Tuesday, August 22, 2017

The 4 Seasons (part 2)

I wrote a article about the different seasons using the MACD (moving average convergence divergence) indicator here. In it, I talked about how the four seasons can be characterised objectively by looking at the slope and the positivity/negativity of the histogram. Let's see if we can replicate that into another indicator - the moving average.

There are a few kinds of moving average, and usually I'm using exponential moving average (EMA) because they are more sensitive to the latest price movement. Moving average should be drawn in a pair, one shorter and one longer term with the longer one being twice that of the shorter one. That means if you use 10 days MA, you should include 20 days MA as the longer term line. It doesn't really matter which days you're using, it could be 50/100, or 100/200, but for the purpose of this article, I'm using my 13/26 days EMA. 13 days EMA is my short term line and 26 days EMA is my longer term line, unless otherwise stated.

Here's the matrix:

I'll illustrate with an example: Singpost
(The red line is the short term line - 11d EMA and the green line is the long term line - 22d EMA)

Different stocks are like different countries in different hemispheres. Some are freezing in deep winter while others are sweating in hot summer. Some have longer summer and shorter winters, while others have longer winters and shorter summers.

Let's have a look at the different index:

DJI : after a prolonged summer, it's autumn now

S&P: autumn had given way to winter. The first snow just fell a few days ago.

HSI: It's still bright and sunny, but to the observant ones, some of the leaves on the trees are turning brown and starting to fall

Nikkei: strange weather phenomenon. Very long summer, a fake autumn, another shorter summer and a brief autumn, bringing us to winter now

STI: winter is coming (or had already come).

This is neither a rally to buy or to sell, it's simply weather reporting. I'm not even forecasting. Doesn't matter whether it's summer or winter, we just make sure we fatten ourselves during summer to prepare for winter, and do the necessary prep work to plant the seeds just when the last snow falls to prepare for the bright sunlight during summer.

Sunday, August 20, 2017

My little life coach

Time flies. My son is nearly 7 months old now and personally, it feels like I've had him for like 7 years. They say that the day passes slowly, but the years spin by fast. I totally agree. Each day leads to night and the night merges into day again, so while you're doing your routine and trying to get by each day, you'll realise that months or years had gone by without you noticing.

Now that the 'honey moon' period for being a first time father had died down, it's all about the daily grind. I think I spend a lot of time with him, but it's always not nearly enough. From a needy and helpless baby, my son has grown to become opinionated. If the milk is not nearly warm enough, or if you didn't hug him in a way that he is accustomed to, he will make his displeasure known to all within a 500 m radius. He is getting harder to take care, because he is less like a rag doll and more like a human now. When the day is bad, I'll remind myself this: would I rather a listless, unresponsive child for me to assert my will onto, or a cacophonous crying baby that is alive? Easy choice there.

He is getting heavier with all the tonnes and gallons of breast milk, expressed so painstakingly and patiently by his mother, and sucked through his tiny toothless mouth. My arms and back muscles are also getting stronger in order to carry him for longer and longer periods of time. The journey thus far might be difficult, but I always remind myself that my son will not be a baby forever. One day, he will grow out of hugging his not-so-cool parents and not wishing for one more kiss or one more bed time story. Everything has his own time and season, so dance in the rain while it's raining.

On reflection, I think everything about having a kid is antithesis to being financially free. Here's a list of things:

1. I get to work lesser hours because I need to spend more time on family. Less work less pay less savings. You can compound the lost savings @ 5% over 30 yrs and see how much you actually 'lost'.

2. My electricity and water bills rose up faster than STI over this year. It used to be about $100 to $120 per month, but now it's dangerously hovering around the range of $180 per month. That's like a 50% increase.

3. I'm such a shopper these days that I qualified for GOLD member for qoo10 for several months now. To qualify for a GOLD member, you need to spend certain amount and consistently. And that cost money. Babies consume a lot of disposables. I'm sure all the diaper, wipes and milk formula companies are smiling all day because they are earning money while my son eats, poops and sleeps all day.

The 'baby monster'

But these things no longer concern me. Loving and nurturing my son concerns me. I think if you're thinking about me, me and me, you're not ready for a kid. It's nature's way of doing a filtering and selection process for parents, sussing out those that are not ideal to take care of the helpless, pinkish little humans. Only crazy irrational people who don't mind delaying their financial freedom plans by sacrificing their income and ramping up their expenses will want a kid. And most importantly, those same irrational human being must have a spirit of self sacrifice for something other than yourself (you can argue that your kid is but a vicarious extension of yourself, of course, but that's a different fight for a different day). But now and then, nature screwed up and let certain people slip through the cracks, to the detriment of their child, and perhaps their parents as well.

If you can survive the financial bombs that are sure to hit in your general direction, and also survive the daily grinds of taking care of the kid, you get to taste the sweet fruits. You get to see the world in the eyes of the child again, but this time, with a matured and hopefully reflective mind. You will join your child to giggle at ordinary things viewed with extraordinary innocence. Every sunrise marks a brand new exciting day of discovery and adventure, shortened only by sun set. You'll see the really important things in life - a heart to love, a hand to hold and a warm megawatt smile. Those simple things will take you all the way up the highest mountain and down the deepest sea and back.

Come to think of it, I think it's a fair trade. I feed, shelter and nuture my son, and he in turn teaches me life lessons.

Monday, August 07, 2017

Surviving vs Thriving

There's a difference between surviving and thriving. When you're surviving, you care only about the bare essentials to maintain status quo. When you're thriving, you strive to exceed and improve the current situation. Both requires different mentality and preparation. I share with you some examples in our daily lives:

1. Taking care of children

I think I'm still at the surviving mode. I feed, shower, change and make sure the baby is alive. But I wouldn't go so far to say that I thrive yet. I'm essentially doing the basic things. Now that I'm used to the routine and the demands of taking care of a baby, I must say that it's getting comfortable. Not comfortable in the sense that it's easy, but comfortable because I'm habituated into the different task and I'm reasonably skilled in the different skillsets needed. It's time to go to the next stage where I thrive. I've been reading and researching on the various things to stimulate the baby so that it will have maximum synapse connections. It will no doubt demand even more energy and effort that I'm currently putting, until I'm used to it, so at least for the initial stages it's going to be hard and tiring.

2. Portfolio

We always think that when the crisis hits us, we're going to make it out of it like Alibaba. But it might not be the case. To survive a crisis is hard enough, because usually more than one bad thing will happen. You might lose your job for example, so are you sure you can put in your investible cash into the market and watching it sink lower and lower and lower? Are you sure you won't need it for other things? To thrive after a crisis, you must be psychologically AND financially prepared for the downturn. You must have psychological and financial reserves. I wasn't prepared in this two aspects the last few rounds, so hopefully I am in the next coming one.

3. Work

We can survive our work by doing the bare minimum requirements not to get fired. But to truly thrive in it, we must put in the extra effort and take the initiative to do things that we are not in our pay grade yet. We do this to improve and also to prove to others that we can take on higher responsibility, which hopefully, comes with a higher pay as well. It might not be just about job scopes, but it could be relationships as well. Are you just surviving on the current relationships with co workers and your bosses, or are you thriving? If you're wondering why others are always getting promoted over you, why others are favoured over you, maybe you are merely surviving in their eyes.

Those are a few examples of surviving vs thriving. But all of these examples have the same underlying commonalities. They are:

1. To thrive, you must first survive. 

2. You must have something steady in your lives before you can take the necessary risk in order to thrive. 

3. You must be prepared to put even more effort and energy to thrive, because the game rules for surviving and thriving is different.

The 1-2-3 steps can be looped in a feedback cycle for improving any aspect of your life. First you learn how to survive. You master the survival skills needed, and after a while you no longer need to think or use much energy. That's when you know you reached steady state. You're ready to learn how to thrive, if you so wish. Not everyone wants to go on the next stage and it's perfectly okay. Next, you need to unlearn all you learned during your survival state and learn how to play the big league game of thriving. After a considerable time, you again reached a steady state where you don't need to expend much energy and effort. That is the new state of 'survival'. This process keeps looping 1-2-3 continually until you stop wanting to go further or you can't master the necessary skills to go up one level or you just run out of life.

How much effort do you need to do all these? Some people count it by hours, so citing some expert out there, it requires about 10,000 hours to reach a certain level of mastery. I prefer it count it by the sacrifice needed. To reach mastery level, you need to be sufficient obsessed over it to sacrifice everything in the midst of learning. Maybe it's called passion, but I find it too vague and over-used. Everyone is using 'passion' to talk about some things that they just acquainted with in the last 5 minutes.

Passion should be defined as wanting to thrive in something by sacrificing your energy and time to the exclusion of everything else. Most people wants the mastery without the sacrifices, and it can't be done. Maybe they don't want it badly enough. Everyone wants to go to heaven, but nobody wants to die.

Wednesday, August 02, 2017

CDL Htrust rights are out

The CDL H trust rights are out. I applied with DBS atm and I've received the refund this morning already.

I don't have any mother shares before the whole rights exercise and before it goes XR, I bought 3000 mother shares at $1.645 each. My entitled rights for this 5 for 1 rights issue @ $1.28 means that I have 600 entitled rights. I applied for excess rights and got 500 shares. In summary:

Mother shares: 3,000
Price of mother share before XR: $1.645
Entitled rights: 600
Excess rights: 500
Total rights: 1,100 @ 1.28

Average price before comms: $1.547
Average price after comms: $1.55411

Since the price of the ex rights mother share is now at $1.610, it's already in the money. Damn, I love entering reits/trust when they exercise rights. Good quality ones will bounce back within months.

Tuesday, August 01, 2017

The 6 Errors in Month-end Accounting

Every first of each month, I'll do my month end accounting for the previous month. This means that I will do a bank reconciliation to make sure that all the accounts are properly tallied and accounted for. Today, when I was doing the same thing I had been doing for years, I realised I had a surplus of $1k. That is, my actual cash that I counted had about $1k more than the amount that is reflected digitally. This is usually a happy problem for some, but for me, any amount more than $50 is a huge major red flag. That means there's some major discrepancy somewhere.

Usually the problem lies with the income part. I must have forgotten to record some cash that I received. In the midst of trying to find out where the error occurred, I discovered yet another major error. I had 3 records of my income, and all three had to tally each month, if not it's another major red flag. Somehow, I had not received cash, but I had in my records that I had received it, and after some investigation and confirmation from the affected parent, I found out the error. It was rectified immediately and all records are tallied now.

This is all thanks to YNAB. If not for that software to do double entry accounting, I probably wouldn't have discovered the error. That brings me to the gist of this post. What are the possible errors that might happen when doing my month end accounting?

1) Error of omission

This is exactly what happened to me. I received cash, but I had omitted the transaction records in my books, so my actual cash holding is more than what my records say I should have. This is quite common. Oftentimes, it'll be some purchase of food or drinks that I had forgotten to record down, but if the difference is only a few dollars, I usually ignore that. It's not a major flag unless it's more than $50.

2) Error of commission

This is when you record things in the wrong account. For example, I draw out money bank A, but I recorded it as bank B. I've encountered this before too, and it's fairly easy to spot. Both accounts will be wrong by equal amount, so a little investigation will shed the light on where the problem area is.

3) Error of original entry

This is when you are supposed to record $11.60 but recorded $16.10 instead. If it's not a big amount, it's actually okay. But if it's a big amount, it's going to be hard to check the records. Especially when there are so many records on food transactions for me. Without the original receipt to counter check, I'll say it's quite impossible to find out, especially if it's cash transactions. Thankfully for bigger items that cost more, I usually use credit card, so there's already a paper trail.

4) Compensating error

This is when you received $500, but you keyed in as $300. At the same time, you also spent $400 from the same account but keyed in wrongly as $300. The positive error and the negative error cancelled each other out. This means that while the balance sheet is balanced, it's wrongly balanced. So far I've not had such errors. Or maybe I haven't discovered it yet...gasp.

5) Error of principle

This is fairly common because of auto-correct in hand phone. Sometimes when I spent $10 in my wallet, it'll deduct $10 from my bank account instead of wallet account. That's an error in principle. Usually a month end bank reconciliation will discover such errors.

6) Error of complete reversal

This is when you are supposed to take out $10 from account A and put into account B, but you keyed in that you take out $10 from account B and put into account A. This is not an issue, because the smart YNAB software will prompt you when such things happen. At least the obvious ones.