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Tuesday, May 29, 2018

Rafflesians and Elitism

Every now and then, the issue of whether RI is elite/guilty of elitism gets debated in the news forum. The substance of the debate is predictably stale.

Arguments that RI is elitist usually fall along these lines:
  • RI caters to rich kids. In 2015, then RI Principal Chan Poh Meng alleged that RI is now a middle-class school. Presumably, because a majority of its students hail from landed houses or private condominiums
  • RI discriminates by taking in only the brightest of each PSLE cohort.
  • RI reinforces or encourages a view that its students are the crème de la crème.

In a letter to TODAY, writers Daniel Yap and Luke Lu had this to say:

The pressing concern for RI is not inclusivity, but representation.

It is not a direct result of RI's status as elite, but an outcome of the larger culture and environment. This was former principal Chan Poh Meng's concern when he said that RI was becoming "insular", not "truly representative of Singapore", and catered to students from the upper class of society.

As a former Rafflesian, I agree that RI is elitist. There is no sugar coating this. But then again, the same can be said about Hwa Chong, ACS, RGS and Nanyang.  It is perhaps not entirely odd that RI is constantly being singled out. Being the best of the best does come with its perks and drawbacks.

The more pertinent (and yet routinely ignored) question to ask is: so what?

You call it elitism, I call it meritocracy. It becomes a game of jargon and labels. In many online debates, the discussion rarely moves beyond superficial labeling and inevitably devolves into name-calling and ad hominem insults.

Yes, there is indeed a difference between elitism and meritocracy, which can be distilled to an issue of attitude, the superiority complex of the elitist.  One may argue that you can believe in meritocracy without condescending your peers, and I agree. I just think it is an irrelevant distinction. Society can function perfectly without tending to the egos of every snow flake.

When Daniel and Luke asked RI to be more representative, what exactly does it mean? Should RI admit students from particular socio-economic backgrounds? Should RI reserve places for students with abysmal PSLE scores? Should RI practice an ethnic or indeed a gender quota to ensure equal representation across all ethnicity, genders and, gasps, sexual orientation?  Where does it all end?

Equality of outcome is equality for none.

Competition exists in life. This is an immutable law of life that transcends all species and is not limited to humans.  Darwinian philosophy informs us that where resources are finite, competition is inevitable and survival is the prize for the fittest.

Applied to the modern day context, one must accept that competition exists in the form of "good jobs" because of the expected "financial security" they bring.  Of course, academic excellence is not the only portal to "good jobs"; this should be self-evident from the preponderance of humble-brags we saw recently where moderately successful academics/professionals "selflessly" posted their laughable PSLE scores on Facebook. But let's not confuse anecdotes with evidence. The issue is not possibility, but probability. If you graduated from an ITE, you are likely to end up in a low paying job. Not definitely. But certainly highly probable. If you graduated from SMU Law School, there is a high probability you would land a good job.

This is why the continuous Government campaign on "multiple pathways" to "success" is so damn patronizing. Unless the G is prepared to be transparent on the statistical probabilities of each "pathway", piling on ever more anecdotal examples is going to convince a grand total of no one.

Don't get me wrong. Every profession deserves respect. But it is also undeniable that some jobs require more specialist skill sets and some are more critical than others.  Imagine if Thanos snapped his gauntlet and killed off all the poets today. Life would go on as we know it, albeit in a significantly duller manner. On the other hand, if Thanos killed all the doctors and engineers, civilization would not last very long. It is eminently logical therefore that some jobs are remunerated more than others.

To that end, the pursuit of academic excellence is not for its own sake. I could not have cared less about my grades back in school if my future financial well-being did not hinge upon how many As I scored.

Which is why the PSLE-abolitionists are barking up the wrong tree. Removing examinations does not address the underlying problem that is competition and the finite-ness of "good jobs".  You abolish one sorting mechanism and there is no doubt another will take its place. It is an inescapable result because competition exists and not everyone can lay their hands on the prized jobs.

This is also my gripe with the examination abolitionists. Long on problem, short on solution. In all this time, I have yet to read a single recommendation, and I will be happy to be corrected if I am wrong, on how to determine "who gets in where" if standardized tests were not the sorting mechanism.

To me, there is logically nothing wrong with RI taking in the best of the PSLE cohort each year.  This is the essence of meritocracy; to the victors, the spoils.

Furthermore, the charge that RI caters to rich kids is, to me, more of an inane observation than a valid criticism.  In a well-functioning meritocracy, this is almost an expected result isn't it? Back to the theme of competition, life is essentially a race. Except that, instead of a 100 meter sprint, it is an endless relay, with your parents passing on the baton to you, and you to your children, and so on. If your parents gave you a head-start, good on you. If your parents gave you a handicap, you run your lungs out to catch up. The role of the State is to make sure everyone gets to take part in the race, not to ensure that every god damn person gets a trophy.

Applying the "race analogy" to RI admission, it is certainly true that richer parents are able to give their kids a head-start and increase their chances of getting a place in RI.  But should we begrudge or penalize these kids just because their parents worked harder when they were kids?

There are of course valid grounds to extend opportunity to the least fortunate among us, e.g., the children of abject poverty, and those living in abusive environments. Suitable interventions in the form of social and financial welfare should be provided such that kids from underprivileged backgrounds are not denied the opportunity to run the race. But let us be clear, these belong to the minority. Once and for all, we should kill the misguided trope of the "undeserving rich".

The median Singapore family income is around S$9,000 (Singapore Department of Statistics).  This probably translates to the typical Singaporean HDB-dwelling family with two working parents. The average kid in this family probably has his/her own bedroom, fiber internet connection, at least one personal computer and a grossly overpriced cell phone. If this kid cannot make it to RI on his/her own merit, should we still scapegoat this to elitism? Patently absurd.

And finally, in any debate about elitism, there would be those clenching their teeth and indignantly pointing out that academic and indeed financial success should not be the only measures of success. To that I say, by all means, to each their own. But if you eschew the conventional definition of "success" and the attendant financial security, then why the fuck do you care who gets into RI?

Sunday, May 20, 2018

Working weekends, Singtel and Skyrim

It is that time of the year again. Working on weekends to hit record billables for the firm, in exchange for getting extra pay.

Honestly, I had thought that this was only going to start in June. Hence, I had strapped myself down for a long, harsh June winter. But it seems like winter came early. Well, what does it matter? Nothing stands in the way between me and FI.  So rise up Dovahkiin!

I am going FUS RO DAH your ass so hard. Die Billables!

Harsh winters will always come. Hence, one should always pick stocks that can weather tough times. Just like picking a Skyrim class - always go for stealth archer, and not some lame ass one-handed sword wielder.  Stealth archers own everyone, whereas one-handed specialists die before that dragon even lands (on legendary difficulty). 

On that note, it is worthwhile pointing out that Singtel did poorly for their Q4 (ended Mar 2018) results. Net profit was down a whopping 19% y-o-y.  The management attributed that to adverse FX effects (both IDR and AUD weakened against SGD), and lower contributions from their foreign subsidiaries Telkomsel and Airtel.

Ominously, Singtel said:

"Barring unforeseen circumstances, the group expects to maintain its ordinary dividends of 17.5 Singapore cents per share for the next two financial years and thereafter, will revert to the payout of between 60 per cent and 75 per cent of underlying net profit."

To me, this is not a good sign.
Singtel admits that telco revenue is shifting from traditional voice services to data services; however its increase in data revenue does not appear to be keeping pace with the loss of traditional revenue.

While Singtel is a stalwart and we can expect its digital and ICT investments (e.g. Amobee) to eventually do well, the transition is not going to be pretty I suspect.

As an income investor, I must say I do not have sufficient confidence that Singtel can maintain its current 5% yield. So it is indeed good that Singtel pledged to maintain its dividend for the next 2 years. My average entry price in Singtel is 3.5; so i should have some window to liquidate my Singtel position before its dividend payout becomes inevitably reduced.

Be nimble in responding to changing environments. Reallocate resources when needed.

Onward to FI!

Thursday, May 10, 2018

Frasers Log Trust

Frasers Logistics and Industrial Trust (FLT), one of the crown jewels in my portfolio, announced that it raised $329 mil via a private placement. This private placement saw the issuance of 333.2 million shares at $0.987 per share (about a 5.4% discount over the VWAP as at 9 May).

The rest of the funding required for the purchase of its European assets will come from a preferential share offering to existing unit holders. Specifically, there is a 10 for 1 share offering, which would be priced between 0.942 and 0.967. Existing shareholders may subscribe for their allotment from 23 May .

I currently hold 170,000 FLT shares, and should theoretically be entitled to purchase another 17,000 shares at the discounted price. I will certainly try to get more if at all possible.

This announcement was a little bit disappointing. It would have been preferable if the private placement tranche was not nearly twice the size of the preferential share offering to existing unitholders, which leads to significant dilution. To ease the swallowing of this bitter pill, it seems that the preferential share offering is priced slightly lower than the private placement. Cold comfort. But as the Hokkiens like to say, "no fish, prawn also can" .

FLT also declared an advanced distribution prior to the date of the new units being issued, which is fair enough. This advanced distribution is estimated to be around 0.69 cents a share.  Coupled with the earlier announced half year distribution (until Mar 2018) of 3.61 cents, I expect the total dividends from FLY (payable in June) to be around 4.3 cents a share, or around $7,310.  Ka-ching. These funds will go straight into the war effort against the eternal enemy, that is, Work.

Onward to FI!