BULLy the BEAR

I know I've not been blogging for some time, so here's my feeble attempt to do that.

Blogging has always been a reflection of myself. Though I've not been writing, I've always been reflecting. So, maybe this blog article will just log in some of the things that I've been thinking about since the myriad things I reflect are too short to exist as an individual article by itself.


1. Most dominantly on my mind is how to make more money. Ya, I sure know how it sounds like. But that's the truth. I'm still trying to meet my 50k target by this year end, and am most happy to say that for my target set per month, I managed to do it. But it's getting tougher and tougher to do that. Hey, setting a goal is the first part. Relentlessly pursuing it is the next part. Who ever said it's going to be easy?

Sometimes the only motivation for me to keep doing work at the pace I'm doing is the elusive utopia that I won't be doing this forever and I'll be financially free from the burdens I'm carrying now. I need to remind myself why the hell am I saving for.


2. Time and money. I need to leverage my time more. I NEED to earn more but work less. I know it can be done and I just need more time to do it. That would be one big goal settled, if I managed to pull it off successfully. This will really seriously accelerate my goals of being financially free.


3. Endowment plans... I always try to separate my insurance from investment. For example, I never try to use whole life as an instrument for investing and will not compare the returns of whole life to say a fund returns. I've no intention to cash out my whole life policy to get the cash returns (though it's good to have an option if I have to) hence will not launch into the big debate about buy term invest the rest philosophy.

What I want to say is that endowment plans does have its uses as a savings plan. Endowment plans have a lock in period, maybe like 10, 15, 20, 25 yrs, which you have to pay premiums for a certain period (like maybe for 5 yrs only). I think a typical endowment policy will give returns of like 3-4% projected. But for planning purposes, I suggest taking a look at just the guaranteed part. If you put in 50k in premiums, if I get back say 70k guaranteed, I'm fine. Any extra coming from non-guaranteed part is bonus to me.

Ever though this will severely underestimate the returns from endowment policy, it will prevent disappointment when the policy matures in the 10-25 yrs later. I'm trying to protect the downside here, because while investment returns can yield higher (maybe 6-10% pa?), investment returns are non-guaranteed at all. Can I bear the consequences of not being able to meet my savings target?

So, if I have a child today and want to save up for the education needs of say 70k in 20 yrs time, perhaps I will subdivide the 70k savings target into two. The first will be dumped into endowment but looking only at the guaranteed part only. The second will be to do my own investment.

To illustrate, I'll do 60% in endowment, meaning 42k. I'll go hunting for an endowment that gives me 42k guaranteed in 20 yrs time. Then for the remaining 40% (28k), I'll do my own investment. I just need to start off with around 9k (8,730 to be exact) and earn a compounded annual growth rate of 6%. I think that can be reasonably achievable.



Mega downside: I'm in heaven, but at least with the endowment policy that I bought, it can still continue saving after I'm gone. You can get a lump sum payment...that's the best I can do. Love you, kiddo, will be watching over you from up here. Take care of mummy.


Super downside: Daddy can't work after the accident. At least with the waiver of premium, the endowment policy can still carry on. Sorry kiddo, you might have to borrow some money.


Downside: I lost all my 9k and I have a shortfall of 28k. Hey, daddy tried his best, I'm sorry kiddo, you have to loan the remaining 28k yourself. At least daddy can sponsor you 42k of your fees, representing 60% of the amount you need. Be thankful.


Upside: I have more than 70k because the endowment gave me an extra 3% returns and my own investment generated 10% returns. Hey kiddo, you can keep the money to start your own little venture and own stock investing.



I'll rather protect my downside. It'll be sucky not to be able to give your child a good education. I'll seek to minimize my maximum regret.


~I'm not a financial advisor. If you act after reading this personal ranting about my life, you seriously need to find a qualified one. Run, don't walk.

After reading so many books on financial freedom, I realised these are the ways to be a millionaire. Why are people so obsessed with being a millionaire? I'm not so sure, perhaps it's a milestone in their lives. For me, being a millionaire is not the most important thing to do. How about being able to spend a million for a start? Haha!

Ranked in order of ease, these are:

1. Start off as a billionaire, spend till you become a millionaire

I suppose a portion of the world's millionaire are actually formed this way. It's the best way to be a millionaire. Shiok until cannot shiok.


2. Use SGD $3,494.28 and exchange for 1 million Zimbabwe dollars

You want to be a millionaire right? Next time, when you rub a magic lamp, make sure you tell the genie exactly what kind of millionaire you want to become. 3 wishes are very precious...




3. Start saving 3k per month for the next 27.8 yrs

Hey, even by putting aside 3k per month regularly under your pillow, you can amass 1 million given enough time. If you start working at age 23, and do that consistently till you reach age 51, you'll get 1 million. Not so simple, because in order to save 3k, assuming 50% savings rate, you'll need to earn at least 6k and spend only half of your income. And make sure you don't hire a new maid and forgot that you had a million under your pillow....


4. Start with 25k, invest at 9.7% per year over 40 yrs

Or start off with 50k and invest at 10.5% for the next 30 yrs. Too long? How about starting off 100k and investing at 10.5% for the next 23 yrs? Easier said than done, I know. A mixture of trading and investing might just push it through. Unless you're Mr. B himself, who gets a CAGR of 20% at last count. Hey, at this rate, you'll double your money every 3.6 yrs.

It seems like many people prefer sat 10 am to 12 noon. The venue proposed is actually Tea Chapter. You can click on the site here to view it. However, it opens at 11am.

I suggest we meet at 1045 am on 27th June, sat, then by the time people comes streaming in, it'll be just nice. They sell some little snacks there too :) I think the gathering will take 2-3 hours.

IMPT: Since the response is not warm, I think we'll postpone the session to future date :)

Trying to arrange an outing in a tea house recently, so need some feedback from the regulars. Can you please post in the comments:

1. The day of the week which you are available eg. Fri or Sat
2. The time of the day which you are available e.g from 11am to 3pm.

The venue should be the place I mentioned last time, no need to mention it here again. If you're unsure, can always ask those in the cbox.

I'll try to arrange it :)

First of all, a disclaimer. If I really know how to motivate people, this will really be my ticket to financial freedom. To motivate someone, you really need to understand both the science and the art. I've been doing this for 6 years, with varying results. Still trying... Broadly, to motivate people you have to maximise their pleasure and minimise their pain. I'll try to include accompanying examples.

Where applicable, I'll use a common example to illustrate the finer points. The example is this scenario where you are bringing your kid to the toy store. But the kid wants to buy a particular toy which you are not so interested in purchasing.

1. Threat of punishment

It's the classic "If you do this, I will do this" kind of motivation, though the "do" part is more like a disincentive to do certain things. I've always seen parents who said this. It's more a perceived punishment rather than actual punishment. But if the promise of punishment is not carried out, then the threat gets weaker over time.

Example 1: "If you are still so naughty, I'll will make sure you'll get caned when we get back"

2. Lure of rewards

"If you do this, I will do ___" - that's the key point of this method. The "do" is followed by something positive and pleasant. The promise of reward is usually good enough to motivate someone, not the actual reward itself. If the reward is not carried out after the promise, the method gets weaker over time.

Example 1: "If you get 80% of his final year exams, I'll buy you the toy. Do you want to study hard for your exams?"

Example 2: "If you don't make a scene here, I'll bring you to eat ice cream. The weather is so hot, you do love a nice cool ice-cream don't you?"

3. Reduce disapproval

I find that women are better at using this. Humans need to seek approval from significant people in their life - either parents, partners, spouses, friends, classmates etc. By putting your criteria in which you disapprove people, you can put a disincentive for others not to act in a certain manner.

Example 1: "Look at the little boy there who is crying. He is so disobedient and don't listen to his mummy. I don't like kids like that. Are you going to be disobedient like the boy too?"

4. Maximise approval

Same as disapproval. You set your criteria for your approval, then you compare how someone is approved by you because he/she fulfilled the criteria.

Example: "See your brother sleeping in the pram. He's so nice and quiet. I love kids who are quiet and obedient, so please don't make me angry ok?"

5. Appeal to ego/pride/vanity

Self explanatory? A bit similar to approval but the motivation is clearly different. Ego/pride is more internal.

Example 1: "You are such a big kid now, still crying at this age? Look that uncle is laughing at you now"

Example 2: "You are such a big kid now. Big kids don't cry over toys. You don't want to cry over little things like toys right?"

Example 3: "If you cry more, then you will be ugly already. No more pretty face. You like to be pretty right?"

6. Fulfil basic needs

Basic needs of a living thing are the ability to reproduce, to eat, to excrete and to move about. Essentially, this is the need to survive (or the survival of one's genes). This is one of the most important yet primal motivator in anyone's life. Crude but it works very well. In modern times, the need to survive can be rested on one commodity - money. Thus, wanting to earn more money is classified by me as a primal need to survive.

This method is so effective. Just look at what people will do just to survive an earthquake or tsunami.

7. Satisfy curiosity

To discover the unknown, to find out 'what if'...these are motivated by the need to satisfy one's curiosity. It's the motivation that makes one read a book (to find out what happened) and perhaps to finish one whole drama HK drama series in one seating. I suppose scientist are quite motivated by this. It's quite hard to find people who are motivated by curiosity in Singapore, from my experience. It's a rare sight.

Do you ever wondered about this - Imagine you have a stock which you had bought at $1.20. The price now is $1.80. It gives out dividend (not guaranteed, of course) at a rate of 5 cents per annum last year (dividend yield of 4.2%), with possibility of increasing its yield every year. Will you sell the stock for capital gains of 60 cts (1.80 - 1.20 = 60 cts) but forsaking 5 cents or more dividends forever?


Here's a few ways to valuate this:

1. Assuming that the dividend is fixed at 5 cts forever, it'll take 12 yrs (60/5 = 12) for the dividend (if you hold the stock) to cover the present capital gain (if you sell it now at $1.80). Which do you think is better - 60 cts gain now or 60 cts gain over 12 yrs.

Of course, the complications come in when you talk about the possible capital gain (or loss) if you hold the stocks for 12 years. The company might be bankrupt, it might freeze or cut dividends, it might give more and so on. It's never easy to decide.


2. The first method does not take into account the time value of money. It's better to do a discounted dividend approach to account for the time/money relationship.

Below shows my calculation, assuming there is no change in the dividend given per year. I assume a discount rate of 4% (why? that's the inflation rate I assumed) to account for the opportunity cost of holding cash.



After my garbage in garbage out (GIGO) exercise, I end up with a value of 41 cents. The safety factor is to account for any funny things that makes my assumption invalid. If after accounting for the safety factor, I end up with 60 cents, then theoretically I have no incentives to act on either options of holding or selling now. To push me to sell now, I raised the value of 41 cents by 30% to 53 cents - this means if I gain anything more than 53 cents, I'm actually motivated to sell now to lock in my gains.

Since selling now at $1.80 I'll get 60 cents. I'll sell now.

Again, this method does not take into account the possible capital gain/loss of holding the stock for a long period of time. I've already stated in my previous blog post "The false security of intrinsic value" the illusions associated with this kind of discounting method of valuation, so I shall not elaborate more here.


3. Last method is this: I saw another counter with better prospects, so I sell now to lock in my gains, and switch to another counter. What is better prospects? It could be better yield, safer yield, likelihood of higher capital gains in the future, charting etc. Exactly how does one know which counter gives a better prospects - I leave it to you. I do not know myself.

After being played in and out by the market, my inclination is towards method 1 and 3. If it does not scream out buy when using a calculator with only + - x ÷, then you probably need to look elsewhere.

Pac andes just threw a grenade towards my direction. Make it 2 grenades. It got me hot and bothered!


1. First grenade - they are issuing rights on a basis of 1 rights share @ $0.15 for every existing share held. The rights come with detachable warrants, with an exercise price of $0.23 each to convert to 1 ordinary share.


Hey, didn't pac andes do a rights issue in 2007 before? And they are doing it again? C'mon...are you so pressed for money to keep asking shareholders to part with their cash?? It's not enough to dump shareholders with rights issue, and you still want to get more money out of shareholders when they convert their warrants??


2. Second grenade - they are going to restructure their share capital. Initially, their share capital of $400 mil is divided into 2000 mil shares, with par value of $0.20 each. Now, they are going to divide their share capital into 8000 mil shares instead, giving a par value of $0.05 each.

This takes some fees and do you know what's the rationale for this exercise?

It's stated that the main purpose for this reorg of share capital is to enable the company to undertake the proposed rights issue because the average closing price of pac andes is at $0.186 (for the 7 month prior to the date of the announcement today). This happens to be below the par value of $0.20 per share in the current system.

Since the Bermuda Companies Act prevents a company from issuing shares at a price below the par value of the share, they are going to go through a reorg of the share capital just so as to allow the proposed rights issue to go on! They stated that this will allow them greater flexibility in issuing new shares in the future when the opportunities arise.


HELLO! There's a lot of nasty things I wouldn't want to blog in public. What is the management thinking about?!

I was just doing some simple calculations to see how much I need to earn in my working life (assuming I have to retire at 55) in order to sustain myself only till the end of my life. I've a average monthly expenditure of around 2500, all inclusive.

So assuming I pass on at age 85,

$2500 x 12 x 54 = $1,620,000

I probably need this much money now in order to stop working yet be able to sustain my lifestyle till 85. This 1.6 million of course do not include family, or any other commitments that I incurred while I survive till 85...thus it's quite an underestimate.

Reality sucks, isn't it?

Assuming I maintain my expenses after I retire all the way till 85, I need to spend $900,000 (based on $2,500 per month expenses for 30 yrs). I only have 24 yrs to get this amount before age 55, the age I can retire. This means that I need to save $3,125 per month from now till age 55 in order to save up to that amount. That's hard saving only and it's hard saving that amount for that long period.

If I have an investing capital of $100,000 now, I figured that I need to get a returns of around 9.6% per year on average to multipy that capital to reach $900,000 in 24 yrs. That's assuming I didn't add in more capital to that initial capital outlay. Do you think it's do-able?

How can anyone not invest? It's not impossible to reach financial independence, but it'll be very hard if one has to do it by savings alone.