— gold crash vs stocks crash
Current stock valuation is high, but gold is also high… not sure why.
If you fear stocks may fall, then you may buy some gold now, hoping for it to give you some profit in the anticipated equity crash.
— in a flight2safety, gold is stronger, more sought-after than USD
In covid19 pandemic, USD lost value against gold and other currencies, partly due to printing money.
Context: At end of the Affiliate Marketing Essentials course, after listening to Ewen Chia’s 20-minute elegant presentation I was struck by its radical simplicity. I realized there’s a similar radical simplicity in my recreational MOETF investing. I stumbled on this system after decades of investing in FSM.
Similar to Ewen Chia — we strip away lots of mainstream complexities
Similar to Ewen Chia — the system works, for whatever reasons.
This blogpost is about MOETF. So (now in Oct 2021) I will summarize the key features into a phrasebook, half-ranked by importance
[r=radical simplicity]
[v=vague but important guideline]
update: FIRE doesn’t pay enough attention to disasters…
There are countless (too many) online discussions of FIRE, largely in the U.S. context, and largely among younger bloggers (See https://www.forbes.com/advisor/retirement/the-9-fire-blogs-you-should-read/).
I find the discussions less relevant to my situation, given my limited bandwidth, but I remind myself to never dismiss inputs from young people or inputs from other cultures. Once a while, I could find relevant pointers, perhaps in car choice and college choice.
— peers influence
In the U.S. I will be surrounded by Chinese and Indian peers. They represent a negative influence on me in terms of FOMO (kiasu, consumerism).
Similarly, I think my wife felt a form of pressure living in Newport among the rich and educated white-collar young moms.
With my unconventional choices, my journey would be a lonely journey, unless I find like-minded and rational voices in the FIRE discussions. Those who write a lot (like the bloggers) tend to be fairly rational like me.
— defenses (financial++)? Largely missing from FIRE discussions, various defenses (cushions, buffers, shields) form the bulk of my planning. The rest of my planning covers popular, mainstream topics like savings rate, nonwork income, brbr,,, These topics does relate to my defenses but my focus on defenses is not shared by the FIRE discussions.
The bedrock of my defenses, the bedrock of my financial planning is career longevity — FIR-End@life.
— parenting cost — is seldom discussed. An elephant in the room.
— withdrawal rate — is present in CPF-life, not in my current FIRE planning.
— Social security — is less reliable than CPF
— Malaysia — (and China) is a viable option for my wife and me, if our long-term planning turns out less successful than anticipated.
— homesteading is most popular in the U.S. but not every early retiree likes it
— healthcare — is country-specific. The U.S. discussions (not a lot) is largely irrelevant.
Beside the long-term costs and the major hospitalization costs, every outpatient medical cost can add up a lot
–Inflation — is a key risk missing in some FIRE discussions.
Gold can offer effective protection, but is seldom discussed. I think the FIRE guys may dislike the carry cost
U.S. inflation is higher than Sg.
— stocks — is a prominent feature of the FIRE discussions. I think many of my U.S. friends also rely largely on stock portfolio. Most of them rely on index ETF.
Worth learning.
— alpha males: MMM, Jacob (ERE) and the leading FIRE bloggers are all alpha males with
In contrast, the regular guy has much less capacity to pull it off.
Workout classes … is One of the greatest illustrations of the framework defined in rmSelf^xpSelf .
Q1: As of today, do I feel tougher working out by myself compared to a class?
— Q: is this creep? .. (not splurge) Yes according to the evaluative rmSelf’s, but I need to honor the xpSelf.
If I were to answer Q1 during every class, I would give a positive answer 80% of the time. In summary, I do feel good whenever I was in a class.
So there is some minor conflict between the evaluative rmSelf vs the xpSelf. There are other factors at play, though they would make this blogpost more suitable for the open blog.
— Q: how does personal training compare? The xpSelf would feel less rather than more comfortable, and the cost is much higher, offending the rmSelf.
So the best workout class is a large, low-cost class.
I think Investment should be … supplementary. Consider
We need to be competitive and productive in our core competence. Rather few people’s core competence is investment analysis. These invidividuals are employed by the likes of GIC.
If you neglect the core competences and rely too much on investment you will /drift into irrelevance/.
Alan Tan … said U.S. stock market shows self-renewal.
see also the older blogpost [14] long-term +ve trend: U.S.only
My conviction is based on 1) data 2) explanation.
I’m slightly more “independent” in my thinking. For yeas my U.S. allocation among my equity holdings was around 10% to 20% no more than 25%. I also flipped through the influential [[irrational exuberance]] written before the dotcom crash.
==== shorter trough, faster recovery
I like Jay Seide’s summary — the broad U.S. stock index always rebounds after a big correction. See [[irrational exuberance]]. Using whatever arbitrary criteria, let’s say there have been 20 crashes over 20 years. Among them, this rule has seldom been broken — recovered within 3 years, usually within a year.
However, Longest trough in Nsdq100 is 17Y
Q: why U.S. stocks show better trough i.e. faster recovery?
— reason for China’s long trough: retail investors tend to bid up the price too high, resulting in a super-long trough. In contrast, U.S. market has more institutional investors. Vance of DBS pointed out that China markets are increasingly open to foreign institutional investors
— [warning] data sample size is very small
There are not 500 regions where only one region (US) is head and shoulders above the rest (like Linus Pauling who twice won Nobel prize unshared).
There are not 90 (non-overlapping) trough periods in a data sample where the shortest 5 all belong to the U.S.
— [warning] regime change
— [warning] index composition differences .. Vance of DBS believes the index component is one reason. He said STI has mostly sunset-sector stocks. However, I would say hot tech stocks tend to become overhyped leading to longer trough.
SND stands for “supply-and-demand”. As a universal framework for investment analysis, it has limitations in some markets. In this blogpost I will focus on my asset classes.
— PE/HY-bond — I bought a few times. I think in this case supply is tightly controlled by the issuers and demand is dominated by credit risk and coupon rate.
Investor mind share is very low. No herd anything.
— commercial properties — Probably less retail influence than in residential market, and less herd sentiment.
— residential properties — high Demand from retail investors.
I think retail investors often value comfort and luxury in additional to total return. These are rational considerations for consumption assets.
— penny stocks on SGX or U.S. — investor mind share is much lower than blue-chips. However, herd mentality can still affect some retail sellers.
— well-known stocks — are the extreme case of sky-high SND. Both supply and demand sides have large institutional investors, but price is often driven by retail investors. Retail investors can be irrational and mis-informed, and can ignore the fundamental and mostly follow herd sentiment.
Therefore, to make money in these stocks, fundamental analysis may not help (may be relevant in the long-run) and sentiment/timing may be the dominant factor. I generally avoid these stocks.
— physical gold .. kinda similar to well-known stocks, but bid-ask spread is much worse because an institution is usually the other side of a retail buyer or seller. The institution would demand a bigger bid/ask spread.
Two retail traders directly interacting is only possible on the futures market.
k_investor_selfEval
The more specific/unusual the better. I hope to develop more strengths, and give my kids and younger friends.
— significance of these strengths? Not to be exaggerated or belittled. I want a fair assessment of the significance of these strengths.
However /tempting/ it is to derive and assign some numeric “value” to each strength, such numbers would likely be extremely unscientific and un-objective. Instead, it’s more useful to ask questions:
Q: Will these strengths grow in significance as my income drops in older age? I am 90% certain.
Q: Will these strengths grow in significance as my asset grows? I am fairly certain.
Q: Will my “worldly” wisdom grow with experience, in this and other domains? I hope so. Look at grandpa.
Investment loss can be devastating, not to be taken lightly.
https://blog.seedly.sg/fire-financial-independence-retire-early-in-singapore/ is a 2019 blogpost by a co-founder of seedly.sg. I don’t plan to spend too much time on it — not a major publication like the BizTimes article. Note both are written for the same target age group.
— age 45~50 — the ideal early-retirement age for most Singaporeans. In my early 30’s I had a very high Fuller wealth
— 50/30/20 — monthly income: 50% spent; 30% saved; 20% invested. An aggressive yet realistic plan
— YOLO (You Only Live Once) — a very common counter argument. I feel the author is in the same age group and presumably in sync with the debate.
— Earn/Save/Invest — you need to excel at 2 of 3 i.e. doing better than average.
Defensive portolio is an important and popular theme, popular with retail investors, important in academia.
It assumes cashflow is the most important human need (necessary and almost sufficient factor), but how about food supply, healthcare, family?
Look at the blogpost such as G5 Shields@family_livelihood .. Adequate-cashflow-when-needed is only one of my top 5 protections, therefore overrated.
In a blackswan event (not as rare as earthquakes) such as the covid19 pandemic, ordinary people like me worry about food security, hospital overrun, restriction in travel and family reunion. These human needs … are beyond what cashflow can provide.
How about street safety, air/water pollution, water shortage, climate change?