Thursday, August 27, 2015

What I did when the Market tanked

Looking at the title, this is obviously a trap to lure people to read things that has nothing to do with the title at all, So don't say I didn't warn you lol

I was away from Singapore during the worst two days in Singapore's stock market history. As the world's stock market went tumbling down, I was sitting on a bed waiting for breakfast to be served. Do you ever have a feeling that the market always crashes when you're not around? It's like there's someone out there who just knew when to screw up the market when you're away on a holiday. Anyway, where did I go? I went Bangkok.

I always go to Fuji restaurant in Bangkok for my Japanese food fix. I'm pleasantly surprised to see them opening up multiple branches. The sashmi there is to die for, especially with the low price. 

This was less than a week since a bomb went off near the Erawan shrine (the four-face buddha), so of course, it's with a little trepidation that I leave the safety of Singapore. This trip was full of incidents that, if I'm more superstitious, I'll have totally abandoned it. Here's a list of problems:

1. The bombing incident at Bangkok, which occurred less than 1 week before the schedule departure. It's like some godly power telling me to abandon the trip.

2. Unable to change, or postpone the trip, because of work and some un-claimable clause from travel insurance

3. During the check in of the flight at Changi airport, it was discovered that my name isn't on the list despite having a printed confirmation slip from Scoot. It was with a lot of phone calls back and fro to some call centre at Philippines that another flight scheduled 4 hours later can be arranged. Half the day is gone by then.

4. After confirmation of the flight, it came to my knowledge that the hotel is not confirmed. So, this is the first time that I'm going overseas without confirmation of a place to stay.

5. Everything is settled once Bangkok is reached. But on our return flight, we realised that the baggage limit is reached. Why? Because the travel agency didn't include include it in, and we ended up having to pay another sum to settle the issue.

6. And the whole trip have to be marred by another flight delay by about 1h 30 min.

I seldom go on holidays, but when I do, I've the luck to experience all the cock ups known to frequent travellers, haha! Still, it was an experience to have it and perhaps some lessons to learn from all these 'mis-adventures' too. It makes me wonder why get any insurance in the first place lol! Thankfully, the insurance that I bought has this ubiquitous SG50 discount, so I'm paying $26 for two.

These glistering little packets of carbs with the golden sweet Thai mangoes,  poured with the slightly salty and warm coconut milk, is such a treat that I ate it everyday while in Bangkok

How is Bangkok like? I've not been there for a long while..perhaps by at least 5 years? I think the Bangkok now is more cosmopolitan. On the basic level, there really isn't anything different from Singapore. There's a lot more tourist, especially middle eastern ones, who are all clad in black with the women entirely covered except for their eyes. They are looked upon by the locals with a little bit of curiosity mixed with caution, especially in light of the nationality and ethnicity of the bomber in the recent incident near Erawan shrine.

This should cost about 60+SGD? Here's a very decent meal for 2 cost about 50+ SGD, including all the sashmi you ever wanted to try in Singapore but is deterred by the pricing. 

The locals are full of shiny examples from K pop celebrities, with their straight Korean brows, whitened skin and dyed curly hairdo. Almost every female I come across, which is about 9 in 10, all fully clad with make up. From the socialites dining in atas places near Central and Paragon area, to the cleaners and servers who work in the food court, almost all the females wore makeup. On more than one occasion, I saw the shopkeepers finding some reflective surfaces near their shop fronts and applying their mascara and lipstick. It seems clear that the South Korean wave had also hit this place, and pretty hard too. This is an interesting phenomenon to observe as an outsider.

One of the most glaring observations, other than the heavily made up female local population, is that there is apparently no people older than say 50 years old in Bangkok. If you see someone around that age in Bangkok, I can bet you my last Thai baht that they are tourist. Food courts (yes, they have that concept too, likely imported from Singapore since I saw Food Republic there as well) are also served by staff and cleaners no older than 40. It makes me think about the kind of people whom we hired back in Singapore. Where did the elderly folks in Bangkok go to? Why are the elderly folks in Singapore still working at their age? Again, the stark contrast in the age of the workers is something to take away from this trip.

I love MBK. It's a blast from the past with all these old tech gadgets. Going there is like going back to the 90s in Sim Lim Square, complete with counters filled with pirated games and DVDs. Look at the macintosh! 

While we are walking around, I wanted to try out some authentic Thai restaurant in the shopping district. After searching for a few hours, we came to the realisation that there is no authentic thai food. I mean, if a tourist comes up to me in Singapore and ask me where to find a restaurant that serves authentic Singaporean food, I'll be hard pressed to say which one. Likely I'll recommend hawker food, but again, what food best represents an authentic Singaporean food experience? This is a difficult question to ask, and a deeply ideological one at that. Our identity is often tied up with food, and perhaps Singapore is just like that - a rojak of different cultures all mixed together, with a spicy but unifying sauce of wanting to do better than the countries we came from.

Bangkok serves a lot more international food than its own food. Any type of cuisine that you crave for, you can probably find them there. But just like Singapore, there's an overwhelming bloom of Japanese and Korean food. Everywhere I go, I see Japanese food culture influence - Harajuku's ice cream crepe, thick pork broth ramen, Sushi bars and omu rice. I don't like Korean fare, and don't care to try any of it but I see Korean hotpot and buffet sprouting every corner. Will it take over their local cuisines? I think yes, eventually, though I hope not. I really love my tom yum and mango rice. Anyway, everyone should try the Japanese food in a proper restaurant there. The prices there are really value for money and we feasted on sashimi like a mad Robinson Crusoe on rampage.

I went there exactly a week after the bombing incident. There's a lot of people filming there. I can see at least 3 groups of filming going on there, with a lot more tourist using their cameras and recorders. Wife said one of the faces got chipped off, but I was too concerned about hurrying through that place to really notice.

On a side note, you can see that security is stepped up tremendously. Every junction and every entrance and exit of shopping malls are fitted with a guard and a metal detector. You have to open your bag every single time you enter. Army and police officers dotted the streets and malls, and the general feeling of safety is there. But for those who had been on guard duty, you know how safe these acts are. You can't check everything but it does bring a certain level of safety psychologically. Maybe that's all that matters. I still went to Erawan shrine, on the strong request of my wife, and prayed that everything goes well in our family and friends. Will go back to return our wishes and make more offerings of flowers and incense again, we promised.

Thursday, August 20, 2015

Aspial 5.25% bond - Good buy or Goodbye?

Aspial, the group that is better known for the brands under the group: Lee Hwa jewellery, Gold heart, Citigems, as well as the pawnshop that litters all over neighborhoods in Singapore like a blue plague - Maxicash. They are offering a retail bond, one of the rare ones in Singapore, at an interest rate of 5.25% per year.

The question on my mind is whether this is a good buy.

Bonds being bonds, are capital guaranteed upon maturity. But the guarantee of a bond is only as good as the solvency of the company issuing the bond. And we really just need it to last 5 yrs until the maturity of the bond in order for the bond investors to get their capital back.

I have such a hard time looking for annual reports at their main website that I have to resort to SGX's site for their financial information. There's even a missing file in their link for the annual report, tsk tsk. Usually I like to take my info first hand from annual reports, so this is quite an exception. Still, I must commend SGX's revamped site. It's quite useful to learn about a company in a very short time.

Here's the chart showing their debts and various ratios relating to debt:

Good or bad?

Their debts are just mounting year after year. But increase in debts is okay if their debts are just a small portion of their assets. Just how much of their total assets consists of debts (both long and short term)? In FY2011, it was 72%. Then progressively in FY2012, it went up to 76%, then FY2013 was 74% and finally FY2014 was 77.5%. So that's about 3/4 of their total assets. Okay, that's still alright, because perhaps that's how their business model is based on. Different industry have different debt levels to run smoothly and I'm certainly not an expert in deciding what the right level of debt is for their business to run. Debt can be a good thing in the right hands.

But can they pay their debts from the income and cashflow generated from their business?

Total revenue is kind of stable, but their net income isn't coming in as well. All their earnings ratio, returns ratio are dropping, as shown below:

Okay, drop in net income is still okay as long as their cash that it brings in is enough to pay upkeep the cash burn. So, do they generate enough cash in their business?

Cash flow from operation is just negative. It seems like most of the cash flow comes from financing, and that part of the cash flow contributes enough to have the net change in cash as positive. Verdict? Debts is their way of financing their business, which isn't generating enough cash flow from their business operations and they have to progressively borrow more to upkeep their cash burn.

This is not a good company to buy, if you ask me. The bonds, however, might be a different matter altogether.

Can they survive for 5 yrs? Likely, as long as they can continue to borrow money. Or if the banks are reluctant to offer them more cashline, they can resort to another one of these retail bonds, likely at higher interest rate in the near future when their cash runs dry. They probably won't die within 5 yrs, and might even enjoy a revival of sorts in their pawnshop business if the economy downturn comes in the near future.

I wouldn't let my parents get any of these though, because there's always a risk of default in bond in this unrated debt that they are offering. It's on a whole different level from the FCL bond that is offered to retail earlier this year at 3.65 %. Since the min bid is $2k, I might get in for a small amount, maybe 2k to 3k, which is only a tiny percentage of my portfolio.

Nothing more, and definitely, no show hand in this bond. Application had started already, and will end on noon Aug 26th, with DBS as the sole bookrunner. Trading of bonds will start on 31st Aug and investors will be paid semi annually on Feb 28th and Aug 28th every year, until 2020. News just came in that Aspial had re-allocated $25 million in bonds offered to the public to its placement to institutions. So now, the public tranche is $25 million, down from $50 million.

Wednesday, August 05, 2015

My personal inflation rate

Lizardo here did a very interesting take on the inflation rate in Singapore. He found that based on the official recent 35 yrs of history (1980 to 2015), the average inflation rate is about 2.22% (or CAGR of 1.97% pa) . A longer period from 1962 to 2015 gives an average inflation rate of 2.75%.

I think the official figures might not mean much to you, because it depends on the price of a basket of goods that may or may not be relevant to you. Hence, the concept of personal inflation rate is much more relevant and customised for individual's taste and consumption patterns. To get a good proxy of my own personal inflation rate, I thought that we can compare how my expenses rose over the years. It's not the best way to calculate it, but it's fairly good approximation.

I had my first track record of my expenses back in 2008. Back then, I wanted to try tracking in detail for 1 month, or at most 2 months. But before long, 8 years had passed and I have a full record of my expenses from 2008 to 2015. Everything is included here, including parent's allowance, mortgage, daily expenses, etc. Here it is:

For 2015, I annualised the expenses plus another x amt to approximate the usually more spending that occurs towards the end of the year

I highlighted 2011 to 2015 because that's the years in which I shifted from living in my parent's house to my own home with my wife. There's a huge jump in my expenses because there are a few financial bombs that exploded over that particular period between 2008 to 2010. There's a wedding (small bomb), there's a COV and renovation of flat, plus a first down payment (big big bomb) and there's a down payment for a second hand car (small bomb). All in all, the expenses are fairly huge but unlikely to occur again.

Thus, from 2008 to 2015, my expenses increases by an average of 6.9%. To remove the one-off cost of getting a flat and renovation, I also looked at the average increase from year 2011 to 2015, and it worked out to be 0.4%. How about CAGR? From 2008 to 2015, my CAGR is 5.71% pa, and from 2011 to 2015, my CAGR is 3.85% pa.

I think for all purposes in planning, I should use an inflation rate of 4% pa until I have more stable data of my expenses. No hurry.

Monday, August 03, 2015

5 ways to avoid emotional capitulation

I know quite a lot of people are sitting on a huge pile of cash, waiting to be deployed into the stock market when the situation presents itself. I'm always very interested in the psychology of investors and how they intend to cope with the volatility of the market. It's really easy to rationalise and say you will cut loss when the counter goes below a certain level and you will buy in when others are fearful. It's even easier to say that when your cash hoard is very high and you have very little skin in the market.

It reminds me of the difference between a chicken and a pig. When you're served breakfast, a chicken is involved while the pig is committed. A chicken will lay an egg and it won't be any more different before and after giving you the egg. On the other hand, a pig will have much more to lose when it gives you the ham.

Are we also like that? When we have huge pile of cash, we can say a lot of rational stuff and quote a lot of Buffett's sayings. That's because we're involved but not yet committed. When you put in a huge percentage of your networth into the stock market, it might be a different story altogether. Things that you thought you should do suddenly becomes so hard because a huge part of your emotional well being is tied to the money you've put into the market i.e. you have skin in the game now. Welcome to real life, committed pigs!

There's a few ways I can think of to mitigate this risk of emotional capitulation:

1. Research and read up really really in depth into the company you're buying. The level of commitment is directly proportional to the homework you've done into it, and not by the amount of articles you've read that is written by a stock market guru. I personally find that the more you know about the company you've bought in, the higher your confidence in buying an unloved counter. If you just follow others, a little spook will get you running and peeing in your pants.

2.  Invest passively into an ETF. Most of the fears comes from losing your money, and that can come from a company going belly up. Buying into ETF will remove that possibility of individual company going bust because an ETF rejuvenates itself by changing the components. It's like a hydra with the ability to regenerate another head when you cut off one of its many heads. That should provide some confidence in the solvency of the companies you've invested, and hence you can really put in a bigger capital when the going gets tough, instead of cashing out and running away.

3. Diversify your investment. Diversification can come in two forms - firstly diversification in terms of companies and industries, and secondly diversification in terms of timing. Unless you know what you're doing, putting 100% of your money into one or two companies can be a strategy to be a millionaire from a billionaire. It can work tremendously well, but it can fail spectacularly as well. For general folks, it might be better to have at least some semblance of diversification across different companies and different sectors. You can take this further by going into different countries, different assets etc. As for diversification in terms of timing, this is another strategy to enter the markets at different intervals instead of one concentrated timing. The underlying principle is that you can't pick the bottom, so dollar cost averaging will likely make your pickings better. If you're a trading god, then forget what I said here because it doesn't apply to you.

4. Just buy and forget. An ostrich approach will work well if you get into blue chips. Looking at all the gyrations of the price will make you want to act, whereas the correct action is simply to do nothing. So stop staring at the counters in your portfolio and get a life! Come back and see once all the smoke and gunpowder smell dissipates, and you might find a dead body or two, together with a handful of gems.

5. This last strategy is controversial. It's just holding a bigger percentage of cash. I know how useless cash is generating for your passive income, but it serves a purpose. It gives you the options to act on the opportunities that may come and this gives hope. From my experience, those who cut loss and run away from the market are those that are over invested either in one or two companies (lack of diversification) or over invested in terms of total networth. Imagine 80% of your networth is in the stock market and when it crashes, leaving only 40% left, you'll start to panic. Having a buffer of cash will help to stabilise the overall volatility of your portfolio and also allows you to keep on getting in on the good deal that comes in.  I seriously doubt I can invest 100% into the market, even in the deepest depth of the market, because that will make me very jittery. It's like telling a frugal man that he has only 1 week to live and he should spend all his money within that week. What if he somehow out live the week? Thus having some cash left over is going to be more calming on the mind, despite his one week dateline to spend.

So, are you going to remain chicken or are you going to be a pig?

Wednesday, July 22, 2015

How best to utilize the Singapore Savings Bond?

With the recent announcements of the Singapore Savings Bond (SSB) coming up in Sept, which is just 2 months away, there's a lot more thinking on my part regarding how best to utilise this new instrument to preserve and grow our wealth.

The advantages of this savings bond is widely reported in the newspaper. It's that you can cash in and liquidate the bond any time without price risk. For bonds, there is a maturity date and if you hold the bonds till maturity date, there is a guarantee on the capital invested. The price in between the purchase date (if you buy on par) and the maturity date can fluctuate widely, and possibly go down because of the near certainty of a interest rate increase in the short term, but you can sleep well on it. Because if you hold the bonds till maturity, you'll get back the par value of the bond. However, if you cash in early before the maturity date of the bond, you stand to lose (or gain) depending on the price that the bond is trading at that point in time. Well, the SSB don't have this advantage at all.

The other advantage is that the interest rate will pro-rate according to how long you hold. If you hold it for 1 yr, the interest rate of the investment sum will approach the 1 yr bond interest rate. If you hold it for 10 yrs, then you will get the interest rate equal to that of a 10 yr bond interest. Add to the fact that you don't have price risk when you cash out early, this serves as a quick and dirty way to hold your excess cash.

The last good thing about this is that it's guaranteed by the Singapore government. Ultimately, a bond is an IOU from the debtor to the lender, where the lender lends a sum of money to the debtor, with the debtor promising to pay the sum borrowed plus another interest to compensate the lender for lending. Hence, a bond is as guaranteed as the solvency of the debtor. If the debtor crash and burn, so too will your piece of IOU. In this case, the debtor for the SSB is the Singapore government. As good as gold, as they say.

Do bear in mind that you need about 1 month's time to liquidate the bonds. So, it's probably not good to leave ALL your extra cash inside. What happens if you have an emergency where you need a sum of money NOW? Got to think about that.

So how am I going to utilise this new instrument?

1. I'll first put in about 3-6 months worth of emergency cash in it as a first tranche. Since I'm paying my mortgage using cash, and I'm filling up my CPF with cash as an emergency hoard for paying my mortgage, and the CPF pays higher rates than the SSB, I'll likely put in an amount equivalent to 3 to 6 months of expenses WITHOUT including mortgage. I'll rather put my mortgage money in the CPF, thank you very much. Some people are funny, they are actually asking whether they can buy using CPF...

2. Next will be my war chest. Currently they are sitting in my POEMS money market fund, getting about 0.5% pa. If I put it in SSB for 1 yr, I'll get around 0.9% pa. For 2 yrs, it'll be about 1.2% pa and so on until 10 yrs, which is about 2.4% pa (and expected to rise too). Maybe I'll put in 2/3 of war chest inside here and will keep the rest as cash. The exact proportion I haven't worked it out yet..we'll see how it goes.

I'll put in my 3-6 months emergency cash in first, get to know how the system works, and see how to do it regarding my war chest. I'll be a great additional weapon to use, but I still wish we have more retail bonds lol

Monday, July 20, 2015

What would change if you earn $25k per month?

I saw a newspaper article today here that talks about the difficulties of older aged PMETs who are struggling to find work after being laid off in the last financial crisis. In the article, there are several examples of people earning (to me) an extremely high income. There's one getting $25k a month and another earning $9k per month. On Sunday Times, there are a few woman earning $10k and $9k per month, and wanting their significant other to earn as much, if not more.

When did salaries get so high? Is it so easy to get $10k and above per month now? Are they are the top earners or are they the norm? Wouldn't you want to earn $25k per month too?

But the real question is this: if they are earning $25k per month in the past, why are they still struggling to find a job now? Wouldn't they already paid up their debts, saved up a huge amount and semi retired with that high income? I guess not, hence they are in this current situation they are facing. The basic of being wealthy is really just to spend less than what you earned. That is the base of pyramid - the foundation. Without that, other things like investment or insurance wouldn't be able to come in and build a higher pyramid.

If you start earning $25k per month, what would change? In order to earn that amount, likely you are going to have a different set of friends and contacts who are likely earning around that income too. You'll probably start eating in a higher end restaurant since they are all eating there. You'll also likely to drive a similarly branded car in order to fit in. I think if you're going to earn this amount of income, you'll likely increase your expenses proportionally too.

Unless you don't mind being a social outcast. It's not so easy as saying if I earn $25k and I keep my expenses constant, I'll save a lot more and so on. There's likely going to be a lot of social pressures, likely coming from your new found friends, colleagues and perhaps your family too. To say no to all these, you really have to align what you want with your money. Do not belittle the social pressure of fitting in with your peers.

So, what should change if you start earning $25k per month? A difficult question to answer. Given a choice, perhaps it'll be easier to earn much lesser and fit in with an environment of people who are also lower spenders. I'm not so sure I have the willpower and the social strength to still earn that much and yet remain a social outcast. It's really not that easy.

Wednesday, July 15, 2015

Should everyone invest?

Before answering that, let's change it to another question: Should everyone have tuition?

No. Because not everyone needs it, though most will probably have to seek some sort of guidance every now and then. If you're highly disciplined, understands what is going on in school and has access to occasional help, then go ahead and do it independently! I also don't have access to tuition at all in my schooling days, but that's a zillion years ago and I know how tough it is like these days. So, in summary, it can be done. You can have no tuition provided you do these and that.

Going back to the original question on whether one should invest, I think the answer is no. To qualify that question properly, I'm talking about investment as in the stock market. I've heard stories in createweath8888's blog regarding people who do not want to touch the stock market at all. These people have very low maintenance and their personal inflation rate is so low, it wouldn't hurt if they didn't invest their money at all. Investment is, afterall, just one way in the great scheme of things. Some people who have excellent career paths can also save a huge amount of money, squirrel it somewhere and use it sparingly till the end.

Assuming you want financial freedom (and always bear in mind that not everyone is aiming to have that), and here are some other ways to reach it:

1. Work like crazy, save like crazy, live in a low cost environment so that you can spend less without working anymore. This range from migrating to another country to living with nature in a self sufficient community. There's a movement in other countries where people live way below their means, become self sufficient and generally living a life without the need to use much money at all.

2. Do your own business. Once you achieved a certain level of success, the business runs without you and you will have a stream of income coming in till your retirement. I would't say this is passive at all, but it's still a more reliable income than depending on someone for work. At least you can control some of the variables more than a mere employee can. Could be an good option, or worse, depending on whether you succeed or not, haha!

3. Marry a rich partner. Hey, it works, but not for me. More likely I'll make my partner rich LOL

Monday, July 13, 2015

6 problems that prevent students from scoring

This article is first published in my tuition site here. I thought it'll be great to share this with the parents and students who sometimes read this site.


In my years of tutoring, I found that there are 6 categories of problems that students faced. I’m going to list out all these potential problems and then we will see how we can reduce or eliminate them.

1. Not knowing the content well
2. Lack of exposure to different types of questions
3. Unable to finish exams in time due to lack of speed in finishing the questions
4. Poor exam skills
5. Stress related issues during exams
6. Carelessness

1) Not knowing the content well

This can be the easiest problem to solve, but can potentially be the hardest too. Lack of knowledge can be caused by a variety of problems that may occur during the transmission of the knowledge by the teacher to the student. It can range from a noisy classroom, teachers who don’t know the content well themselves, unmotivated students, lack of proper note taking etc. It’s not a major problem and most students want to do well in school, so the motivation is somewhat there already if the knowledge can be packaged and structured in such a way to make things easy for the students to grasp. But if the problem comes inherently from a lack of motivation, then this can be a tricky issue.  Students don’t always come into classes all prep up and motivated to learn. They may have a whole baggage of issues that needs to be unraveled in order for them to be ready to learn anything. A lot more counselling with both the parents and the student will be the usual practice in such circumstances.

2) Lack of exposure to different types of questions

The symptoms usually go like this: Student can do all the simpler questions during lessons and when doing homework, but when it comes to exams where the questions are trickier, they crumble and can’t do it at all. This shows a superficial understanding of the content such that when the question is not presented in a standard format, the students are unable to recognize them immediately. Lack of exposure can be reduced by exposing them to harder and more challenging questions. But the trick is not to let them tackle the hardest one immediately. An ascending progression towards more challenging questions of the same topic or theme can be prescribed to slowly ease the student towards tackling the ‘funnier’ sort of questions. Usually other school prelim papers will help a lot in exposing students to non-standard questions.

3) Unable to finish questions in time

Knowing something and able to do a question given unlimited time is quite different from being able to finish it efficiently within the time constraint. In exams, there is always a time limit and students who can do the questions but unable to finish it in time will be severely penalized. This is actually a good problem to be in because it shows that the student can do the questions, but just not fast enough. Not a lot of students will fall under this category. In this case, the remedy is to drill the student.  Constant practice will streamline thought process and develop the necessary muscle memory to do different types of question efficiently within the time constraints. Every question will be a timed practice. Like an athlete preparing for a sprint, timed practice will stress students sufficiently and force them to always keep a watchful lookout to finish the question in time. Such speed drills are different from accuracy drills. The general principle is to expose oneself to different sort of questions so that one can do at least 80 to 90% of the whole exam paper regardless of the time taken. Thereafter, speed drills will force the student to confirm to the time constraints of the exams. Usually speed and accuracy are inversely related, so by doing it faster, accuracy will be lost and there will be more careless mistakes. The student will then learn the right balance of speed and an acceptable loss of accuracy to maximize their marks.

4) Poor exam skills

This is an important component but seldom taught to students. Best practices include knowing how much to write given the marks allocated, definition of keywords in the question so that one is answering the question adequately, techniques in doing MCQ papers, checking of answers, knowing when to cut loss and move on, choosing option questions to maximize marks, time management in handling different sections of the paper etc. A good student with minimal exam skills will be unable to maximize the marks scored.

5) Stress related issues during exams

There is a small percentage of students who behave like a different sort of person when the word ‘exam’ or ‘test’ is mentioned. This group of students can handle everything competently during non-examination time but when it comes to crunch time, they will have a nervous breakdown. The symptoms are: Very good results during non-major exams but just passing or failing when it comes to the major ones, with the heightened possibility of having stress related psychosomatic illnesses like severe headaches, fever and general unwell. This is a very difficult problem to solve and the success rates of the remedy vary widely with individual students. The remedy is to let the student have as many stress practices as possible. Usually this will involve timing them during their practice sessions and giving them lesser time than normal to complete them. Hopefully, and that is all we can do, that they will get used to the elevated stress level and learn to treat major exams as mere practice. Even with many hours of tuition, we cannot really get to the root of this problem easily.

6) Carelessness

This is a spectrum of effects ranging from very careful (less than 5% marks lost) to normal (about 10% marks lost) to the extremely careless (20 to 30% marks lost). This is not easy to root out. Carelessness can be masked as a defense against not knowing how to do. Usually the self is more comforted by the fact that it's a random and unavoidable careless mistake rather than under preparation of the exams and general lack of content etc. Genuine carelessness comes when the students settle on the very first answer that comes to their mind (or had worked out) without the expectation that their answers may be wrong. Even with checking, they can miss out the careless mistakes that are hidden in plain sight because they are not really looking out for errors, since they believed the answers they had given are correct in the first place. Therefore, reducing carelessness is a matter of following a set of procedures that iterates in a loop until the correct answer is found:

(1) Read the question
(2) Find the answer
(3) Check to see if the solution answers the question
(4) Repeat (1) to (3), until (3) is satisfied

Most students will do (1) and stop at (2), without going through the all-important step (3) to reflect and examine the solution to see if it really makes sense. The balance, really, is to do all these steps within the time constraints while maintaining accuracy and speed.

These are not isolated problems and most are actually dependent on each other. If you manage to solve one, you’ll likely reduce other problems as well.

Some students will no doubt ask why they have to learn trigonometry or integration when they have no need of such knowledge in real life situations. The skills needed to perform well in exams are part of this hidden curriculum that is not taught formally. After all, once you had left school and returned all the academic knowledge back to your teachers, what’s left in you are all these skills of success, of determination, of building a proper system of feedback and reflection that will guide you in through the tougher, the crazier and higher staked game of life.

Thursday, July 09, 2015

Half year review

Tracking is different from managing goals. If you track your goals but didn't do any reflection, then the feedback system is lost and you might not really use the data that you've tracked wisely. You can even say that tracking is a tool to mine data for reflection, so that you can have a better outcome at the end of the day.

Time flies, and the more I age, the faster it flies. Days zoomed by, followed by weeks and then months. Before I can unwrap my Chinese new year's ang bao, which is still placed at the same location where I've left it months ago, half a year had already flew past. It's good to sit back and see what I've done in the past 6 months.

1. Savings

I've increased by savings goal to 60k this year and I'm about 2/3 done. This is a great year for me in terms of work and I'm working like crazy because of the workload carried over from last year. But as mentioned before, even though I worked very hard, it's not as stressful compared to the times when I first tried the 50k savings challenge. I think primarily, the difference lies in the mindset. Back then, I was cutting back on a lot of things to achieve it. It wasn't sustainable and it sure didn't make me happy. This time round, I didn't even consciously do it because my expenses are so SOP (standard operating procedure) that I don't have to think much about it. That's why they say saving the first 100k is the most difficult but it'll get easier as you build your 'savings muscles' by practicing it all the time.

Reflection: Good pacing of goal. I like it that I achieved much more without trying hard. All the right practice must be in place already. And as always, I'm very grateful for all the recommendations of students and all the LP's parent and student word-of-mouth advertisers for helping me all through the years. I'll never know when my work will dry up, so it's good to make hay while the rain shines.

2. Books

I don't think I've read so many books in half a year before in my life. I'm currently on book 30. I'm interested in exactly how much time I'm spending on reading, so I downloaded this desktop/mobile app called Toggl. I know this app is not used for this purpose, but whatever..

The blue column represents the number of hours reading. I only started using the app in May, so there's no data before that. June was horrible in terms of energy lack and general fatigue, because I adjusted my schedule from afternoon to late night and go from morning to late afternoon. It totally drained my energy level because I think I'm really a night person.

I'm usually only book 30 near to the end of the year, so I'm about 2-3 months early. I should be able to go past my goal of 52 books a year very very comfortably with perhaps a good lead. I usually start reading a lot more once my work winds down towards Oct and Nov.

Reflection: I was reading so many books that even my wife starts to read a lot now. Talk about good healthy contagious habits! Financial books some more! It would have killed her years ago, so I'm secretly happy about it, haha! It's very good for us to read the same books, because we'll bounce ideas off each other and discuss about the book's major themes and examples. I think it's important for couples to share the same cultural background, so that there's a lot more common points to bond together. That's why people do sports together, or movies, or just general dating.

3. Parent's investment funds

I'm now managing a total of 220k of my parent's retirement fund. The amount is crazily huge, even bigger than my own funds. I'm grateful that they trust me with their hard earned money and I'm doing what I can to make sure their trust in me is well justified! Most of the money is in bonds/pref shares. With the new fraser centrepoint limited (FCL) bonds ipo-ed a few months ago, I subscribed a lot more than what I wanted and passed a bulk of them to my parents. Just a few days ago, my parent's fixed deposit amount is released from holding, so they wanted to inject more capital in. I just transferred the FCL bonds that I hold and pass it to them.

So far, so good, even with all the turmoil in the market. I'm giving them about 2 to 2.5% pa, which is set to rise year by year to about 3-4% until they choose to withdraw out the funds. Then I'll give them a bonus based on whatever cash is left after subtracting from the guaranteed capital loss of buying bonds/pref shares above par value.

Reflection:'s a huge sum if I sit and think about it. What happens if the amount is lost? That's why I only put it in traded bonds and spread it over a few counters like banks and government linked companies. I wonder which is better? A) Getting those bad ass 250k a pop institutional bonds but getting only 1 lot, or B) spreading it over above par bonds/pref shares that are already trading in the secondary market on sgx.

Well, I choose the latter. I hope more good quality bonds are out there, then I'll switch some of the above par bonds with the new issues and rejuvenate the portfolio.

Wednesday, July 08, 2015

HSI free falling -1450 pts

HSI did a good show today. Following the rise and fall of Shanghai closely, especially the latter, HSI went into free fall and dropped a staggering 1450 points, which represents a total of 5.84%. It's a figure that we don't see often and I thought it'll be good to save a screenshot of today's market close for future reference. So here we go:

What good is the knowledge of such things?

I think firstly, it gives you a sense of how bad market can go. If you keep working on CAGR, you'll find that the line is always linearly going upwards. Every year add x% to your previous year, without fail. But we all know that's not going to be true. The market will swing up and swing down violently and often we will be tempted to do things we otherwise might not do. You know, we always wish for a company that we're aiming at for a long time to drop a lot. But when that happens, you might have issues with survival than to talk about wealth building.

Secondly, it gives a sense of perspective. If you've been through a market swing of -50% and can still eat and laugh like nothing happened, then I know your true risk profile. No point talking about all the theory and risk management isolated from emotions. Everyone who had been in the market long enough will have to go through this acid test one day.

Will the market slip further on oil and greece? Maybe this time it's China (since when is it not China?) or perhaps EU woes? Who knows...but I do know what I'll do when that happens.