blogs (and this is just Singapore-based ones!) that start off as personal finance blogs but have now ventured into the space of giving advice on stock-picking.

Now, it’s one thing to give advice on how to save money but when you give advice to people on investing, that’s a whole different ball game. There are some basic principles to investing but giving advice on whether to buy or sell a certain counter is treading into a murky swamp that even professionals fail to do very well.

Take the following for example:

Not going to put a link to this and forgive my amateur attempt to mask their identities. You can go search for the post if you want to but I suggest you spare yourself the agony.

I saw this featured on my feed that Google’s curated and it looks like this blog’s trying to sell some course that teaches you how to invest so that you can spend your time travelling and experiencing the fun stuff in life.

But I read the post and realise that it’s as vapid as the title.

There is NO SUCH THING as a safe return. Dividends can get cut, Bond prices can go down and assuming you get 6% in one year, then what? What are your chances of finding another “safe” 6% yield for another year and another and another?

The worst part about this blog is that they were even featured in a local newspaper which goes to show how FinLit inept our local journos are as well.

In Short

I really do hope that people out there beginning to take an interest in investing find the right sources to start with. In the Singapore Financial Blogger Universe, there are way too many bad sources and few good ones.

In the vein of supporting FinLit, I suggest starting with the following places:

Personal Finance/ Investing with a Singaporean flavour
Investment Moats
Financial Horse
Dr Wealth
The Fifth Person

Anyone from the Riholtz Team (Ben Carlson, Michael Batnick, Josh Brown, Barry Ritholtz)
Early Retirement Now
Mr Money Moustache

There are definitely other good ones out there but this list is not a bad place to start to or even get by with.

Delusions (The Reformed Broker)

It’s true. The academic world has known for a long time that more data points do not necessarily make for better predictions. Unfortunately, as humans, our confidence goes up based on the amount of information we have. this is why I’m all for making investing as simple as possible.

Hackers may have just stolen $1 million from the Ethereum Classic blockchain in a “51%” attack (MIT Technology Review)

So much for the much-vaunted about revolution of blockchain. I chanced upon this soon after reading another post on Marginal Revolution about how blockchain technology is less secure than people think it is.

The funny thing is that the Marginal Revolution (MR) article is on a study about how, in theory, the blockchain can be compromised and then, this MIT article shows the execution of it. I may be misinterpreting the article but it sounds like what happened in Ethereum Classic is an actual happening of what’s described in the paper the MR article talks about.

Which brings us to the more important point – technology progresses and improves lives, but often not overnight in the way that people in 2017 were making blockchain out to be through the way they invest their money.

Updating My Favorite Performance Chart for 2018 (A Wealth of Common Sense)

Check out Ben Carlson’s yearly tally of how various asset classes fared and their performance in subsequent years. It’s interesting and tempting to use the table as a gauge of what’s currently cheap or expensive but the table only goes back as far as 2009 so to use the table for any sort of investment decision is dangerous.

For example, the 10 year tally shows that REITs, Large Cap (US stocks), Mid Cap, and Small Cap were the best performing asset classes over the 10 year period and in terms of frequency, it holds too. However, we have been in a bull market and so to extrapolate the same sort of performance for another 10 years may be detrimental to your portfolio if a deep bear markets follows.