Best Things I’ve Read All Week (7 May ’23)

QQQ

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Money Can’t Buy Happiness…Or Can It?
(Of Dollars and Data)

I’ll be the first to admit that I was one of those who bought into Kahneman and Deaton’s finding that earning more than $75,000 per year doesn’t make one much happier.

And of course, I think it was earlier this year or late last year when mainstream media was publishing headlines about the new study that found that happiness actually rises with income all the way to levels up to $500,000 or something to that effect.

So what gives? I’m glad Nick Magiulli breaks down the latest study by Kahneman and Killingsworth (author of the study which had findings opposite of Kahneman’s) which aims to resolve the difference between the two studies.

So it turns out that Kahneman and Deaton’s study was measuring unhappiness and this latest study also finds that more money only makes happy people more happy while it does nothing for unhappy people.

Ultimately, happiness comes from within.

The Singapore Terrible Index and the Glorious S&P 500 Index
(Investment Moats)

I’m not going to comment on the snarky tone that Investment Moats has taken on of late.

Let me state the positives. I agree with Kyith that Mr. Loo of 1MDB fame has been giving bad advice when it comes to investing in Singapore equities. As pointed out by Kyith, even if the STI’s performance has been bad, the STI isn’t the only game in town.

I also agree that the assessment made that Mr. Loo’s criticism of the STI is not exactly accurate because, in his YouTube videos, I’ve never heard him cite returns that account for returns in a common currency. The S&P which Mr. Loo prefers is denominated in USD while investing in the STI or Singapore equities is denominated in SGD. So if you want to be honest, you need to account for the impact of FX rates on returns.

Mr. Loo is a brilliant marketer and promoter but he is certainly no investment guru. If anything, I find him becoming more and more like a Singaporean version of Robert Kiyosaki. He could be right on his market calls but he may not be right for the right reasons.

Ok, that aside, let me point out the parts of Kyith’s post that I have problems with.

First, Kyith uses the returns from a fixed time period (1970 to Apr 2023) to make his point that investing in Singapore equities has been pretty ok. I suppose he did that because that’s the entire history of the returns available. The problem I have is that taking an arbitrary starting point like 1970 is just a bad analysis because that is cherry-picking a starting point that could be biased towards/against the calculated returns. I wouldn’t have an issue if he had presented rolling returns (maybe 1, 3, or 5 years) for comparison.

Second, I’m not sure why he bothered to compare investing in Singapore small-caps with the S&P500. You’re basically taking on very different risk-return profiles here.

Third, this point is particularly important because I’ve seen many other financial bloggers make this mistake. If you want to compare returns, you should use investable returns. I’m not sure how investable the S&P500 and MSCI Singapore indexes were in the 1970s but even in more recent times, I’m pretty sure that investing the S&P500 through an ETF or index fund that tracks it is going to be lower cost and has less friction than a fund that tracks the MSCI Singapore Index. This is going to make a big impact on the returns an investor is likely to achieve. Similarly, this is why I wouldn’t have brought up the Singapore small-cap index because those many of the names on the index are likely to see the kinds of returns promised by the index once you actually account for bid-ask spreads and other friction that come with those less liquid names.

Yeah, so that’s all I have to say on the matter. I hope that what I’ve shared comes across as constructive criticism and if anyone gets offended by what I have to say, then I can only say that this wasn’t my intention.

Additional Buyer’s Stamp Duty (ABSD): How Much You Have To Pay To Own Multiple Properties & 5 Ways To Avoid ABSD
(Dollars and Sense)

The recent move by the government is definitely targeted at the hot money moving in Singapore’s property sector.

It seems to me that the private property market in Singapore is a whole different ballgame now. It’s all about making returns rather than for the utility of staying in the property.

On one hand, you have the Singaporean/PR who believes that property investment is a surefire way to get wealthy.

On the other, you have foreign buyers looking to move wealth out of their home country and I guess one of the easiest ways to move wealth and ensure that the wealth gets preserved is to move into real estate (Singapore is by no means unique in this regard).

It’s no wonder that I see many former students only in their 20s choosing to become property agents. After all, if one deal nets you as much income as your peers earn in a whole year, then what’s the point of getting a deskbound, 9-5 job?

Given the dynamics, I’m not sure I want to be a private property buyer in this market. You’ll need the continued flow of hot money in order to make money from property investment and we know how fast sentiment can change.

Best Things I’ve Read All Week (30 Apr ’23)

A quarter of the year is gone. May the other three-quarters be good for you.

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What Beat the S&P 500 Over the Past Three Decades? Doing Nothing
(Morningstar)

Let your winners run.

MAS proposes stricter standards for prospecting, marketing financial products
(The Business Times)

(The article is hidden behind a paywall)

From the gist of the article, it seems that MAS wants to propose stricter standards on how financial products are advertised. While the article refrained from explicitly identifying the kinds of businesses that currently do this, it seems that the measures are aimed at the sort of people that market financial products at roadshows or the sort that advertise products with high returns on social media without further details on the type of product or the risks involved.

The Problem With Being House Rich
(A Wealth of Common Sense)

While the post is about US homeowners, the same applies to Singaporeans. Maybe even more so given the high rate of home ownership in Singapore.

The 15HWW Permanent Portfolio Update: April 2023
(15HWW)

For those looking to emulate Mr. 15HWW, I suggest taking the following into consideration before going further.

1. The portfolio hasn’t exactly been permanent since crypto was in the original formulation of the portfolio. Remove crypto and reevaluate the performance for a better gauge of the portfolio’s performance.
2. Benchmark the portfolio against something that has actual risk-premia rather than the CPF SA which is essentially a risk-free long bond. This is only fair as CPF is a government-backed scheme while equities, bonds (if they aren’t government securities), and crypto obviously have a risk-premium baked in.
3. His “permanent” portfolio carries FX risk. This isn’t an argument for or against the dollar. Once again, just pointing out that investing in Berkshire, Gold, and Crypto all carry FX risk relative to the SGD.
4. I’m not sure why there’s been a rule change from “rebalancing” to “no rebalancing” but this essentially means that this portfolio will eventually be STI/Berkshire/Crypto-heavy. This is given the assumption that equities and crypto have a higher expected rate of return than cash/bonds/gold. I’m not saying it’s a bad thing (see first link above) but just something to be aware of.
5. You don’t measure volatility based on drawdown. But that’s also why this portfolio can’t be benchmarked against the CPF SA (vol = 0, drawdown = 0). Just saying.

I’m not saying that this portfolio is bad or it shouldn’t be implemented. I’m not about to tell someone how to invest their money. I’m just saying that I disagree with many of the points made in the post and if you want to get an accurate sense of the actual risks or how to measure those risks present in the portfolio, then you need to consider the above points.

All in all, the permanent portfolio isn’t so permanent after all.

How NOT to write a post that’s based on data

Most people can’t process numbers. I’ll be the first to admit that numbers don’t come to me naturally and even with my training in economics and finance, I’m still more of a narrative person than a numbers person. However, because I’ve seen enough people try to interpret numbers (and fail badly!), I usually can tell when it’s an obvious #chartcrime or a bad attempt at using numbers to try and provide credibility to an argument.

I’ve been following Vina Ip’s blog for a while now. For those who don’t know, her blog is Property Soul and she has written quite extensively on the property scene in Singapore. Her posts that deal with the property market are quite insightful because she goes into quite a bit of detail on the obscure numbers that many Singaporeans may not be aware of unless they follow the property market closely. For example, she has blogged about how the sales launches may not be as successful as the media and property developers make them out to be due to industry practices such as returns after the initial booking.

So, when I saw the title to her latest post “The truths behind our higher incomes in census 2020” I thought I was in for a treat. Sadly, the title is clickbait.

In her post, she references the Department of Statistics Singapore’s 2020 census and goes on to ask if Singaporeans are really more affluent as the data shows. Specifically, she asks four questions:

• Who are the highest income earners in Singapore?
• What is the real picture of Singapore’s household income?
• Why are more residents staying in condominiums compared to HDB flats?
• Why many Singaporeans can’t afford private homes despite higher incomes?

Question One

Honestly, I don’t know what she means by the first question because she just quotes a bunch of meaningless statistics from the survey and then concludes with:

However, take note that census 2020 was conducted in the midst of Covid-19 from early February till end December last year. Respondents who submitted their completed survey over the Internet was 64 percent, followed by submission through CATI (Computer-Assisted Telephone Interviewing) at 25 percent and face-to-face interviews at 11 percent. We can’t deny the fact that the higher the income of invited respondents, the higher chance they have access to internet, computers and smartphones at home, and the higher their response rate. Therefore, the survey results may be biased.

I don’t know what she’s smoking but in Singapore, I don’t think there is an upward bias in wealth or income surveys because of accessibility to the internet. As far as I can tell (and internet/mobile broadband penetration rates will confirm), pretty much everyone in Singapore is connected to the internet.

Furthermore, this is a census and not a survey. Censuses pretty much reach the entire population and therefore, there’s little worry that the sample is not representative of the population.

Question Two

Vina also doesn’t make a very good attempt to answer her second question. All she does is cite the median gross monthly income figure and then go on to say that the lower-income families (either earning $4000 or $5000 per month) form a larger percentage than the highest income bracket of $20,000 or more per month.

In my opinion, this doesn’t give a “real picture” of Singaporean household income. How does this proportion compare to the previous census? And like she mentioned in quote above, last year was a year impacted by COVID. So, are the proportions cited above likely to be a temporary thing or will it be more permanent?

To complete question two, Vina then goes on to say that there is a marked increase in households with no income (“52 percent increase in households with no income”) relative to the previous census. The first thing to note is that this is bad reporting because while it is true that the number of such households have increased by 52%, the proportion of such households have actually decreased.

From Chart 1, you can see that the number of traditional retiree households (green box) have increased from 4.1% to 7.5% of the total resident households. The proportion of younger households without a working person actually decreased from 6.4% in 2010 to 5.8% last year.

Source: Key Household Income Trends, 2020, chart 1

Even among the “Households With No Working Persons Excluding Those Comprising Solely Non-Working Persons Aged 65 Years & Older”, the Key Household Income Trends paper notes that “Households with no working person could have income from non-work sources”.

In short, based on this part of the data, it’s tough to conclude that things at the bottom are worse. In fact, things seem to be better.

Question 3

Her answer to this question is basically to say that more people are staying in private property because more private property had been built. Hence, I have no idea what the point was about. I’m not even sure how this point relates to the income trends.

Question 4

I’m not even sure this is something that can be picked up from the key household income trends census data. For this point, she uses a hypothetical example to show why owning a private property may not be sustainable for a couple who earns $9,000 per month.

I think her point would have been better served if she used the actual median monthly household income figure (in case you’re wondering, it’s $9,189) from the survey. However, my question would then be whether the typical person staying in a condominium is at the median and whether the example she used applies to that person.

For example, many of my colleagues who are staying in private property did not buy their condominium last year. Even if they did, I’m pretty sure it wasn’t their first home which means that the down payment and loan numbers used in her example do not apply as they would have profits from their earlier property.

She then cites her own 3-3-5 rule as a yardstick for affordability. I don’t necessarily disagree with her rule but like all arbitrary rules (for example, stocks are cheap if the P/E is 15 or less), you have to think of these as rough measures that may bound to stop working at some point.

Conclusion

Now, I’ve thrown a lot of shade at Vina Ip but this is a cautionary tale for all of us.

Sometimes, as humans, I think we already have a narrative in mind and if we don’t keep our minds open, we just end up seeing what we want to see even if the facts could be interpreted differently. I admire her conviction to put her view out there. Unfortunately, in this case, I can’t agree with the interpretation based on the facts I see.

Best Things I’ve Read All Week (13 Dec ’20)

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Tony Hsieh’s American Tragedy: The Self-Destructive Last Months Of The Zappos Visionary (Forbes)

So while the majority of the business world were mourning the passing of a business visionary, it appears that in recent years, Frank Hsieh’s genius has led him down a path of self-destruction. As much as business visionaries and geniuses should be held up as examples of how they have transformed the world, we shouldn’t forget that there is often is another side – the side that shows the cost of the genius and vision.

Tesla Bears: A Short Short Story (Visual Capitalist)

Nice visualisation and accompanying commentary on how the shorts have been killed on TSLA. By the way, I saw another this same statistic (that TSLA shorts have fallen to around 5% of outstanding shares) on The Compound. If you’re a trader, this may just mean something.

Investing For The First Time? Here’s Why It Is Better To Invest In Gold Than Stocks (Vulcan Post)

I’m putting this one here as an example of what NOT to read. When you see mainstream media promoting a certain asset class, please run for the hills. Even if they say it’s a sponsored post and what not, it’s still disingenuous to promote a certain asset class or financial investment if you’re not invested in it or if you have no idea what the downsides are.

Ecohouse conman finally arrested (Property Soul)

I almost forgot about this case. But quite funny to see the disconnect in Singapore where there are people who don’t trust that their monies are safe in CPF while there are others who feel it’s ok to pour their savings into some property development on the other side of the world.

Best Things I’ve Read All Week (15 Nov ’20)

=D

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What is Liquidity? (Part IX) (The Aleph Blog)

A terribly important piece. I learned a lot.

The basic principle of liquidity of an asset is that it must be able to (more or less) retain its value if the asset needs to be sold. What many people (myself included) often forget is that the actual liquidity of an asset depends a whole lot on the environment as well.

The growing U.S. deficit raises questions about funding as China cuts U.S. debt holdings (CNBC)

This may be the start of something. But I certainly didn’t expect it to be JPY.

How Property Developer’s Discount Affect the Appeal of New Launches Versus Resale Private Properties (Investment Moats)

Good read on some of the inner workings of the property market in Singapore.

Consideration when buying property in Singapore

In a previous post, I mentioned about our recent decision to move to a new home and my brief thoughts on some of the considerations that we had when buying the new place.

In this post, I hope to explore some other angles to buying a property in Singapore. Hopefully, this would help if you are looking to buy a property in Singapore.

First things first, I’m not a professional property investor, analyst, or researcher. There are tons of others out there with more experience and knowledge about the property market in Singapore.

What I do have is some knowledge and training in economics and finance. And well, buying a property is one of those decisions that economics and finance is well suited to tackle.

Why are you buying the property?

This is perhaps the most important question to ask yourself before buying the property.

Are you buying the property to stay in? Or are you buying the property as an investment? Or perhaps, both?

The reason why I think this question is so important is because many people often confuse what their objectives are. They start with buying a place thinking that it’ll be a great place to stay but after talking to some people who are in the industry, they then decide that they should buy the biggest property they can afford because it’ll be a great investment.

While the two objectives may not be mutually exclusive, I find that seldom do the two converge. Or at least if they do converge, it comes at some cost to the buyer.

Let’s take the first scenario – you are buying a property because you need a place to stay. In this case, the analysis is simple. Treat all the associated costs as a housing expense and simply find the one that minimises cost or maximises utility for each dollar of housing expense. Let’s see how this applies.

Given the choice between buying a condo or resale HDB, both on a 99-year leasehold, roughly of the same age, and that’s located in the same area, what would be your choice?

In this case, I would go for the HDB resale simply because for a unit with the same floor area, the cost per square foot is less than half that of the private condo. I find very little upside to having a walled community simply because a housing type is labelled “private”.

Maybe you get some sort of kick living in private property because of the gym or the pool (beware that these come with the associated higher maintenance cost) but the point is, when you take on the bigger mortgage, you’re aware of why you’re doing it.

You can take it one step further and figure out if it’s better to rent or to buy. I think it’s a very good exercise you could do and at the minimum, the basic considerations would be the rent vs. mortgage and maintenance costs as an owner. Once you work out the NPV of renting vs. buying, you can then factor in the fuzzy stuff like emotional attachment to a place as an owner.

If you assume that the property will act as both an expense and an investment, then automatically, you must factor in the rate of return that you expect to earn on the property as well as think of how you would (eventually) monetise the asset.

However, you must be aware that if your home is also your biggest investment, then you must also recognise that you are taking on a lot of concentrated risk.

For example, if for some reason you have to liquidate your investments, it will also mean having to move house and remember that property, as an asset class, isn’t very liquid.

Furthermore, if you cash out of your home in the future, you’ll need to realise that if property prices move up in tandem, then selling your place at a good price means buying another place at a higher price.

Besides the there are costs of moving to a new place. Downsizing or moving to a cheaper neighbourhood is another strategy but you must recognise that those options have their associated costs to them as well.

Besides that, remember that opportunity costs matter. Investing most of your wealth in property that typically returns the same rate as inflation also means that you give up earning returns in other asset classes such as stocks.

What can you afford?

So once you’ve decided why you’re buying a property, the next thing is to decide what your budget is.

The first thing to recognise is that not everyone who says they have your best interests at heart really has your best interests at heart. After all, consider the incentives of your real estate broker. They earn a commission (~ 2%) for each sale transaction that they represent their clients.

If you understand this, then you’ll understand why an agent might try to encourage you to buy a bigger property than you might want to or need to. And this is precisely why you hear stories property agents telling their clients to “upgrade” from one property to two or agents telling their clients to “upgrade” from HDB to private property.

If you ever find yourself seduced by some of these pitches, go and re-read the previous section. Know why you’re buying the property in the first place.

Also, don’t listen to the bankers. They’d love to lend you more, particularly against collateral that they can seize in the event you default on the loan. That’s the reason why there are government regulations on how much loan you can take. The banks won’t need protection. It’s naive buyers that do.

I’ve found that the best guide to how much house you can buy comes from Property Soul. She has a 3-3-5 rule that provides a good rule of thumb for how much expensive the property you are trying to purchase should be. Note that the rules of thumb are fairly conservative so if you stick to her rules, you’ll be safe.

Conclusion

In short, this post isn’t meant to be a guide to buying property in Singapore. Instead, I hope that you get a sense of the financial considerations that one should take note of when buying a property.

Postscript: After I wrote this post, apparently the regulators have become aware of some of the more egregious practices that have been going on in the property market.

Buying/Selling property in times of Covid-19

tl;dr

We moved to a new place and that decision was triggered by my wife thinking about whether to change the main gate. Buying a property is fun and games. Selling a property, not so much. But it let us cash out for some nice gains and get an upgrade in terms of location.

We bought a new place!

I thought of doing this post some months ago, in the midst of the hell that is selling the house and moving to the new one. And all this on top of the I had to juggle some things at work that I couldn’t exactly run on autopilot.

However, I put off writing this as I didn’t want to jinx the deal before everything was done and dusted. Now that we’ve officially handed ownership over to the buyers, I can finally write this post.

The decision to look for a new place started last December when my better half thought of changing the main gate. The gate had been creaky almost ever since we moved in and we had been thinking of a better main gate that would be more cat-friendly.

Then it hit me, why not just move to a new place?

We had just reached the Minimum Occupation Period (MOP) on our Build-to-Order (BTO) flat a few months prior and I think moving to a better location had always been on the back of our minds.

Furthermore, we didn’t do our previous place up with cats in mind and over the last few years, we had a patchwork of modifications to make the place safe for cats. Buying a new place meant that we could start from a blank slate that would incorporate more cat-friendly elements in the design of the space.

In this post, I hope to share some of our experiences in buying and selling property in Singapore. This is not meant to be a definitive guide but I hope to share some of what I think are some of the more important considerations that I’ve learned throughout the whole exercise.

There are some things I would have done differently if there was a chance for a do-over while there are also some things I think we really nailed.

Buying our new home

I guess buying was the easy part.

Over the years, we already had an area in mind that we would want to move to if we ever decided to get a new home. That pretty much narrowed the search for us.

In terms of the house-hunting process, now that was a different story. We aren’t particularly fussy but we figured that if we move, the new place had to be as good as, if not better than our old place.

The location that we had our mind on would definitely better in terms of location as it was much closer to an MRT station. The downside was that apartments in the area were a lot more expensive, especially if we were to look at private apartments.

Some of the older apartments in the area were also old enough that we could potentially outlive the lease as both newer private apartments and HDB flats run on a 99 year lease. So, we confined our search to flats built from 2000 and after.

To keep things short, we saw some nice places and some really horrible ones. In the end, we settled for a place that pretty much had the same layout as our previous place. Together with renovation magic, we’ve made it into a place that works very well for us.

The flat itself is breezy, located extremely close to the MRT and other than some stinky drain pipes, there isn’t really anything bad about place. We’re keeping our fingers crossed that we don’t get any nasty surprises but so far, we’re really loving our new place.

The biggest downside is the new, increased mortgage that we’ve had to take on. It’s double our previous mortgage but to be fair, it’s not unaffordable by any stretch. Of course, the proceeds from the sale of our previous place helped to offset part of the cost of the new place so if we had not sold our previous place, that value would have just remained locked in within concrete walls.

Selling our place

To be honest, there isn’t much to dislike about our BTO property. It’s cheap, the neighbours are great and the environment is quiet and peaceful. On top of all these, the more recent BTO flats have nice 3/4 height windows and a nice, regular layout that doesn’t leave you with awkward corners or much wasted space.

If the property’s so good, then why sell?

One, the location was pretty inaccessible. Our previous place was about 15 minutes by bus from the nearest MRT station. With the best of conditions, it was also a roughly 30 minute drive to my workplace and a 45 minute journey by public transport to my wife’s workplace.

Second, there were a raft of BTO projects that were launched after ours. This meant that if we did not sell now, there would be increased competition within the next few years.

It was also later that I learned from more learned observers that property prices in that district hardly move much which means that there wouldn’t be much more upside in terms of price appreciation if we were to hold onto the place for a few more years.

The biggest downside to selling would mean having to take on another (and much larger!) mortgage when we were quite close to full paying off the previous mortgage.

The other thing I’ve come to realise is that property as an asset really sucks because of how illiquid it can be. It took us a full 7 months from listing to actually get an offer that we finally accepted. (Thanks Covid!) For the actual completion of the sale, it took us a full 10 months from listing to completion.

Furthermore, we had to drop the asking price once because of a desperate seller some floors above us who sold their flat at- or just under-valuation. This affected the valuation of all the other flats and in Singapore, the valuation of the flat affects the amount of loan that the would-be buyer can get from lenders. In the end, we were fortunate that our place fetched a price that wasn’t too far off from what we initially hoped to get.

The other thing that sucks about property transactions is the amount of paperwork that has to be completed. Even with a property agent helping us, the paperwork that to be submitted to lawyers and the procedures that we had to complete on HDB’s website still felt like we had to jump through a few hoops.

HDB, if you’re listening, you might want to improve your ‘Windows Inspection’ form. It totally doesn’t make sense that we had to select the option on the form even the HDB officer came to inspect the flat. That option should have been checked based on the outcome of the inspection.

Selling the flat also meant having to meet all sorts of prospective buyers. From an Ah Beng tattooed dad who had to consult his fengshui master to a ‘Rich Man’ looking to downgrade from his Condo to this Mother of two who couldn’t keep her hands off flipping the light switches to see how our place looked in natural light. You name them, we’ve seen them all.

Not sure why, but some of them really represent the kind of Singaporeans that make me swear off going on holidays with tour groups. To be fair, there were some nice viewers as well and I believe we sold our place to a very nice family.

It also didn’t help that we had to tidy the place each time there was a viewing as we have a fair amount of things. This is the kind of costs that people don’t factor in because it’s not easily quantifiable.

Ending Thoughts

To conclude, buying and selling property takes time and a lot of work. You may enjoy it but I certainly have better things to do with my time. However, I wouldn’t change it because the change in location really makes things much better for us and the livability of new flat is really better than the old one.

Best Things I’ve Read All Week (23 Feb ’20)

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.

Best Things I’ve Read All Week (8 Sept ’19)

Linkfest alert! Somehow lots of good stuff to read this week.

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Millennials agree on the best way to invest—but they’re wrong (CNBC)

Never thought it’d be the same in the U.S. but real estate is probably most Singaporeans’ favourite investment vehicle as well. So much so that the government has to intervene in the property market in a HUGE way – something like 90% of Singaporeans stay in public housing and the government has slapped all sorts of taxes on buying and selling property for investment purposes.

I think it was Shiller that did a study showing that in the long-run, real estate price gains return roughly the same rate as real GDP growth which in a developed economy is probably 2-3% p.a.

The whole “I like it because it’s tangible” is a cop-out. The real reason is leverage and due to the fact that most people don’t understand opportunity cost.

“HE’S FULL OF SHIT”: HOW ELON MUSK FOOLED INVESTORS, BILKED TAXPAYERS, AND GAMBLED TESLA TO SAVE SOLARCITY (Vanity Fair)

I’ve never been a fan of Elon Musk. Too much self-promotion and hype.

Modern Monetary Theory (MMT) Has An Argentina Problem (Global Macro Monitor)

That’s right. The problem with MMT is when people lose faith in your currency. However, the U.S. case for efficacy might be more akin to Japan’s experience rather than Argentina’s.

Gold (in real terms) (The Big Picture)

Once again, a good reminder that many people don’t understand real rates of return and opportunity cost. I know of a senior colleague who held most of his assets in gold since the 90s and sold out during the GFC to rotate into REITs.

He wasn’t prescient of all-knowing. He just acted on the advice of another colleague. The funny thing is that he never compared how holding much of his wealth in gold compared to holding his wealth in equities for much of the 90s and 00s.

Lucky for him, he’s made more than enough to retire comfortably.

Financial Horror Stories (The Wealthy Accountant)

Extremely good read. Underscores the importance of understanding accounting as an investor. Seriously makes me think of learning accounting at a more in-depth level.

The Trump Narrative and the Next Recession (Project Syndicate)

Sometimes I wonder if Trump is trying to get the economy into a recession so that he loses the election. The article by Shiller gives a behavioural/psychological take on how a recession would cause Trump to lose the election.

Best Things I’ve Read All Week (16 June 19)

We’re halfway through the year! Time really flies, doesn’t it?

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The Fecundity of Endowments (Northwood Family Office)

A paper on safe withdrawal rates for long-horizon portfolios. The paper proposes a safe, simple, and dynamic approach to the safe withdrawal rate. Totally makes sense and I can’t imagine why no one thought of this before. (h/tip to Investment Moats for this)

Go read the entire paper. It’s only 8 pages long and not very technical.

Georgetown study: ‘To succeed in America, it’s better to be born rich than smart’ (CNBC)

I can’t say that I’m surprised at this finding.

I wonder if we’ll find similar results in Singapore or will we find that our much-vaunted education system is really a social leveller?

Some Good News For Retirement Savers For Once (A Wealth of Common Sense)

Ben Carlson breaks down the findings from a Vanguard paper and notes how stark the difference is between voluntary enrolment and automatic enrolment in 401(K) plans.

Ladies and Gentlemen, this is why CPF is forced upon you.

Unfortunately, along the way, the usefulness of CPF gets diminished by letting people use it for (overpriced) housing. Those who need CPF for retirement will have spent it on housing and those don’t…well, CPF is a drag on compounding wealth.