Tag: t_critiq77

critical, bold views against HERD instinct or conventional mainstream thinking

SG CPI-inflation: 30Y xp, basket composition

Posted on by tiger40490

% of burn rate … excludes tax payment, P in P+I

Is it better to spin off to a new bpost [[30Y xp@SG inflation]]?

k_deflation

For long-term burn rate management, inflation (along with medical) is one of the top 5 concerns. Long-term (30Y) prediction of inflation is unreliable. 3k/M burn rate doubling over 20Y is an unreliable prediction.

If we exclude flights, enrichment, bx, rental cost, then the crbr (couple retirement burn rate) is showing very low inflation. Indeed, each individual’s concept of “basket of goods” can vary greatly, just as each person’s retirement burn rate. (The last observation was echoed by Officer Teo at Bishan CPF service center.) My own burn rate record-keeping is more reliable and relevant data source than official inflation, though I can derive insight from official “basket of goods” including housing, private car, enrichment.

==== CPI basket. https://www.singstat.gov.sg/find-data/search-by-theme/economy/prices-and-price-indices/related-info/faq-on-cpi shows the percentage weights for an average Singaporean family, which contrasts my percentages (in color):

  • 25% housing + utilities .. (excluding telco) SG CPI uses imputed rent, so this weight is comparable to mine (30%). From here on, I need to include a phantom $2k imputed rent into my monthly burn rate. Also 25% weight in U.S. CPI
  • 21% nutrition
  • 17% transport … (including flights) more like 10% due to absence of car
  • 8% recreation + culture …. probably including tourism, dining
  • 6.5% education .. more like 15-20% in my basket
  • 6.5% medical .. (including bx, excl wellness) $176/M more like 4% of my 5k/M. Was 10% in my basket during Q3sg.
  • 5% household_durables … (unfamiliar category) includes semi-consumption or big-ticket items like furniture, electronics
  • 5% misc
  • 4% comms .. includes phones and monthly bills. $200/5k = 4%
  • 2% clothing

Warning: CPI excludes non-consumption expenditures such as loan repayments, purchases of houses, income taxes,,,

Q: which category is currently my biggest category, beside housing?
A: nutrition, utilities (MRT, energy, telecom…)

==== Q: Did individuals’ basket price double over 30Y?
Raymond said “less than doubled over 30Y”. Raymond pointed that actually some items became cheaper, often thanks to Chinese improvement in quality. (See also https://tanbinvest.dreamhosters.com/wp-admin/post.php?post=549&action=edit)  Raymond also felt housing inflation is too high due to government. I think he mostly referred to BTO prices.

Zeng Sheng said “maybe 60% increase” since he arrived in 1998 (22 years ago).

Pauline Teo’s book basically says “yes”, using 3% compound inflation rate. The Jan 2021 DBS seminar also used 3% compound inflation over 20 years. The Singapore CPI inflation rate shows average around 2%/Y, according to my google search in 2020.  BeReadyWithCPF microsite also used 2% inflation to forecast retirement cash flow.

— in 1994 I started living on my own, spending perhaps $500/M excluding rent. When I first met XiaoAn I think he guessed “probably below $1500 including rent” and I said yes. Assuming my 2001 burn rate was $1k/M excluding rent,

Q: would I be able to live alone today at the same burn rate?
A: Yes I’m confident. Look at my c++US phase excluding rent + airfare.

— Q: has price doubled over 30Y from 1991 to 2021?

  • shirt, pants, shoes – i feel didn’t double
  • pouch — doubled.. was probably $2-$3
  • cinema .. didn’t double. Alternatives include home movie
  • backpacks — didn’t double, due to cheap imports from China
  • doctor consultation – didn’t double, due to OPEC-style price control
  • —- nutrition
  • cheapest coffeeshop meal – didn’t double. $3~5, based on … 10 observations. My recall is rather imprecise and unreliable, often mixing cooffeeshop and foodcourt prices.
  • foodcourt .. comparable foodcourt meals costs $5~6. If I compare the price figures displayed in food court, then apparently doubled, but most of those stalls I “never” try. Probably in 1991 they were already pricier than mixed vegie rice.
  • bread – didn’t double
  • milk – didn’t double
  • Burger – didn’t double
  • Ice Kachang (and other deserts) – more than doubled. Used to be $0.60. I feel this is classic luxury item. I should simply avoid it.
  • —- housing-related
  • HDB rental – I was paying $300 in 1995 to 2005. Now should be more than double.
  • electricity tarrif before GST: 16.7c/kWh as of 2005. Not doubled.
  • —- transport:
  • MRT fare – roughly doubled. In contrast, NYC subway has increased from USD2/trip (2007) to $2.75 now.
  • bus fare — nearly doubled. Was 50c
  • air ticket – didn’t double. Actually lower if you include Budget airlines.
  • Taxi meter fare nearly doubled, but Grab is a bargain

https://tablebuilder.singstat.gov.sg/table/TS/M212951 shows about 69 specific items (of the CPI basket, mostly nutrition). It plots the price change over 12 years.

What items are in the hard_basket?

— over 30Y, some things became …. cheaper !? See also globalization reducing minimum cost@acceptableFood

  • laptops, budget smartphones, routers
  • broadband
  • mobile plans. If you look hard, you can find some “products” that are cheaper than before.
  • bicycles esp. foldable
  • haircut — $5 in 1991
  • fan
  • stationery
  • white sugar, beer, … according to singstat

own`family car]SG: white elephant

Posted on by tiger40490

https://www.budgetdirect.com.sg/car-insurance/research/car-ownership-singapore

k_X_car_dependency

Q: Looking at the stats below, what’s the need/motivation for a car in the family of Kevin.A, kun.H, Jun.Z, yu.Lin, and all of my 92S27 classmates

Based on very limited observations (not “evidence”) I will stick out my neck and venture to offer my opinion that it’s possibly lifestyle creep. Many of my friends live in condos located far from public transport. I guess a lot of HDB dwellers and office workers are in familiar situation — owning a car mostly for leisure and convenience of the family with kids and grandparents. If (a big if) my opinion is valid, then

  • it helps explain their cash flow stress level.. brbr, Fuller wealth, early retirement
  • it helps explain their worry about the impact (not “likelihood”) of job loss .. high monthly burn rate. Re OC survey 2020. In contrast, Raymond can last years without a job.
  • it helps explain their housing preference .. they use their car to discount the commute tcost. Well, tcost is a hard cost and can’t be discounted!
  • Let’s remember the the other tcosts — stuck on road; maintenance; insurance; paperwork; recon on bills (remember BGC rental)
  • it helps explain their lack of time for exercise.. In contrast, non-drivers walk longer for commute, and some commuters stand or even do yoga in MRT.
  • it helps explain why SGD 200k spare cash pile is not easy or common for them.. they would use this “pile” to pay off car loan or upgrade to a better car

In (tentative) conclusion,

  1. I think I’m better than many of these car owners in terms of earn / save / invest.
  2. perhaps car ownership is really valuable to them. If no more than “marginally important”, then it’s a huge waste of resources — both $$ and time.

— stats .. As of 2021, Singapore has

  • 577k personal-private cars excluding taxi/private-hire cars
  • 68k private hire cars
  • 15k taxis
  • 142k motorbikes

As of 2018, 35% of Singapore households owned at least one car (presumably including private hire cars), down from 42% in 2013, presumably due to Grab etc.

— Convenience .. is a lubricant and important to my life as well. Convenience is very subjective, not rational .
Convenience comes at a $cost. Some people are willing to sacrifice brbr (like 2 to 1.5) for convenience, but I won’t.

— 150k / 10Y total cost of car ownership … I won’t spend too much time. There are many breakdown analysis online, usually including loan interest.

  1. https://dollarsandsense.sg/2018-edition-cost-owning-car-singapore-10-years/ uses a $94k model to derive –> SGD 157k over 10Y. A 2022 POEMS webinar also used this estimate.
  2. https://www.singsaver.com.sg/blog/car-maintenance-cost-in-singapore#final uses an $80k model to derive –> $12557/Y * 10Y + $19155 for Y1 = $145k over 10Y

## BestCountry@@ objectively proud@your local living condition

Posted on by tiger40490

 

A teenager is often told that her country (or city) is one of the best to live in the world. In reality, for every country, its nationals have some advantages and disadvantages, but some of the cited advantages are made up by the media or propaganda. They include things like better weather, wider food choices, police presence, strong military force, diversity in population, young population, rich culture/history. Today I want to focus on the factors widely agreed among the rich countries. By these standards, the Scandinavian nations, Japan, Australia .. probably come on top.

Q: how relevant is this blogpost to where2retire?
A: I think most if not all of the factors relevant to a teenager are relevant to a retiree, too, fundamentally.

  • [i=infrastructure]
  • [f=financial]
  • — half ranked by noteworthiness. The obvious ones are ranked lower. I avoid high-level, vague items
  • inclusive workplaces and schools .. relatively free of discrimination [prejudice]
  • [f] low national debt burden .. lower taxes going to debt servicing
  • security in food, water, energy supply
  • efficient legal system .. accessible [affordable] to the public
  • weather .. not extreme or disastrous like heat waves, hurricanes, flooding
  • [i] flood control .. esp. in tropical locations
  • [i] clean streets .. with some landscaping
  • .. adequate green spaces .. esp. relevant in cities
  • walkable, bike-friendly … not car-first !
  • plenty of exercise facilities .. swimming, stadium, jogging paths…
  • [i] electricity and internet connectivity .. reliable (weather proof), fast, affordable,
  • [i] public transport .. reliable, extensive (re Bayonne), frequent, cost-efficient [affordable]. Grandma often points out the MRT lifts
  • [f] stable currency, inflation
  • [f] low GST, low property tax, low utility bills
  • [i] accessibility for those in need
  • universal and inclusive education for 9+ years. Special needs education, leaving no one behind.
  • [i] pollution control .. air, water, noise
  • [i] public healthcare .. accessible, affordable
  • [i] congestion control .. often comes with high /tariff/ on gas or car ownership
  • street safety .. crime rate,
  • PPP-adjusted median household income after tax?

— More importantly, here are examples of Not “widely agreed” advantages. Many of them are based on FOMO[F] or exclub[e]

  • [e] home to world-class universities/companies? Perhaps parents would envy another country with many world-class colleges… But look at European nations, Japan,
  • [F] a country with pockets of tech innovation? But the locals (as compared to foreign talents) may not be able to benefit. Perhaps young citizens would lament their country’s relatively backward technology but.. Hey, technology is a race! Inevitably, only a small number of national can be leaders. Many developed (and widely envied) nations are technology adopters rather than innovators, in most technology domains.
  • [F] infrastructure .. Perhaps many (including outside observers) would not feel lucky/enviable about limited infrastructure esp. if less connected… But I think some remote island states (NZ, Japan) can be quite prosperous and comfortable. On the other hand, healthcare infrastructure (including sanitation) is a key livelihood feature.
  • natural resources? Look at Japan, Korea, Macau,
  • population density .. there are advantages to dense or sparse locations
  • athletic ranking .. (adjusted by population)

—  Q (related): What nationality is enviable esp. in terms of healthy longevity?

Whenever we compare different passports and identify the handful of lucky nationalities, each of us tends to focus on a specific aspect. There are a wide range of factors. Here I want to explore in and around an important area i.e. healthy longevity.

If a nationality is associated with 1) longevity and 2) “adequate” livelihood, then it would be a subject of envy by most standards.

 

Y Sg home buyers max out mtg quantum: greedy #LIR floor

Posted on by tiger40490

See also

Delphia of OC is a mortgage specialist. She shared her personal observation that majority of Singapore borrowers (probably including non-PRs) would max out their borrowing capacity i.e. loan quantum.

One of the most important limits is TDSR. (For HDB units, another important limit is MSR.) No more than 55% (was 60) of income (including CPF) is allowed to be used for instalment. 55% of total income spent on debt servicing?!  Sounds like dangerous (cashflow) low ground.

I asked her why the “majority” has such a motivation. Delphia said many want to maximize their investment i.e. grabbing the biggest property they can afford. OnePearlBank might be one example.

— interest rate sensitivity

Delphia herself felt buying at the current price level doesn’t sound like smart “investment“. However, such a strategy was considered a leveraged investment at a very low borrowing cost, though interest can skyrocket.

These “investors” believe that if they wait long enough, their leveraged investment would appreciate — sure-win.

When a lender calculates monthly instalment, a key input is the interest rate. A max-out borrower would want a rock-bottom rate like 0.1 ppa to minimize the projected instalment, but MAS uses 4 ppa known as the medium-term interest rate floor.

Wallace Xu said something similar about American home buyers… they are highly sensitive to rate hike.

— my preference for (net) current income and against windfall

I never like to bet against rate hike. I always maintain a war chest to wipe out my loans whenever LIR breaks my threshold. My own “exposure limit” is lower than MSR limit.

When you focus on current income, you will naturally become more careful with LIR cost.

zero-sum games, Productive_Asset[def] #bccy,gold

Posted on by tiger40490

I still believe that on the secondary market, stocks and bonds ain’t zero-sum games, because each of these products generate new wealth/profit out of thin air — NZSG[non-zero-sum games]

  • In contrast, I believe options and futures do not have such trends and therefore zero-sum. I would say for all of these derivatives, there’s no income generated out of thin air like bond coupons.
  • long-dated oil futures .. inflation-based growth asset. ZSG.
  • casino game .. Classic zero-sum game
  • bccy ..  speculative growth asset, related to inflation and FOMO. ZSG.
  • Rental rEstate .. productive asset. Also a speculative growth asset based on FOLB. People’s desire for better home is insatiable mostly due to FOLB.

A related concept is productive_asset — assets that generate  net-positive current payout

  • div stocks
  • rental rEstate having positive cash flow
  • coupon bonds, and short duration zero bonds
  • bank deposits

— stocks .. There’s a general trend of long-term appreciation. We can see the trend based on official closing price (fair valuation).

Many early stage hot tech stocks are not productive. They are speculative assets, driven by FOLB.

Dividend cashcows, are productive_asset. They can also be growth assets. Utility stocks, oil stocks, tobacco stocks, eReit.

Value stocks are still growth assets, (in theory) based on earnings growth.

— bonds + bond mufu .. NZSG. They are suitable for insurers, foreign reserves,

If, hypothetically, the bond coupon is so low as to be wiped out by transaction costs, then between the buyer and seller, this is a zero-sum game.

— How about physical gold coin? If you keep it at home for 50Y, then it is likely to appreciate. This likelihood is the same if the gold coin changes hands over the 50Y. Therefore, trading gold is not zero-sum game.

Fundamental reason behind the NZSG —  accounting_currency (denomination currency) inevitably loses value against gold. If two school boys trade marbles and cards it’s clearly a zero-sum game, but now they receive one point for each game and those points give them special privilege . Counting by the points the trading is NZSG.

gold .. inflation-based growth asset. ZSG.

Now, bbcy also generates no income, but is it an inflation hedge like gold?

 

 

validating 炒股 books

Posted on by tiger40490

Nobel laureates are peer-reviewed experts. Most investment books are not so theoretical.

For all of these books, peer review is the best validation, better than popularity. Many best-selling book with lots of media coverage can be proven invalid by the market a few decades later.

In contrast, sometimes a theory is actually validated over a long horizon … like 200 years! This is basically Fama’s criticism of Shiller.

A peer-reviewed investment theory is more validated than a “popular” book, but not as validated as a chemistry theory. Asset pricing theories are hard to validate, esp. compared to phy/che/med theories. Very limited data available to use for validation.

[22]Chn not rising as a financial superpower #CNY,stockMkt

Posted on by tiger40490

— review of https://www.channelnewsasia.com/commentary/china-yuan-renminbi-currency-flow-us-dollar-finance-2758231

“As of 2022, the yuan is not viewed as a safe haven, Chinese stocks languish and no Chinese city is more than a regional financial center.”

I think HK/Tokyo/SG qualify as more global (rather than regional) financial centers because their currencies do not scare foreign investors.

“About 90 per cent of foreign exchange transactions involve the US dollar, while only 5 per cent use yuan…. Some depict the yuan’s tiny 3% (2.88% as of 2022 https://data.imf.org/regular.aspx?key=41175) share of global central bank reserves as quick progress because it is up from 1% five years ago. But this share is similar to those of far smaller economies like Canada or Australia, and well behind what analysts have been projecting.”

“Foreigners own about 5 per cent of stocks in China (versus 25 to 30 per cent in other emerging markets), and about 3 per cent of bonds in China (compared to around 20 per cent in other developing nations).” I think HKEX is considered outside China.

fake ECR due to end-stage shoot-up

Posted on by tiger40490

Compound return fallacy is the bigger framework

Criteria for ECR is as stringent as dynamic binding/dispatch 🙂

  • For 20+ years, every annual return must exceed the riskfree rate by 100 bps [2]
  • investor can top up but not withdrawal

From now on, I will mostly look at equities, esp. U.S. equities.

— the shoot-up .. When the annual returns are up-n-down, in hindsight we can still see a “fake exponential” curve due to one shoot-up period towards the end [1] of the holding period.

The growth curve is actually non-exponential, but at a coarse granularity, it looks exponential.

In reality, many investors miss that shoot-up phase. Their portfolio will be hopelessly non-exponential.

— [2] average annual return .. Compound return fallacy has more details.

Many analyses compute an average annual return from positive and negative annual figures. Then they plug this average into compound return formula — a blatant abuse of math. If you use the raw returns (not the average) to plot a curve it will NOT look exponential. — [1] Q: what if the shoot-up happened before the end of an observation window having up-n-down, i.e. the end phase is not shoot-up?
A: I believe the curve will NOT look exponential.

— effect of observation frequency
rEstate valuation changes quarterly, not daily. I only monitor my property NAV once a year at most.  Therefore, I don’t see up-n-down. If you have only 10 yearly observations in a time series, is it exponential?