What a year it has been. In a flash, 2015 has come and gone. As a blog BigFatPurse is an oldie now at eight years and counting. As an incorporated company, BigFatPurse has just made it past two. Like a toddler, we are just starting to get stable on our feet. We are growing and learning fast.
In this high mortality business environment, we have not only managed to escape start up graveyard, but have turned a second year of respectable profits. That in itself is reason to cheer.
As we wind down and take stock for the year, I would like to share three lessons I have learnt this year. I play three different roles in BigFatPurse, and there is an important takeaway for me in each aspect. Here are my thoughts.
As a Blogger
[Free Ebook] How should you invest your first $20,000?
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
BigFatPurse started as a blog in 2007. When Alvin first approached me to write for BigFatPurse in 2012, I agreed readily. Not because I had a background in finance or investment or journalism. I agreed only because I enjoyed writing, and there is no better way to learn than to share.
Writing is a solitary activity. For the introvert in me, writing is about finding peace and joy.
I also love new ideas. I love sharing them with whoever cares to read. I could be sitting in Starbucks, or in the library or on an aeroplane putting my ideas together into an article. It is a fruitful and satisfying process.
I am thankful that despite BigFatPurse the company having to fulfill its commercial intent (we have rent to pay and staff to feed), BigFatPurse the blog remained entirely free-spirited. I choose what I want to write and was never compelled to dwell on something I had no interest in, just to bring in the traffic.
And despite the business taking up more and more of our time, Alvin and myself still try to write at least an article a week each. It can be stressful to meet deadlines at times. On the other hand, writing is also a way to de-stress and ‘escape’ from the grind of day to day business.
When I first started I had no idea that I will still be writing three years down. In preparing for this one, I spent some happy minutes relishing my first article.
My son has just turned three and he is fascinated with this cartoon series called Peppa Pig. The characters include Peppa, her little brother George, Mummy Pig and Daddy Pig. My son does not get much ipad time, definitely not at meal times or in the car. But when he does, he goes for Peppa Pig without any hesitation.
For a long time I could not understand the fascination. The animation is not fantastic. The soundtrack is so so. The storyline speaks about every day events. The characters are well, pretty regular pigs.
And then one day it just struck me. It is not about the graphics or the soundtrack or even the depth of the characters. These are adult stuff. They matter to me. Only me. Not him.
Peppa Pig is about things he as a three year kid could relate to. It stirs his emotions. The things the characters do, they speak to him. They make him sad and they make him happy.
Learning from a Cartoon Pig
As a blogger, I have a lot to learn from Peppa Pig. When I first started, I wrote only about the things I wanted to write. I wrote it in the manner in which I wanted to write. I disregarded all concerns about whether people wanted to read. It was my article. Read it or get out of the way. It was my way or the highway.
Peppa Pig has taught me that writing is not about me. Instead, the focus should be on the audience. It is about reaching out and relating to people. Like how Peppa Pig relates to three year olds, BigFatPurse is about relating to Singaporeans and their money concerns.
Do not get me wrong. It is not about writing frivolous articles with clickbait titles. I believe readers are discerning and can tell between quality and mediocre content. I believe readers can detect sincerity and effort.
I also believe all bloggers need to project their own voice. Readers must know what we stand for. Only when readers do will they follow and only when they follow, are we able to claim some small measure of success.
I have a long way to go, and I will be working hard on this in 2016.
As an Investor
In many of the classes we conduct, Alvin would always share about the iceberg theory.
An iceberg is this mass of floating ice formed over hundreds of years. To the human eye, they are humongous structures. The largest iceberg in the world is the B-15 calved out from the Ross Ice Shelf in Antarctica. It has a land area of 11000 square kilometers, almost 15 times the size of Singapore.
But as the cliche goes, that is only the tip of the iceberg. In actual fact, 90% of the volume of an iceberg is below the surface. There is an entire world of ice deep below, away from the prying eyes.
We would always tell people that an investing strategy is but the tip of the iceberg. At most, a good strategy will bring you ten percent closer to being a good investor. It is the 90% below that determines whether or not one finds success. And for years we have been telling people that this 90% is but the ‘psychology’ of an investor.
Within myself, I have always struggled with that definition. I have a degree in psychology but none of the ‘psychology’ I have learnt in school then could ever make me a better investor.
For the longest time I had wanted to find a better word for whats below the iceberg. I needed a better way to frame the issue. It all came together for me with the following book.
Book of the Year for me
If I could choose to read one book in 2015, it would be Misbehaving by Richard Thaler. Thaler is an economist and an academic at the University of Chicago Booth School of Business. For his initial exploration in this field, Thaler is also recognised as the Father of Behavioural Finance.
Since the days of yore, there is only one school of finance. It is the ‘finance’ that as retail investors we are all so familar with. To be a competent investor, we need to know finance. We need to be well versed in stock valuation, economic projections, interest rates, bonds, commodities, and also technical analysis. These are knowledge grounded in numbers.
Traditional finance makes a very critical assumption – that human beings are rational creatures who will act accordingly to maximise profits and minimise potential losses.
Yet, in experiments after experiments, scenarios after scenarios, behavioural scientists have shown that human beings DO NOT act rationally. We are driven by emotions, our thinking is clouded by heuristics and assumptions. We make all the ‘mistakes’ a computer will never make. That is what makes us human.
In academia, behavioural economists are threatening to turn traditional finance upside down with their new theories. The arguments have been raging and will continue to rage on.
For me, it is now crystal clear. Traditional finance represents the tip of the iceberg. Behavioural Finance represents what is underneath the surface. The tip is about the strategy, the base is about the investor.
As an investor, the strategy we choose is represented by the iceberg that is above the water and visible. We can choose to day trade, or buy/sell options, invest in properties, or gold, or mutual funds. All of them can lead to the possibility of profits.
But before any investor surge forward to pick up a new investing strategy, they should start by learning about themselves first. It is the base that anchors the iceberg. It is what is underneath that keeps it afloat.
If we are risk averse, we will never be comfortable with a highly volatile trading strategy. If we are busy, we will never have time to monitor the markets and react acccording to the demands of a strategy that requires our constant input. The best strategy is useless if it is not applicable. Forcing an inappropriate strategy on an investor will only lead to ruin.
Of course, behavioural finance is much more than strategy-investor interaction. Reading about behavioural finance is often about learning how wrong a person can be. To me, that is satisfying. I know that in order to be right, I have to first understand why and how I can be so wrong.
As an investor, I am always looking out to understand myself better. I hope to write more about behavioural finance and embark on greater self discovery in the coming year.
As an Entrepreneur and Businessperson
The notion of entrepreneurship is a very romantic one. It entails the ability to build something up from scratch. It involves choice and freedom, allowing someone to make decisions. It gives someone the idea that they can change the world with their invention and product. And upon success, the financial rewards can also be extremely enticing.
Ask any married couple (especially one with kids) and they will tell you that romance is hard work. It requires effort and it does not come easy.
Responding to a question at the DBS Asian Insights Conference in July this year, Banyan Tree Chairman Ho Kwon Ping cautioned against romanticizing the notion of entrepreuneurship. There are constraints for Singapore and for local entrepreneurs, and these constraints include size and the lack of access to global markets.
It would be foolishly romantic to think that we can breed entrepreneurs like Steve Jobs who will then be able to radically change the course of our economy, he said.
I am all with him when he likens entrepreneurship to foolish romance, albeit in a different sense altogether. Like many romantic liaisons, most entrepreneur do not know what they are getting themselves into when they first start out. Myself included.
Few people see the hard work and late nights behind the facade. Few will understand the frustrations and the rejections. More importantly, few will ever comprehend the feeling of the uncertainty that comes so naturally with entrepreneurship territory.
Successful entrepreuneurship is about having the courage to sail out into the ocean far enough to lose sight of the shore. Because only when we have actually done that, will we be able to discover new lands.
And as with all forms of exploration, many have to fail in order for a few to succeed.
Thank You All
I remembered during the early stages of starting up, I was frustrated by the lack of pace. I wished for things to move faster. I believe we are not pushing hard enough and that we can do more. I was getting impatient and I spoke to Alvin about it, half expecting to be brushed off.
What he said then had a great impact on me. He reminded me of this African proverb
If you want to go fast, go alone. If you want to go far, go together.
Throughout the year, I am constantly amazed by the things we have pulled off together, things we could never have put together as individuals. Each time it happens, I am thankful that we have the range to make up the speed.
So for my last article of 2015, I would like to express my appreciation to the entire team here at BFP. We may not always agree, but we are in this together and we will forge forward together.
Thank you for the hard work, thank you for the understanding, thank you for watching my back. Finally, thank you for being great friends!
image: mariashriver, wired.com