Thoughts on the Sweat Debt

I woke up early around 7am. After some reading, checking on my adsense earnings and serving out my food in Cafe World (a game in Facebook), it was time for breakfast.


We went out to eat again.


For me it is always the same food stall but I simply adore the food. The hustle and bustle of the market just makes the food taste so much better. I ordered a cup of $0.70 coffee from the coffee shop. The uncle gave me a knowing look. I was his regular customer afterall.


After eating breakfast, it was time for a family walk as we walked around the neighborhood and did some grocery shopping.


Back home, we spent our time reading the newspapers.


I was just reading this article on the Straits Times which talks about the 'Sweat Debt'.

A global management consultancy firm (Hay Group) actually says that workers are feeling increasingly frustrated especially if they have undergone wage cuts and stuff.


A poll showed that 29 per cent of employees felt frustrated while 35 percent feel detached. Only 16 per cent felt effective in their jobs.

I am not too sure how the survey was conducted but it seems that a total of 64 percent are either frustrated or detached from their work.


That is a huge number of people who are totally not involved in their work. If work takes up such a huge amount of our waking hours, isn't it worthless to pursue something that we do not enjoy and which we have no attachment to?


Too many people work simply because they need the money to survive. They work for money. And yet they claim they are not a slave to money. How can that possibly be??


If they are doing something they do not enjoy for the sake of money, aren't they a slave to money?


Too many people sacrifice lots of their time and effort on earned income. They have not explored the potential of passive income from online sources, businesses and stuff.


And then I looked at myself and realised what a different life I am living from the rest of the people around me! It is 12 noon and here I am writing about the events that have happened to me in the morning =)


When others are dressed in their office attires rushing off to work, I am dressed in my bermudas and slippers going for my breakfast. I sometimes give an almost apologetic look to those whom I meet in the elevator and it seems that they look at me scornfully (especially those who have seen me so many times before).



This also got me thinking deeper about pursuing my dreams and goals that I have set for myself and how I should reward myself if I achieve them.

I am still very much like others working for a living. The only difference is that I hope to be financially free by earning passive income that is greater than my monthly expenditure.


For a start, I have been trying to earn more money using online sources. My daily earnings from online sources currently amount to less than $5 a day.


If I am able to hit the $10 a day earnings in online income, I will buy myself a PlayStation 3 which I always wanted.
Once I hit the $100 a day earnings, I will buy myself a Mont Blanc Pen



Once I hit the $200 a day earnings, I will go on a short holiday trip to Europe with my family.

How to Earn $180 Passive Income Per Month

It is 1.23 AM in the morning.

And here I am punching in some numbers furiously into my calculator.

So I did some rough calculations and it seems like I will be falling short of my passive income goal for the Year 2009.

I am still short of $180 dollars per month to hit my goal of $400 per month in passive income.

Any suggestions to achieving this figure?

I figured that if I invest my money in a REIT that gives me 10% yield, I will require a capital of $21,600.

I do have free cash sitting around that amounts to $21,600 but I am wondering whether investing in REITs is really the best option to hitting my objectives for this year. My current REIT portfolio already has healthcare, residential and office REITs. Perhaps its time to add some retail or industrial REITs in?

It is a pity that I sold away my canroys too as I felt that the capital gains that I got were quite substantial. After selling my PenWest Energy Trust, the price continued to ZOOM upwards way past the price that I sold it for. Nevertheless, I did make quite a good return on inital investment.

Decisions, decisions, decisions.......

Investment Ideas for Financial Freedom

A lot of ideas have been developed and contributed to the world of finance over the years. These include scholarly articles and books about money, investment and wealth.

It is one of my goals to compile all these ideas into this site so as to further develop and integrate these ideas into my own investment strategy and journey.

The list of famous people that I would like to learn from include the following:

Scholars and Their Ideas
1. Charles Dow
2. Louis Bachelier
3. Harry Markowitz
4. William Sharpe
5. Eugene Fama
6. James Tobin
7. Alfred Cowles
8. Franco Modiliani
9. Merton Miller
10. Burton Malkiel
11. Nicholas Nassim Taleb
12. Barr Rosenberg
13. John Lintner
14. Jack Treynor
15. Fisher Black
16. Paul Samuelson
17. Robert Merton
18. John McQuown
19. James Vertin
20. Hayne Leland
21. Mark Rubinstein

Investors/Traders and Their Ideas
1. Warren Buffet
2. Jim Rogers
3. Philip Fisher
4. Alexander Elder
5. Jesse Livermore
6. Peter Lim

Businessmen and Their Ideas
1. Donald Trump
2. Richard Branson
3. Bill Gates
4. Robert Kiyosaki (Rich Dad, Poor Dad)


Help me expand this list! Any suggestions would be welcomed.

2 Months to End 2009

Oh No!!

It is just a short two more months to the end of 2009. And it seems like I have yet to hit my objective of $400 per month in passive income for this year!

How could I have fallen asleep and not keep track of my passive income earnings?

Last year, I managed to achieve my goal in a pretty short time simply by buying lots of REITs. This year however, the global financial crisis sort of through my whole REITs buying strategy off track. I got a little bit afraid of buying more REITs as most of my REITs had fallen in value.

I really need to get to work so that I do not fall behind my earnings goal. Otherwise there will be lots of catching up to do for the year of 2010.

Any suggestions please?

Read Related Articles:
1. Welcome to My Financial Freedom Journey
2. Financial Freedom Number
3. Financial Freedom Goal

The Price of Coffee

I realised that there is a vast difference in the price of a cup of coffee in various shops.

In a normal hawker centre coffee shop, a cup of coffee will cost you around $0.70
In a fast food restaurant, a cup of coffee will cost you around $2.00
In Starbucks, a cup of coffee will cost you easily $5.00

Matter of fact is that the coffee actually tastes almost the same to me. I certainly cannot tell the difference between a Starbucks coffee and one that is served in Macdonalds if you put me through a blind test.

What is amazing is that it does not mean drinking at Starbucks will make me a happier person. In fact, it is possible to drink a cheap cup of coffee and still derive the same amount of satisfaction and happiness.

It is thus possible for a person to spend a lot less and still be happy. Better to be eating bread and living a peaceful life than to have a buffet spread everyday but be unhappy.

Just my thought for the day.

The author had a cup of coffee at a fast food restaurant that cost him $2.10 today. He feels that the coffee was only average and did not particularly enjoy the coffee session anyway.

Read Related Articles:
1. Another Day at Starbucks
2. Why People Buy the Stuff They Buy

What is Dow Theory and Why It Matters to You

What Dow Theory?

Charles Dow never wrote about any Dow Theory nor presented it as a trading system.

However, Dow Theory today serves as a theory on underlying stock prices and is very much a pillar of technical analysis. The theory was derived based on editorial articles that Charles Dow had wrote and it was subsequently called the "Dow Theory" by others who referred to his work.

Dow himself never spoke about any such theory. If anything, Dow was more a scholar than a speculator.

Dow Moves to New York City

Dow was born in a small town in Conneticut in 1851. He apparently held around twenty jobs before he found his passion in journalism. After certain life events, Dow decided that carrying out journalism at the Providence Journal was too small for him. He packed and moved to New York City with an old friend, Eddie Jones.

Together with Jones and a friend named Charles Milford Bergstrasser, they decided to go into a news distributing business. They called their company Dow, Jones and Co.

Perhaps the most lasting contribution to finance was the Dow Jones Average that was the first attempt by someone to create a sort of aggregate indicator of stock market trends. The Dow Jones Average is still what most people turn to if they want to find out how the market is doing today.

6 Basic Tenets of Dow Theory?

One of the assumptions of Dow Theory is that trends in stock prices, once under way, will always tend to persists until the market itself sends out a signal that these trends are about to be reversed. The 6 basic tenets of Dow Theory are as follows:

1. The market has three movements. A main movement( measured in years), medium movement (months to a year) and short swing (hours to a month). It can be said that these 3 movements can occur simultaneously, for example: "a daily short swing in a bearish medium movement under an overall bullish main movement."

2. Market Trends Have Three Phases. The accumulation phase, public participation phase and distribution phase. The accumulation phase is when investors who are in the "know" are buying stocks against general market opinion. The stock price does not change much in the accumulation phase. The publich participation phase is when this information becomes known and there is a rapid price surge. The distribution phase is when astute investors exit their holdings.

3. The Stock Market Discounts All News. The stock market price quickly adapts to any information that becomes available.

4. Stock Market Averages Confirm Each Other. When two averages move together, it confirms that the direction is correct. If two averages diverge, it means change is likely to come.

5. Trends are confirmed by Volume. Low volume trading does not make up a trend. Only high volume indicates a trend.

6. Trends exist until definitive signals prove they have ended. There are times when there are market noises and small reversals occur against the trend. This noises should be ignored and the trend should be given the benefit of the doubt. Difficulty lies in deciding which tools to use to decide whether the trend has ended.

Analysis of Dow Theory & Why It Matters to You

Till date, there has been no conclusive evidence on the profitability of using the Dow Theory. While studies remain inconclusive, some have have argued that Dow Theory produces excess risk adjusted returns compared to a simply buy and hold strategy.
Today, many chartists or technical analysts still consider Dow Theory's definition of a trend and its insistence on the study of historical price action of stocks as one of the pillars of technical analysis.

Read Related Articles:
1. To Trade Or To Buy and Hold

Book I Am Reading

I have been reading Capital Ideas by Peter L. Bernstein the past few days.

It provides an insightful account of the origins of Wall Street and also touches on the pionering work of all the early scholars with their new theories on risk, valuation, investment returns and the actual implementation of these theories to the real world.

This book really provides in-depth insights and timeless advice and shows how the unique contributions of these various individuals have profoundly changed the investment world as we know it today.

Why people should read this book is because it provides a very academic response to what has proven to work and doesn't work in the world of stocks.

Random Walks in Stock Market Prices - A Case against Technical Analysts and Fundamental Analysts

Eugene Fama quote on Chartists:

"He must show that he can consistently use these patterns to make meaningful predictions of future prices"

Eugene Fama quote on FA:

"The analyst cannot merely protest that he thinks the securities he selects do better than randomly selected securities; he must demonstrate that this is in fact the case."

My Stand

The onus is on all chartists and fundamental analysts to prove that their system works better than a portfolio of randomly selected securities. I do not side with any camp.