Tag: t_vague

##[22]realistic Macro economic risks2threaten ffree

Posted on by tiger40490

This analysis takes effort. Here’s a modest start. I think without in-depth and comprehensive analysis, my bare-bones ffree is built on shaky ground and naive. My passive income and low burn rate is not a boundless umbrella capable of keeping out all /hazards/ —

  • asset country risk — what if Cambodia or Philippines gets into trouble and property market collapses? Capital control?
  • local market risk — (SnD) say BGC market, or BKK1 shop units
  • credit risk —
    • My rental income is “guaranteed” by developers. If rental market sinks and a developer fails, then my unit is still in usable condition, but I would lose the bulk of my rental income and need to earn the same amount (a few thousand only:) as salary.
      • Therefore, it pays to reduce over-concentration on one developer.
  • Currency risks — suppose I’m retired in Singapore, and PHP or USD weakens. Luckily, my SGD rental income is in SGD.
  • inflation risk — Singapore is hopefully well-managed. Lucky my overseas/local rental incomes rise with inflation
  • other SG country risk — what if the economy declines? What if rental demand declines? I feel U.S. rental demand is more robust than in SG.

Luckily in addition to the (SG/SEA) rental incomes I have diversification of incomes in the form of stock dividends.

See also the ffree derailers. In contrast, today’s blogpost is macro-level.

— Macro risks often affect thousands or even millions of people. I would not feel so bad. With BGC, FX risk affects tends of thousand of investors. With khm, country risk affects thousands of investors

With my Brazil HY/PE, credit risk not macro risk was the problem, affecting dozens of investors.

— another factor: For my bare-bones ffree set-up, One of the biggest uncertainties is predictability of (in/out) cash-flow.

Every investment has uncertainties aka risks. Experienced investors often categorize dozens of known risks into a handful of categories. The grouping is mostly conceptual and arbitrary.

As Wallace Xu said, rental prop mgmt probably needs the owner to stay local and learn the legwork. This should reduce (not eliminate) the cashflow risk.

Q: Singapore government did a scenario planning exercise. Shall I do the same?

On the other hand, there is a common “non-believer” tendency to cast doubt over any long-horizon cash-flow analysis. Even after we compile and analyze all the “hazards”, the non-believers still say that there are big “unknown hazards”. Some people even worry about the credit risk in insurance policies.

Well, I did live without a salary for 3 years.

There’s reason to believe that compared to other governments, Singapore government will continue to be more caring, more attentive, more resourceful, more frugal.

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.

the rich adjusting to simpler life #universal

Posted on by tiger40490

Once you are used to a private car, you may feel entitled. If that car ownership grows expensive, many would fail or refuse to adjust , and end up paying the increased cost. The same pattern applies when you are used to 2 cars, or you are used to a big home, or you are used to having maids, or pets.

Personally, I had adjustment problems when my commute deteriorated to exceed 45 minutes.

Adjusting (to a simpler life) is one explanation why those earning $300k still feel the livelihood pressure.

div^capital_gain: which do you bet on@@

Posted on by tiger40490

Between dividend and capital gain, which *one* is your primary focus financially? Which one do you bet on? Choose one please.

— Betting on dependable dividend income for retirement .. is betting on the “business” to generate free cash flow.
After we pay $40 for a XOM share, we hope to receive around $2 payout every year, without worrying about the short-term fluctuations in XOM price, assuming we don’t need to sell.

— Betting on capital gain is betting on supply/demand, betting on sentiment, betting on collective human reaction to news.

In this bet, inherent profitability of the business (heart@valInv) is perceived like weather or another source of news.

For example, when Twitter banned Trump, investor sentiment turned negative but some reactions were positive. Energy news impact energy stocks in complex ways, due to investor reaction.

— buy-n-forget .. is harder for tech stocks.
Tech stocks, China stocks, financial stocks generate paltry dividend. So I am forced to monitor the sentiment and hope to escape before any crash.
— buy-n-hold .. is the default for dividend investors. During the long holding period, we hope to be lucky with DYOC.
— Market timing .. is much less important for dividend investors. They kinda watch for entry points. They don’t watch for exit points, except for reallocation/re-balancing.

Buying too high …. is kinda tolerable for dividend investors, as long as DYOC is well-maintained. This depends primarily on dividend cut/raise decisions by the business.

recreational investing #w1r3

Posted on by tiger40490

limit order (rather than fractional) is part of tCost optimization.

My stock investing can be characterized as recreational_investing. Biggest risks are 1) sleep]peace, focus@work 2) mkt risk.

I feel the tension between two forces
* self-hate due to low $ROTI, low commitment amount… tolerable for recreational investing
* if I bet bigger, I hit high tcost (due diligence + babysit) and much higher market risk.

The most promising solution is bigger buy-n-forget, buy-n-hold for bigger dividend. I can also stick to recreational investing, and keep my portfolio NAV below $20k.

— ROTI .. as a metric is critical. The time must be time well-spent, in terms of

  • (Most of the benefits are related to retirement.)
  • brain stimulation (anti-aging), highest in stock-picking, lowest in mufu picking [1]
  • learning, self-growth, self-discovery
  • meaningful interaction with real people not automated programs [1]
  • pnl .. is usually below $3k, but can become 10k
  • joy.. I think many retirees use stock investing as a pastime. It’s their own money, not wasted on unhealthy activities.

Some retirees use recreational investing to fend off inflation, and build a small legacy for a grandchild. Could be as small as $5k, but it gives meaning to the effort. Meaning can be important to an otherwise meaning-lite recreation.

In contrast to roti, the ROI metric is less critical for a recreation [1].

— [1] discussions: single stocks far exceed funds
I have found far more online discussions of single stocks than funds.

In my chats with friends, fund investing is a shallower topic than stock-picking.

— risk capital i.e. money you can afford to lose. See blogpost on risk capital
— Pool size: perhaps 10->20-100k, depending on your family brbr, mtg/college and other obligations, dependable income, retirement time-frame,
— asset classes:

  • stocks; reputable funds; REIT fine but rEstate is not recreation 🙂
  • FX, gold, oil

risk rating: high-risk assets are welcome due to the small exposure.

cpfLife strength against inflation@@ 2phase analysis

Posted on by tiger40490

As of 2021, my default retirement destination is Singapore ( roaming_retirement as a viable 2nd option). So there’s a real, valid question, raised at the recent DBS seminar:

Q: is CPF-life payout sufficient against Singapore inflation

My fundamental stance — I’m betting on Singapore government to manage inflation and sustain CPF-life pay out.

— Phase 1: now till 65 — Government bumps up ERS amount by about 3% annually to match inflation.
I’m basically confident to meet ERS, perhaps by liquidating some property assets.

— Phase 2: from 65 to my twilight years — Vance Chhoa pointed out that monthly payout amount won’t increase year after year and will suffer from erosive inflation.

Given that I plan to live 30 years in Phase 2, this erosion will be significant.

Basically I choose to put it out of mind for now. I will surely think about it in the future. No hurry.

See recreational_investing_for_retirees and MOETF

##[19] G11 progress]PFF plann

Posted on by tiger40490
  • MOETF with firewall, 3Y BnF, 3min due diligence
  • exp recon process improvement

No oth please.. I feel proud of my independent thinking and progress. I feel these items are remarkable and visible signs of progress. New and better ideas for the next 1~30Y.

I guess many of my U.S. and Singapore peers don’t have such a /progressive/, continuously refined financial plan.

Even though some of them (YW.Chen, Shuo, Ash.S,…) have multiple properties; some (Venkat?) more successful with U.S. equities, I feel most of them follow the bandwagon with fewer bold departures.

  1. [aU] bold decision to stay rented on lease spread, without U.S. home ownership — lower cash flow burden than buying 700k. 700k is like Ivy League plan among the Chinese immigrants.
  2. [AU] bold decision on college fund — discussed with grandpa, Kyle etc , and more convinced than ever to avoid the rat race to branded colleges … insider.
  3. [AU] bold decision to accept average school districts and focus on conducive learning environment instead of test scores
  4. [u] surprise discovery of current income /vis-a-vis/ windfall far out
    1. analyzed three ffree scenarios, based on my detailed burn rate record
  5. deeper conviction and belief in U.S. equities, /vis-a-vis/ other regions
  6. surprise discovery of SG elderly healthcare as more efficient and accessible than feared. No driving required as in U.S.
  7. [a] incisive researched on U.S. burn rate and figured out it’s much higher than SG due to Melvin3
  8. [u] more firm than ever before on my bold decision to work till my last day
  9. bold decision to include 43R model in my default plan, rather than the conventional 2FH model
  10. [AU] singled out Bayonne and South Edison as my bold yet viable choices

Above are progresses made since mid 2018. Below are Earlier progresses, roughly ranked by importance :

  1. bold investment in a 3rd shop unit, despite the concentration risk and lower NRY guarantee than before.
  2. bold decision to choose lower CPF-LIFE payout, since I don’t need the higher monthly payout or bequest.  This decision has implication on my savings rate now.
  3. [u] tried out dividend stock investing on Robinhood
  4. [au] bold idea of sending kids to Singapore universities, avoiding the mad rat race
  5. bold idea on MYS retirement — need more evidence and research
  6. [u] bold decision to stay as contractor
  7. [u] tracked family burn rate for years
  8. [a] passive income added up
  9. [u] bold and unconventional decision to favor walkable locations, to reduce car dependency
  10. new plan on HDB jumbo unit
  11. [a/A=high leverage i.e. high impact at low effort, low distraction, low laser dispersion]
  12. [u/U=unconventional among my Chinese peers. Back bone required]

[22] j4 buy@every correction/crash

Posted on by tiger40490

Warning: [[irrational exuberance]] gave lots of data against this /tactic/ — Invest at every correction or crash, invest in bigger amounts than you have recently done in normal times. If decline continues, then decide whether to buy-n-Forget or invest more.

ETF quickGrab: buy-low +! due diligence is a more concrete plan.

— J4: ECR compound return .. widely accepted, even on non-U.S. markets [1].
This perception basically assumes that after every decline, perhaps after a few years [1] of zigzag, market would eventually transition to a “fast_window”, where annual return stays above average for months or years.

Some traders focus on the shorter horizon and target to capture a few months of fast_window. In contrasts, authors (big influence on me), financial advisors, financial planners, bank staff … focus on a longer horizon of a few years to a decade. But regardless of horizon, all of them agree on one thing — the fast_window.

— J4: DCA robot.. See my blogpost on DCA
j4: DRIP robot is related

DCA and DRIP assume that even after a market /rally/, it’s not unwise, not risky, to let the robot continue investing _small_ amounts.

— [1] Warning: this analysis only applies to U.S. equities. Non-U.S. markets can experience a long trough before (hopefully) entering a fast_window.

[15] asset balancing needed@@ #hedging

Posted on by tiger40490

Q (recommended question): is my asset allocation comfortable and fulfilling[meeting my current pff goals]?
A: overall yes. I have always wanted a small allocation to eq until I feel comfortable, so I don’t really care about the eq/bond ratio.

Q: is my current asset allocation rational?
A: no clue

Q: is it positioned to capture the upside? people generally say the upside is in eq, esp US but not China
A: I would say I have a reasonable exposure that I can accept. I am not an eq believer… i see few trends long term. Only US shows me a trend but it’s expensive now.

See the post on non-performing investments — real experience.

Q: is it hedged against the black swan?
A: Not sure. Experience shows that our estimate of the downside is usually underestimate. I don’t want to be risk-averse either. Risk averse people would favor cash!

Q: within eq, is the geographic allocation comfortable?
A: I would say yes. I was confident about
* US
* Jap, Europe, Thai, Taiwan, Korea
* China
so I allocate according to my feeling

Q: Allocation/balancing across industries… comfortable?
A: I would say yes. I assume most of the sector funds are US-heavy. I feel US is expensive and I already have bigger allocation to US than elsewhere.

[22]elastic: hard basket

Posted on by tiger40490

 

See also

At the 2022 inflation peak, across the countries I know, most of the high inflations actually hit (minor categories or) “elastic” categories [i.e. easily replaced by cheaper alternatives] like food, entertainment, travel. In contrast, A small “hard basket” determines the amount of purchasing power loss , or the shrinking of my dollars (saved or earned) during bad inflation.

This is an Aha insight. The CPI figures and inflation economics are misleading or inapplicable until we uncover this insight. Based on the  economics concept of Substitute, this insight is a a fundamental observation, laying a cornerstone for my blogs on CPIx-inflation, burn rate, livelihood, FullerWealth, freedom, exclub, successC/successE, recreations, wellbeing[Kahneman], stresses of modern life..

Inelastic demand (def) .. might be an abstract descriptor. It refers to the limited drop in demand for a good when its price goes up. In the hard basket, consumers still need (“demand”) the same items at the same quantity, even when prices rise.

Q: in SG/U.S. given that many substitute goods come in myriads of price levels, which specific items in my “basket” are the hardest hit by high inflation … 刚性需求 ?

  1. — half-ranked by hardness
  2. fruits, raw veg, raw meat/fish, starch
  3. non-elective medical/dental care .. esp. polyclinic and TCM
  4. (US) health insurance
  5. school fees
  6. utilities .. [telecom, heating,].. To cope, I would eat out, stay outside home longer, take shower at office/swimming
  7. public transport .. To cope, I would avoid taxi, prefer bicycle, live close to connectivity hubs (U.S. or SG)
  8. rent .. To cope, definitely relocate to remote, smaller, old houses. RV is popular among older Americans.. [[nomadland]]
  9. college .. To cope, delay enrollment or choose less expensive colleges.
  10. — disqualified items
  11. most foods .. There are many price levels, so I could always opt for “less hiked varieties”

Q: within this hard basket, which items are the biggest in terms of dollar amount?

  1. rent
  2. public transport
  3. utilities

Q: within this hard basket, which 2 items are the “hardest”[least elastic] ?
A: see the half-ranking

— Q: within this hard basket, which 2 items (tend to) experience the fastest inflation?

  1. rent
  2. gasoline?
  3. basic healthy nutrition.. See the singstat data in SG CPI-inflation: 30Y xp, basket composition

To varying levels of effectiveness, governments could slow down inflation in public-education/public-transport/public-utility/public-healthcare costs