I. Topic of the Session#
The session centered on the core principle of long-term investment strategies. James reiterated his investment philosophy: “Buy QQQ whenever you have money and hold it for the long term.” The discussion expanded to cover aspects like investment philosophy, risk management, and values, incorporating current events and questions from attendees. James also shared insights from legendary investors like Warren Buffett, encouraging attendees to cultivate a sound investment mindset.
II. Briefing Highlights#
- Buying at the Dip vs. Buying When You Have Money: James cited research from ChatGPT, indicating that even with the ability to accurately predict and buy at market dips, the long-term returns differed minimally compared to simply buying when one has available funds. Over a 20-year period, the difference was merely 8%, translating to a difference in annualized returns of less than 0.2%. Hence, rather than expending time and effort predicting market bottoms, it’s more effective to seize opportunities and buy QQQ when you have the money.
- Risks of Leveraged Funds: Using the 2000 tech bubble as an example, James explained how leveraged funds can accelerate losses in bear markets, potentially leading to devastating financial setbacks, even bankruptcy. He simulated a scenario where an investor repeatedly buys more leveraged funds as the market declines, culminating in financial ruin. This served as a cautionary tale against the “buy the dip” strategy with leveraged funds, emphasizing the importance of risk management.
- Keys to Investment Success: James emphasized that the key to successful investment lies in overcoming human weaknesses. Maintaining a detached and “unfeeling” attitude towards invested capital and short-term market fluctuations is crucial for adhering to a long-term investment approach.
- Market Cycles: James stated he wouldn’t teach attendees about predicting market cycles or any trading techniques. He considers these unimportant and prone to misinterpretation and misapplication, potentially leading to increased risks. He advocated for a long-term investment strategy, likening it to riding a cable car, a smooth and steady ascent to the summit of financial success.
- Money and Values: Acknowledging that individuals have different values regarding money, James advised understanding and respecting diverse values, discouraging attempts to impose one’s own values upon others. He used the example shared by an attendee about a mother preferring a financial subsidy over a family trip to illustrate the diverse ways people assign value to things.
III. Q&A Session#
IIM:
- Shared: A story about a deceased friend, leading to reflections on money and values, and expressing confusion about balancing personal values with those of others.
- Question 1: How to understand some people’s “frugality” with money while being “generous” towards their pets.
- James’s Response: People manage their finances differently based on what they consider important and valuable. What might be significant to one person may hold little value for another.
- Question 2: How to understand a mother who prioritizes money over a family trip? How to better understand the needs of others?
- James’s Response: This mother might have certain unmet needs, possibly requiring material security before pursuing leisurely experiences. Understanding true needs involves offering more choices (e.g., money plus a trip). Avoid trying to change others’ values; focus on understanding and respecting them.
Brian:
- Shared: Encountering a friend who suggested leveraging to purchase Nvidia stock, leading to questions about investment advice.
- Question: How to evaluate investment advice received from others?
- James’s Response: The validity of investment advice depends on individual judgment and risk tolerance. It’s important to avoid blindly following the advice of others and to think independently.
Iny:
- Shared: Experiencing a sense of calm and reduced anxiety after adopting James’s investment approach. This newfound peace of mind allows for dedicating more time to important matters like family, and interestingly, focusing on work has led to increased income.
- Question: How to understand the phenomenon of increased income resulting from a dedicated focus on work?
- James’s Response: This exemplifies the principle that altruism ultimately benefits oneself. By focusing on serving clients and enhancing product or service quality, one ultimately gains client recognition and rewards, leading to higher income and a sense of accomplishment.
Haoqing:
- Shared 1: An experience with check fraud, prompting concerns about bank security and the risks of using checks.
- James’s Response: Banks do not verify the identity of check depositors. Checks present security vulnerabilities, making it advisable to use safer online banking and digital payment methods like Apple Pay.
- Shared 2: Thoughts on the decline of US manufacturing and the rise of Asia, attributing this to factors like US regulations, labor laws, and unions.
- James’s Response: The decline of US manufacturing and the rise of Asia are multifaceted issues stemming from a complex interplay of factors, including national policies, labor laws, and unions. While Asian countries might resort to suppressing labor rights and environmental regulations to gain a competitive edge, the US places a higher value on worker well-being and environmental protection. This divergence in values contributes to different developmental paths.
Becky:
- Shared: Based on personal experience working in a digital payment company, Becky recommended that everyone stop using checks due to inherent security risks. Digital payment methods offer greater security and convenience, with features such as spending alerts that enable prompt response and recovery in case of issues.
Mike:
- Shared: As a long-time follower of James, Mike witnessed the evolution of his investment philosophy, from initially holding 30% SPY to converting to 100% QQQ, and eventually incorporating leveraged funds. He also shared personal investment experiences, like selling NIO and allocating a portion of his portfolio to private market investments.
- Question 1: Is investing in Intel after its acquisition worthwhile?
- James’s Response: James advised against investing in large companies that are acquisitive. Acquisitions often lack efficiency, posing integration challenges and potentially hindering productivity. While acquiring smaller companies for technological advantages makes sense, acquiring large companies is akin to amassing a pile of scrap metal.
- Question 2: How to view the supply chain security concerns stemming from the US outsourcing 3C product manufacturing, citing examples like the BBB Call explosion and walkie-talkie incidents?
- James’s Response: Espionage is ubiquitous, and supply chain security is just one facet of this broader issue. Governments might implant spy codes in chips and software for surveillance purposes. Explosions are a relatively rudimentary form of espionage; more sophisticated methods can be extremely difficult to detect and prevent.
- Question 3: Is it possible to offer advanced courses for more experienced attendees? He suggested using portfolio sharing as a means to differentiate attendees’ learning progress.
- James’s Response: James stated he wouldn’t differentiate between attendees nor offer advanced courses. Assessing whether a student is genuinely learning is primarily based on their attitude, not investment returns or holding duration. Even portfolio sharing can’t truly gauge learning progress. James mentioned his personal sensitivity to words and language, enabling him to discern learning attitudes from attendees’ emails and the way they pose questions.
IV. Noteworthy Insights#
The best time to buy is when you have money. – James
Many obsess over finding the perfect entry point, but research indicates that even if you could perfectly time market dips, the long-term returns barely differ from simply buying when funds are available. Instead of wasting time trying to predict the market, seize the opportunity and act promptly.
To succeed in investing, you must be indifferent to the money you invest and the fluctuations in stock prices. – James
Overcoming the human tendency to fixate on money and fear short-term market swings is essential for maintaining a long-term investment strategy and achieving stable returns.
To achieve effortless investing, you need to be numb to money. – James
When investing becomes a habit, free from emotional impulses and external distractions, you can achieve optimal results.
The concept of a “benefactor” is relative. – James
People perceive and absorb information differently. Who you consider a benefactor might not be perceived as such by others.
Don’t try to change other people’s values. – James
Everyone has their own values and ways of life. It’s important to understand and respect diverse choices.
Espionage is everywhere. – James
Information security is a growing concern. Be vigilant and protect your personal data.
Acquisitions of large companies are generally inefficient, and leaders who are fond of acquisitions usually have inflated egos. – James
Integration complexities and high management costs associated with mergers often outweigh the benefits gained.
The US excels in areas such as finance and technology design, while Asian countries can only substitute and supplement in specific aspects. – Haoqing
Within the global division of labor, different countries have distinct strengths and weaknesses, leading to divergent paths of development.
The best judgments are validated by facts. – Mike
The success of an investment philosophy is ultimately determined by its long-term returns, not short-term fluctuations or gut feelings.
Your attitude determines my response. – James
James adjusts his responses based on the learning attitude of the attendees. Attendees who are truly dedicated to learning will receive greater guidance.
Investing in individual stocks will ultimately lead to bankruptcy; holding onto individual stocks will also ultimately lead to bankruptcy.
– James
Companies have lifecycles. Holding onto a single stock long term significantly increases the risk of encountering bankruptcy. Diversification is key in investing.
V. Summary#
This live session once again emphasized the importance of long-term investing while reminding attendees to stay rational, patient, and vigilant. James addressed attendees’ questions regarding investment strategies, risk management, and the relationship between money and values, sharing personal experiences and insights. Key takeaways include avoiding market timing, leveraged funds, and individual stock investments, and embracing an attitude of indifference towards money. Attendees actively shared their own investment experiences and reflections, prompting deeper contemplation on investment, money, life, and more. The session also delved into the philosophies of renowned investors like Warren Buffett and discussed various social phenomena, creating a rich and informative experience.