Wednesday 30 July 2014

Opportunity comes - we recognise it?

I had a lot of fun the last few days facilitating a moot question here recently.

One spin-off which deserves a post by itself is this thing - If opportunity knocks, can we recognise it?

When I was working on the selling floor as retail sales assistant, the dream for most of us was similar to police constables aspiring to be plainclothes CID.

In retail, most of us want to be Buyers! It's the "glamour" part of retailing. No need to wear uniforms, no shift-work, normal office hours, and weekend offs!

To be precise, we all want to be Fashion Buyers. Who doesn't want to have buying trips to Milan, Paris, and Tokyo?

But what if one gets an offer to be a Stationery Buyer instead? 

As a Stationery Buyer, there's hardly any overseas buying trips as we are mostly dealing with local distributors and suppliers.... Bummer.

I watch in disbelief as some of my younger colleagues turn these "opportunities" down!? Didn't they say they want to be buyers? 

They rather wait for that "cookie-cutter perfect and ribbon tied and nicely gift-wrapped" opportunity to appear. Meanwhile they moan and groan that company never give them opportunities to grow... How retailing no future...

How about your dream to trade full-time to achieve? We all know its notoriously difficult to break-into trading for others.

Guess what? A commodities trading house is willing to take a chance on you and offers you a position as Coffee Trader.

Instead of grabbing it immediately, you still want to counter-offer and negotiate terms? Hello!

I know. The reality is you wanted to be a Bond or Forex trader at a big investment bank or hedge fund - these 2 markets by themselves are much much bigger than the equities market. Is it glamour you after or the love of trading?

While you were dithering, that Coffee Trading position was given to another leaner, meaner, and hungrier applicant.

Imagine you are a medical student. Study so long and hard, finally graduates. And to reward your "success", as part of your housemanship, you got assigned to the A&E department where you have to do the graveyard shift occasionally.

Hello? Isn't those kind of graveyard shift jobs "belong" to those who never study enough? Like those working at convenience stores, supermarkets, fast food outlets that open 24 hours?

So do you still want to be Doctor or not?

Unless we can claim "who we know" or "who my daddy knows" privileges, for the rest of us, we all have to pay our dues.

Be it as a cook or as a lawyer.

The trick is to do it first and quickly use this experience as a stepping-stone for something closer to what you really desire.

And ask yourself - is it better to be inside first then plot a transfer, or is it better to be outside hoping and waiting for someone to let you in?

Sunday 27 July 2014

Round Table Reflections on Rental Property or Dividend Stocks exercise

Thank you everyone who participated in our exercise on which we would prefer - a rental property or dividend stocks?

Again I stress there is no "right" or "wrong" answers, only opinions. Who is to judge whose opinion is better?

For those who have attended workshops or trainings, at the end of the session, there usually is a round the table reflections from the participants and facilitators.

Let's start with me! 

Tip! Always start your reflections early. If wait till the end, whatever you want to say has already been said by others - boring!

1.  I noticed from the responses, there are broadly 2 groups of decision makers - one group thinks from the head; the other from the heart.

2.  It's interesting most of the respondents are bloggers themselves. Some I know better than others. Most have chosen and gave the reasons why that are in harmony to what they have previously blogged about - their investment philosophy. But a minority, eh.... have responded in a way that's not really "aligned" with what they have blogged in the past... A bit of 自相矛盾... Wink.

3. Guess why I added the genie element to the question? Have you noticed when we ask a question, we get 10,000 questions back? It's human tendency to renegotiate, counter-offer, argue, and do everything else just so we don't have to answer the questions directly.

Have you noticed one blogger who have no problems commenting everywhere, very self-assured, confident, simply can't bring himself to have a bit of fun with this exercise? Why do you think so?   

The one minute dateline is just a subtle cue not to think too much. One respondent picked up on it. Wink. 

4. Most of the time, opportunities do not come in a nice cookie-cutter packaging or format that we prefer. For example, how do I reply if I prefer gold or cash right here right now? Especially if I am of the opinion both rental properties and dividend stocks may suffer a correction soon?

To choose either rental property or dividend stocks will create cognitive dissonance in me. And that's painful. But I still want the million $...

La papillion has successfully demonstrated a way out!

Just choose either one, the genie does not care which you choose. Reasons why? Can say I happy what! Isn't that a good enough reason?

If we choose dividend stocks, we can sell them off this coming Tuesday. If we choose rental property, OK, may take longer as in weeks or months to sell it off, but still very doable.

Either way, we still can convert it to whatever we really prefer once we have sold them off. Wink.

It can be gold, money market funds, or blow it all on wine women and song!


Who says to be financially literate we should read more financial books?

Those who are parents, you may want to encourage your children to read widely - yes, even those frivolous fiction stuffs like 1001 Arabian Nights. Wink.


Thursday 24 July 2014

Rental Property or Dividend Stocks?

If you only have a million $ and you are allowed only 2 choices:

1) To buy a rental property to collect rent.

2) To invest in equity to collect dividends. 

Which one would you choose and why?

My esteemed reader temperament asked this question and I think this can be a fun exercise to see what others think.

I believe most people would say:

a) It depends...

b) How can buy either at current prices?

c) Can choose half/half?

d) And other "wu liao" (silly) questions...

To make this exercise more interesting and clearer, let's imagine a genie pops up with a gift of a million $ to you. The condition is you have to make a decision right here right now in 1 minute - either buy a rental property or invest in dividend stocks. Failing with, the genie disappears with the million $.

Clear enough?

OK, own time own target.

Tuesday 22 July 2014

REITs versus Brick and Mortar Properties

Yes, REITs do own property assets. 

They could be residential, commercial, or industrial properties; hotels, hospitals, and what have you - just as long it's a building or space where you can lease it out to tenants.

Does that mean when I own REITs, I am a property investor too?

You can call me Al!

First of all, if it makes you happy, why should you care what others think what you call yourself? 

I call myself a nano hedge fund manager. Laugh all you want. I choose it not because of hubris; it's to remind myself to focus on absolute returns and to be able to do it both ways (stop sniggering, it's not what you're thinking!)

REITs are equities

Having said that, to me, REITs are no different from any other equities. It's just a paper asset where we "own" a fractal share of a company - nothing more; nothing less.

As a minority shareholder, do I have the power or influence to hire and fire the CEO? Decide his/her compensation? Do I get to approve the strategic plans of the company like the Board of Directors do? Was I ever consulted whenever a company takes out a huge banking loan? Or when they do a Rights Offer? Or Share Placement to another idiot institution investor so as to dilute my existing holdings in the company?

No. Hence, when I own shares, I don't call myself a Business Owner. (I consider myself more of a freeloader)

Using the same logic, when I own a REIT previously (sold for capital gains), I don't consider myself a Property Investor either.

It's same same but different!

Property is about king of the castle (or dog house)

A brick and mortar property that I own is a physical asset. It's something I can feel and touch.

I can pretty much decide whatever I want to do with it. Rent it out, do an asset enhancement (renovation), knock down a wall or two, leave it empty gathering dust, etc. 

Of course there are certain restrictions, especially if it's a HDB or Strata unit...That's why properties with less onerous restrictions on the ownership cost a lot more...

What's the difference between paper and physical assets?

Let's take the example of gold. In theory there's no difference between owning physical gold and buying a Gold ETF. But in period of distress and you need to get away quickly, try bribing the pilot or boatman with a Gold ETF statement...

REITs won't go to zero?

Eh... In US, where the REITs market is a lot bigger and deeper than ours, there are some REITs that have sought bankruptcy protection... 

During the GFC, I was aware of 2 SGX REITs that almost failed... Lucky 2 white knights came to the rescue. Hell hath no fury like a yield investor scorned! Try going through a dividend suspension or a massive dividend hair-cut as a REIT investor during 2008... 

Similarly, remember when AIG almost failed during the GFC? Read about worried policyholders queuing outside the Robinson Road AIA building wanting to surrender their policies?

Isn't insurance "supposed" to be safe? Well, that's paper assets for you.

Therefore in investing, never say never!

Property can go to zero!

Yes! For leasehold properties, the value can go to zero. "Ah ber then"?  Sometimes I read funny statements in the internet that big daddy cheat us, we don't own our HDB homes, etc... 

You can't really have a conversation with such people if they don't understand the meaning of leasehold. 

So be clear on whether you are leasing or buying a freehold property. 

How to visualise 99 years? Just look at HK. The New Territories were leased to UK for 99 years, and I think the Britons made a lot of money out of these 99 years. So 99 years is long enough to make some serious money if we are lucky! Stop complaining already.

All asset classes went down in 2008

Don't listen to me. If you were around in 2008/09, all you have to do is to go down memory lane or do your own research if you were sleeping at the wheel then.

ALL asset classes went down.

Even gold!?

Even bonds!?

When you have margin calls and redemptions by shell-shocked investors, money managers have to liquidate whatever assets they can sell - even the good ones. 

But with QE money printing, gold and bonds rallied (after a brief temporary dip) while equities lagged behind. (Something to be said about having other asset classes in your portfolio eh?)

As for property in Singapore, did we have 50% correction like for STI? Not even 20% dip for Singapore properties right?

With QE and zero interest rate policy in the States, brave property investors that bought in 2009 were a happy lot especially after cashing out in 2013. Even happier when you factor in the 5 to 1 leverage! Without it, property investing is too boring for most "investors" - who are actually speculators.

So no single asset class can protect you during 1997, 2000, 2008 - unless you are great with market timing by going 100% into cash - which is an asset class all by itself.

Those with cash in 2009 is like a kid in a candy store.

Many wished they had more cash rotting in the bank during 2009!!!

Man-whoring ways

If you are not a one woman man as in loyalty to one asset class only, welcome to the world of prostitution: I am a equities man-whore.

Big daddy says we must constantly re-skill and upgrade.

Well, I am levelling up from equities man-whore to asset-class man-whore!

Life time learning?

Sunday 20 July 2014

What Passive Income?

There's some emotive words out there that work very well in attracting consumer attention:



Buy 2 get 1 free!

Bonus pack!

And for the journey towards Financial Freedom, there is this popular "Passive Income" quote that never fails to attract interest and attention.

When we were young, we get an allowance from our parents. To us, this allowance is "passive income". We didn't do anything to earn it did we? But to our working parents, is it passive?

To the mistress of a wealthy businessman, the "housekeeping allowance" may appear passive, but we know there are certainly some activities she has to perform....

Even marry into wealth it's not passive as we need to first be "active" in hooking our partners up. Unless you are one of those mail-order bride or groom...

Quick quiz!

Do you know anyone who gets money from a source without having to do anything "active" to earn this income in the first place? (Besides getting money from parents lah!)

I do!

I know descendents of another branch of my family tree do get annual dividends from Ngee Ann Kongsi - just for having the right surname. Typical Teochew - boys get more; girls get less.

I guess that goes also for those who get regular money from a Family Office or Trust that's left behind by a wise, compassionate and super rich ancestor.

And those who inherited rental properties from mommy and daddy.
Now that's Passive Income! Without lifting a single finger, money comes. 

As for all other forms of so called "Passive Income", especially rentals from investment properties, and dividends from equities, is it "passive" really?

Unless inherited or gifted to you by someone, we need first to secure or earn this supposedly "passive" flow of income right?

And that's where we see the difference between shepherds and sheep.

Shepherds are constantly, actively searching for loop holes, opportunities to exploit.

Sheep just passively wait for shepherds to guide them.

Lucky, good shepherds will steer sheep to green pastures. Sheep just surrender their wool for this "service"; shepherds don't work for free.

Unlucky, some sheep may discover belatedly that some shepherds don't just want wool, they want lamp chops too!

Wednesday 16 July 2014

Specialist versus Generalist

The panda has a specialised diet consisting almost exclusively of bamboo.

So is the just as cute koala bear that survives mainly on a diet of eucalypt leaves.

Now compare them to humans or bears who are omnivores.

We humans eat almost everything! In some countries, humans have diets that include spiders, insects, scorpions, etc. 

Talk about survivability!

In the Corporate world, we commonly start out as "generalist" executives. Over time, we discover what we like or excel in, and we will gravitate towards a specialisation.

We end up as "specialist" managers in Marketing, Human Resource, Finance, Operations, etc.

Guess what? For the elite few, we end up back as "generalist" CEOs or Managing Directors.

When it comes to investing or trading, some agonise over whether to specialise or be a generalist.

Don't ever let others tell you what you should do.

Unless you have a habit of lying to yourself, you know who you are.

If you are a carnivore, you are a trader, a salesman, an entrepreneur, and so on.

If you are a herbivore, you got to be on high alert that you don't end up as the menu when others invite you to join them for dinner. 

(OK, need to make this metaphor clearer as we are dealing with herbivores - be aware that some seminars and talks are actually slaughter houses for the unsuspecting "guests"; and some even pay to join the event!!! And be very aware of that "friend" or "classmate" who is ever so helpful to "share" with you their good fortune and opportunity of a lifetime...)

If you are omnivore, you have headaches! Which is good because you have options!

Sometimes options confuse us. We can choose to be a vegetarian or vegan. We can choose to go for a low carb diet like Atkins diet. 

And we can be very fussy with what we put into our mouth. I have a ex-ang moh colleague who spent 5 years in Singapore without once trying our hawker centre food!!!??? It's only fast food and Western restaurants for him. Know any fellow Singaporeans like him on our travels?

Some omnivores look enviously at herbivores and carnivores, wishing to be more like them - specialists. Well you can! But the decision making part sucks though... What if we make a wrong choice?

Well, if you choose to be a panda or a koala bear, just make sure you don't ever run our of bamboo or eucalypt leaves!


Monday 14 July 2014

Running in the Maze of Life

Have you noticed this phenomenon when shopping in IKEA?

Don't laugh! There's a lot of science and understanding of consumer behaviours that's gone into the design of the maze.

Isn't it true pretty much of most things in Life?

After going through one meaningless relationship to another, we finally realised The One for us has all along been in our midst near us. It's just that we didn't notice.

After jumping through hoops and rings, and attending courses and seminars for the Holy Grail to Riches, we finally realise Buying is not the answer; it's Selling that makes us rich!

After spending loads to buy Happiness, we finally realise Happiness is a choice we can make.

After searching high and low for the answer, we discover we already have it all along. 

If we are spiritual, now why would our Creator create a "defective" specimen? The Creator can't be so petty and insecure as to be like our Chinese Kung Fu master who always kept 1 secret stroke from his students? Just in case?

If we are non-spiritual, Nature will take care of everything. If we don't have what it takes to survive, we will become extinct. Do the trees have goals to grow 10 metres taller the next year? Do the birds worry about their old age when they can't fly anymore?

What we need is frequently close at hand. The problem is either we create our own mazes to run for ourselves, or we run in the mazes others have created for us.

All in the name to "look busy".


Friday 11 July 2014

Blending Cash and Equity together

When you drink Chivas Regal or Johnnie Walker whiskey, do you know they are blended whiskey?

Blended whiskey is the product of mixing one or more higher-quality straight or single malt whiskies with lighter spirits and water.

And no, the best whiskey is not always the "pure" single malt kind. Wink.

Most people only consider black or white choices. Left or right? Yes or no? 

When it comes to investing, some can be very polemic - like "cash is rotting in the bank".

See below chart for something interesting:

Was it what you expected?

Can you figure out why most veteran retail investors/bloggers have some kind of opportunity fund war chest?

And no, emergency fund is separate from opportunity fund. They serve 2 different purposes.

This is nothing new to most fundamental investors, especially if you are business financed trained. 

If fundamental investors can enjoy reading boring Company Annual Reports, they can pretty much sit down and do their own reading and research into Portfolio Management.

How cash and bonds in a portfolio can reduce the volatility by quite a bit.

What if you don't like reading and studying (that's why you're not fundamental investor)? 

Well, there are a few options:

1) Talk to a financial adviser you trust - those got CFA behind their names OK? But whether they want to charge you a fee or do it for free (but sell you stuffs) you decide.
2) Buy your favourite finance blogger coffee and see if he/she can help answer your question. 

There's a bleeding heart that spoils market by giving "advice" for free. If you have to ask "who?" you are not part of his/her circle. It's always good manners to have a relationship first before asking something for free. Wink.

3) Crash got sound. Just like drinking coffee, some don't add sugar, some add 4 cubes of sugar. You'll find out how many cubes of sugars that's right for you by trying it out yourself. No plan, no knowledge. Just do first; figure it out later through stumbling along.

P.S.  This works whether you are planning for your retirement, journey towards financial freedom, investing for your child's uni fund, or saving towards that deposit for your dream private property.

Wednesday 9 July 2014

Trading is lot like the movie Edge of Tomorrow

Yesterday Tuesday afternoon, I went for my discount movie watching fix. 

What do you know?

This Tom Cruise movie Edge of Tomorrow was surprisingly entertaining!

It's Groundhog Day meets Starship Troopers.

For Sci-fi buffs, it's not anything "new"; but for casual movie-goers, I heard some people mumbling what what was it all about? Didn't understand this; confuse about that - as we walked out of the hall when the movie ended.

Trading is Live. Die, Repeat or Entry. Exit. Repeat

A trade "lives" when we make an entry. It dies as we exit the trade. Then the whole process repeats itself in the next trade.

Each time, we learn something new - about ourselves, the market, and our trading vehicle.

Just like the movie, no? (Eh... You may have to watch the movie first)

Most traders do not have the "power" to Entry. Exit. Repeat.

Why? We are hampered by the Mind part of the Method, Money, Mind trilogy.

Some of us can't seem to learn from either our successes or failures. No matter how many 2nd chances we got. 

We can see it in our Corporate life. I'm sure you can spot senior colleagues who think, act, and function like their 2nd year in the company times the 10 or 20 years they were in the company - no growth in mental capacity.

And then there are those who stubbornly refuse to explore Money Management techniques. Clinging to the idea that if you "hold" a losing trade long enough, it will breakeven - one day.

Entry is trading; exit is buy and hold "investing" - schizophrenia is never good. 

The good news for the remaining surviving traders is we can Entry. Exit. Repeat. 

Can't wait till I hit my 10,000th trade!

It's a bit like the XXX hours flown for a pilot.

And the XX jumps of a sky-diver. 

There are no secrets or short-cuts. Just practice, practice, practice. 

And the ability to bounce back from a stumble.


Sunday 6 July 2014

English, Mandarin, Dialects

What a surprise!

This weekend, I got a morale boost while reading the local news.  

I'm not that 2nd rate after all!

I do speak Singlish and can talk "male chicken" as well as any other loud-mouthed Singaporean. 

However, when the occasion calls for it, I can switch to Standard English - the kind spoken by our Ministers. 

It's not fun and games if you only speak Singlish. There's a invisible ceiling if you work in Corporate. But if you own your own company, then "Limpeh this, Limpeh that" works!

As for Mandarin, let's say I am having my 2nd renaissance. Have been reading the Chinese dailies since my return 2.5 years ago. Am proud to say I can speak Mandarin without having to use English words as substitutes. 4 years of painful adjustment in Shanghai helps.

There's a funny incident at NTUC when I just came back from Athens. We have to weigh the vegetables to get the price tag and the auntie there thought I was "Foreign Talent" when I spoke to her in Mandarin.

I had to switch to Hokkien to reassure her I am Singaporean. But a good wake up call. Need to switch back to Singapore accented Mandarin. I don't want to be one of those Singapore born and raised all their lives, study 3-4 years in London, suddenly come back with a fake accent. Who are we kidding?

I speak Teochew. I am Teochew. That's thanks to my maternal ah ma. Ah ma came from Mainland China before the war. Her Teochew is the real deal. 

I remember young that time when buying fishball noodle, the hawker was laughingly telling me that my ah ma's teochew is very "white"; very pure. That stuck in my mind.

I met a 70 plus Swatow Teochew gentlemen in Shanghai. He told me he understood 70% of my Singaporean Teochew; I was very pleased.

I speak Hokkien. That's because growing up in the 70s, its a English and Hokkien speaking world. HDB neighbourhood friends speak Hokkien, primary school classmates speak Hokkien, army mates speak Hokkien.

In Xiamen and Taiwan, my ability to converse in Hokkien came in mighty handy. There's immediate rapport and "kinship". Never mind I am a Teochew; it's close enough!

There's a funny incident where over one dinner in Xiamen, we had a friendly argument amongst 4 of us colleagues over a dinner dish - 1 Singaporean me, a Xiamen native, a Taiwanese expat working in Xiamen, and a Northern Chinese colleague from Qingdao. 

What is 土豆

To the Northern Chinese, it's potato.

To all us us Southern Chinese, it's peanuts (pronounce the above in Hokkien).

Of course I know in standard Mandarin peanut is 花生.

Without knowledge of Hokkien, I would not have sided with my Southern Chinese cousins. Imagine the irony if I had sided with the Northern Chinese. LOL! It's a  bit like American and British English or Bahasa Malayu and Bahasa Indonesia - we can tell where you came from the words you use.

And do you know during the Tang dynasty, the official court language spoken at that time is very similar to what is modern Hokkien? That's is why if you recite Tang poems in Hokkien, they rhyme better than in Mandarin. Try it!

So don't put Mandarin on too high a pedestal over other Chinese dialects. Dynasties come and go. You never know when the balance of power may swing back to Southern China...

I speak Cantonese albeit brokenly. At least I made the effort! Listen to comprehend I no problem. That's all thanks to all those Fong Bo Bo black and white movies and Man in the net HK serial dramas in the 70s.

My 5 months in Shekou, Shenzhen was the time where I had the opportunity to use Cantonese on a daily basis. Of course they laughed at my broken Cantonese. They also say I speak it with a heavy Teochew accented Cantonese. I am very happy; I am Teochew what!?

There's a elderly couple down the corridor from my flat. I've no clue how it started but they always converse with me in Cantonese whenever we meet at the lift or at the hawker centre. I think that's nice. I can reach out.

I know a bit of bazaar Malay.  A bit from my Malay neighbours, a bit from Army, and now learning from my Malay colleagues on the selling floor. Tried using Malay with the customers. They laugh, I laugh. Ice broken. I had fun!

After Malay I think I will go for either Thai or Japanese. It depends on where I get "lucky" first. Wink, wink.

Now imagine my good luck big daddy only introduced the primary 8 streaming thing a few years after I managed to scrap through primary 3 by the skin of my teeth. Streaming at primary 3!!!??? You got to be freaking kidding me!!!!!!!!

I don't mind the study a few more years thing as time is relative. So what if I take 8 years to finish primary school and I live healthily to 85? Would you be happier to finish graduate studies at 18 but can only live till 55? Same goes for the never ending race to get that promotion faster, to reach that financial freedom age quicker. Why the rush? You running out of time?

Opps! I digress...

Can you imagine someone up there in bureaucracy making a decision for me that it's to  my "best interest" to be Monolingual? (Can linguistics skills be determined by academic results?)

Take away the few things that I like and comfortable with?

Thank goodness Lady Luck had other plans for me....
Who knew decades later, compared to my kōhai 後輩 who are at best Bilingual, I am not so 2nd rate after all!

P.S.  To polyglots and those elite students who studied 3 languages in school during my time, please allow me to sing 1 hour in the spotlight for once. I know I am nothing compared to you all. Have a bit of compassion. Namaste.



Wednesday 2 July 2014


When you think of Steve Jobs, which fits better? Visionary or Great Goal Setter?

What's the Vision of the company you worked for?

(Student readers can refer to the annual reports of any listed company you currently vested in.)

What do you see?

It's usually a few words that are vague and can mean anything right?

Now look down at the Mission Statement.

More words. Less broad. Less vague. But still can mean pretty much anything isn't it?

Think for a minute why companies can't be more specific like your X amounts in Y years financial freedom goals?

Why don't they just say:

To grow the annual revenue from $100 million to $1 billion in 10 years?

To build 100 more stores in the next 5 years?

To increase the market share from 10% to 30% in 8 years?


We were already on the treadmill when in school. It's the same treadmill when we worked for others after leaving school. We soon forget we were told how to speak, act, and think while running in the treadmill.

Isn't it ironic that you find those seeking freedom from the treadmill are still using the same language and tools of that animal in the treadmill? They say they want to leave, yet they cling on to what they have gotten used to all their lives. 

The tell tale signs? Once they hit their financial goals, they will move the goal posts. Running is all they know... 

Don't laugh. Wait till it happens to you and you will know how terrifying that feeling is when you can do whatever you like!? And no one to tell you what to do anymore!!!

What language and tools do land owners, shepherds, and puppet masters use?

Just look up.

P.S.  Readers may be interested in this old post for more context and examples:

Life goals - be as vague and broad as possible

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