Tuesday, September 30, 2008

Investing vs Gambling

A friend of mine had asked me for basics of how to invest in the stock market. I'm writing some basic fundamentals but they will probably be seen as near-heretical by most financial professionals. Neverthless, here it is.

When people talk about "investing" in stocks, they can mean one of two things (1) short-term, which means they do things like trying to time the market such that they can buy stocks for cheap and sell them for expensive and (2) long-term, where the investor simply takes advantage of the fact that, over 20+ years or more, the stock market will tend to do better than not.

The reason why people like to do short term investing in stocks is precisely the reason why I think it's a terrible idea - because stock prices fluctuate a lot over the short term. The basis to short term investing in stocks is that every company's stock price fluctuates because of factors inherent in the company or in the market as a whole. Know enough of the factors, predict them accurately, and you have a profit on your hands.

I think this is a load of baloney.

What you are trying to do with short-term investing is that you are trying to make an accurate prediction given incomplete information. So is everyone else. The only time someone has a fairly complete picture is when the stock market actually takes everyone's incomplete picture and turns it into a price. Sometimes you win, sometimes you lose.

Oh wait. Does that sound a bit like picking a winning horse at the turf club?

The reason why people like talking about playing the stock market in this way is because it gives them the illusion of being better than everyone else. People love talking about how much money they've made in the stock market, TOTO, 4D etc. It's riches, quick and easy, and socially affirming to boot. What they don't tell you is how much they have lost investing in stocks over the long run. I doubt they know themselves.

So the first question you need to ask yourself when you are investing - are you really doing it to invest in your future? Or are you doing it to be fashionable and make a quick buck? If you are doing it for the latter, I have no advice for you. I don't joke about money. If you're doing it for the latter, I'll write more.

Otherwise, I advise you to find some other person. There's a money manager I can introduce to you. :)

Wednesday, September 24, 2008

Investments in Singapore

I've been speaking to a money manager over the last week. I will say that I am completely underwhelmed by the investment product offering in Singapore. For one, the product offering shown to me by that money manager (who will remain anonymous) consists largely of managed funds with high front-loads, high rear-loads and high expense ratios.

I have several objections to this.

The first is that I am not paying good money to have people make my financial decisions for me. I will pay some money for being able to get a diversified portfolio with only a few choice picks. I will pay for the convenience of someone administering my money for me. I will even pay for the convenience of not having to remember to get my trade every month, and to make sure my money is locked in for the long term. These are things I will pay for. Not for my decision making process to be taken from me by the same financial engineers yahoos responsible for the current hullabaloo in the markets now.

The second is that my investment on returns, no matter how good the mutual fund is, WILL be eaten away by the outrageous fees charged by the fund managers. An expense ratio of 1% means that the fund needs to perform at least 1% better than average to give me average returns. Excuse me?!

The last is that I get the impression that the money manager wasn't listening. I told her I didn't want managed funds. I told her pretty explicitly. I don't blame her for trying. I just told her that these guys don't seem to be carrying the products I want for my investment.


For those of you who haven't already figured out, I'm a believer of index fund investing. The problem is FINDING an index fund in Singapore worth investing in. I can hardly believe that some of these funds in Singapore dare call themselves index funds.

Lion Global Investors, I'm looking straight at you when I say this.

Let's take a very simple product offering - the Infinity US 500 Stock Index Fund. It is better than many funds out in the market today. When I say better, I mean "less of a ripoff". Its front load is a lowly 2%, and its expense ratio is 1.17%. Which sounds pretty okay compared to a 5% front load and an expense ratio of 1.75% right?

Wrong. Take a look at this - the fund that the Infinity US 500 Stock Index Fund is supposed to be mirroring. Yes, you saw right. The expense ratio is 0.3%, without a frontload. This flies in the face of every index fund principle I know. Infinity is supposed to be mirroring an index. The whole point of an index fund is to reduce the expenses to a minimum, and bet that the stock market on the whole will do well over time. What is this nonsense about a 2% upfront?! Why are you charging a spread of 0.77% over the US 500 Stock Index Fund for blinding following the S&P 500 index?

I cannot blame people for wanting to earn a living. I can understand earning a living. I cannot understand people wanting to earn a living through exploiting me less than the competition.


I'm going to take some time to highlight what I think is the only nugget of gold in index-based investing in Singapore - the iShares S&P 500 Index Fund. It's essentially like an index fund that is traded like shares on the Singapore Stock Exchange.

The reason I like the iShares is that it essentially tracks the S&P 500 for about the same expense ratio as a true index fund would, at 0.09% expense ratio. It also doesn't have a front load, which is great. The only catch is that it trades like shares on the stock exchange, so you have to pay brokerage fees, so there is a hidden "front load" of sorts, and there are clearing fees of 0.05% up to $200. However, brokerage fees range from 0.25 to 0.5 % in Singapore (depending on volume traded). That means my front load is 0.25% to 0.5% + 0.05%, and my backload is the same, which makes this FAR less than the Infinity US 500 Stock Index Fund, which is its closest competitor.

Look. I can't do math that well, but even I know that 1 or 2 percentage points compounded over 25 years (which is the timeframe for investment I am looking at) is a massive difference.


Now all that I am short of is finding a financial institution that will essentially do what I tell them to and STFU about their over-engineered financial products. I am looking for a bank or brokerage that will take a fixed amount every month and buy whatever they can of the product portfolio I tell them to buy, every month, on the month, on the dot.

In short, I'm looking for a system that forces me to be responsible, disciplined and act as my prosthetic memory. The reward for this (which is a pretty simple job if you think about it) is my brokerage fees, on the month, every month for 25 years, longer if I happen not to need the money after that.

Any takers?

Thursday, September 11, 2008

Guilty Pleasure

First person that came to mind when I saw this was Ilkka. The man who considers training for three hours three to four times a week the minimum necessary to retain his skill.

Finland - Be Afraid, Be Very Afraid Demotivational Poster


Wednesday, September 10, 2008

This Blog

I've been reading Pat Law's and Cowboy Caleb's post on the Singapore blogosphere.

I find it sad that a blog allows us to write about anything in the world, yet so many of us chose to write about ourselves. Is human nature that shallow, and the world that fragmented that we need to literally put ourselves out there for all and sundry to view?

I am not going to take the high road - I'm guilty of some of the sins that Pat Law and Cowboy Caleb have set out. Recently, too, my posts have been irregular and of pretty crappy quality. It is with this in mind that I'm going to try to set out what my blog is.

I write this blog for various, evolving reasons. In the past, this blog was a dumping ground for the dissatisfaction I felt for Singapore, and by extension, my life. This post "The Singapore Condition" I wrote 3 years ago remains one of my favourite, and one of my reader's favourites as well.

But life being life has taken a huge unexpected turn. I never expected to be back in Singapore, under those circumstances to boot. Things have changed. I have changed. My blog has also changed.

I stopped writing about my complaints about Singapore, mostly because I find myself with very few complaints. Singapore has improved. It is a long way from being ideal, but the lesson I paid blood to learn was this: you do what you can, and let God sort the rest out. Being impatient for change changes nothing.

This is my blog now. It is a collection of posts which generally falls into the following niches:

(1) Historical European Swordsmanship. I write about this fairly often of late because it is my interest. My fellow swordsman, Kenneth, maintains a nice blog for the techically inclined. Tome takes cool pictures. I don't want to reinvent the wheel here. My niche of a niche is to write about swordsmanship in a way that is hopefully understandable to the non-swordsman. I don't think there's enough of that around, and I hope that this blog would at least give a non-swordsman a glimpse of what we actually do.

(2) Inner Space Articles. A dear friend once described these posts as my version of Chicken Soup for the Soul. I write a lot about hope and love and renewal. That is because these are things that I've given a lot to understand, and I am beginning to gain a glimmer of wisdom about these things. I write these to firm up my ideas, and to hopefully allow readers some insight into some hard-won lessons of life.

(3) Current Events. I tend to focus more on US based news than Singapore based news these days. I also tend to be a bit more picky about the current events I choose to comment on, mostly because I am sick of the same tired arguments being trotted out by the Singapore blogosphere. So unless I have a fresh spin on things, I'll keep quiet. Assume that I have libertarian-liberal leanings alright?

(4) Interesting events in my life. I promise to write only when something genuinely interesting happens in my life and not write for the sake of writing.

One last thought. I've never written for the sake of traffic. I write for the sake of being read. And I hope that you will continue reading.

Tuesday, September 09, 2008

A Note from Future Self to Past Self


I know the blog title is a bit dramatic. Nevertheless, that's how I feel when I speak to you, even intermintently, even if it is through this clumsy medium of my blog.

I've been putting off writing this message for a long time, not because I didn't want to say anything, but because I didn't know what to say. It's the sense of having a feeling but not knowing how to express it well.

You've commented often that you see me as what you could possibly become. I feel the same way - I see you as a younger self if things had gone the way I wanted them to. It is no secret that I regret my inability to read law in England, or journalism in the US. In you, I get to live a vicarious life of how I would have lived if I had my way.

Or perhaps not.

You see, in spite of everything that I feel I have done wrong, every event I regret the necessity of, and every missed chance I cursed at, I never regretted the chances I did take, and the life I did lead. In you, I see the person I would have become even if my choices were different, the same essential person. To use your words, pompous, opinionated, hopelessly anal-retentive, paranoid, genuine, interesting and self-aware. In that sense, you offer me some hope, that these are parts of me that stick with me regardless of the occassionally fucked-up life choices I make.

You are right, of course, that self-absorption is alright only if it becomes self-awareness. No, it wasn't to cushion the impact on a fragile teenage ego that I didn't tell you. Some things you just have to find out for yourself. You wouldn't have believed me if I told you. I know I wouldn't.

Six years on, I offer you, perhaps, a modicum of hope that you may become less anal-retentive, pompous and opinionated. Life and age have their way of polishing away your rough edges. These days, I daresay I've become not only self-aware, but self-reflective, and I hope that you will eventually become the same.

Your Friend,

Monday, September 08, 2008

Dagger Training

I'm going to spend a bit of time writing about dagger duels in the context of the martial art I practice. For those of you not interested, there's a nice video of Jon Stewart taking a piss out of the GOP here.

We spent most of yesterday training with daggers. The daggers we use are wooden, about a foot long and look like glorified icepicks. For those who know what i am talking about, we train with rondels.

Because we primarily train with a piercing weapon, we do train for some things I would not even imagine using on modern knives, i.e grabbing or slapping the blade. Nevertheless, some of the stuff we do IS applicable to a modern knife fight, which brings me to my thoughts, which are

  1. Speed kills
  2. The default for a knife fight is a mutual kill
  3. Let the other guy see what you are doing (HT: Chris Blakey)
Let me explain each.


Speed Kills

This adage is generally true to varying degrees. Acting and reacting faster than your opponent generally gives you an edge. This is especially true in dagger fights because of several reasons.

The first is that a dagger, as compared to unarmed, IS a situation where the first good strike will kill or disable, and your target area is almost the entire body, even if you are wearing armour. Contrast this with unarmed. A fist generally doesn't kill or disable with the first strike unless you are hitting somewhere pretty specific. If you want to disable someone while you are unarmed, you generally have to break their structure first before you throw/lock/break/disarm, which involves working your way into a position where you can do that.

The second is that, compared to a longer weapon, like a sword or poleax, the dagger has a much shorter tempo. It's almost as fast as moving your hand around unarmed. Contrast with a sword or a poleax, which trades some speed for a lot more power and measure.

In short, because (1) getting the first strike CAN lead to victory and (2) dagger use lends itself well to quick strikes, speed especially kills with dagger strikes.

(Note. Speed gives you an edge. It doesn't win you the entire fight. I've won dagger and sword bouts with someone I judge about half again as fast as I am. I've lost dagger and sword bouts to people half as slow as I am. It's more important to do things right than to do things fast. Doing things right AND fast generally kills though.)


The default for a dagger duel is a mutual kill

What happens in a dagger duel is that both sides will be wanting to strike first with the dagger, for the reasons I mentioned above. The first good dagger strike ends the combat, so there's plenty of incentive to move in for the kill fast. Because both people are thinking like that, it's likely both people will try to attack first. Baring massive disparities in speed, both are likely to inflict a killing or disabling wound. Both die.

Hence, the default for a dagger duel is a mutual kill.

Having that in mind, what we train for isn't maximising the speed of the first strike. That leaves a lot to chance, i.e it depends on having an opponent that is slower than you. What we do train for is to strive for control over the weapon, then launching a counterstrike.

That is to say, the key to winning a dagger duel is controlling the opponent's weapon.


Let the other guy see what you are doing

This is something brought up by Chris on Sunday's training, and I agree with him. There's no point attacking if the opponent cannot see what is happening. I know this sounds counterintuitive, but hear me out.

Recall that the most reliable method of winning a dagger duel is to control the opponent's weapon?

By controlling your initial attack and making it visible, you have (1) limited your opponent's options for defence down to the most appropriate response and can therefore (2) predict the counter-remedy ahead of time. What's more (3) if your opponent commits to his defense too early, you can change your line of attack fairly quickly and get him where he's not defending.

Moreover, making your attack committed and visible is it's own defense. You stop yourself from leading before your dagger covers you, which is the worst mistake you can make in a dagger duel, and often ends with you walking into the point of your opponent's dagger.

Chris demonstrated this for us during one of the bouts, and I believe him. I also tried this in one of my bouts against Robin, which lead to a very nice feint.


The one complaint I have about myself for dagger is that I've not been able to get into my head and muscles the proper counter-remedy measures. Because it's a fraction of a second (during the interrupted attack) of a fraction of a second (during the defense and remedy) I just kind of go into a spastic spasm when I'm supposed to execute a counter-remedy.

The only way to remedy this is more training I suspect. Anyone else encounter this?

Bandwagon Jumping

My biggest objection to Sarah Palin isn't the fact that she's a neo-con, or that she wishes to impose her views on Creationism or reproduction rights by way of political machinery (HT: Tym). No, it's the fact that her appointment represents the worst political practice of all: bandwagon jumping.

If you are in political office, or have political aspirations, please take note. Don't insult the intelligence of your consituency. Someone will pick up on your bullshit. Have some conviction please.

Thank god the US has Jon Stewart. (HT: Zach)

Monday, September 01, 2008

Employment Day 1

I know it's a bit of a shock to go from "Unemployment Day 1" to "Employment Day 1" but there you have it.

I generally don't write too much about my work, seeing as most of the stuff I work on tends to be confidential (professional hazard) and even the stuff I -can- write about, the context is confidential. Hence, I'll stick to writing about incredibly shallow things about my new job.

  1. My new workplace is incredibly close to my home. It's about as close as one can get from my home, given the way Singapore's residential areas are zoned. That means I can get up at 8 in the morning, change, drive, park, walk to my office and still be in time for work at 9 with time to spare.
  2. I have an office. This is the second time in my career I've had an office, the first was when I was a lowly peon-associate at my old law firm. This office is set up much more nicely than my old office too, with nice shelving and a big ass table I can actually hold meetings with.
  3. My new office laptop is literally twice the size of my old office laptop with 3 times as much RAM. The only problem with it is that it has an European keyboard. No biggie, since I had some practice in Finland typing with it, but it gets annoying at times.
  4. My new office is tiny. There's about 10 people located in Singapore, as compared to the hundreds at my old workplace. I enjoy the solitude, to some extent, but I do miss the hustle and bustle of the old workplace.
That's all for now.

And for those who are on my Facebook, yes I did actually get attacked by a one-armed, one-legged, one-eyed monkey in Tioman.