Month: September 2015

The Need for Sleep Reserves

See page for author [CC BY 4.0 (], via Wikimedia Commons

All Time Sleeping Average: (Target) 7h30m / day (Actual) 7h25m / day (105 day average)

3 Day Sleeping Average: (Target) 7+h / day (Actual) 5h50m / day (7h, 6h69m, 3h28m)

I keep talking about sleep debt, but I never touched upon the topic of sleep reserves.

Using personal finances as an analogy, not only does one have to eliminate / minimize debt, one also has to have emergency funds on hand to deal with emergencies.

One “emergency” was going to the Muse concert yesterday at the Asia World Expo, which made me go to sleep at 2:46 am and wake up at 6:15 am, before having to take a nap until 7:00 am since I just didn’t have the energy to wake up. And all of this made me groggy and also feel sick.

Which is also another important reason why sleep reserves is important. Once short term sleep debt accumulates too much, I easily get sick. And once I get sick, it requires much more sleep for me to recover than just repaying the sleep debt until my average sleep per day is 7 hours 30 minutes (which is my target).

And that doesn’t make any economical sense whatsoever since every hour of sleep missed could rack in much more hours of sub-optimal mood and wellness.

So what’s the game plan?

On the long run, I’d like to boost my long term sleep average to 8 hours since that ensures all sleep debt in short term or long term is thoroughly cleared.

In the short run, I will measure my 3 day average sleep time and make sure the 3 day average never drops below 7 hours, since “Athletes build up sleep reserves or defecits over 1-3 days” and “Medical evidence suggests that for optimum health and function, the average adult should get seven to nine hours of sleep daily“.


Start Small Is Bearing Fruits

By PhreddieH3 at English Wikipedia (Transferred from en.wikipedia to Commons.) [Public domain], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h29m / day (104 day average)

When I decided to abandon perfection for action and start small for investing, exercising, writing, sleeping, and volunteering 2 months ago, I would not have imagined the difference it has made to me.

Constantly writing one blog post per 1-2 days has made me exceptionally aware of myself in terms of what I want and how I’m doing.

It has given me much more conviction to cut losses on investment mistakes and hold onto correct investments that are going through volatility, with the reverse of both being the biggest problems I had in investing.

It has made exercising absolutely not an excuse when I only needed to do the calisthenics once / week, and the consistency has made me much stronger and given me much more energy. I’m now contemplating increasing the exercise frequency due to always wanting to exercise my energy, which was something I never would’ve contemplated before.

It has allowed me to repay all my sleep debt and be aware of how to better monitor and regulate my sleep, allowing me to carefully avoid burning out.

It has also allowed to persist with volunteering with Crossroads for 2 months every Saturday and have the confidence knowing that Crossroads is indeed not a great fit for me based on a bigger sample of volunteer experiences than making a split second decision based on just one volunteer experience.

I’ve really enjoyed this experience of reading, learning, thinking and writing during my spare time, and can’t wait to continue to reap the benefits of consistency 🙂

How to Deploy Lump Sums of Money

By Qurren [GFDL ( or CC-BY-SA-3.0 (], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h29m / day (103 day average)

Holdings lot of cash to hedge against losses and exploit great bargains has always fascinated me, which is why how much cash to hold and how to deploy lump sums has been something I’ve written about.

But I’m starting to question my previous article called “Aggressive When Opportunities Are Scarce“, where the premise was that when number of stock purchases I can make is greater than opportunities, I aggressively snap up the stocks and vice versa.

The premise is still valid, and I have executed it with my own personal portfolio, but I think it’s too aggressive.

Yes, the reason why I abandoned Shiller P/E as an indicator on how much cash to hold is because if the rate of return is above an extremely conservative discount rate, the huge margin of safety should render market timing useless.

But, if you really try hard enough, you will find enough opportunities to soak up all your funds, which is what happened when I found quite a lot of profitable Hong Kong net net stocks using

So essentially, I’m currently fully invested with the money set aside for investments, and it’s making me slightly uncomfortable even though I know investing should be done on a good enough basis.

That’s until I did further research and re-read an article I previously bookmarked called “Do Not Dollar-Cost Average for More than Twelve Months“. The premise is that you should dollar-cost average within 6-12 months for any 5+% cash to stock transition, and at most 18 months for any 30+% cash to stock transition.

And I think combining this dollar-cost average rule with my rule for being aggressive when number of stock purchases I can make is greater than opportunities would help retain the ability to snap up bargains before they dry up while not being fully invested too early.

On hindsight, I should’ve spread out all my investments over 18 months since I started off with so much cash, before I focus more on a 6-12 months dollar-cost average plan if my cash is below 30% of my portfolio.

So what I will do now is to keep holding my current investments since I did buy them at significant discounts and the investment thesis is still valid, but be less aggressive in deploying capital as I accumulate cash from my job and my dividends.


Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)

The Snowball Blessing Manifesto

By Kamyar Adl (Flickr) [CC BY 2.0 (], via Wikimedia Commons


  • We believe those who are in a position to compound wealth are the fortunate minority in a world of poverty, hunger, disease.
  • We believe as a member of the fortunate minority, it is our obligation to use our fortunate position to give back to the world and make it a better place.
  • We believe one of the best ways to making the world a better place is through the power of compounding, which helps snowball our blessings to the world. This can be in the form of investing now to compound future donations, or donating now to compound future good.
  • We believe that for us only, the best way to maximize the power of compounding good is our love of fundamental analysis and rationality, by quantitatively identifying what’s important, and quantitatively making and measuring our progress in terms of investing and donating.


  • We will constantly read, think and learn to compound knowledge that enables us to see the world better and generate better insights that can make the world a better place.
  • We will constantly review our investment philosophies, strategies and performances to identify areas to better improve our investment returns.
  • We will constantly review what we think is the most important aspects in philanthropy, how we measure success and how we can achieve the ideal success.
  • If not directly involved in evaluating charities to donate to, we will constantly review the different organizations that evaluate charities to determine whether to follow their donation recommendation weightings fully, semi-full or not at all.
  • We will constantly review the optimal proportion of donation to income/wealth, and the optimal investment strategy that best helps meet the target charities’ funding needs.

When Do You Pay for a Paid Screener

By Revised by Reworked (Own work) [Public domain], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h29m / day (100 day average)

I didn’t realize there were so many net net stocks in Hong Kong (literally my own backyard) until I stumbled upon an article by Mark Lin on Seeking Alpha called “Seeking Hong Kong-Listed Net Cash Stocks As Deep Value Investment Ideas“.

And compared to the literally shit quality net net stocks available in USA (as of Sep 23rd using Graham Investor’s net net screener), the 55 Hong Kong net nets I found from yielded at least 8 stocks that increased book value over 5 years, paid a dividend in past 5 years, and had profits in past 5 years. I even found a well known local company called Tse Shui Luen Jewellery at 52.09% discount to its NCAV.

To me that was surprising. To absolutely be ignorant in the trove of treasure that I can easily access with my Hong Kong brokerage account is just astounding to me since I’ve spent so much time looking and buying US stocks.

But the question dawned upon me, when does using a paid screener make sense? After all, I could only identify these Hong Kong net nets through a paid screener (albeit with a trial 30 day account), which couldn’t have been done directly using free stock screeners I’ve come across to.

I think there’s two aspects that need to make sense before you go ahead and subscribe to a paid screener:

  1. Does the returns you make from the lucrative investments discovered by the paid screener more than compensate for the monthly subscription fee?
  2. What is your hourly salary if you assume every hour in a month is a working hour?

So for “1. Does the returns you make from the investments discovered by the paid screener more than compensate for the monthly subscription fee?”, using as an example, let’s do a mathematical exercise to illustrate.

If the monthly subscription fee of the basic plan is 24.95 USD / month, and we assume that what Warren Buffett observed was right about returns from net nets (“returns within a 2-year timeframe 70 to 80% of the time“), and we further assume we were using a 30 stock portfolio (Benjamin Graham recommended 10-20 stocks) with around $1200 USD / stock at $18 stock commission / trade and that every stock was bought at 2/3 discount to NCAV (as recommended by Benjamin Graham as well) the returns from a 30 stock portfolio would still be a respectable 13.32% after taking the monthly subscription fee and stock commissions into consideration [1].

So in this case, if you can’t find any investment that can give you 13.32% return other than a 30 stock portfolio filled with net nets fueled by a paid screener, it probably makes sense to pay for a paid screener.

The only risk would be if there wasn’t enough net net stocks available to fill the 30 stock portfolio, but even then you’d only need 0.83% post-stock commission annual returns to break-even the paid screener’s monthly subscription fee.

For “2. What is your hourly salary if you assume every hour in a month is a working hour?”, it is important to take your waking hour’s worth into consideration because you should always outsource tasks that cost less than your hourly wage to maximize the value of every minute. So taking the 24.95 USD / month subscription fee of’s basic plan, find out how much time it takes to filter stocks manually to generate your list of lucrative investments multiplied by your hourly salary and compare it to the monthly subscription fee.

Taking net net stocks as an example again, if your hourly salary is 3 USD / hour, the 24.95 USD / month subscription fee implies that it is worth 8.32 hours of your time. The question than becomes whether or not you can generate your list of net net stocks within 8.32 hours.

The other question that needs to be answered is how many times you’ll generate your list of net net stocks in a month? If you generate it twice a month, can you generate your list of net net stocks within 4.16 hours? If you generate it four times a month, can you generate your list of net net stocks within 2.08 hours?


[1] Assuming 80% of stocks reach full value in 2 years and the other 20% of stocks remain at same value as purchase price, then the returns is calculated as ($36,000 * (((1.5 ^ (1/2)) * 0.8) + (1 * 0.2))) – (24.95 * 24) – (18 * 60).

1.5 is the 50% return one would get if 2/3 discount to NCAV is sold when the stock price becomes = NCAV.

^ (1/2) is converting the return over 2 years into CAGR (what is the equivalent compounded return the portfolio makes / year).

0.8 is the 80% of stocks reaching full value.

1 * 0.2 is the other 20% of stocks which remain at same value (which is represented by multiplying by 1).

Multiplying both (1.5 ^ (1/2)) * 0.8) and (1 * 0.2) gives you a weighted average of return one would get.

24.95 * 24 is basically the’s monthly subscription fee of the basic plan over 24 months.

18 * 60 is the $18 USD stock commission done twice for the 30 stocks in the portfolio (once for buying, once for selling).


Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)

Tax Efficient Geographically Diverse Investing Strategy

By Arvalarva (Own work) [CC0], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h29m / day (97 day average)

I mentioned that I prefer Divided Wide Moats versus Non-Dividend Wide Moats even though a lot of the returns is consumed by the 30% withholding tax I have to pay as a non-US citizen.

I also mentioned that I like to be geographically diverse with my investments.

And I realized both preferences don’t need to be mutually exclusive.

What if for my dividend growth stocks I only invested in Non-US Dividend Wide Moats (specifically HK and UK, which has 0% dividend withholding tax) and for US stocks I invested in Non-Dividend Wide Moats?

So something like (hypothetical portfolio):

[50% Dividend Growth]

British American Tobacco – UK (12.5% weighting)

MTR Corporation – HK (12.5% weighting)

Hong Kong Exchanges and Clearings – HK (12.5% weighting)

Cheung Kong Infrastructure – HK (12.5% weighting)

[50% Non-Dividend]

Berkshire Hathaway – US (12.5% weighting)

Markel – US (12.5% weighting)

White Mountains – US (12.5% weighting)

Alleghany – US (12.5% weighting)


It’s an intriguing concept.

But of course, in terms of execution I won’t exclude US Dividend Growth Wide Moats. If the post-tax potential returns is higher than my conservative discount rate, it should still be captured.

It’s just that whenever stocks that fit the aforementioned criteria (Non-US Dividend Growth Wide Moat and US Non-Dividend Wide Moat) are available, I’d be willing to bend my max. 6.25% weighting rule to overweight the stocks. I’m also open to the idea to sell existing stocks which require hefty dividend withholding tax to make such overweight purchases if cash runs out.


Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)

Considering Black Swan Events For Decision Making (Revisited)

Ödön Heller [Public domain], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h30m / day (96 day average)

I made a terrible mistake in thinking through the problem of black swan events in decision making (original article).

Using insurance as an example, the decision of whether to buy critical disease illness DOES NOT boil down to whether I can afford the expected utility value of cancer treatment.

Instead it boils down to if I can afford the full cost of a black swan event (critical disease in this case) when it does visit me.

If I can’t without insurance, then I must ensure I can with insurance, because having enough money or insurance to cover only the expected utility value won’t protect you when a black swan event does happen, because in the face of a black swan event, you can either afford it or not. There’s no middle way.

Which is why the quote “Only invest what you can afford to lose” holds a lot of wisdom. Even if the probability of having all your wealth getting wiped out in investing is low (eg. investing in only wide moat stocks at extremely cheap valuations), the probability is still there, and if you’re lucky/unlucky enough to have the low probability black swan event happen to you, you need to make sure you weren’t all in with your investments.

And another thing I want to point out that was a mistake in the previous “Considering Black Swan Events For Decision Making” article was the payout ratio of the critical disease insurance being sold by my friend. I won’t disclose the insurance company since I have no benefits in promoting them, but at around $300 HKD / month I can ensure that once a critical disease like cancer hits me with a hefty 40,000 USD to 138,000 USD, I am fully covered.

Also another thing that this insurance buys me is being comforted by the fact that my mum has at least a decent amount of money to fall back if I die before she does. If I don’t die, at least the financial burden of the critical disease won’t affect my mother, which is another great thing about this deal.


Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)

Short Term / Long Term Sleep Debt Cycle

By Walsh, J., et al. [Public domain], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h29m / day (96 day average)

I think setting out to make sure on average I was having at least 7 hours and 30 minutes of sleep was a good health decision.

But using an average without any measure of volatility was a big mistake, because even though on the long run getting “enough sleep” is a great health decision, accumulating sharp amounts of sleep debt in the short term can still make me sick.

It’s similar to the relationship of Current Ratio and Debt to Equity for companies. Low Current Ratio could kill a company in the short term due to not being able to cover expenses when incoming cash flows are temporarily down, and High Debt to Equity could kill a company in the long term due to dry up of cash flow caused by most of it being used to repay debt principal and interest.

And the importance of sleep cannot be underestimated. Not only does it reduce the chance of me feeling sick, based on observation there’s been a very strong correlation for me with getting enough sleep vs having a good mood. Getting enough sleep also helps me think quickly and clearly and make less decisions due to decision fatigue.

What triggered such a critical review of my sleeping habit has been how I’ve felt this week.

Below is the amount of sleep I’ve had since Sunday:

  • Sunday 13-14 Sep (Time in bed is 4 hours 12 minutes)
  • Monday 14-15 Sep (Time in bed is 8 hours 59 minutes)
  • Tuesday 15-16 Sep (Time in bed is 4 hours 1 minute)
  • Wednesday 16-17 Sep (Time in bed is 9 hours 33 minutes)
  • Thursday 17-18 Sep (Time in bed is 9 hours 13 minutes)

I started feeling very sick since Tuesday due to 2 nights of low amounts of sleep within 3 days and playing a full competitive soccer match on Tuesday night. Even with 2 nights of 9+ hour sleep and a long term average of 7 hours and 29 minutes of sleep, I still feel like shit today (Friday 18 Sep).

The feeling of shittiness also meant that I spent most of my off work hours trying to get as much sleep as possible, meaning I was cutting down on morning time for myself (meditate and exercise) which had spill on effects of making me feel even more shit.

And interestingly enough, the vicious cycle of feeling like shit due to lack of sleep always starts off with a shitty Sunday->Monday sleep. This usually happens because I usually go to sleep much later on Fridays and Saturdays, which cause my body to be still awake at very late hours on Sunday and thus very hard for me to get to sleep on Sunday nights.

This leads me to just staying up very late during Sundays until I get sleepy enough to sleep, which just makes for a shitty start to the week.

Since sleep quality on the app Sleep Cycle is highly correlated with hours of sleep, this following graph of my 96 days of sleep tracked is a great reference point for my observation:


So to help solve this short term debt cycle problem I keep having every week, there’s a few measures I will take:

  • Ensure I have a good start to the week by getting enough sleep on Sundays
  • Ensure I get enough sleep on Sundays by enforcing a stringent regular waking time (6-7 am) which helps cut down on sleeping too late during Friday and Saturday nights
  • Create a pre-sleep routine that involves cold showers (I feel sleepier when my body temperature is low)

Invest In Industries/Regions Beyond Your Job/Location

“Black swan jan09” by Taken byfir0002 | 20D + Canon 400mm f/5.6 L – Own work. Licensed under GFDL 1.2 via Wikimedia Commons –

Sleep per Day: (Target) 7h30m / day (Actual) 7h29m / day (92 day average)

Rare and improbable events do occur much more than we dare to think.

So when you invest in industries and regions close to your job and location, you’re essentially doubling down on that specific industry / region.

What this means is, if your industry / region is going through tough times, not only is your main source of income (for most of us) in danger, the investments are also going down the drain at the same time.

You might end up with nothing, which is akin to going all-in in Poker but ending up losing the bet.

But what about those who claim you should invest in things that you’re very familiar with? Surely you can only develop such circle of competence to judge whether a specific company in that industry / region is a great investment or not if you actually work / live there?

There are a few perspectives regarding this question, which is namely:

  • You might work / live there, but you may over-estimate your ability in judging whether a specific company is a great investment since it requires both business analytical skills and financial analytical skills
  • You may further over-estimate your ability in judging whether a specific company is a great investment simply due to your character (not willing to drill down into details of company or practice second level thinking)
  • And if you don’t suffer from the 2 problems mentioned above, you shouldn’t go all in. Leave enough cash reserves and investments that aren’t of your job / location so that if the investments that are of your job / location go completely bust you still have enough to start over again without drastically reducing the quality of your lifestyle.

Even the strong advocate of concentration Charlie Munger doesn’t recommend going all in, instead encouraging people to at most invest “almost all wealth invested, long term, in just three fine domestic corporations“. Notice how he said “almost all” instead of “all”, and to make at least “three” bets instead of “one” or “two”.

Never go all in, because you never know when black swan events will happen to you, even if the probability is low.


Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)

Defensive & Offensive Aspects of Moat

Photo: Cpl Barry Lloyd RLC/MOD [OGL (], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h30m / day (89 day average)

I remember disagreeing with Morningstar on whether Cheung Kong Infrastructure (HKEx: 1038) had a wide moat or not.

For Morningstar, a Wide Moat is defined as the ability to generate near-certain excess returns in the next 10 years and likely for the next 20 years. So by that definition, Cheung Kong Infrastructure definitely doesn’t possess a Wide Moat since most of its returns are capped by regulations.

But that’s the offensive aspect of Moat, which is the ability to grow returns.

To me, what’s more important is the defensive aspect of Moat, which is the ability to retain earnings after taking inflation into consideration, because being able to grow returns is betting on the future that may not materialize, and that by being careful with valuation one can use the margin of safety “to render… forecast unnecessary“.

So in a sense, there are stocks out there which Morningstar deems as Narrow Moat but which would absolutely fit my requirements for my dividend growth portfolio due to the defensive aspect of the Moat.


Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)