Author: Growing your tree of prosperity

Valentine’s Day Post : Find love like a Quantitative Investor !

This Valentine’s Day, readers are in for a treat ! Today, I will explain in detail my quantitative approach towards finding a significant other. If I become a dating coach, I will become so rich, Warren Buffett will be asking me for financial advice. If every guy follows my approach towards meeting women, SDN will cease to exist and no one will use Tinder anymore. Here is how to adopt a quantitative approach to seeking love. a) Decide to make a choice about your life partner. Once upon a time, I was matchmade to a lady banker. After two...

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The Model Thinker #5 : Power Law Distributions: Long Tails

Long Tails are the bane of many investors. As I derive a lot of investment insights from quantitative investing, I have to accept the precarious position of comparing investment strategies using mean and variances while obviously being aware that markets do not act “normally”. Unlike the normal distribution, long tails are modelled differently. One example is the size of cities. Cities have a tendency to arrange themselves in power-law distributions which is governed by Zipf Law. The rank of a city multiplied by its size is a constant. New York has a population of 8.6M. Second in rank is...

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Insights and observations from Dr. Wealth Graduates Session.

Yesterday I gave a talk to 200+ graduates of Dr Wealth programs and it was really fun ! I have a different approach towards conducting investment training, very much preferring to learn from my students as my students learn from me. As such, this blog readers can benefit from the positive interaction I have with my audience. Most of the content of my talk yesterday was to describe the results of the portfolios built by my trainees and how successful I have been so far when I invested in our co-created portfolios. But as a crazy science experiment, I...

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Financial Blogosphere as Wu Lin

Happy Year of the Pig everyone ! I am now blogging from Kulai and I wanted to write an article that is whimsical and yet consistent with the spirit of Chinese New Year.  For many years, I was unable to appreciate Jin Yong novels because they are written in Mandarin. Finally, thanks to a recent English translation, I was able to read about the Legend of the Condor Heroes, a martial art epic that makes Westerns like Lord of the Rings look boring by comparison. And what an experience it is ! Today I will try to recast our...

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Opportunity Cost of Studying for a Degree of your Dreams.

My daughter has a strong artistic bent. As a father, I have chosen to let her pursue her interests. Recently, I have been tempted to transfer her to language classes to reinforce her weak English scores, but I think my daughter would be much unhappier without Art classes in her life. I also had an interesting conversation with a friend regarding this matter. This conversation came about because I have always expressed my unwillingness to work with an artist to create an RPG product because I was not confident that they are conscientious enough to deliver on time (...

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Alternative view on CPF withdrawals at age 70

In my opinion, there is too much negativity on the news that our government will allow a citizen to start getting a CPF payoff at age 70 unless he or she fills out a form to extract the money at age 65. This is because, unless a citizen is really uneducated or has a mental condition,  a citizen can write in to take out the money at age 65. The hostility is misplaced. I think citizens should be more hostile to the idea that the upper echelons of the government has been gripped by a few simple ideas from...

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The Model Thinker #5 : The Normal Distribution

The normal distribution curve can be used to assign probabilities to values. Every data point can be condensed into two numbers, the mean of the curve which measures the average, and the variance, which measures the dispersion of the curve. The normal distribution curve is symmetric about their mean and finds application in many areas of nature. The average height of the test scores, size of flora and fauna, life spans can all be modelled by the normal distribution curve. A very important theorem is the central limit theorem, where adding or averaging the random variables produces a normal...

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On employee engagement and productivity and the death of a Singapore Son.

One of my favourite bloggers, TACOMOB has not only made a come back after taking a long break from his blog, he showed up for my preview this week. I strongly urge you guys to read his comeback article here because it provides a lot of food for thought. The FIRE movement is strengthened by the dissatisfaction of workers in Singapore. While we are not responsible for the poor work cultures in Singapore that lead to so many workers becoming disengaged, we derive a lot of our popularity from it. Attaining FIRE often requires massive personal sacrifices, sometimes we spend...

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Should you buy REITs based on a “Good” Sponsor ? Part 2

Here’s a nasty thought experiment. Suppose on one hand, you have a team that is a sample of RI, ACS and Hwa Chong students. Their average PSLE score is 265.  We shall call this team A. Team B consists of a bunch of kids from government secondary schools, such Changkat Changi Secondary or St Gabriel secondary secondary  etc… Suppose this selected sample would also have an average PSLE score of 265 ( this is a small sample size and some kids volunteer to go to ordinary schools ! ) Is there a significance in the life outcomes of these...

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The Model Thinker #4 : Modelling Human Actors

The first serious chapter on modelling covers human actors. There are two general approaches to modelling a human actor. a) The Rational Actor Model Modelling human actors as being rational has come under a lot of criticism but no other model has the kind of consistency and elegance offered by this approach. By making an assumption that a person will act rationally, you can also come up with behaviour that approximates that of a highly intelligent player. In the Rational Actor model, individuals choose the action that maximises their payoff. This pre-supposes that a payoff function is defined over...

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When financial bloggers take a break

This is a pretty rough week. First 15WW has expressed a desire to take a break. You can read about it here. Then yesterday I received news that Cheerful Egg would also be taking a 90 day break to reassess his priorities. These are good bloggers to follow because their material is quite candid and original. The work of a financial blogger is a thankless job. A few years ago, a lot of us came in with the idea of monetisation of our blog material. That turned out to be much harder than we thought. Even if we can...

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An Earnest Conversation – Dealing with posts by commissioned sales professionals that you may disagree with

Money Maverick wrote a really sweet post which showed his human side. I would like to invite everyone to read it here. While you don’t have to agree with Money Maverick (I certainly don’t), you will probably accept that he should be treated like a fellow human being and did not deserve this level of abuse online. Not everyone in the community likes the style used by Money Maverick, some folks say that he’s too slick and basically would share details on the securities he pitches only to his clients. As a trainer who does uses my blog to...

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The Model Thinker #3 : Aristotle’s categories

I can argue that Aristotle is the philosopher who inspired all of quantitative investing. Even before the establishment of modern financial markets. Aristotle created a framework of inquiry that is relevant even today, his ten categories being : Substance, Quantity, Qualification, Relative, Where, When, Being-in-position, Having, Doing and Affection. By inventing these categories, it is possible to classify everything under the sun. Once a set of objects can be categorised, we can start hypothesising about the relationship between these objects. Naturally, in this modern world driven by data, a good working theory can result in extraordinary profits. To bring...

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What does the Finance Industry and the Social Development Unit have in common ?

Until the Millenials developed Tinder, dating was not a straight-forward process for guys in my generation. An entire generation of men were emotionally scarred by the Social Development Unit or SDU. I was, fortunately, not a victim of this government initiative. Instead, after being burnt by a match-making attempt by my parents, I developed my own quantitative approach towards meeting women. ( This is why I have a family today in spite of being D&D otaku and troll. That story is something I will tell another day. ) Some of my friends were not so lucky as to escape...

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How to take a crap on quantitative backtesting.

With the efforts I have been gaining to show up some misconceptions about investing in local stocks, I would have thought that I should be become by now public enemy number 1 from value investors. Sadly, I have read some attempts to discredit quantitative backtesting and I find that they are either holding back key information, or generally lack intellectual sophistication. As such, I will take on the burden of criticising quantitative backtesting myself. This is because, of all people, I cannot afford to drink my own Kool-aid. Not only could I stand to lose money if my methodology...

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