Author: Growing your tree of prosperity

Seedly Event 2019 – Talk Cock Sing Song Ba Long Long ?

I was still recovering from yesterday’s talk and the traction for this Seedly event has been amazing. At this point of time, bloggers have already beaten me to this game, and there is at least one summary that I think it’s worth reading if you missed yesterday’s event. Interestingly, I don’t have any negative things to say about the speakers before me. I typically conduct a critique of other speakers in the pane in a blog article that follows the event. Initially, I felt that some of Victor Chng’s approach towards calculating yields based on original cost did cause...

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The Model Thinker #7 : Concavity and Convexity

Convexity are functions with an increasing slope. Most of us are familiar with the eighth wonder of the world compound interest, without which the financial markets would not exist : V(t) = V(0)(1+R) ^ t Another variant of convexity is exponential decay. In these models, the slow begins at a negative value and increases towards zero. A half-life model can predict that your engineering degree would be halve its value every 4-5 years. Concave models are the opposite being functions with a decreasing slope. One possible function is the log function : V(t) = N log Rt Where the...

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Why i told my friend to get his son into JC instead of Poly.

The story began months ago after my friend wrote to me privately with a query. His son managed to score 12 points for his O level exams and he wanted to ask me where should his son go to next. This a JC or Poly question. Upon knowing his son’s grade, I congratulated him, and told him that his son has done well. He should definitely give JC a try, and the actual identity of the JC did not matter. In spite of the fact that my friend is,  himself, a living and breathing example of a successful polytechnic...

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The Model Thinker #6 : Linear Regression

To understand a linear model, such as y = mx + b, you need to know that the dependent variable like y varies linearly with an independent variable like x. In real life, you can model almost anything linearly, such as modelling a person’s math’s score as a linear function of the number of hours studied, family socioeconomic status and number of accelerated classes. In the earlier math example, the number of hours studied makes the biggest difference in math scores, followed by number of accelerated classes, followed by socioeconomic status ( yes ! ). This coefficient m in...

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Curious case of leveraging Astrea IV bonds.

Sometimes I make mistakes when I teach a class. Fortunately, the smart folks who attend the session call me out very quickly and I can adjust my position rapidly on the spot. In this case, I made a glaring mistake projecting the yield of Astrea IV bonds, taking the coupons and dividing it by market price to get more than 4% yields. One of my students is a brilliant CFA III candidate and he pointed out my mistake immediately after punching numbers into his Texas BA II calculator. I have overestimated the yield to maturity of the bond. The...

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Letter to Batch 3 of Early Retirement Masterclass Students

<<  Sharing this to readers as it is also a personal update. First time running a course while on pain-killers. >>Dear Students of Batch 3, It’s been a great honour and privilege to be able to conduct a 2-Day Early Retirement Workshop for you. This is the first class that I am conducting under a regime of painkillers. I had a toothache a day before and did not want to risk surgical extraction before conducting the lesson. I am grateful that a student introduced his dentist friend to conduct the procedure for me although I am not too sure whether...

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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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