2018 Annual Letter to the supporters of Dr Wealth

It has always been a blessing to be writing an annual letter and to continue the tradition – it means that I’m still alive and kicking (ass). These were past years’ letters if you have missed it: 2015, 2016 and 2017.

I have also noticed that the style of the letter changes every year. To maintain the consistency of change, this year’s letter will be quite different too.

I thought that a letter is supposed to talk about deeper things. And deeper things usually mean explaining the WHY – why we do certain things. So that’s the style how this letter will go for this year.

Why we write what we write

You might have noticed that our recent articles have been more controversial. It is deliberate but not for the sake of being controversial. We wanted to tackle the deepest seated beliefs of people and in the event we will definitely touch some nerves and get people riled up about what we have written.

I will do a quick rundown of a handful of such articles.

The first was targeted at discussing the differing mindsets between monks and warriors. Financial bloggers tend to adopt the monk mindset – they are wealthy because they want very little things in life. The entrepreneurs on the other hand desire greater empires. And the rest of the people are somewhere in the middle. It is not about who is right or wrong but to allow readers to see both ends of the spectrum so as to know the path to choose and it was a conscious decision. Successes are often found in the extreme ends.

The article got some financial bloggers’ responses and these two are well written: 15HWW and Minimalist in the City.

The second one which I think created some commotion was the article that targeted the Singapore parents, whereby I challenged the notion of tuition and why it isn’t a default option for every kid. Indeed Singapore values education qualifications but not all kids can strive in an academic environment and there could be better uses of the tuition money.

Below are the top comments we gathered from Facebook and we believe they didn’t even read the article and merely responded to Lee Kuan Yew’s quote that accompanied the link of the article (“When the graduate man does not want to marry a graduate woman, I tell him, he’s a fool, stupid. You marry a non-graduate, you’re going to have problems, some children bright, some not bright. You’ll be tearing your hair out.” — Lee Kuan Yew).

Basically, they were defending the non-graduates. My article didn’t slam the non-graduates if they have read it. On the contrary – I encouraged the non-academically inclined ones to build other skills and don’t fight the scholars in a game they cannot win. They can succeed better in other avenues. Everyone has their weaknesses and strengths so it pays to focus on the latter.

The third one which was worth talking about was none other than the topic of CPF. This started as a poll in the BIGScribe Facebook Group and I gathered the viewpoints into the article. Of course again, there were strong opposing views on this matter and it was difficult for the different groups to see eye-to-eye with each other.

The fourth one is an article written by one of our staff, Irving, challenging the Singaporeans’ expectation of a HDB flat. Many of our seniors have benefited in the property boom in Singapore, thanks to the economic growth we had in the past 50 years. HDB wealth were made and this has led to an unrealistic extrapolation of historical success into the future. We are a young nation and in our lifetime we will begin to see more HDB flats hitting their 99-year mark and the worst consequence is that the flats become worthless. He was calling for more prudence than exuberance.

The last one is a recent article. I challenged the way that financial advisory goes about their business benefits the rich more than the average. Of course this didn’t go well with the financial advisors while it rallied support from those who were anti-advisory.

But I’m not anti-advisory. I think consumers should have the right expectations about what a financial advisor can help you with. You cannot be a poor bloke and expect the advisor to make you rich. You are responsible for your own wealth. When you are rich, the advisors can serve you better and keep you rich.

These are touchy issues but the more we should bring them out for discussions. We standby what we have written and we welcome differing viewpoints. We expect to agree to disagree, because such topics will never have an unanimous conclusion.

But like the Wittgenstein’s ruler, some comments told us more about the commenter than the comment itself, especially when it becomes a personal attack. It basically tells us that we are touching his nerves and he has to retaliate to defend his belief.

Some of you might say that we did it for the purpose of getting web traffic and in turn it helps our business. It is true as we are a business entity at the end of the day. But this is just part of it. We also want to provide value to readers and getting an article read and discussed is a sign that we are doing it correctly. There’s a reason why the articles are posted online rather than in a personal diary. We have done stock case studies as well as videos but they didn’t generate as much interests as the touchy topics. It doesn’t mean we will stop doing them, it just means we do less of them.

See, we respond to your feedback. It isn’t what you say but we observe what you vote for with your actions.

Why we run the courses we run

We are in a niche business. Most people don’t care about their finances. Out of those who care, most people would rely on finance professionals to serve them. We only serve those who are interested enough to DIY their investments. A small pool basically. So if we only wanted to make a lot of money we could have picked a more lucrative business.

Hence, it made me wonder why some people had the impression it was easy money. No business is easy and only people who are crazy enough will do it because they think that their odds of success are higher than what history suggests. If a business doesn’t provide any value to the society it will eventually be obsolete. So I think there’s no point judging what is a good or bad business, let the market decides.

The investment education industry (if there’s one) is a tainted one with many people relating it to scammy get-rich-quick schemes with hard-selling techniques. There’s the first impression that we always have to fight with and how does it feel when people cast you in the same light and mistaken your good intention? I used to be concerned about what people think of me but over time I understood that I couldn’t convince everyone and I should just let the cynics be.

The common critique about investment courses is that a lot of things can be found on the internet so why pay a good sum of money to attend a course? I can answer this in two parts.

First, information is pretty useless if you do not use it. Internet has made information available to unprecedented number of people and it is a blessing. But the rich-poor gap continues to widen because information itself doesn’t create results. Also, people are still sending their kids to schools despite having all the information in the internet. In fact, they send them for extra tuition classes which information can also be found in the internet. So the argument doesn’t hold water because information is not education. Learning can be accelerated when it is structured and having someone to explain abstract concepts to the student.

Second, it boils down to what we value. Some people would save money by avoiding cabs but would splurge on a Louis Vuitton bag. Some people wouldn’t bat an eye spending on travels while others would rather stay at home playing with the latest IT gadgets they just purchased. There are millions of things we can spend on and what and how much we spend on is a reflection of what we value. People who usually dismiss an investment course is because they don’t value it. The reasons could be that they are already seasoned investors so the difference is not worth paying for in their context. Or it could be a case where they have a lot of time and patience to figure things out on their own and hence don’t see the value of paying for a course to save time on learning. Those who are willing to pay for investment courses are those who valued it more than the others. They may be beginners with no financial knowledge or background. They may have tried investing on their own but didn’t work out for them. Or they need a strategy as they are totally clueless how to start. A myriad reasons. But we are in no position to tell people what they should value in their lives. So attend a course only if you value it enough.

Each year we review our suite of courses and we have added and removed courses along the way. Again, we respond to your feedback as a customer. If we insist that we are right all the time, we will be out of business very soon.

Some of you might have noticed that we have introduced two new courses in recent months.

Firstly, the Early Retirement Masterclass (ERM) taught by Christopher Ng was launched in Sep 2018. I have known Chris for years and I first knew him as a financial blogger. He is the real deal because he is one of those rare Singaporeans who could retire early and live solely on his dividends from stocks. We felt that he has a lot to offer to fellow Singaporeans to help them achieve their early retirement too. It took a lot of encouragement from our side to keep him going to conduct this course. So do learn from him as much as you can!

The second course is the 8-Figure Trading Blueprint (8FTB) conducted by Robin Ho. He is one of the most prominent legendary traders in Singapore. Again, he is the real deal because I have personally witnessed his trading records. He is no stranger in the training scene as he has held courses for both finance professionals and retail traders in the past decade and more.

This is the very first trading course that is launched under the Dr Wealth umbrella and some investors who don’t believe in short-term trading might question our intention. My stand hasn’t change. I believe that it is easier to make money from long-term investing than with short-term trading. That said, it isn’t impossible. And I cannot force everyone to be a long-term investor because not everyone wants to be that in the first place. This is where we get someone who has excelled in short-term trading to teach you how he does it.

If you have not realised by now, we choose real practitioners to teach. Paper qualifications are not a major consideration. We want people who have risk their money and have succeeded building their wealth to share their experience. We don’t want theorists. We also demand that our trainers must succeed as an individual investor or trader as working in the finance industry is a different story and may not be relevant to the individual who is risking his own money with less access to information and resources.

I even tell others often enough that we choose credible trainers and make them sell the courses, while our competitors probably got salesmen to teach. You cannot blame me for having this impression because I realised our trainers cannot sell well while our competitors often do not have this problem.

Why we invest the way we invested in 2018

The stock market did very well in 2017 and many thought that it would continue in 2018. However, the market dished out a nasty surprise. Anyway, the stock market throws surprises every year. Hindsight is always more accurate than foresight.

Our portfolio took a beating too and the only saving grace is that we are still positive and beating the relevant indices. We are up 33% over the past 5 years excluding the dividends.

We have more people believing that this is the start of a bear market and some have even taken short positions. It doesn’t help when you hear a lot of different opinions and the social media just makes things worse. You can have respected but opposing voices of being a strong bull or a bear believer, and each posting numerous examples to prove his point. So confusing and frustrating for investors. Who to believe?

We have only made one decision for our stock investments, which is to stick to the investment processes we have developed and taught to our students. The Factor Based Investing framework is fundamental analysis by nature, using investment metrics that have been proven to work by the Nobel Laurette and PhDs in the world. Maybe because of my background in engineering and science, I need a lot of proofs in order for me to believe in it enough to use it. Factor-based investing is perfect for me as it is essentially evidence-based investing, I could review the papers and see the results for myself. And in practice it has served us well for the past 5 years. Hence, there’s no reason to ditch it.

The downside is that you have to stick to the Factor strategies through thick and thin, even during market crashes. This is something that I realised many cannot accept. It is downright stupid to hold on to your stocks and watch your net worth extinguished helplessly. It is intuitive to sell them to prevent further losses. But the obvious is usually not the wisest thing to do in investing. By reacting to the prices or your own fear, there’s a tendency you would sell low and miss out on the recovery because it becomes harder to buy back at higher prices for the same shares you have sold low. This is why many investors get stuck in the ‘buy high and sell low cycle’.

There are some people who believe they can sell before a crash. It is easier said than done. We have so many differing views about the stock market direction right now. So should you sell now? Is this the real crash? It isn’t clear at all. And there’s a price of getting the prediction wrong. Assuming you sold the shares and this isn’t the real crash and the market goes up by another 50%, you would have lost the opportunity to grow your wealth. What if you didn’t sell and this is the real crash?

We do not profess we know how to time the market and we accepted it. We see many legendary investors like Warren Buffett, are doing fine even till today when they did not sell their stocks in previous bear markets. So we placed our decision making on the processes we have developed, to tell us whether to buy, hold or sell, and not letting our fear or greed to decide on our fate in the markets.

Saying is always easy. Even holding stocks can be a challenge for many people. Maybe they think they are long-term investors but once they have experienced some fear of loss they might just sell and become short-term investors. The best analogy is like riding a rodeo and the wild ride would throw most people off it. It takes a lot of strength to actually hold onto your stocks while the market tries to fling you off with great volatility. The problem compounds when they think they are riding a docile horse (smooth-sailing rising stock market) but got a shock when they discovered it was a rodeo (volatile stock market).

I’m not trying to convince you to do the same. I’m just sharing my beliefs. You will have your own beliefs. We don’t trade the market, we trade our beliefs of the market. We can agree to disagree and there’s no point arguing.

What to expect in 2019?

We will still write articles. We hope you will read them and engage in the discussions.

We will still run investment & trading courses. We hope that you will participate in them and be committed in building your wealth.

We will still invest. We hope that we will continue to do better than the indices.

For the past graduates, we will be doing something special for you so look out for the announcement soon.

For every DIY-stock investor out there, we will also be launching a tool in the second half of 2019. It is free and I hope you would find it useful.

Thank you for reading till here and for being a supporter of our work. Our true measure of success is that you will miss us if we ever get captured by John Galt one day.