Some new Hong Kong blogs

Hong Kong focused personal finance and investment blogs are few and far between so it was good to see two new additions:

• The Investment Portfolio from Aspiring Investor
• My Investment Portfolio from Bean Counter

I have added them to my blog roll and look forward to following their progress.

Behavioural finance resource

I came across this site on behavioural finance while checking out the Bogleheads forum. A lot of useful references and materials on behavioural finance terms - including several that I had not heard of before.

I can see some constructive web-surfing time being spent there.

Resources for personal finance and investing

I reader asked me about what resources I use to help with my finances. The short answer is a lot. In fact I spend far too much time surfing the internet and doing finance related reading when I could be doing more productive things. In any case, here is a list of my most frequent reads (or, if not read frequently, the ones I consider to be the most useful):

General personal finance - forums and aggregators

PFblogs. This site aggregates a very large number of personal finance and investment blogs. I tend to visit almost daily.

Bogleheads. This is for those who follow the John Bogle philosophy of keeping costs to a minimum and investing in a mix of low cost index funds with periodic rebalancing. I'd subscribe to this approach if I could access such funds from Hong Kong. Even with limited access to such products, this is still worth an almost daily visit.

Early Retirement. A forum for people who have or wish to retire early. Excellent reading for both motivational and more practical purposes. The retirement calculator is an excellent tool.

The only issues I have with these are (i) there is a lot of stuff which is of limited interest to me and (ii) they are (understandably) very US centric. All three sites are worth visiting often, but I frequently find myself spending too much time there.

A word of caution - while there are a lot of great blogs and other websites out there, there is also a lot of material which is either wrong or dangerous.

General personal finance - blogs

Millionaire Mommy Next Door. Written by Jen Smith, a self made millionaire who retired very early in spite of starting on a low income. Ms Smith's story and her postings cover many important personal finance issues in a clear no-nonsense style.

7Million7Years. Written by entrepreneur Adrian Cartwood, who went from having a negative net worth to more than seven million in the bank in the space of seven years. Very different from a lot of other writers, the author provides a very refreshing and welcome approach to achieving financial independence.

The Simple Dollar. If I had to pick one blog to recommend to people who were just beginning to manage their finances, this would be the one. Although I have outgrown a lot of the postings, it is worth visiting for the book reviews alone.

These are my three favourites. There are some other regular reads listed in my sidebar.

Hong Kong real estate

Centanet. I primarily use this for looking at transaction records when buying or negotiating lease terms

HSBC property valuation tool. A number of banks have these on-line valuation services. They tend to be conservative, but will generally give a good benchmark for calculating the maximum amount which a bank will lend against the property. I also use this for keeping track of the value of the portfolio

SCMP Property Post. A bit limited but it gives me an idea about what is going on in the market

Walking around and visiting show flats for new buildings. Having purchased from a Hong Kong property developer once, I have no intention of ever repeating the experience. The main point of these visits is to remind myself that the secondary market represents better value (and to get decorating ideas).

Taking the time to look at properties every few months. There is no better way to know the market than to get out there and look around.

Talking to investors (professional and private). Usually a worthwhile exercise (and generally more interesting than most of the other conversations that come up).

There are much better Chinese language sources - unfortunately, I do not read Chinese

Hong Kong stocks

Bloomberg. Although I do not have access to a Bloomberg terminal, I can get some of the feeds on a delayed basis through my bank. This is a good source of leads for stock research.

Reports provided by contacts at brokers and private banks. I view broker reports with a high degree of suspicion. Again, they are a useful source of leads for further research.

HKEX. This enables me to read recent announcements, annual and interim reports etc for all HK listed companies. Other stock exchanges provide similar services.

Finet. A HK financial portal. There is a reasonable amount of useful information on this site.

I tend to avoid talking to people about stocks or frequenting stock chat forums - it's too easy to get caught up in the herd and too much time is wasted reading rubbish.

Books

Ten favourites are listed here .

Books on economic history. The more I read about this subject the more comfortable I am with my handling of my finances - probably a bad sign.

Newspapers and magazines

The Economist. The best magazine for global financial and economic commentary. We subscribe to this.

The Financial Times. It's a UK paper and I am neither from the UK nor do I have any substantive investments there. However, it rivals the economist as one of the best sources of commentary on global financial and economic issues. We recently decided to subscribe when access to a free copy got cut.

SCMP. Hong Kong's leading newspaper. SCMP contains good coverage of financial issues with (as you would expect), a focus on Hong Kong and greater China.

Other

Fuller Money. Although predominantly chart focused, there is a huge amount of very useful material - enough to justify a subscription. Even if you do not want to subscribe, the free abbreviated comment of the day makes interesting reading.

Merrill Lynch Cap Gemini World Wealth Report. This report comes out once a year. Leaving aside the voyeuristic statistical data, the high level insights into how the wealthy manage their money makes this mandatory annual reading for me.

Barclays Wealth. The Insight reports make very good reading.

People - the most important category

My parents - who taught me that money does not grow on trees and exposed me to the financial world at an early age.

My long suffering wife - who shares many of my values and puts the breaks on some of my more reckless ideas.

A wide group of friends, colleagues and mentors who provide both ideas and informal brain storming sessions.

The people component has been the most incredibly valuable resource in my financial journey. I seriously doubt if I would be as close to achieving financial independence without them.

Other suggestions welcome.

Ten favourite finance and investing books

Over the last 20+ years I have read a lot of books on personal finance, investing and related topics. The following is a list of the the ten books which I have found most useful and/or interesting. I could easily list a lot of other books which I regard as excellent, but have arbitrarily limited myself to ten.

The ten books selected cover what I consider to be the four of the seven main areas relevant to people concerned about their finances. The fifth area (biographies) is not represented - as much as I enjoy reading about the successes of others, such books provide much less in terms of assistance with my financial management than books on the other topics listed below. The sixth (tax) and seventh (estate planning) topics are not represented either. A combination of Hong Kong's relatively simple tax regime and the lack of books on estate planning in Hong Kong make inclusion of books on these important subjects either immaterial or impossible.

The basic criteria for selection is personal preference. I'm sure others will have different views.

Personal finance

The biggest issue I have with a lot of the literature on personal finance is that it is heavily focused on issues which are relevant to US investors (particularly on the tax side).

The Millionaire Next Door (Thomas Stanley and William Danko): this is the best book on the live within your means principle that I have read.

The Automatic Millionaire (David Bach): a basic guide to the need to and benefits of paying yourself first, saving early and often and paying down unproductive debt.


Investing

One of the issues I have with a lot of the literature on investing is the assumption that a range of low cost index funds are readily available. Until 2000 when the Hong Kong Tracker ETF was listed such funds were generally not available to Hong Kong investors. Things have improved since then, but the range of low cost funds is still limited and the MERs of what funds are available are higher than US investors in the likes of Vanguard are used to paying.

Missing from the list are books about investing in real estate. I have not found such a book on Hong Kong real estate and other books on the subject tend to be country specific.

The Four Pillars of Investing (William Bernstein): writing on personal finance and investing does not get much clearer than this - for most people low cost index funds covering basic asset classes and periodic rebalancing will produce the best returns. The author also gives some history lessons and a short course in behavioural finance.

The Only Guide to Alternative Investments You Will Ever Need (Larry Swedroe): covers most of the alternative investments available to investors and explains in very clear language which ones are worth considering and which ones should be avoided.

Where are the Customers' Yachts? (Fred Schwed): one of the earliest lessons on the conflict between the interests of the brokers and the interests of their clients.

Economics

Notwithstanding the current popularity of criticism of classical economics, understanding economics is helpful when making investment decisions.

The Origin of Wealth (Eric Beinhocker): one of the best books I have read. Excellent. Among other issues, this book explains why so few companies out perform for long periods of time.

Your Money and Your Brain (Jason Zweig): a basic introduction to behavioural economics. A useful self help book in the sense that it gives you the knowledge to avoid doing a lot of dumb things with your money. I wish I had read this before I invested in a Vietnam equity fund near the top of the market.


History

It seems that every bull market/bubble throws up a new generation of investors who believe that "this time it is different". Even a basic reading of economic history should be enough to cure people of this delusion.

The Great Crash (J K Galbraith): A concise history of the stock market crash of 1929, the events which preceded it and the depression which followed.

Against the Gods: the Remarkable Story of Risk (Peter Bernstein): a history of risk in business and how it is perceived and managed.

Anatomy of the Bear: Lessons From Wall Street's Four Great Bottoms (Russell Napier): a look at bear markets and how they end. A little bit dry, but still an excellent and worthwhile read. This book was at least partly responsible for putting most of my cash into the market between October 2008 and May 2009.

Some books which I really should get around to reading:

A Random Walk Down Wall Street (Burton Malkiel)

When Genius Failed: the Rise and Fall of Long Term Capital Management (Roger Lowenstein)

I was tempted to write a post on the ten worst or most overrated books I have read but I'd prefer not to get sued.