When is a circle not a circle?

When it's our MRT circle line of course!

I don't know about you, but it looks like a horseshoe or omega line to me.

Reminds me of the story about the Emperor's clothes...


Almost circle is not a circle.

Just like almost first simply means you came in 2nd best; nobody remembers those who came in at 2nd place....


Of course I understand the engineering feat and financial resources to link up Harbour Front and Marina Bay is not something for faint hearts.

You mean the land reclamation and port development works at Tuas is less?


Enough looking at others.

Now look at ourselves. 

Are we not doing the same?

Our circle is not complete, yet we tend to speak and act as if it' a full circle!? OK, not you. You are complete. But I'm sure you have this experience with a colleague, neighbour, or school mate?

How about mouthing work/life balance and going home on the dot at 5pm, and upon reaching home we lock ourselves in the room to read annual reports or marvel at squiggly lines or candlesticks?

Yeah, work/life balance my foot. 

Our circle is not complete - just like our MRT circle line.

 
 

Risk Management vs Money Management

They are not the same.

Let's use the Singapore Pools' 4D example as most Singaporeans can relate to it:


Money Management

$1 bet can win $3,000 if bet with Small option.

Maximum loss is $1

Maximum win is $3,000

Risk/reward ratio is 3,000 to 1 (Good or what? A 3,000 bagger!!! Peter Lynch who?)


Risk Management

The odds of your 4D winning the first prize is 10,000 to 1 (Source: Singapore Pools website)



Seeing the whole picture

If I'm a snake oil salesperson trying to promote an investment/trading vehicle, of course I would only stress the Money Management part, and conveniently avoid mentioning the Risk Management part.

Anyone one here were sold on the benefits of buying Options?

At most can only lose the premium right? (Same as 4D example)

But our winnings are unlimited!!! (A bit like Toto snowball upsized!) 

Isn't the risk/reward enticing?

But what if I tell you now that 75% of options expire worthless? (Source: CME reports)

Can it be the same persons encouraging you to buy options are the same ones who are taking the opposite side of the trade against you? (Tip: Alarm bells should ring if the guru "strongly recommends" a specific options broker or platform to you. Why do tour guides bring you to a specific retail store?) 


Live by the sword; die by the sword

Before you go rushing to write options, please remember that by selling options, you now have limited winnings (at most pocket the premium), but now have to bear the risk of unlimited losses.

How to visualise unlimited losses?

AIG for years were making good profits by selling Credit Default Swaps (CDS) to investors who wish to hedge against their bonds defaulting. 

All it took was one Lehman event to bring down the whole AIG down (Is AIG bigger than our local banks?). Yes, the US government did bail-out AIG, but if you are a shareholder, your holdings were so diluted that at best you can only recover 10 cents on the dollar...

Yup, if you think your Risk Management is better than AIG's, have fun writing options! And if you think selling options is "passive" income by collecting the option premiums every month, the best of luck to you! 

Will anyone bail you out if you were wrong? Hey, don't look at me.


Insurance for dummies

OK, not everyone is familiar with options. How about insurance then?

Think of travel, accident, critical illnesses, disability, term insurances and what have you. Must exclude Wholelife as we all will die one day (now you know why the premiums for Wholelife are so expensive).

Anyone have a habit of pooh pooh others who buy 4Ds, Toto, Big Sweep. Silly bunnies, don't they know gambling is flushing money down the toilet?

Ah! But you do own some of the policies above right? And?

You were probably focusing on the Money Management part (or were sold to).

Bet you didn't consider the Risk Management part.

Not feeling so smug now, are you?

Those who support Singapore Pools and those who overbought insurance products have a lot in common than you think!




P.S.  Risk Management vs Loss Management

 

Love at Changi beach

Both of them are sitting at their spot at Changi beach.

The sun is setting. 

The shimmering waves providing the backdrop to the silhouettes of people jogging, cycling, and rollerblading by. 

He turned and look at her.

Her face glowed in the amber of the evening sun.

Gently, he stroked her long tresses behind her ear.

Surprised, she whispered in a embarrassed voice as she brushes his hand off, "Stop it. People may be watching..."

"You are so beautiful," the man looked intently into her eyes.

"Stop playing around."

Bashfully, she turned her head to avoid his eyes.

But her hand reaches out to his hand.

They clasped. 

Silently, both of them just sat there enjoying the evening breeze.

"Grandpa, grandma!" a little boy of ten shouted.

"Mother says the barbecue is ready. Come back to the chalet!"

Gingerly, she helped her man rise up from the park bench. And handed him his cane.

Butterflies fly funny, don't they?

Have you seen how a butterfly flies?

Haphazard, fluttering with drunken like jerky movements, and in zigzag manner right?

Makes a mockery of aerodynamic principles no?

OK, if you are not familiar with aerodynamics, just compare the flight of a butterfly with birds and other insects like the common housefly and mosquitoes.

Why do you think the butterfly flies the way it does?

Have you ever felt like a butterfly in the company of other people?

Especially on the first day of school or work?

Others can fly higher, faster, smoother, more efficiently, or at the very least, fly in a bloody straight line! 

You can't.


Friend, have you taken a look in the mirror recently?

You are the most beautiful insect in the world, you with your mesmerising iridescent scales in full technicolour, and you are self-conscious of the way you fly???

No.

You are definitely not the condor. Nor are you a bumble bee!

Accept who you are and you shall soar higher! Without those bricks on your shoulders weighing you down, you'll feel lighter and freer!


What?

You feel down because you look ugly and hairy? You don't look anything remotely like a butterfly...

Come closer my caterpillar friend. I've something to whisper in your ears...
  

 

Size does matter for income plays

When you buy computer software, especially games, there's a minimum PC requirements and recommended requirements. 

We quickly learn that it' best to ignore the minimum PC requirements...


If a person wishes to have a dividend income of $50,000 per year starting this year (notice I omitted the word passive), I guess the recommended capital would be $2 million dollars at 5% yield.

Wait!? My math don't add up you may say.    



Let's park this question for now and explore other alternatives:


1) $1 million at 5% yield

This will get you the $50,000 per year you so desired. But the price to pay is you are 100% all-in. No opportunity fund or dry gunpowder. No ballast.

That means you have lived through the May 2013 taper tantrum where have experienced how income stocks all got whacked in the head - some more than others. And you totally OK with the temporary capital loss. You are confident that your income stocks will recover eventually - like it did currently now. You speak with conviction as you have lived through that experience. You know what you are doing.

I would rate this strategy as minimum requirement to get $50,000 dividend income per year. 


2) $500K at 10% yield

That's obvious isn't it? And that's what newbie income "investors" normally chooses.

This stock is yielding 4% but this one one is yielding 8%... Buy the 8% one! Easy!

If only they stop and reflect for a while why they are the only "smart" ones who can spot it. I mean why other investors are bidding the price up for that 4% dividend stock and not biting on the one which is yielding at 8%??? Don't other investors (especially the institutional ones) know math?

These newbies have probably not gone through May 2013 taper tantrum, never mind to have experience what it means that hell hath no fury like an income investor scorned - like during 2008/09.

How to spot these newbie income investors?

Just ask 2 questions and you'll know:

a) What's the dividend payout ratio?

b) What's the dividend growth rate for the past 5 and/or 10 years?

You'll soon realise they are not income investors but yield hogs from the blank stares you've got...

It's the equivalent of a newbie trader who jumps into the market using 10:1 leverage and have no clue what is risk management!!!???

No, $500K at 10% yield is not a strategy; its a train wreck waiting to happen... 


$2 million at 5% yield for $50K 

I guess some of you have figured what it means and why it's recommended - starting this year.

For those who haven't figure it out, no worries. You will in due time. It will just cost you some money but trust me, that's how we remember what not to do in the future!

Single and Married

If you have appetite to see what divorced looks like - Single, Married, and Divorced.

It's the thinking about it which is hard

This post is dedicated to those who without knowingly, tends to whine, complain and moan a lot...

Of course we do not change simply by reading a story. But if one reader can pause and go, "Hmm.. I never saw it that way..." 

This post would have served its purpose. Namaste.




Story told by Ajahn Brahm - A British monk in the Thai Forest tradition of Ajahn Chah.

One of my stories was when we were building the main hall in my teacher Ajahn Chah’s monastery, there was a lot of earth left over and we had to move that earth from one place to another because Ajahn Chah, my teacher, said it didn’t look good over there.

It took three whole days of very hard work from 9 o’clock in the morning until about 10pm with hardly any breaks. We’d already eaten our meal for the day, and that was one day after the other in the tropical heat. When we were finished, we were very happy but then Ajahn Chah left for another monastery. The following morning, his deputy abbot came up to us and said he thought the soil was in the wrong place and we had to move it. So for another three days we moved it to another spot, and again I was very happy when it was all finished.

But the next day, Ajahn Chah came back and he said, ‘What did you put the soil over there for, I told you to leave it over here.’ And so for another three days we had to move the soil again. And of course by this time I was getting very angry and upset. And being a Westerner, in an Asian monastery, I could swear in English without anyone understanding. But they did understand because they could see my body language.

And I always remember one monk coming up to me and saying, ‘It’s pushing the wheelbarrow is easy, it’s the thinking about it which is hard.’ 

And that’s changed the whole perspective of what I was doing. As soon as I stopped complaining and moaning, it was easy to push that wheelbarrow, in fact it felt much lighter. 

And this is actually how I learned about the secrets, one of the secrets, of monastic life. Didn’t matter what you were doing, whether you were sitting for hours and hours and hours in your hut, whether you were working building a monastery, there’s a thinking about it which made it hard.

What if you fxxxed up the end game?

Singapore's road and traffic management is one of the best in the world! Just travel to any 1st tier Asian cities and you can immediately see why we stand out - and that's a key competitive advantage in the mind-share of entrepreneurs and top company executives.

Now look at Changi Airport. Immediately we have a new terminal there are plans for the next terminal or runway. We are always building in anticipation of future demands. Big daddy did say they are willing to sacrifice SIA to retain Changi Airport's status as a regional hub. Now that's focus!

How about our PSA ports? Can anyone remember PSA were caught with their pants down with a bloated body after losing market share to our friendly northern neighbour some years back? Now with a lean and mean body, nobody in PSA will make the same mistake twice as they know heads will roll. Anyone been to Pasir Panjang recently? Big, bigger, more right? Try losing our status as the premier transshipment hub in South East Asia!


Now contrast the above with the challenges we have experienced in recent years:

1.  Public transport infrastructure as in MRT breakdowns and overcrowding of our buses.

2.  Public housing not keeping up with population growth and influx of foreign workers.

3.  Shortage of hospital beds in our public health care system. 


Use your imagination to figure out why some sectors are more prioritised and we are willing to plan for some redundancy in anticipation of future demand, while in some sectors, we rely on "crash got sound" - you cry we give you; no cry no milk.

Of course to be fair, big daddy made some remarkable recoveries once they realised that you can hit every economic KPIs all you want, but what's the use if you fxxxed up the end game by getting yourself booted out of office?


This post is not about politics - its all about you!

I used the above public examples so that Singaporean readers can verify for themselves and use them as a mirror.

Now look at yourself. The goals and plans you are pursuing today. 

Are you not acting in similar manner as big daddy?





P.S.  In case you are wondering, yup, I am using the same technique as my Zebra story for those who have heard my first public talk

For those who are confused or catch no ball, I highly recommend you read this excellent story by the Butterfly man: The Inattentive One.

We have used different vehicles to essentially say the same thing. Different readers; different vehicles. 

Palliative and Hospice care versus Curative treatments

I know. 3 big words on a Monday morning can be a bit early....


When discussing medical treatments for our love ones, it can be sensitive. You know why? One word - Guilt.

We don't have to be Buddhists to know that all of us will get old, get sick, and die one day. But we get all fluster up and emotional when we discover we or our love ones have contracted a "serious" illness.


Self
 
This wake-up call makes us guilty for the life we have lived up till now. Always making plans but never acting on them... It also forces us to re-examine the priorities in our lives; now that you are conscious of your mortality for the first time. No, we are not forever young. 


Loved ones

We know that early detection of stage 1 cancer is more likely to be treatable than stage 4 terminal stage. Yet we act and behave in a way that focuses on turning a blind eye to early signs... (My next post will elaborate more on this selective focus)

We let things drag and when the truth hits, we lash it out on everyone else. How doctors are blood suckers... Big daddy heartless... Why private hospital better because can get same day appointment or next day surgery... No long waiting like in public hospitals... We start throwing money at the problem.... As if the above will help when we discover we have stage 4 terminal cancer....Guilt gets in the way of rationality...
 
Deep down we know if the cancer was discovered earlier at stage 1 or 2, waiting 6 months for a medical appointment or surgery ain't going to make things worse. We can look on the bright side since it's now not a medical emergency!?


You die; I die; we all die

This post from CW provides a real life example:

You die. I die. Doctors also die???

Of course to be able to make such a decision may depend highly on our spirituality, how we have lived our lives till now, and most importantly, the wisdom to make choices.

Yes. There are choices. And its not all about curative treatments.


Prayer and Zen

Serenity prayer for the spiritual:

God, grant me the serenity to accept the things I cannot change, 
The courage to change the things I can, 
And the wisdom to know the difference.


Alternatively, there's this Western quotation that I find quite Zen:

For every ailment under the sun, 

There is a remedy, or there is none, 

If there be one, try to find it; 

If there be none, never mind it.

P.S.  You may have noticed I like to use the word "spirituality" instead of "religious". That's because atheist and agnostics can be spiritual too. I am inclusive.  

Why it's hard to be a Woman

Thank goodness I'm only a man.

"Mom! Got anything to eat? I'm hungry."



 

Actionable Money Management

For the last 2 weeks, I got stopped-out from my Simsci shorts.

This morning, I took profit from my short AUD/USD trade prior to the RBA rate decision; and made enough to cancel out the losses from my recent Simsci missteps.

The 2 mantras of Trend Following's money management are:

1. Keep losses small

2. Only losers average losers
 

Small losses can be even out by small winnings.

If we limit ourselves to not suffering no big losses, that means we are left with big winning trades. No?

If not, how do you think I doubled my trading account the the year before, and tripled it last year? You mean you believe I never made losing trades? Don't tell me you believe in dragons and phoenixes hor!


Tip: Many newbies (whether investor breed or trading pedigree) often like to ask gurus: "How do you find winners?"

When they should be asking: "How do you limit your losses?"

If you pause and think about it, isn't that's how you "verify" whether that guru you are asking got "substance" or not?

I mean any idiot can also make winning trades - just look at the testimonies that these gurus share about their students' winnings. (I stress again it's students OK?)


Only then perhaps you can understand this quote from George Soros:

"Its not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."

 

How do you wish to finish a Marathon?

There are black and white people - some call them one-track minds - who will immediately think of running a marathon, and/or focus more on the competitive sport of benchmarking who have the better times.

But I didn't ask about running or how fast to run a marathon; I only asked how do you wish to finish a marathon.


Think about it for a moment.


Finishing a marathon is not so daunting now, is it?


Walk

It may take much longer, unless you are too young, old or ill, most abled people can finish a marathon by walking without too much training and preparations. 

We just need a pair of comfortable walking shoes, a water-bottle, and frequent rest stops during the walk.


Cycle

Steve Jobs alerted me to the fact that when a man is on a bicycle, he becomes the most energy efficient animal from getting from point A to point B.

Don't believe? Next time you are at East Coast, try renting the bicycle for 2 hours. You don't feel tired even after riding for 2 hours right? OK, the bum may sore; but that's from tiny triangle bicycle seat....

I guess women enjoy bicycle seats more than men.


Chauffeured

OK, some like to drive. I've met colleagues in Sweden and China who simply love driving. They always volunteer to drive. 

I prefer to be chauffeured.

I can't afford the Diving Miss Daisy kind, but I can afford the Comfort Delgro bus and taxi kind.


Imagination

OK, I think I'll stop here. You can have your own fun thinking up other ways to finish a marathon. 

And if you want to try this exercise with your investtor/trading friends, just change the post heading to:

How do you wish to finish your financial freedom journey?




 

The Song of Malaysia's GST

The last time I posted this Hokkien rendition of "Let It Go".

Thanks to my cutest friend coconut sharing with me, I must share with you all this Cantonese version of Beyond's 海阔天空.

Super funny and very creative! 

And don't forget to appreciate the vocals and lead guitar parts. Excellent! 

Damn! I wish I can sing like that...


A special shout-out to our Malaysia cousins. We Singaporeans have a 21 years head start over you. I know that KNS feeling.

But it will soon pass. Trust me.

Death and taxes.