Lazy sunday

This is one of those lazy Sunday that I didn't have to work and have the time to read newspaper at a very leisurely pace. This is so unlike the past few weeks where I've to scan the headlines and basically leave it at that. So, naturally, my eyes focused on the investing segment of the Sunday Times. This person was giving 5 tips on how to invest despite the bear.

My first impression is that how come nobody is giving tips on how to invest despite the bull. Perhaps it's our natural inclination to see prices rise up. Even the major stock exchanges in Germany and US are setting up measures to prevent short trading in case the market plunges too fast and too soon, but they did not do anything to prevent long buying in case the market rushes up too fast and too soon. Quite bias, don't you think?

Anyway, here are the 5 tips. Having nothing better to do, I thought it'll be a good idea to reflect on how these tips are useful to me or not.

1. It is better to remain focused and stay invested during volatile times.

It further elaborates by saying that over the long term, you can ride out the volatility. I hate it when people say that. It oversimplifies a lot of things. So do we stay invested in one company over the long term or do we put all our investing money in the market (regardless of the companies actually invested) over the long term? From the people I talked to, they seem to think that the former is the way. They then quote Warren Buffett doing that too (if you think so too, read more about him).

In my opinion, I think that staying vested in the market for the long term is the right thing. But you need no stay invested over the long term on the same companies. Just do the necessary adjustments from time to time.

2. The three Rs: Revisit goals, review portfolio and rebalance your investments.

Ok, this I agree. I made a mistake in the past of not reviewing my investments. A good profit thus turned to a very bad loss. I guess everyone does that kind of mistakes. It's a very very good idea to rebalance your investments. It's like a garden full of plants that you want and a lot of weeds. Just take out those weeds so that you can clear more space to grow the plants you wanted.

3. Spread out your risks, diversify

The article says to diversify across different asset class. Ok, it's great advice. But to a common retail investor, it's hard to do spread out your assets into more than 2 classes, unless you have a lot of bullets to fire everywhere. To me, if you have less than half a million to invest, you might want to concentrate on just one or two asset class. Perhaps stocks and bonds? If you have more than half a million, then capital preservation might play a more important role, hence the need for a more robust portfolio to weather the shit in life. Stocks, bonds, properties, commodities might even out just nice.

Please don't quote me Warren Buffett's style of focusing. You're not him and he's not you. Besides, he has many many more companies than you will ever have.

4. Have a balanced portfolio

Erm, isn't this tip the same essentially as tip no. 3? I guess the author elaborated more on using the funds approach. Coming from the head of UOB deposits, investment and insurance branch, I guess it's normal to talk about this.

5. Market corrections can mean opportunities; use dollar cost averaging to smoothen price swings

I'm not such a big fan of blindly doing DCA. I believe that the market can be timed, not precisely, but approximately. We do not have to buy every month because we cannot time the market. Just do DCA with some chartings, and I think you can do a lot better and save yourself on the transaction costs.


As with all articles, they never never talk about selling. It's all about entering the markets and giving the impression that by holding long enough, you'll have a good return in the end. To me, selling is the other half of buying, and there really is too much literature on how to buy and when to buy. How about doing a DCA on selling? As market goes up, you sell a little more and a little more so as to average up your selling price?

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The flight of Icarus

I would like to share a Greek mythology with you. This is not about Odysseus nor Sisyphus - it's about the story of Daedalus and more importantly, his son Icarus. You might not have heard of Daedalus but surely, you must have heard of the Minotaur. The Minotaur is the half man half bull creature that is found in the Labyrinth of Crete. There is a great story of how Theseus, the 'real' son of Poseidon (not the Hollywood fake version of Percy Jackson), survived the labyrinth and defeated the Minotaur. Daedalus, the craftsman who built the labyrinth, had to escape with his son Icarus. He thus built a pair of wings, one for each of them and gave his son strict instructions not to fly too high up near the Sun for the wax on the wings will melt and he will surely perish.

Icarus's over-confidence got the better of him

Icarus followed his father closely in the beginning, never straying too far from him. However, the adrenaline that surely must have pumped in his veins made him high and most importantly, made him forget about the dangers that was warned by Daedalus before taking on this journey. The initial cautiousness gave way to recklessness as Icarus flew higher and higher up the sky. So confident of his own ability to control his flight that Icarus could no longer hear Daedalus's warning.


Alas, it was too late. As Icarus flew higher up towards the Sun, the wax that attached the wings to his body melted and soon, he was flailing his bare hands in vain as he dropped like a stone into the sea.


Moral of the story:

If it's quite a bullish time, always be careful when the price of your stocks go higher and higher. Icarus had forgotten that the half-bull had been killed by Theseus and ignores his father's warning not to aim so high up the sky... to his own peril.

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Reality check 2

This is more of a personal reminder not to over invest in the market. There's a lot of uses for my cash these days and the problem becomes a little bit more thorny when the market is showing more value these days, after crashing and crashing when the Olympian Gods turned their backs on the troubled Greece. Better do a little back-of-the-envelope calculation to ensure that I have sufficient cash for immediate use.

Here's a quick breakdown:


1. Housing - 110k

This gets a little bit more troublesome since I entertained the idea of getting a 5 room flat. This is different when I started writing about some details with regards to the amount of cash I needed. Just based on 4 room with a price tag of 400k, I need around 60k cash. If I get a 5 rm, which cost around 500k, I think I need to raise that amount to 110k cash.


2. Wedding - 32k

A few things are set in stone. I already got the suffer rings and the package, and paid for a deposit for the hotel. What's left are some miscellaneous and the rest of the banquet. For worst case, I do not assume that I can get back anything after the banquet. I know I know, I'm sick.

Suffer rings + Package + deposit = 9k
Miscellaneous = 5k
Hotel banquet = 18k

Maybe I should dangle a carrot in front of me while carrying my burden...

Drum roll please....... Ladies and gentlemen, I need 140k by end of the year. Hmm, based on what I have now and my savings target by end of the year, most likely I will be able to hit 85% of the target without any help from the market. THAT is quite reassuring. This means that I can tap maybe 10k of my reserves to average down some holdings, but when the market rebounds, I'll have to take an equivalent amount or more of my capital out. In other words, USE SPARINGLY.


Okay, by next yr, I would need to renovate and furniturised my new home. Based on the estimate I did in the previous post, I would need 50k. But that's another 365 days more to go - I'll just walk ahead by putting one foot ahead of the next. The situation might change drastically by the end of the year, so no point planning so far ahead.

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Of rainy days

I was walking my way to work and when it was about to rain. Not just the typical afternoon showers but it was this gigantic, monstrous, end-of-the-world kind of rain. The clouds are so dense with water vapor that it seems as if the mothership from Independence Day are coming to consume all lifeforms on Earth.

It seems that I'm going towards Mount Doom

I was just enjoying the sights, sounds and smell of the impending rain. I was so suitably impressed that I took a picture of it to keep, and that's the picture you see above. Believe me, it's much worse when you're actually there because it seems that the darkness is about to touch and consume you.

However, since I vowed to myself never to be delayed by rain or shine, I just marched on.

Isn't the stock market the same? There's this big impending cloud of doom creating an overcast in the global market, seemingly about to consume it all. I've read an article yesterday saying there we should liquidate all the stocks that we have and buy gold. I do not dispute that, but I think we ought to be careful not to over-react to both market extremes. In good times, be a little bearish and hold on to your purchases. In bad time, be a little bullish and buy a little at suitable levels. Most importantly, do not let the market determine your mood.

It was 2 hours later after I left that area. It didn't rain at all.

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An hour to eternity or an eternity in an hour?

I saw this panel from my favourite one-panel comic site : Wulffmorgenthaler. As always, it always inspired me to write certain things after reading it. One panel comic also makes me think a lot, despite its apparent simplicity. So this is one of the latest one from those comic genius:

We have a very short time to spend with people before we each go our own separate ways

I like this one because it reminds me that we have a short moment to spend time with each other before our paths diverge and we all go our own separate ways.

I think while it's important to delay our wants and settle our present needs first, so that we can save up for the future, we cannot forget to enjoy ourselves. While it is wise to save up for the future, it requires wisdom to decide when to live for the moment. In that sense, I need to work on the wisdom part. I mean that is the problem with savers - they tend to save too much, perhaps even accumulating money for security sake. While spenders had their own sort of problems, I guess spenders wouldn't regret their experiences at all.

I had a wonderful day with brothers and sisters just dining and chatting. I'm going to buy a kindle dx to reward myself for the insane months of hardwork and oversaving (Can you imagine that? Oversaving! Is there even such a term?). I'm going to have a planned relaxing week ahead.

I live for the moment now, at least for this week :)

I leave you with this beautiful poem by William Blake, Auguries of Innocence:

To see a World in a Grain of Sand
And a Heaven in a Wild Flower,
Hold Infinity in the palm of your hand
And Eternity in an hour.

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Fair value of noble after XA

When I saw noble, I suddenly remembered that they are going to go XA today. Haha, it just slipped my mind, if not I'll have calculated the fair value of noble before today.

BTW, I chose option 3. Seriously, I didn't really choose it. I can't sell it at the price I wanted, so no choice but to hold it then :)

They are going to give a dividend of 0.036 USD per share, payable on 6th July. I didn't read closely and I suppose that the dividend is only for shares held before XA and doesn't include the new rights shares.

Here's the information required:

Dividend: 0.036 USD per share
Forex: 1.38 (assumed)
Bonus exercise: 6 for 11
Last closing on 14th May: 2.98

The fair value, defined as the price of noble after XA NOW such that there is no change in one's profit/losses BEFORE XA but after distribution of dividend, can be calculated as such:

[2.98 - (1.38 x 0.036)] x (11/17) = 1.896 = 1.90

Currently, noble is having a buy/sell bid of 1.89/1.90 and it opens at 1.90. How would it close?

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What are your reasons for having kids?

** "BIAS" is a special feature in my blog where I get to say whatever I want with scant regards for your feelings. I'm not politically correct in this feature, so go ahead, judge me."


I was talking to a few people about the cost of rearing a kid in Singapore. It dawned on me that there are so much responsibilities and duties, not to mention the financial cost, associated with bringing up a kid. That makes it strange because when I (casually) ask people why they want a kid, the most common answer is that it's the most natural thing to do. It's almost like no second thought is needed. Just snap your fingers, let's have a kid.


Not that it's not a valid reason, of course. It's just that if my kid is suffering in the world and he asks me why did I bring him here to suffer, I better have a proper explanation for it. I can't just say that it's the natural thing to do after getting married. Having said that, I think some people better not have kids, despite whatever the government is trying to promote here. Have a kid so as to have some months of paid leave? Have a kid to reduce your taxes? C'mon, it's not as simple as just a money problem, even though it can form a big part of the stress faced by parents.

It's not always so romantically happy in having a kid

I think the biggest problem is time and effort. Some people just do not want to spend the necessary time and effort to raise a kid. They just throw money at them, perhaps to replace their guilt or simply their lack of interest in having a kid in the first place. I might even think they regret the whole thing. Hey, if you are going to screw up your own life, don't screw up an innocent life.


Is my generation the selfish lot?  The generation who only cares about self-interest and throw away all the goodness of family life? I do not think so. I do not speak for others, but at least for me, I think I couldn't be more self-less. If I cannot make sure I can do my best to bring up a kid that will make the world a better place than without, I would rather not have a kid. If you went through the system while growing up and suffers through it, would you want your kids to go through the same routine? I have my reservations on that.


Having said so much, do I like kids? Yes, I do. Would I want children? Yes, I do. But it is not a light decision to make, nor will I make it a hasty one. No amount of tax rebates nor months of paid leave can push me to have a kid. Do you really want parents who would have more kids to have such incentives? If you can make the environment and social institutions more friendly towards parents, then perhaps it can push me and others to have more kids. Until then, I'm sorry, I really do not think all the campaign will work well. The pull factors are just simply not attractive enough.

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As an afterthought, what about push factors? Pay triple the tax if there's no kid in the family? No buying of subsidized housing? When all the nice candies do not work, maybe the pushing and shoving just might. I hope I do not live long enough to see such acts here.

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Musing over my options for noble

For some strange unfathomable reasons, noble had decided to issue a bonus exercise of 6 bonus shares for every 11 shares held before ex date. Why 11 - a prime number? Wouldn't it round off nicer if the exercise is 6 for 10, or even 6 for 12? In order to round up nicely, investors must hold shares in multiples of the lowest common multiple of 11 and 1000 (who say maths is useless?). However, 11 is a prime number, so you must have 11 lots at the minimum in order not to end up with odd lots. If not, I think the trailing decimal places in the calculation of your bonus shares will be rounded down.


Each share is trading currently at around $3, so 11 lots will cost $33,000. Not a small sum of money at all for retail investors.


I am holding 2 lots of noble, so I'm trying to find ways to circumvent the problem of odd lots. I knew about the unit share market from poems trading platform. It's used to trade shares lesser than the board lot size of (usually) 1000 shares. I think somehow, I've got to use this feature in order not to end up with odd lots.


Here's a few ways that I can think of:


1. Buy 2 more shares from the unit share market, to arrive at a total of 2002 shares of noble before ex date. Since 2002 is a multiple of 11, I'll end up with 1092 bonus shares, giving me a total share after ex date of 3094 shares. Commission structure of unit share market is 0.28%, with a minimum of $10 charge.


Great...it's still odd...not a fantastic idea. I'll have to sell 94 shares or buy another 906 shares from the unit market to end up with nice board lot size.


2. Buy 9 more lots of noble to arrive at a total of 11 lots of noble before ex date. This will entitle me to 6 bonus lots, with a total of 17 lots of noble after ex date.


If not for the exorbitant extra 27k needed, this will be a good solution. I don't think I want to put so much into noble just so that I can skip the odd lots...bad idea.


3. Do nothing before ex date and get a bonus share of 1090 (rounded down), arriving at a total share of 3090 after ex date. Then go to the unit share market to sell off 90 shares of noble or top up with 910 shares to get 3 lots or 4 lots respectively.


The added advantage of topping up with 910 shares is that I would expect a selloff immediately after ex date as investors go to cash out their odd lots, so I might be able to buy at a much cheaper price to average down my overall purchase.


The estimated price after XA is $1.95. Assuming I want to buy 910 shares off the unit share market at 2.20 (I assume an even higher buy price at unit share market), it'll cost be $2002. Add in minimum commission of $10, it'll be roughly $2020.  The dividend of roughly $100 can be used to offset the cost of purchasing the odd shares too.


Might not be such a bad idea.


4. Sell off noble before ex date and buy it back a few days after ex date.


I like this idea a lot, so I've been queuing to sell for the last couple of days. If there really is a sell off after ex date, I'll be able to skip all the nonsense odd lots and even get a cheaper price for the shares. However, doing so, one will not be able to get the dividends. This should not be a big deal, considering how little the dividend is. I wouldn't be worried about this.


Do note that due to the low liquidity at the unit share market, the buy/sell spread can be quite big. You also have pay the minimum of 0.28% of transactions or $10, even if you buy/sell 1 share. Proportionally, the cost is higher. As such, I think no.1 is a very bad idea. I'm just wasting money doing it that way. No. 2 is out for me as I do not wish to be overexposed to noble, given my capital size.


So, it boils down to no.3 or no.4. Let's see which one the market throws at me.

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For whom is the whole life insurance meant for?

Just for whom is the whole life insurance meant for?


I've heard a number of people saying that they don't want to buy whole life because when they get older, their dependents would have grown up and thus there's no need to cover them anymore. The alternative is thus the term life plan because it's cheaper. This seems to suggest that the whole life plan is just for the coverage of their dependents in case the sole breadwinner (the person insured whose life is insured by the whole life policy) passed away.


My post here is to question that very assumption - that the whole life plan policy is to cover dependents in case you pass away prematurely, thus leaving them with a huge lump sum.


I do not use the whole life for such purpose. There are cheaper alternatives for such lump sum gift for those loved ones you leave behind to take care of financial matters. I propose that a whole life plan can be used to protect your own savings that had been built up thus far, from events that can erode it considerably. Events such as cancer, stroke, heart attacks and any other events that are debilitating yet not fatal immediately. In this sense, whole life policy will act like compulsory savings to force you to save up for such events.


Term plan can work the same, yes. But the catch is that term plan coverage only last around 60 yrs whereas whole life plan cover for an extended period till 100 yrs old.

So what happens between the years when your term plan coverage ceases? I think whole life can be used precisely for that purpose - to cover for the period when your term plan no longer covers you, until the day you pass on.


If something strikes you after 60 yrs old, and you do not have whole life coverage, someone will have to foot the bill. There are hospital and surgical fees to take care of, and there are other fees that had to be incurred that do not require hospital stay. Only the former are covered by H&S plans, so what about the latter? Things like non-standard drugs, stay home nurses and maid, overseas treatment....who is going to pay for them? The H&S plans do not cover things like that and I do not want to burden my spouse, relatives or dependents, so I have to depend on myself. But I do not trust myself that I can save up enough for such purposes, hence a whole life plan is critical for me to hedge against my own ability to prepare for such events.


I think of my own situation. I am sandwiched between two parties - the needs of my parents and the needs for myself. I've to buy insurance for my parents because they only have enough savings to take care of themselves if nothing extraordinary happens. If something is to happen, it will firstly wipe out all their retirement savings and secondly tap into my savings too.


They told me if something bad is to happen to them, I don't have to treat them because there's no point. I do not think I can do that. Can anybody do that? Not me. I only have limited amount of savings to handle my own affairs. If I have to help my parents, who would foot the bill for me if something is to happen to me? My dependents? Then this whole cycle will repeat again!!


I'm not a saviour nor a hero to rescue my future generations from this vicious cycle. I'm just a normal person struggling to make good on my dual duty as both a kid to my parent and a parent to my kids. It is only responsible for my kids to be born into this world without the excess baggage of the previous generation. I might not be able to do it, but hey, guess what, I'm doing my best.


It's also a bit too much to ask for a product to cover all of this stuff that I've talked about. It's not possible. I'll try to cover as many loopholes as I can foresee and do my best to steer my ship as danger free as I possibly can.

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Do note that I'm not a financial advisor. Of course I'm not. I'm just trying to make sense of all the debate here and there and reason out for myself on the actual purpose of certain insurance policies. I believe that no financial advisor can do that for you - you've got to think and reason it out for yourself. I do not presume to think for everyone, because my situation is uniquely mine. So do not follow me, because I'm not your leader. Do not walk ahead of me, because I might not be able to follow you. Do however, walk beside me as a friend, so that we can all share and discuss all our interesting life experiences together.

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The official reason why MBS screwed up

** "BIAS" is a special feature in my blog where I get to say whatever I want with scant regards for your feelings. I'm not politically correct in this feature, so go ahead, judge me."


I saw from my favourite one panel comic site, Wulffmorgenthaler, dated May 7th, regarding this picture shown below. I liberally changed the script and inserted my own as a dig at the latest Marina Bay Sands (MBS) saga over the kind of world crass standard they exhibit recently.

I mean, they are hosting lawyers. MBS sure knows how to pick their fight. They could have screwed up on a conference by the society of garang guni, or the hen pecked husbands club, but they had to pick their fight on lawyers. Bummer...

I thus present to you, my interpretation of the issue. No need to thank me, MBS, for giving you an idea on the official explanation for the screw ups. There's only one thing worse than lawyers...

The official reason why some of the rooms in MBS are not air-conditioned

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For the benefit of those who did not read up on the news, here's the article, reproduced from channel news asia site:

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How my world came tumbling down

After a few people smsed me and emailed me, I kind of realised that this post is a bit too much. Hence the disclaimer before the actual post itself. Do know that while reading this letter, it's supposed to bring out a certain point that is found only towards the end of the letter. SO, while reading it, the scenario painted out are NOT TRUE. While writing this disclaimer will spoil the "ah-ha" effect, I think making people unnecessarily worried about me isn't exactly the intended point either.

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Dear readers,


I had a very very bad week.


I fell down the stairs when I was going for my dinner last week. Dropped down a flight of stairs, sprained my left hand and broke my leg, leaving my leg in cast now. That was after I received a letter from the hospital after a full body check up the previous month. What can I say? The results are...not optimistic at all. It says that I've a growth in my right forearm, so more needs to be done before it can be ascertained whether it's malignant or not. As I was musing over the possibility of a cancerous growth, I must have lost my concentration and fell over the flight of stairs.


How can a spate of bad news hit me so relentlessly and furiously? Didn't my mum's high blood pressure got worse this month and had to be sent to the hospital? My pet cat's recent death already had me sleeping with my pillow wet and my eyes puffed up with all the crying. I don't think I've anything left to cry anymore. My gf had threatened to leave me after a very bad spate of arguments, so I can't seek consolation with her. Can I talk to my friends? They had 'left' me because while I was busy with my work, I didn't have time for anyone except to make more money. While they are physically there, our frequencies no longer resonate. It's just an empty feeling talking to them, because it reminds me of how things were in the past and how different they are now.


But all these did not happen at all. I did not fall off the stairs. I did not go for a medical checkup and neither did I receive any letter sentencing me to death. My leg is perfectly fine and my hands are still as dexterous as ever. My mum's blood pressure did not get worse and she did not go to the hospital at all. My cat is still very much alive and mewing for attention occasionally. My pillow and bed sheet are crisp and fresh as it had been changed just last week. I did had arguments and disagreements with my gf but she did not threaten to leave me. We are still very much in love. My friends are still there with me and though our frequencies no longer resonate perfectly, they are still in phase with each other. Conversations with them are no longer are as satisfying as I used to remember them, but we still know each other like a connoisseur to his favourite vintage wine.


So why did I tell you this? I just lost a few k in the stock market as the price spirals down and I want to let you see things in the proper perspective. Things are not as bad once you realised that you have a wonderfully blessed life right now, at this very moment. What is a few k of losses? Don't wait for the moment when you lose the things you have now to realise how fortunate you are.


Life is still very wonderful :)



Yours truly,

La Papillion

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Of fishes and men

You must have heard of this story, it goes like this:

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An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.


The Mexican replied, "only a little while."


The American then asked why didn't he stay out longer and catch more fish?


The Mexican said he had enough to support his family's immediate needs.


The American then asked, "but what do you do with the rest of your time?"


The Mexican fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life."


The American scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC where you will run your expanding enterprise."

The Mexican fisherman asked, "But, how long will this all take?"


To which the American replied, "15-20 years."


"But what then?"


The American laughed and said that's the best part. "When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions."


"Millions.. Then what?"


The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."


The moral of the story… Know where you’re going in life — you may already be there.
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I disagree with the moral of the story. In my own twisted interpretation, the moral of the story, to me, is:

1. If the Mexican is already a millionaire and is thus living the life doing what he wants (i.e. fishing leisurely). then the moral must surely be that you must work hard to have a certain amount before you can do what you want in life. In other words, work hard now, so that you can enjoy your retirement doing what you like without worry for money.


2. If the Mexican is not a millionaire, then there is some difference between a millionaire-turned-fisherman and a fisherman, even though there are doing the same things now (which is fishing leisurely). I do not know if the Mexican's wife and family will argue with him everyday to bring in more money to feed the family or not. It's not stated in the story, but I would imagine so. There are responsibilities to fulfill, and so I would not seek to do what I really wanted before settling those responsibilities.


3. I remember what snr bro said the other day. Young men must spend more time and energy to earn money. Older men must spend their money to earn more money. Perhaps the Mexican is doing that, or had some other income stream so he do not have to be there physically to earn the money.


The fisherman's tale is not as romantic as first thought. Life is inherently harsher than a fairy tale.

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STI spooked by the PIGS

Who's afraid of the big bad PIGS? In the real world, the wolf should be afraid of the PIGS. One little pig knocked on the wolf's door and caused such a panic around the world. Now, the wolf is afraid that other little PIGS will come to knock on his door.

Let's take a look at STI weekly:

Weekly chart shows a bearish divergence on long term force index, but not on macd histogram yet. The degree of selldown isn't as much as that experienced in January earlier this year. Maybe not yet? haha! The previous selldown took 4 weeks (4 bars) before stabilising, so perhaps we'll see the same too? The selldown had brought STI to the value zone already, so the minimum target of the selldown had been reached. It will most likely over-react to the downside.

STI daily:

There's a gap support around the region of 2790 to 2820. Looks like that level also coincides with the mid term trendline established in Aug last year. Another 1.5% to 2.5% to go? I don't think now is the time to sell your cats and dogs to raise capital to buy up stocks. I finished my first wave of buying...will wait for clearer signs before putting in more money.

When there's nothing to do, do nothing.

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Solution to problem sum

Here I shall reveal the calculations that I had based on the problem posted in this earlier post. I sort of figured out that nobody will be so bothered enough to go and try calculating the theoretical price of ARA after XA, so I might as well show the answers now. Thanks HH for trying it! Haha :)


Since in the real world, there are no teachers to check for you and no answers behind the textbook to assure that you're right, we always have to try solving the problem using different methods. If all the methods arrive at the same conclusion, then chances are, you're right until someone proves you wrong.

First method:

I tried using numbers to have a feel of how it works:
Let's say I have 10 lots of ARA shares @ $1.00 average price. Since the dividend is declared at $0.025 per share, or $25 per lot, I'll have $250 dividend for my 10 shares. The closing price a day before XA was $1.15, so I can calculate what's my profits so far.

My inventory before XA: 10 lots of ARA shares bought at $1.00

Sell price : 1.15

Profit from shares : (1.15 - 1) x 10,000 =  $1,500
Dividend : $250

Total profit before XA: $1,750 (1500+250)

Now, what happens after XA? The price of ARA drops because there are more shares floating around due to the 1 for 5 bonus issue. This means that for every 5 lots of ARA shares you own, you will now have 1 lot of bonus ARA shares. The price drops accordingly to reflect the fact that the market value of ARA remains the same. Do note that only the ordinary shares are entitled to dividend; Bonus shares are not entitled to this round of dividend but they are eligible for future dividends.

Let y be the price of ARA after XA.

My Inventory after XA: 10 lots of ARA bought at $1.00 PLUS 2 lots of bonus shares

Sell price : y

Dividend : $250

Profit from the original 10 lots of shares : (y - 1.00) x 10,000
Profit from the bonus share : y x 2,000
Total profit : 10,000y + 2,000y -10,000+ 250 = 12,000y - 9,750

Since y should represent the theoretical price such that my profit/loss before and after XA is to be the same, I equate the two profits,

12,000y - 9,750 = 1,750
Solving,           y = 0.95833

Hence $0.958 is the price such that my profits before XA and after XA is the same.

Second calculation:

I noticed that several terms can be removed without changing the answer. First of all, dividends doesn't matter as both sides of the equation contain the $250 divy term. Next, even if I tried different no. of shares bought at different price, it doesn't change the answer. I changed all the variables to algebra, and confirmed that the calculation remains the same. Without bothering you with the details, here's the much simplified formula:

Price = 5 x (closing price before XA) / 6

Since the closing price is 1.15,

Price = 5 x 1.15/6 = $0.958

Third calculation:

Not really a calculation. It's more like to show you that chartnexus had worked out what I had worked out in the morning. The chart clearly shows that the price before XA, on 28th Apr, had a closing of $0.958 whereas it was 1.15 just the day before the software updated the changes.

The closing price a day before XA clearly shows $0.958 instead of $1.15

The theoretical price is definitely different from the closing price. I cannot predict how the price will close and I know that the theoretical price will only be there for a fleeting moment. So, isn't it a waste of time trying to calculate something that only exists for a moment?

Not to me. I take great pleasure in such intellectual masturbation. It's like an unreachable itch behind the back, irritating me until I can solve it :)

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Problem sum

This morning, I was trying to settle a problem related to the market. In real life, much of the challenge lies in defining the problem, rather than solving it. Once the problem is defined clearly, the solution can be found, or you can find people who can help you solve your problem. I shall spend some time defining the problem.


The problem is laid out here. I had bought shares of ARA on three separate occasions. They declared a dividend of $0.025 per share and thereafter a 1 for 5 bonus share issue (meaning that for every 5 shares held, you'll get 1 bonus share). The bonus shares are not entitled to the dividend because it comes after the dividend is declared. The last closing price of ARA yesterday before it went XA (ex-all) was $1.15. So, the question is, what should the theoretical price of ARA shares be, after it goes XA today? The theoretical price is the price of the new ARA shares after XA, such that the gain/loss before XA but after XD (ex-dividend) is the same as the gains/losses after XA. To put it more simply, what is the price of ARA today upon XA, such that my gain/loss is the same as my gain/loss yesterday, before XA?

A good problem will generate sparks in your neurons

I had worked out the answer, but I thought it'll be a nice exercise for those interested to solve this mathematical problem sum related to the stock market. I'll share the answers that I had worked out in a few days to give time for people interested to work it out :)

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Don't be the last fool standing

As I see more and more newbies coming in to the market, I thought it'll be only right to warn them that the market is not their mother to give them money, but to take it away from them. I must have repeated this countless times in previous post, but it seems I only see more clueless newbies coming in to participate in the market.

Some of the gripes I had with newbies are:

1. I'm in it for the long term

I cringed whenever I heard the word investing for the long term. It shows a few things - firstly, the person saying it believes that in the long term, every mother father stock in the market will rise. How long is long? From historical data, if you invest in STI, you won't lose any money after putting it there for 14 yrs. If you look at Joseph's theory in cycles, you also need around 12 yrs before we can say that we're peaking. All these are related to STI only, so if you're investing in individual companies, then you also assume the individual company's risk, which may not be correlated to STI at all.

So, the ultimate question is - are you prepared to hold it for the really long term - 10-15 yrs - all the time while your stock is bleeding, your capital locked up and seeing light only after that time period had passed? If you do not have the conviction, don't tell me you're buying for the long term.

2. While the attitude is to hold it for long term, there is no corresponding attitude to learn the market properly for the long term.

First deserve, then desire. If you do not wish to learn more about the market, yet wish to profit consistently in it, then you're like the weekend jogger who wants to compete with an Olympian athlete in a race. You might win him occasionally when he's not paying attention but when he does, you're dead. The odds are so against retail investors already, so why make it worse by not learning it properly?

Putting money in the market is like playing musical chairs. While the music is playing, everyone is happy. But when the music ends, do not be the last fool standing around mystified while everyone had found their seats. I repeat - do not be the last fool.

5 individuals but 1 chair - who's going to be the last fool standing?

3. The interest rate in banks is so low, so investing is good as it gives high returns

Yes, the interest rate is miserably pathetic at 0.125% per annum, but who ever heard of someone losing their principal sum by putting money in the bank, to the tune of 30-50%? That's how much you can lose by risking your money in the market. Don't just look at the returns, look at the possible losses! If you think you have a strong risk appetite (by filling those silly forms), ask yourself what you will do if you invest 30k but you are left with only 15k. Don't learn the lessons the hard way like me.

4. Greedy not to miss the run, yet no fear that the market will turn against you

Afraid to miss the market? Why so eager to lose money? If I know anything about the market, it's that it always give you second/third chances. There will always be opportunities, so why so eager to jump on in? Sincerely, without any malice, I wish that any newbies who put their money into the market loses their money when they first started. That will put them into the correct mindset. If anyone makes money, they start thinking that the market is like an ATM machine.

That's when the market starts clawing back the money given to you, often with a hefty interest put in.



Will people heed the advice? I bet most won't, there's why the market is as it always had been. Sounds harsh? Well, I know that money is hard earned, so don't waste it like that. Go smoke a cigar and have a good meal, at least you'll have some fun and entertainment.

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Of Dragons and Men

On Sunday, while waiting for my gf to appear, I was spending the time at the MPH browsing some books. I picked up T.Harv's Secret of the Millionaire Mind from the shelf and started reading some chapters of it. It was a wonderful recap of what I had gathered from the book, since the last reading maybe like 1-2 years ago.

A phrase caught my attention. It goes something like this, "Rich men grows bigger than their problems. Poor men tries to solve their problems".

I took my eyes off the page and reflected on that line. It struck me like a chord that resonates within me...how true! The line simply means that if we grow bigger than the scope of our problems, than the problems cannot even harm us significant. In fact, some of the problems might not even be problems anymore.

This message drives in deeply, especially after I've watched the 3D version of How to Train a Dragon (btw, a wonderful and touching story). I watched in glee as the Vikings throw their catapults at this giant dragon that just leaps out of the screen. The boulders just bounced off its thick hide whereas earlier on, the same catapult just knocked off some of the smaller dragons.

Problems are relative, it seems. If you're a big dragon, you're not bothered by the relatively small stones. But if you're a small dragon, you're especially bothered by the relatively big stones, but quite immune to the smaller ones. This idea of growing bigger than your problems focuses the attention not on the problems, but on the one thing you can control - yourself.

That's quite refreshing to me. Some examples of how this works:


1. In the past, I tried not to take cabs because I always think that it costs several bus/mrt trips and I could save that few dollars. As I grow out of this problem by earning more and valuing my time more, I no longer worry about taking cabs. I might just take it when I'm tired and had a hard day, or simply to save time.


2. I used to fret when students cancel my lessons and drop off the tuition classes. But as I get more and more students, the percentage of cancellation drops as I grew 'bigger'. It doesn't affect me much anymore. In fact, sometimes I would be very happy as I can get to rest or spend more time with people I value.


Maybe it's time for me to re-read that book again after so long. Might want to add it to the list of books that I must read every year :)

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The stress faced by a teacher

These few weeks I'm ultra busy. Normally, I'm just busy. The mid year examinations are coming, so that's bringing a lot of extra work to me. When you read this post, I'm probably out working already - I just scheduled this article to be posted at this time and date. Ah, the magic of technology.

In the past, during this period, I'll be quite stressful. This is because I've to push students to cramp a lot of things in their mind to prepare them for this major examination. I certainly don't like doing this because it's a mad rush of time. But can you imagine the students? It'll be worse because they are the ones taking the examinations and facing the consequences in the end.

Over the years of tutoring, I realised these truths:

1. Some students just do not want to get A. You might want them to get it, but if they do not desire it, they will just put in enough effort to get whatever grades they think is fair for them. I realised it's more of a motivational issue than a knowledge issue. I blogged about motivational methods in the past, and I employed every single trick that I talked about, to various outcomes. I can't do it consistently so I usually try to do everything and see if it hits something. If I managed to motivate them, they will do all that is necessary to get it done.

2. I fully understand the stress of teaching students. It should be (if it isn't already) the first thing they warn you about when getting your teaching degree. You say something important, students do not get it. You say it again, they got it, then after a while, they forgot about it. So you repeat and if they still do not get it, you get frustrated. This is because there's no reward in your actions. Action without reaction leads to frustration. But what happens if you give up? Then there's no hope anymore.

This is of course easier said than done. I had given up hope on students too (maybe less than 5 out of so many over 7 years) because I'm only human and can only take a certain amount of punishment before I give in. But remember, if you give up, there's no more hope.

3. It's possible to win a battle but lose the war in teaching. While stressing the importance of major examinations, you can actually create such bad vibes in learning that it might lead to bigger problems downstream when it comes to anything school related.

I remember teaching a JC student about maths. Though he didn't do very well in statistics when I taught him (he always get mediocre grades for his tests), he found the topic fascinating. I jumped on that curiosity and introduced him a few things that are not required in the examinations but can expand his views on the topic itself. So years had passed and sometimes when I met him on the street, he'll shout out to me and said that he remembered me teaching him statistics and had a fun time together. He even wanted to do a statistics course in university.

I pointed out the story to highlight the fact that it's sometimes easy to forget the perspective in things. Being zen-like and having the belief that things will work out well in the end will remove some of the stress in teaching students. I always say this: Things could get worse ...but it didn't.


So, for all the parents and tutors out there teaching their kids, I hope this article gives you something to think about over the weekend. Have a great weekend :)

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Changes in the education system

** "BIAS" is a special feature in my blog where I get to say whatever I want with scant regards for your feelings. I'm not politically correct in this feature, so go ahead, judge me."



I read with interest regarding the latest changes to our education system. Most of the time, the changes will relate to mother tongue - a misnomer for the second language we learn besides English. The bugbear had always been the teaching of chinese, which many found it extremely hard. Interestingly, scant little had been done for tamil and malay when compared to chinese, where many innovative and creative ways to teach are reported in the newspaper. I could be wrong, but if there's any changes, it is definitely not as 'reported' as those changes made in the chinese language. Maybe the advocates for changes in the malay and tamil languages are not as loud as those for the chinese language.

What's the problem with the current psle system? There are 4 subjects in the psle scoring system - english, 2nd language, maths and science - all of them had equal weighting in the final tally of the psle score. The new change is to correct the weighting of the 2nd language, so that it will count lower towards the final score.

I'm thinking aloud to myself :

1. From what I observed, most of the kids from the upper echelons of society speak English at home. I'm from the middle class, so of course I do not have the same opportunity to mix with those who are really in the top of the top. I would assume that, they too, will have kids who speak English at home, and not their mother tongue.

2. Again, from what I observed, those who do not speak the language naturally at home will not do very well in exams. If the kids do equally well, they must have spent a lot of effort and money to raise their proficiency in what must have been their 'weaker' language. Since effort and money is limited, the same amount could have been applied to their other subjects to achieve higher results.

3. I tend to teach the middle and lower classes more often that I do to the upper classes. Their main language at home is either their mother tongue or, for those from the chinese ethnic group, their individual dialects like teochew and hokkien. While I won't say that they will naturally do better in their second language, they certainly do not display the same agony when learning them. In fact, quite a few of the students I know actually rely on their second language to push up their grades in the exams. 

So, is it possible that the latest changes to the psle subject weightings can cause a change in the playing field among the different societal classes? Could the changes benefit some classes of society more than others?

If you throng the forums regarding the latest changes, you might have heard variation of conspiracy theories regarding some MPs with kids who are going to sit for the psle soon, and so they are pushing for the change. I couldn't help but nod understandably that such a situation might be true. Whether the rumors are unfounded or not, the fact they people are thinking like that suggest that more explanations and studies are needed to reassure Singaporeans that the changes are in fact for the benefit of the majority, not just for the powerful minority.

Do understand that while the upper echelons might suffer in their education because their weaker language is dragging their results down, at least they have an option to leave Singapore for better opportunities. The rest of us who do not have the means to leave Singapore are stuck with whatever changes and decisions that are made in the education system.

Life is never fair, it seems.

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I'm credible now

Sometime last year, I tried to apply for credit cards but failed miserably. I blogged about how frustrating it is to be bombarded by sales people egging me to get their free cards but when I filled up the long forms and submitted the required documents, they rejected me without any explanation.

After a few tries last year, I gave up. I tried a few things but didn't work. These include:

1. Showing them a fat bank account flushed with cash
2. Sending them 3 years of tax assessment notice
3. Paying 5 bucks for a CBS report to check my credit worthiness

It seems a funny thing right? Banks consider self employed as less credit worthy as someone who is employed. That's how the world works, I can do nothing much about it. But recently, just 2 weeks ago, my application for POSB everyday credit went through and I received the card through my mail.

Plastic plastic - life's fantastic

It was a joyous occasion to me, not because now I have a piece of plastic dangling in my wallet. It's because my concerns - about not being able to borrow money to finance my purchase of property - might not be a problem anymore. It's important to have a good credit history so that institutions can lend you money when you need it. This is definitely the unexpected disadvantage of being a full time tutor. Maybe I shouldn't generalise because it might just happen to me only.

I'm going to apply for a few more cards.

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