Wednesday, October 19, 2016

My retirement comes annually

As my work winds down for the seasonal lull, I suddenly have a lot more free time. To the point that I don't know what to do with my time. I'm very used to working 6 to 8 hours of class time on weekdays (not inclusive of preparatory/marking time), so suddenly having only 2 hrs of work or even none takes a little getting used to. Again.

Every year end, I'll face the same situation of getting 'retrenched'. Every year end, I'll get my little experience of having retired and/or having reached financial freedom. It's the same feeling, that I've did what I had done and now I can finally have my life again. It's also invariably mixed in with the fear and worry that my money might run out, and that next year perhaps my earnings might not be better than this year or the last.

But not yet. For the next 2 to 4 weeks, I'll be having my honeymoon period. It's the period where the stress and worry haven't hit me yet and that all I can think of is the free extra time that I will have. I had dim sum lunch with my wife at 2pm and that stretched on with some shopping and tea to about 430 pm. After that, I read and took a nap until 7pm before I went out to have dinner together. At least for the next couple of months, I don't have to worry about rushing. In fact, I can stop looking at the time and let it pass while I enjoy these quiet moments. Try it. It's a different feeling when you have an agenda for the day versus one where you just get to do what you like when you feel like it. It's the same difference between a free and easy holiday versus a scheduled travel agency kind of holiday. It's the honeymoon period, of course.

I've worked pretty hard for this year - in fact, the hardest I've ever worked in my life! I've saved up with more than enough buffer for the winter months and I don't have to worry so much. But I still do. I guess even when I've reached financial freedom and truly have the option not to work, chances are that I'll still work a little. I don't have the climbing down mountain mentality yet, so perhaps this will change as I grow older. We'll see.

Next year is going to be a life changing year. Let's see how I'm going to navigate through this.

Wednesday, October 12, 2016

The danger of holding too much cash

Today I made a mistake. I was queuing for a counter for about 2 weeks at 1.47. But when the stock started showing surges in its bid and sell volume, I started interpreting it as a sign that the counter will move. Against all reasons, I abandoned my queue and bought at the then sell price of 1.50.

It's only 0.03 cts, yes, and I didn't buy a lot (4,000 shares only), but it was still a mistake. The mistake was not sticking to my plan, which was to queue at 1.47 until it expires or it hits. On reflection, I think there's a few reasons why I did that:

1. I did not do my homework scans on Sunday, which I usually do because I was sick. If I had stuck to my routine, I would have realised that maybe today's funny volume movements are not that funny.

2. I had too much cash lying around. Nearly 50% and was climbing until I bought two counters in the last 2 weeks or so. The danger of having too much money lying around is that you tend to fire more eagerly, sometimes seeing what you mind tells you to see.

I want to take the chance to talk about the 2nd point. This is a relatively new problem for me. I never had the opportunity to handle such a record investment portfolio and a bonanza of cash waiting to be deployed, hence this problem might be more and more frequent ahead. We will all reach there one day. It's best to recognise it and stem it as soon as necessary, which is the real reason for this post. It's to remind the future me to wake up and stop doing adjustments when I should be doing nothing.

If we're doing things right, our portfolio will get bigger and bigger in size. Our money management and our psychology when handling money must also change gear from handling small amount to handling big amount. If your portfolio is 20k, you have a different set of worry from handling a portfolio of 200k. With a bigger portfolio, you also can't do the same thing that you did when you're having a smaller set. You can lose a few 20k, painful yes, but not catastrophically so. Nobody can casually say they can lose 200k portfolio, well, unless you are handling 2 million perhaps.

Some of the things I think we should be careful when handling bigger portfolio size is:

1. Diversification - I'm can't do a concentrated portfolio of 8 stocks. I'm not good enough to know if something will trip up in the companies I invested, so it's better for me to spread the risk to more companies. If one fails, it will not rot and bring down the entire ship. This is very important.

2. Finding a place to store that excess cash that is around. I admit I can't invest 100% at all times, so I will always have some cash lying around. I will always have to find some good place to park that cash and when all my current facilities to max the returns for the cash is used up, I'll have to find new ways to do so. I need to set up a system. I think if the cash is not rotting too much, the problem of wanting to invest eagerly may be reduced or eliminated.

3. How to average in your positions. Now with bigger backing, we can enter in 2 or 3 shots. There's a lot of science on how we can enter with 3 rounds. We can double down, enter at fixed time, enter at fixed interval, enter at subsequent support level and so on. This is vastly different when starting small since we only have 1 good shot if we don't want to over allocate our resources into one single company. The same goes for selling too. We don't have to sell all in one shot. We can sell out in 2 or 3 rounds. I need to experiment and come up with a good system to deal with these, so it's less discretionary also.

Anyway, I've a feeling I'll be blogging more and more about other stuff in the future. However, making silly mistakes is one area that I will never blog less about. If I want to be successful, I should have more and more new mistakes, less repeated ones and more reflections following that haha!

Thursday, September 29, 2016

Phillips money market fund (MMF)

It's been a while since I've talked about Phillips money market fund (MMF). A quick search revealed three articles:

1. POEMS money market fund (MMF) (2008)
2. Phillips money market fund (2009)
3. Phillips MMF (2010)

I know, from first look, they are all the same or similar sounding titles. No creativity on my part in choosing a title, haha!

For those who do not know, money market fund is a collection of short term bonds, deposits and savings. They don't give out interest like what stocks or even banks do. It's more like a unit trust where there's a NAV posted every day. If you buy say at 1.002 and after a month the NAV rises up to 1.012, then you have a return of 0.998% ( [1.012-1.002]/1.002 x 100%). The NAV keeps going up as the deposits and savings are capital protection upon maturity and even during the worst financial crisis, the NAV is steadily increasing.

Here's the returns I've tracked in the past:
2007: 2.01% pa
2008: 1.33% pa
2009: 1.04% pa

I didn't really track after that because it keeps dropping down as the interest rate environment is dropping also. But this yr and the last, the returns had been increasing again.

2015 Aug to 2016 Aug: 0.908% pa

If I take the more recent months, the returns will be even higher (but still less than 1% pa). It's time to take a look at this again to put your spare cash or emergency cash in. The process of taking in and putting in money is very fast, about 1 day usually (depending on time) and 2 business days latest.

What's the catch you ask?

It's not guaranteed by the bank deposit insurance, unlike fixed deposit (up to $50k per bank per pax, regardless of accounts in the bank). So, if Phillips MMF is to close down, then the money might not be able to recover. Well, in that case, don't put your whole networth in lah, just put in a suitable amount. You can use this is pay for your equities purchase using POEMS too, and that's what I do. The good thing about this is that it doesn't require you to jump through many hoops like minimum credit card spending etc. It's very good for people like me who don't have a fixed salary so I can't use those ocbc 360 accounts that people are raving about.

Friday, September 16, 2016

It's 3 am I must be lonely

Restitutive, Retributive and Reformative.

These 3 words keep rolling around in my mind as I woke up in the middle of the night to think about this. It must be around 3am, because that's the time my aircon timer is set and I usually wake up due to the difference in temperature. I must have read it somewhere, but I'm not sure why this suddenly cropped up.

Restitution means to restore or repair something to its original state. Retributive effectively means an eye for an eye. Reformative means to correct or adjust for re-integration into society.

Your kid hits another kid in the playground. As a parent, what do you do?

Restitutively, you should pay a small sum of money to the other parent to restore the 'state' of the kid to its original one. Retributively, you should let the other kid hit your kid back. An eye for an eye. Reformatively, you should get your kid to apologise first (no violence no matter who is wronged), find out why they are fighting, and seek to correct the behaviour of using violence to vent out one's frustration or anger and instead seek other avenues to address the wrong.

As you can see, it's hardest to reform and easiest to seek retribution. There's always 3 ways to approach matters, and it's a good reminder to me as well. The right tool for the right situation.

Thursday, September 15, 2016

CPFIS-OA investors shouldn't invest? Really?

There's always a big hoo ha about CPF investors being unable to hit the 2.5% interest rate of ordinary account CPF. The statistics mentioned in this recent news is that over the last 10 years, more than 80% of those who invested their money in CPF would be better off leaving their money in the CPF OA. It's also stated that 45% of the investors made losses in the scheme.

I don't buy this. I dug further and saw this link for actual report of CPFIS-OA investors in the year ending 30th Sept 2015. For easier reference, I screenshot it below:

The first picture shows that really, for the year ending Sept 2015, 38% of CPFIS-OA investors lost money with returns of less than 0%. 46% of members earned a return of 0 to 2.5%, which means a total of 84% of investors might be better off not touching them and earning the 2.5% OA rate. And so it appears that the newspaper article is correct.

 But let's look at the small footer, where all the important details are hidden

In pointer 2, it says that the data do not include unrealised profits and losses. This is not mentioned in the news article!

Imagine I have 3 positions:

1. Company A, bought 30 shares at $1, still holding on at $1.30
2. Company B, bought 40 shares at $1, but cut loss at $0.80
3. Company C, bought 30 shares at $1, sold at profit at $1.20

Out of the 3 positions, only 2 and 3 is realised and position 1 is still 'running'.

Total amount invested = 30*$1 + 40*$1 + 30*$1 = $100
Realized profit/loss = (40*-0.2 + 30*0.2) = -$2 (loss)
Realized profit/loss percentage = (-2)/100 x 100% = -2.0%

Oh no, so I'm one of the members with losses since my realized profits/loss invested is -2%

But if I'm counting my total profits/losses for that duration, I should include BOTH realized and unrealized profits marked to market, so

Total realized + unrealized profits = -2 + 30*0.3 = $7
Total realized/unrealized percentage = $7/100 x 100% = 7.0%

That's a far cry from my realized losses of 2%. Isn't it?

Monday, September 12, 2016

How we react to other's success story

Someone mentioned his success story. You immediately start to think of what are the circumstances that makes him different from you. Maybe he comes from a rich background. Maybe he don't have NS so he starts working earlier by 2 years. Maybe his parents help him pay the downpayment of his property and his car. Maybe he is single so he don't have to pay as much as a married couple with child. I'm sure you have thought of this, and so do I.

The issue about such thinking is that you start to form a hundred and one reason why you cannot emulate the success story. You start thinking that he is different from you and since you don't have the advantages that he had, you cannot have the success that he is having too. I find such thinking highly toxic and even as I'm still struggling to get over such jealous thinking, sometimes it'll start to creep onto you insidiously. 

I think it's part and parcel of being a human. We have our ego and a damaged ego is very hard to swallow. But it's important to turn such discomfort into a strength and motivation to succeed. You already have a role model who had been there and done that, so your learning curve is going to be reduced. If anything, you have a stronger chance of reaching the same success level in a much shorter time. I believe, self delusional or otherwise, that the purpose of sharing success story is more motivational than boasting. We just need to keep an open mind to learn and not close it off and say he is different from me, and I don't have this or that, hence I can't do it. It's important to accept the discomfort arising from the discrepancies and start closing the gap right now.

It seems like my whole life is trying to prove others are wrong:

1. When I'm in JC, there's this teacher who keeps telling me I should drop Further maths. I didn't and I succeeded in getting an A.

2. When I'm in university, my friends and family told me I can't get 1st class. I didn't believe it and I took extra modules to chalk up the score necessary to get it.

3. When I'm working, friends and family told me I can't work as a self employed private tutor. I won't be able to survive. But I did and I continue to do so.

4. When I'm saving 50k a yr after I woke up from my 'financial slumber', there are folks who told me when I get married and start having to pay for my own property, I won't be able to make it. Well, I'm married and I save even more now. 

Iron-teeth. I get highly motivated to reach my goals in order to prove a point. That's who I am. The quality of my motivation changes from being the angry, vengeful, the in-your-face kind of motivation when I'm younger, to a quiet strength where action speaks louder than words when I'm older. Both are pillars of strength when trying to traverse through the obstacles and road blocks in my path, but the second one is one that springs from self confidence. Not angry anymore, just self assured. I think age tends to do that to you. 

You no longer have to prove your 'worth' to anybody.

Friday, September 02, 2016

Principle of Non-equality of Equal magnitude numbers


Equal numbers a and b of the same magnitude need not be equal
i.e 1+1 is not necessarily equal to 3-1, even though numerically they are both equal to 2.

Method of proof:

By contradiction

Proof A:

I have 3 million dollars, but I lost 1 million dollars, so I still have 2 million dollars. I might go jump down. If I have 1 million dollar and I made another million, I now have 2 million dollars, instead I jump for joy. The former makes me jump down, the latter makes me jump up, possibly with fist pumping and with occasional shouts of joy. Thus they are clearly different, even though it's the same.

Proof B:

I have 3 bad debts (all of equal amount), and I tried all ways to get rid of 1, so now I have 2 bad debts. I'm overjoyed. If instead I have 1 bad debt, and I incurred another one so that I now have a total of 2 bad debts, I'm overburdened with sadness. The former makes me overjoyed, the latter makes me chained in debts. Thus they are clearly different, even though it's the same.

Proof C:

I have 3 multibaggers in my stock investment. But one of them turned from multibagger to multibeggar and eventually goes to 0. I feel stupid and adopt the 'take profit is never wrong' principle. If instead I have 1 multibagger, and I held another investment until it too became a multibagger, such that in the former and the latter case, I earned the same amount of money, I will feel clever and adopt the 'investment is for the long term' principle. Both are the same result, yet they are different.


Hence the principle of non-equality of equal magnitude number is verified.


1. The journey to the result is as important as the result. If the final result is equal, and the journey to reach the result is the same, then it might be equal in all aspects. But I doubt the journey can be the same. Even if the journey is the same, the person might be different. Even if the person involved is the same, the mental state of the person might be different. Hence, it's safe to conclude that equal results need not be equal to the person carrying out the journey.

2. Aversion of loss is stronger than the greed for gain. If I managed to lose more, I will feel more sadness compared to the happiness I get from gaining more. Conversely, that should mean that if I manage to avoid losing, I should feel more happy than losing the opportunity for gains. This explains why when a counter I'm eyeing doubles in price, I can rationalise it off and say it's just not for me or I'm busy or at that point in time I act on the best of my knowledge. But if I managed to avoid buying a counter that halved in price, I shout HENG AH.

3. Comparing against another person is a very silly thing. You're 30 years old and I'm 30 years old. You have 100k but I only have 30k. So? You might have gone from 200k to 100k while I might have gone from 15k to 30k. Our journey is vastly different. Comparing against your past self might at least reduce the number of variables by one,

Wednesday, August 31, 2016

What's with the rant against whole life plans?

I bought a whole life plan. In fact, 2 of them. One is a traditional whole life, where you pay until forever. The other is a limited payment whole life, where the payment period is condensed to maybe 5, 10 or 15 yrs, so you pay a higher amount but you can stop paying after.

There's so much vitriol against whole life that I thought I should make some statement FOR whole life, just to provide some yin to balance out the yang. The ultimate question is this: Will I buy a whole life plan now? The answer is no, but back then, I didn't know the following:

1. I'm a mighty saver. I can save a lot of my income away without external help. I know some people will spend a lot of their income away, so a whole life plan helps to 'lock up' that excess money away and give it back much much later. It's not ideal of course, but between a rock (not saving) and a hard place (not earning good returns on money), I think there needs to be a compromise. I know the rhetoric of buying term and investing the rest. But I think there is a group of people who will buy term and spend the rest. Whole life will help them a lot in this aspect. Back then, I didn't know which group I am in, but now I know. It's my hedge against my own 'money' character, if you will.

So, buy term invest the rest...but in real life, you might not save the rest. Nor invest it.

2. I can earn a respectable returns myself from investing. The second part about buying term and investing the rest is the investing part. Some people don't want to touch investment instruments at all, except perhaps for insurance and savings deposit. Not even bonds are under their radar. It could be ignorance, or fear or more likely a combination of experiential baggage that causes one to think like that. I'm sure you've heard of ultra conservative people like that. If so, then whole life presents a good investment for them. It might not be good enough for you, but it could be so for them. I don't buy into the idea that if you invest in a low cost fund, things will work out well for you. The stock market returns are never guaranteed. Nobody can guarantee you will earn 1% from the stock market if you put in for the long term. On the other hand, I've never heard of people losing money in whole life insurance, have you? The criticism is that one can earn better than whole life, but perhaps they forgot to mention they could have lost money in the process too.

So, buy term invest the rest will beat whole life returns, but that outcome is not guaranteed. A small guarantee might work better for an non-guaranteed but higher return.

3. I am disciplined. I think that sums up the characteristic of a term plan buyer. If you want to buy term plan, you better be disciplined in your spending and also your investments. If not, it's likely to reap the benefits of a buy-term-invest the rest strategy. It's like hiring a trainer for your gym. Can you do it yourself? Sure, all the information is out there, you just have to read and learn it on your own and execute it. But there will be days when you're not motivated and you just need someone to push you so that you can overcome the barrier. For a fee, of course. Not everyone is interested in financial and insurance matters and will gladly outsource it to others.

What I'm trying to say is that the process of discovering yourself takes time. In the meantime, you still have to work out the best decision based on the available information. Back then, my idea is to use whole life as a base and buy term to top up the coverage. When the term expires at 60 or 70, the whole life will still continue to provide coverage. I will then have to option to convert my whole life to annuity, cash out for retirement needs and/or continue the plan and provide a gift for dependents. Ironically, because of my whole life plan 'mistake' that everyone around me keeps telling me, I went to dig further into investment. I would say the 'mistake' started everything I know about financial stuff.

Interesting isn't it? Nothing is really 'wasted' in nature.

My philosophy now goes towards using term and self insurance. From whole life, to limited payment whole life, to term and to self insurance, I think I'm evolving just like a pokemon. I think life experience and mistakes are the candy needed to evolve yourself into a stronger pokemon with more CP lol!

Monday, August 29, 2016

Gold and Silver investing guide

Bigscribe released a new free ebook again, and this time it's about investing in metals. I'm a lay person and I know nothing about investing in metals, so this guide comes as a godsend to fill up my knowledge base. We always hear people talking about investing in metals as a hedge against hyper inflation (like during extreme conditions in wars), so naturally I'm interested to find out more about it.

This book talks about buying physical metals, specifically the buying of physical investment grade gold and silver, and the other little details like where to store and so on. There are other ways to invest in metals, like Gold ETF, but in shit-hits-the-fan situations, buying in such intangible metals might not be good because you're subjected to counterparty risk. In physical gold or silver, you just take and run. From the guide, I even know that there are 2 other ways to invest in gold, other than ETFs and physical gold. I think it'll be a good guide for lay persons such as me to learn about such things, even if you don't necessary have the huge asset base to diversify into precious metals.

The last part of the guide talks about the different myths for and against buying of Gold and silver. I think this gives the guide a well rounded starting point to find out more about the investing of precious metals. Try and register for it here, it's free and set in the local context, unlike other sources from the internet or books.

Friday, August 26, 2016

Using Investingnote's charting platform

I wanted to help those who are newer to Investingnote, my preferred charting software, hence I'm writing this post. I think the people over at Investingnote are really doing a fine job with a free charting software. It's actually quite powerful and I especially like the real time (okay, it lags by at most 2 minutes) update of the charts. Yahoo finance maybe lags by 10 to 15 mins? I've not seen a charting software that updates realtime too, perhaps except those by brokerage platform. But those are pretty laggy and buggy so I don't like to use them much.

This is not a sponsored post. I just think it's a great tool for people to use it, so I'm sharing it. This is also not a tutorial to show you how to use the charting software, but more of how I use the charting software at Investingnote.

When you logged in and click on the "Charts" option on the upper right corner of the platform, you're going to see something like this screen:

I like to add a few indicators to my chart. I mouse over the symbol with the charts, and you'll see "Indicators" appearing.

Clicking on it will bring you to the list of indicators available for you to add in. I proceeded to add in MACD, Elders Force index and Moving exponential by clicking on the names. It'll automatically be added to the charts.

Now my charts look like this:

I don't like the Elders Force index (EFI) in a line form. I prefer the histogram format, so I'm going to change it. I mouse my cursor over to the gear symbol just to the right of the word EFI. It's the middle icon. You're going to see the word "Format" appearing. Click on that. You'll see "Inputs" and "Style" menu above.

Play around with the options. I changed the colour of the plot to blue, line to histogram, and thickened the width of the histogram, as shown below:

If you're satisfied, you can click OK and it'll be shown on the chart. I did the same format adjustment to MACD too. Let's say you don't want to see the MACD appearing, you can hide it by clicking on the first icon next to the indicator:

You can also shift the order of the indicator up or down. Let's say I want to move my MACD indicator right at the bottom of the chart. I'll press the down button on the top right corner of the indicator box:

Once you've pressed it, the indicator can move up or down according to your liking. You can also draw trendlines, horizontal support, fibo etc by looking at left side of the chart:

Let's go ahead and choose the fibo retracement lines:

It's the second symbol, click on that small arrow and you'll see a whole host of options available. Let's go ahead and choose Fib retracement and draw it out. You'll see the results below:

If it's too small and too much things happening on your chart, you can click full screen and blow up the chart to see it clearer:

Okay, here's the important trick. How do you save the nice charts and drawings you've done? There are two ways:

1. Saving individual charts:

Click on the Save chart layout symbol and save everything you're working on for that particular chart. They will ask you to give a chart layout name.

Once you've entered the chart name, you can retrieve it back anytime by pressing the Load chart layout

You can save your work this way.

2. Saving template:

I prefer saving template, so that I can apply this particular set of template (with this set of indicators and format) to different charts. So here's how to do it:

Click on the study template:

You will see the option to "Save study template as". Click on it, give the template a name and you will be able to put this set of layout onto any charts you want easily.

I saved two template (as shown above by the red arrow), the first is "without RSI" and the second is "with stoch RSI".  If I clicked on the template "Without RSI" and click on the box (marked by the black arrow) and type the name of the counter (e.g. SHENG SIONG), I will apply this template onto the chart of Sheng siong.

Of course there are many more functions that I didn't illustrate but I think this is a good starting point to explore the platform yourself.