I. Main Topic#
This session revolves around investment and life wisdom. The core idea is to maintain a long-term perspective on investments, avoid being influenced by short-term market fluctuations, and continuously learn from life experiences to form one’s own investment philosophy and life wisdom. Just like life, investment also requires continuous learning and reflection.
II. Presentation Content#
Utilizing Revolving Line of Credit Home Loans#
- People nearing retirement can consider using a revolving line of credit home loan (HELOC), treating the credit line as a part of their cash reserves for living expenses without touching the principal investment, thereby increasing overall asset returns. For example, if someone has $40 million in retirement funds and obtains a $10 million HELOC, the total assets become $50 million, and the annual disposable funds increase from $800,000 to $1 million.
- The HELOC credit line can supplement the 20% cash portion of asset allocation.
- Note: It’s easier to obtain a HELOC before retirement; it becomes more difficult afterward. The loan term typically doesn’t exceed age 90.
- It’s not recommended to take out a loan after retirement to repay the HELOC.
- A listener shared a strategy of using a HELOC for living expenses, which James considers a good option.
Investment Philosophy and Market Analysis#
- The market, like life, requires a long-term perspective to see the big picture. Avoid being misled by short-term fluctuations.
- In the age of AI, human development will accelerate, and the market will continue to rise. The next two to three decades will be a period of prosperity. QQQ might reach $500,000.
- Focus on long-term trends in investing. Don’t be swayed by short-term market analysts or news. Focus on long-term growth, not short-term gains.
- If you can’t withstand a 50% loss, it’s not recommended to enter the market.
- Invest in Nasdaq 100 index funds (QQQ), unless retirement funds are insufficient.
- Short-term declines are inevitable. Be mentally prepared and maintain sufficient cash reserves.
- Reiterates the long-term investment strategy of “buy when you have money, never sell,” and recommends single lump-sum market price purchases.
Extracting Life Wisdom#
- Strive for daily progress, reflect and summarize regularly (daily, monthly, yearly). Extract life philosophy from experiences and store them in your personal “database” to continuously accumulate wisdom.
- Reflect on everything, from trivial matters (like growing tomatoes) to major social events, to form a comprehensive outlook on life and investment philosophy.
- Learn from past experiences. Reflect on what you would do differently if given a second chance to improve yourself.
III. Q&A Session#
Michael#
- Question 1: How to use the smart rebalancing strategy before retirement?
- James’s Reply: As long as you hold leveraged funds, you can use the smart rebalancing strategy.
- Question 2: How to calculate the Beta value of a portfolio holding TQQQ, QQQ, and cash?
- James’s Reply: Calculate the weighted average based on the proportion of each asset and its corresponding Beta value (cash is 0, QQQ is 1, TQQQ is 3). He reshared the calculation formula with the audience.
Louis Lu#
- Sharing: Expressed admiration for James’s insights from a month prior regarding the possibility of Bitcoin becoming a reserve currency for the US dollar, noting that James’s response aligned with Federal Reserve Chairman Powell’s views.
- James’s Comment: Expressed gratitude for the acknowledgment and mentioned that it’s a fundamental concept in finance and monetary policy, covered in previous lessons.
Shu Fen#
- Sharing: Shared her experience of investing most of her retirement funds in savings insurance a few years ago, resulting in much lower returns than expected. This year, she redeemed a portion of the funds and invested in QQQ, achieving better returns (13.68% in three months). However, with the current market reaching new highs, she’s hesitant to invest further, finding it difficult to overcome the psychological barrier of “buying with eyes closed.”
- James’s Comment: Courage comes from the subconscious and requires training. Believe that the market will continue to rise and practice self-hypnosis to reinforce the “buy when you have money” concept. Used the example of QQQ potentially reaching $500,000 to illustrate that the current price is still very cheap.
Sen Lin#
- Question: What’s the difference between 00662 and QQQ?
- James’s Reply: Suggested referring to the relevant link, as this question has been answered multiple times to avoid redundant explanations.
Yi Wan#
- Sharing: Agreed with James’s investment method but hesitated to share it with older or same-age individuals. Felt more comfortable sharing with younger people, such as encouraging students to start saving $50-$100 per month.
- James’s Comment: Sharing depends on缘分 (affinity/serendipity). Sometimes our remedy is another’s poison. Sharing can also have negative consequences.
Zai#
- Sharing: Responded to Shu Fen’s question about lump-sum buying, suggesting buying in batches or on specific dates, such as birthdays, to overcome psychological barriers.
- James’s Comment: Investing requires reaching a state of belief. Continuous self-hypnosis is needed. “Buy immediately at market price when you have money” is the only truth, no further analysis needed.
Ai Na#
- Sharing: After following James’s advice, she redeemed funds from savings insurance and invested in QQQ and QLD. However, due to insufficient trading frequency, she couldn’t purchase QQQ 2D. Her current living expenses are primarily covered by alimony, and the cost of living in Taiwan is relatively low.
- Question 1: Does she need to buy and sell repeatedly to meet the trading frequency requirement?
- James’s Reply: Yes, she can make small, frequent trades to meet the brokerage’s requirements.
- Question 2: Can she buy fractional shares in Taiwan?
- James’s Reply: Yes, but it’s recommended to buy whole shares first and use the remaining funds for fractional shares.
- Question 3: How to calculate retirement fund needs? Can she receive social security?
- James’s Reply: Calculate retirement fund needs based on annual expenses. Alimony can be considered income, but it’s recommended to claim social security (even if her ex-husband objects) and adjust the asset allocation ratio accordingly, as alimony is not a permanent income source. She needs to be prepared. Also recommended switching from SWVXX to BOXX.
Chen Feng#
- Sharing: Shared his personal investment journey, starting from entering the stock market in 2021, experiencing the “bruised and battered” phase of short-term trading, to shifting to long-term investing after encountering James’s channel. He also established a study group of nearly 300 people, experiencing the benefits of “teaching and learning from each other.” He shared how he introduced the investment philosophy to his sister with 30 years of stock market experience, emphasizing the importance of a gradual approach.
- James’s Comment: Affirmed PC’s sharing, adding the principles of “Buddha saves those who are destined” and “Sentient beings save the Buddha.” When sharing investment concepts with family, start with small amounts of capital, like planting seeds and nurturing them gradually.
Nai Xi#
- Sharing: Thanked James and her friend Yu Sheng for their help. Shared experiences of learning and sharing investment concepts with friends and expressed gratitude for the study group.
- James’s Comment: Shared his early investment experience in 1990, being introduced to investing by his friend Frank, who patiently explained investment knowledge to him weekly, eventually igniting his passion for investing. Emphasized the importance of mentors.
IM#
- Sharing: Felt that James is cultivating logical thinking in students and shared experiences of communicating investment concepts with others.
- Question 1: How did James achieve such a comprehensive understanding?
- James’s Reply: Continuously review and summarize life experiences, extracting the essence, like refining an elixir.
- Question 2: How to communicate with people who believe “the first $1 million is difficult” and are hesitant to go all in?
- James’s Reply: Guide them to think about how to achieve the first $1 million goal and the path to wealth. Suggest small investments based on their risk tolerance, like planting seeds, to gradually cultivate investment confidence.
Hao Qing#
- Sharing 1: Discussed the psychological pressure of buying after a stock reaches new highs. Experienced investors feel more pressure due to having reference points, while newcomers are more receptive. Like buying discounted items in a supermarket, having the original price as a reference makes purchasing more appealing.
- Sharing 2: Shared his views on two newly issued ETFs by Invesco (QBI and QQLV) and compared them to QQQ. QBI selects larger market cap stocks from QQQ, while QQLV selects stocks with lower volatility.
- Question: What are James’s views on these two new ETFs?
- James’s Reply: Doesn’t recommend investing in unfamiliar ETFs, even if they perform well. Stick to investments within your circle of competence. Used the analogy of marriage, advising to choose a partner you understand. Re-emphasized the importance of focusing on asset allocation and Beta adjustments rather than selecting new investment targets.
IV. Key Takeaways#
Buy immediately at market price when you have money. – James
This is James’s repeatedly emphasized investment philosophy, aiming to overcome investors’ psychological barriers and seize market opportunities.
Life shouldn’t be lived in vain. Continuously reflect, summarize, and extract wisdom from experiences. – James
This is not just investment wisdom, but life wisdom.
Teaching and learning promote each other. Buddha saves sentient beings, and sentient beings save the Buddha. – James, Chen Feng
Both teachers and students can grow through the process of teaching and sharing.
The seed itself is not the problem, it’s the soil. – James
An analogy for the dissemination of investment philosophy. Even good ideas require the right environment to take root.
V. Summary#
This session covered investment philosophy, financial management skills, and life wisdom. James reiterated the importance of long-term and value investing and encouraged everyone to overcome the psychological pressure of market fluctuations, firmly implementing the “buy when you have money, never sell” strategy. He also reminded everyone to continuously learn and extract wisdom from life experiences to ultimately achieve financial freedom and fulfill life’s value. He also encouraged listeners to find their own mentors, learn from each other, and grow together, just like his early experiences.
Disclaimer: This article is for personal learning notes only and does not constitute any investment advice.