Tag: t_wrongPriority9

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beatIndex^ livelihoodBoost: choose your goals #R.xia

Posted on by tiger40490

 

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As I continue to invest more money + time, and write more blogposts evaluating my MOETF vis-a-vis other investments, there’s a real growing concern like

Q1: is my time and money well-invested in MOETF?  It is quite productive compared to my other investments, but perhaps an ETF/eqMufu would achieve higher total return and lower tcost?
%%A: even if you hold a SP500 ETF, there’s always [2] a legitimate need for an alternative equity portfolio with lower volatility, lower risk of a “down year”, higher cash payout, higher reassurance,,, Therefore, it’s my mistake to pit MOETF against SP500, when it’s not designed to compete with SP500.
A: tcost is addressed below

There’s a widespread perception that “mindless (therefore easy) investing in the U.S. [1] large-cap index will outperform most hand-picked MOETF in most years“. Buffet has struggled against the SP500 index for decades. I believe many value investors achieve lower return than the US large-cap indices. (Note SP500 is all-large-cap and all-US.) See Buffett no longer beating SP500. I do have some ETFs and mutual funds (T.R.Price) to capture the index appreciation. If after X years (to be decided) I still believe that MOETF consistently underperforms SP500, then I would allocate more to an SP500 ETF.

One portfolio in MOETF would become a fund comparable to a cash-cow retirement account; another portfolio an absolute-return fund without a benchmark. As such, MOETF is designed to meet those “other” needs.

Jolt: Similarly, most SP500 ETF investors also have assets in retirement accounts (401k), bonds (or money-market funds), gold, Reits, rental properties, dividend stocks etc, so it’s unfair to look down on those assets or MOETF.

[1] How about mindless investing in non-U.S. indices? Much weaker?
[2] many investors put aside that need .. unwise

— OPP .. It’s crucial to be clear what exactly we want out of stock trading. Many valid priorities of other investors are not important to us. In fact, these OPPs (other people’s priorities) may get in our way.

  • when you take on those OPP, your life becomes more complicated, when it can be simpler like mine. You may have to babysit your positions. Your firewall is strained.
  • when you take on those OPP, they could displace some of your true priorities. Analog: carry-on luggage (i.e. limited holder of true priorities) vs checked luggage i.e. holder of lower priorities
  • when you take on those OPP, you may inadvertently take on more risks.

Matching SP500 return … is a bad OPP. Investing 80% of my assets, and minimizing idle cash (make every dollar work hard) … is an OPP

Q2: how important is total return (including current income) vs beating some index?

These questions arise more often when I discuss with fellow investors. An unwise investor may have an implicit goal “match other people’s returns” even though he doesn’t know their pain/risk profiles or even their actual return rate. I try to avoid that unwise goal. I often justify MOETF using phrases like “absolute return”, firewall (sleep well), recreational (learning), DYOC(current income),,,

div stocks: widely seen as low-growth #valInv #laughing described the recurring scenario .. When I show my 5% current income to friends, they probably walk away laughing …

— Question 2 is similar to FOMO^livelihood  — am happy with the current income, the low-stress (firewall), the relatively low but positive return, but not so happy when I compare with some “high flyers”. Why the hell do I bother with other people when I’m happy with MOETF?

MOETF generates a few times more current income than any SP500 ETF or cryptos, if I (arbitrarily) exclude the low-yield stocks that I bought for growth.

— rental yield .. is a parallel. So far I’m satisfied with my SEA rental properties esp. the rental yield, perhaps more than my Beijing property. If I were to compare myself with those who achieved 10x returns in some Chinese-hot locations then I might feel diminished.

However my Q1 above is different. Compared to those hot property markets, SP500 is widely perceived as less risky and tracking ETFs are much more accessible (low entry requirement, very passive,,,)

— Learning and fun.. relatively vague ROI, but as a ROTI it is growing more important. See learning: fund^stock-pick

  • If you don’t need learning, then SP500 ETF beats almost all ETFs or eqMufu.
  • If you want learning, then growth stocks and cryptos threaten my firewall (babysitting, buy-n-forget)

— le2 XR… a summary on a familiar question. Q3: given that MOETF can’t outperform a SP500 ETF, why bother to hand-pick to construct MOETF?

  • A(mentioned in earlier mail): foreign stocks .. missing from SP500.
  • A(mentioned in the call): recreation and learning (see above)
  • A(mentioned in the call): dividend payout, esp. during a downturn.
  • A(mentioned in earlier mail): selective cash-out
  • A(mentioned in earlier mail): selective buy .. esp. if I know a company well. This feature could help me outperform SP500
  • A: consider retirees. They don’t focus on “return” only, so they allocate heavily towards bonds, annuities, dividend stocks outside SP500. One retiree I know invests heavily into a rental property for rental income. MyOwnETF doesn’t aim to outperform SP500 but aims to provide other benefits such as access to cash flow.
SP500 return is hard to beat, so I will probably maintain 50% allocation to SP500. As I age, we will need to reduce SP500 allocation.

breakaway[def] from Upper-midClass #w1r2

Posted on by tiger40490

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Q: Why is it crucial for me to break away from the Chinese upper-middle-class mainstream in the U.S. ?
A: My asset and esp. combined salary is lower-middle-class. My carefree ezlife demands that I live well within (hopefully below) my means.
A: if I follow herd instinct, and surrender to that peer pressure,

  • my Melvin3 total burden would balloon to $7-8k, so my total burn rate could exceed 10k/M. I think this burn rate is top 2% of U.S. households.
  • I would lose my cash-flow high ground (brbr, Fuller wealth, FCF,,) My CPF + rental income + Beijing inheritance … all become 杯水車薪.
  • I would lose my steadfast focus on the long-term important/non-urgent goals of healthy longevity, career longevity, family harmony, ..
  • I would long for an additional USD 2M in net asset (endless greed). These Chinese middle-class families typically have a net asset of $1M+ but have a thin brbr. They don’t seem to live within their means.
  • I would be pressured to maintaining my salary and worry about job loss. I would envy those fake role models [interview rock stars, OC-effective guys, ]
  • Such a self-created baggage is simply too heavy. Something’s gotta give.

— t_breakAway tag is not about my own “unique or original” solutions.

It’s more about questioning,  challenging, rejecting and letting go of the Chinese middle-class immigrant mentality.

It’s related to t_mellow,

##hot assets2avoid esp.4 Lower-midClass

Posted on by tiger40490

I see a pattern — if you are lower-middle class like me, but compete with the upper-middle class to acquire these hot, favorite, trophy or popular assets, you would feel the strain eventually. Wrong priority.

Possibly a strategic misstep if you can’t easily liquidate it or if you spend a sizeable amount maintaining a white elephant.

Rule_1: I avoid all of these assets.
Rule_2: always check overvaluation relative to alternatives, and check value/price ratio

[w=white elephant, often high maintenance trophy]

— eg: hot growth stocks with near-zero CDY or very high P/E
— [w] eg: big, luxury cars .. are for the rich
— eg: leading cities .. See mansion^commercial rEstate demand]leading cities #defy`gravity. Beside the Beijing home, all my properties fall outside the category. My HDB is not a private property 🙂
[w] NYC co-op has very high maintenance cost according to Chris Ma.

— [w] eg: top U.S. SDXQ homes, usually SFH with slightly higher psf valuation, but much bigger, therefore a white elephant. GRY suffers as a result.

Items below are not tradable “assets” per se, but still related to the same theme

— eg: medical school .. is for the rich, similar to luxury cars
— [w] eg: expensive branded colleges.  See luxury(+special)Edu: unaffordable to 中产华裔
UChicago is my 1st hand experience, and a breach of my Rule_1
— eg: international competition trophies .. takes lots of effort but often don’t mean much to your career.

## filter conditions4overseas rEstate #unchanged since 2015

Posted on by tiger40490

— my filter conditions for overseas

  1. small quantum. Hard limit? 250k?
  2. rental yield .. this depends on the local economy and rental demand
  3. prime location
  4. — minor conditions
  5. FX risk .. I discussed GBP/SGD (3..) and AUD/SGD (1.3..) with MAPIC advisor and my sister.
  6. legal risks

So for many years I have prioritized quantum and primeLocation. That’s why I always pick up tiny units and never bought in developed countries. Other people usually aim at windfall profit, which is a wrong priority for me. I stay away from the exclub temptation. Windfall profit doesn’t enrich my life as additional NNIA does.

— economic maturity .. a tricky “filter”

Developing countries offer more upside (at least in theory), but there is real risk of getting stuck in “protracted_adolescence”.

Perhaps we could switch from super-macro to less macro like municipal level. Some hotspots in a developing country could avoid protracted_adolescence.

— Wallan case study on 26 Feb 2022 .. See also MAPIC: j4$1100. Based on my filter conditions, most of the early indicators that presenter shared are inferior to the early indicators in BGC or Cambodia locations.

The actual surprises included FX risk, developer integrity. However, it’s possible that Megaworld is below-par but not as unethical as I thought.

I still feel my Cambodia deal is much better overall, based on my priorities.

FX loss (in SGD terms) can wipe out all your capital gain + rental income.

[19] Health-is-wealth: wrong priorities #leisure w1r4

Posted on by tiger40490

Fuller^exclub discussed two definitions of wealth. Now, Based on “Health-is-wealth”, I would regard wellness as a 3rd but qualitative indication of community wealth, at the community level or perhaps national level.

Some neglected elements of wellness:

  • Psychological well-being,
  • longer sleep
  • dental health, straight teeth
  • skin health, scalp health… not vanity !
  • posture esp. after middle-age
  • clear skin
  • endurance,
  • decline in flexibility, range of motion
  • decline in eyesight and hearing
  • decline in muscle strength
  • decline in speed of movement

— wealthy nation as measured by health-is-wealth
Remember the Khmer villagers? I think they may have good enough diet and a level of physical activity that’s better than the richer peoples, but presumably insufficient healthcare including prevention, detection, early intervention, long-term management of many health conditions.

I think there are countries with

  • better diet habits than average,
  • more active lifestyle than average,
  • more leisure time spent on workout, not wasted,
  • decent healthcare at affordable costs

These would be “wealthy nations” measured by health-is-wealth. (Some of these countries may be industrialized or underdeveloped. I won’t attempt to pick an example.)

I feel most communities are kinda lazy. If people don’t have to put up with lots of physical labor and simple unprocessed foods, then they would not. So it might be hard to find a culture, a society that meets my checklist above. Such a community would have to be intelligent, sophisticated to prioritize health over pleasure, comfort, luxury.

( There are plenty of individuals with the right priorities like that. I’m becoming one of them. See the other section.)

I feel Australia has a reputation for more leisure time and more active lifestyle.

Shorter work hours (France?) creates more job positions, reduces work stress (more slack resources), leaves more leisureTime which is a necessary-insufficient condition for healthier lifestyle.

— At the individual level:
Being closer to the Fuller wealth concept, this “definition” is not serious. You can’t measure and rank cities in terms of “amount of health”. You can’t accumulate health and pass it on to next generation or donate it. For self-use, health can’t be preserved or invested for growth. Nevertheless “health is wealth” is valuable reminder.

This pseudo “definition” (more than “ignores”) actively rejects FOMO, peer comparisons, ExClubs.

This definition singles out one neglected yardstick of “wealth” and places it on top of other yardsticks.

— parenting — As discussed with Damian B, parenting probably has a net negative effect on life expectancy at least for fathers, due to the impact on leisure time, stress…
However, the longest-living individuals tend to be grandmothers. I think child-bearing has health benefits.

realistic role models among us #CSY

Posted on by tiger40490

Hi Shanyou,

You said “我现在看周围的人，不是看他自己专业上干的怎么样，因为对绝大多数人干的再好也好不到哪里去” I totally agree. Looking around (including those Morgan Stanley EDs), I think 2% to 4% of my former colleagues/classmates are senior managers (above ED) in big companies across greater China (Not sure for how many years) and everyone else seems to be somewhere behind, in terms of salary.

Note the junior ED and Director in many ibanks are basically team leaders in charge of a few guys, but they are usually paid pretty well, around 200k.

Some specialists can probably earn more. But comparing salary is extremely touchy, irrational, unreliable, and not based on verifiable facts. We all try to be rational and philosophical about peer comparison. I wonder what is a simple, fair and realistic yardstick to see who among us can be a role model.

Obviously health and vitality, harmonious family, comfortable cash flow are basic foundations of “good life”, but what else?

In 2003 a friend of mine (Qi ChongLei) introduced to me his simple concept of “easy life” as a long-term personal goal. He is diligent and knowledgeable (now a senior manager in EBay China). Influenced by him, now I feel a simple yardstick is something like “bare-bones financial freedom to sustain an easy life“. My idea of “easy life” is more like “minimalist lifestyle”. I won’t elaborate, but those peers who don’t need to work are the luckiest even if their lifestyle becomes minimalist. Call them Group A.

If that’s impossible, then some peers can take any simple low-paying job and still live a simple-yet-comfortable life. Low-paying like pretax 50k / year. I think these peers are very lucky simply because they are free to take a break any time. These peers probably hit Level two of 6 levels@ffree #US perspective . I now feel these are the realistic role models. Call them Group A-.

I assume most of us are not in Group A or A-. Perhaps you know someone in Group A- but he may not feel that way about his life.

And then, there’s group F — many peers actually struggle on the “foundation” level — failed marriage; serious chronic illness; problem kids (Note academically mediocre kids like my son are fine kids) ….

A friend has such limited marketable skills that he can’t find any other job so he has to accept shitty tasks imposed by his boss, and work under constant pressure. Another friend is forced to work 7 full days a week. I said this is illegal. He said the U.S. labor law doesn’t really protect him, due to legal cost, legal evidence … Even if he wins he would lose his job soon.

I have more than one close friend who have only three-digit savings and/or heavy debt. High interest payments. Uncomfortable cash flow.

I classify these guys as Group F, perhaps unfair to them. Some of these individuals might have some level of financial success (even freedom) but not my role model. Financial freedom is the wrong priority, the most important but not the dominant criteria for a role-model.

— my top strengths in SelfMgmt, as I told grandpa in a 2019 call from Bayonne

AAA cash flow - burn rate including debt
A   cash flow - passive income
A-  cash flow - 30Y balance sheet mgmt
AA  #1) cash flow
AA  tech IV - QQ
A-  tech IV - algo @WallSt
A   #2) tech IV
A-  #3) wellness

Each is an extremely important strength. ( Some of them are probably viewed as competitive “advantages”. )
I only need to be really good at one of them to be rather successful.

However, in reality I’m “generally good” not “gr8” at any.

They each provide a cushion/buffer against the “blows” in our lives. No perfectionist please — No cushion can be perfect as life is full of adversities and setbacks.