I. Theme of the Session#
This session’s core viewpoints from Teacher James revolve around two main areas:
- The Decisive Nature of Investment Choices: Not all index funds can make you rich. Through detailed data comparisons, the teacher reveals the huge long-term return gap between QQQ and other index funds like SPY and VT, emphasizing the decisive role of choosing the right investment target (like QQQ) for wealth accumulation.
- The Importance of Financial Communication: On the road to wealth through investment, maintaining family relationships (especially with spouses and parents) is crucial. The teacher advocates for building financial consensus and trust among family members through continuous, “chatter-style” communication, sharing responsibilities, and avoiding family conflicts sparked by wealth growth.
II. Briefing Content#
The Wisdom of Family Financial Communication#
- Communication with a Spouse:
- The “Constant Chatter” Method: It’s recommended to share investment ideas, operations, and progress with your spouse in the form of daily conversation. This isn’t for them to fully understand, but to give them a sense of participation and the right to be informed, building synchronization and trust. For example, casually mention what you bought more of today, what class you attended, or any new ideas you have.
- Shared Responsibility: Communicating from the start to reach a consensus gives both partners a sense of ownership in the decisions. Whether there are profits or losses, you can face them together, avoiding one person bearing all the pressure and getting unappreciated for their efforts. The teacher uses his company management as an example: his subordinates know all the information he does, so responsibilities are shared, and the manager feels no pressure.
- Avoid Secrets, Honesty is Respect: There should be no financial secrets from your spouse. Say what’s on your mind; this is a form of respect. Making decisions alone, regardless of success or failure, can pose a risk to the family relationship.
- Communication with Parents:
- Early Planning and Gentle Communication: When parents are approaching retirement age (50s-60s), you should begin discussing future financial and care arrangements. Use a caring tone and examples (like the sudden situations of neighbor Mrs. Chang or Uncle Li) to gradually “brainwash” them, rather than forcefully demanding management rights.
- The Role of Children: Children who have learned about finance should bravely take on the role of the family CFO (Chief Financial Officer), responsible for financial planning, investment management, and payment systems, while keeping clear accounts and reporting to the family regularly.
- Elder Care Trusts: If parents are not comfortable entrusting their money to a single child, or if the children cannot reach a consensus, consider setting up an “Elder Care Trust.” The bank would be responsible for management and payments, and some banks even allow specifying investment targets.
- The Practice of Caring for Parents:
- Prevention is Better Than Cure: Care for your parents should start with daily life, paying attention to their “eating, drinking, defecating, urinating, and sleeping.” Take them for regular health check-ups (for the “three highs” - high blood pressure, cholesterol, blood sugar), monitor their vision (e.g., get injections for macular degeneration early, even if you have to pay out-of-pocket), hearing (e.g., get hearing aids from Costco early), knees, and other body “parts,” intervening at the first sign of a problem.
- Focus on Sleep: Understand your parents’ sleep situation. If they don’t sleep well, you can discuss solutions, such as trying Melatonin, and avoid sleeping pills with significant side effects.
- Health is the Children’s Happiness: When parents are healthy and can take care of themselves, it is the greatest happiness for their children. Don’t wait until they are bedridden to start managing; the family burden will be extremely heavy by then.
Index Fund Performance Showdown: Why Choose QQQ?#
- Astonishing Long-Term Performance Differences:
- 40 years: QQQ had an annualized return of 14%, while SPY (S&P 500) was only 8.95%—a huge gap.
- 17 years: QQQ’s annualized return was 15.8%, SPY/VOO/VTI was about 9.6%, while VT (Total World Stock) was a meager 5.7%.
- 10 years: QQQ’s annualized return was 18.17%, SPY was 11.8%, and VT was only 7.8%.
- Conclusion: Those who invest in QQQ might become “billionaires,” those in SPY are “wealthy people,” and those in VT might become “poor people who think they are rich.” If the direction is wrong, all effort is wasted.
- Investment Correction:
- Problem: What if I have already bought SPY, VOO, or VT, especially in the US where I have to pay taxes?
- Answer: You must sell! Pay for past mistakes, pay the tax once, but in return, you get much higher long-term returns in the future. Don’t cling to the wrong assets for a lifetime just to save a little on taxes.
- Sunk Cost: It’s like finding out the elevator is broken and switching to another one immediately, not stubbornly waiting in the broken one. It’s also like realizing a relationship isn’t working after five years; you can’t continue down the wrong path just because you’ve invested five years.
Investment Philosophy and Asset Allocation#
- From Money Anxiety to Magnanimity: Taking the sharing from student Michael as an example, he used to have anxiety about money because he was afraid of spending it. After getting rich through investing, his life got better and better, but more importantly, his mindset changed. He learned to use money with magnanimity for physical and mental health and family happiness. Letting go of money anxiety can improve relationships with family.
- The “C” Investment Philosophy: Aims to eliminate poverty and people’s anxiety about money. We should not be slaves to capital, but capitalists. “Wealth is a gift, happiness is a human right.” We should live a worthy life.
- Asset Allocation Principles:
- Cash is King: Keep at least 30% in cash. Cash is the “Noah’s Ark” of investing; it can save your life.
- Use of Leverage: For those who want to use leverage but are afraid of the risk, you can start with a lower Beta (e.g., 0.5-0.7) and gradually get used to it.
- Strategy for Young People: Even with little capital, you must first establish an emergency fund. For example, if you only have 200,000 TWD but your annual living expenses are 300,000 TWD, you cannot invest this 200,000. You should save up the emergency fund first, and then invest the rest.
III. Q&A Session#
Jiang#
- Question: I am 27 this year. How should I prepare for my parents’ (around 60) future medical expenses? About how much money is needed?
- Teacher James’s Reply: Based on my mother’s experience (she had 6 million TWD prepared when she started needing care at age 80), and considering inflation, one parent might need about 10 million TWD in 20 years. I suggest you start now, saving at least 10,000 TWD per month for your parents, and separately save for your own retirement. More importantly, start paying attention to your parents’ health now. Take them to the metabolism department for regular check-ups (like blood sugar, cholesterol) and address hearing and vision problems promptly. Prevention is better than cure.
Yonglin#
- Question: The retirement account at my current company (TIAA) does not offer QQQ, but my previous company’s retirement account (Fidelity) does. What should I do?
- Teacher James’s Reply: First, for the account from the job you’ve already left, you can do a Rollover into an IRA account, which will allow you to freely invest in QQQ. For your current company’s underperforming retirement account, I suggest you stop contributing to it. You should prioritize maxing out your Roth IRA, and put the rest of your money directly into your own Brokerage Account to buy QQQ.
Washington#
- Question: My colleague bought long-term care insurance. Is this necessary?
- Teacher James’s Reply: Don’t buy it, ever. Having your own money to invest is the safest insurance. That insurance doesn’t “care” about you at all.
Liu Nian#
- Sharing: I am a new student. I previously followed the advice of an influencer and heavily invested in US long-term bonds, suffering heavy losses. Since getting to know the teacher, I decisively liquidated all my long-term bonds at a -18% loss and moved the funds into the 00662 asset allocation. Thank you very much for the guidance, I believe the future will be better and better.
- Teacher James’s Comment: It’s a good thing you got out, otherwise you might be down 50% by now. Well done.
Rui#
- Question 1: I want to buy TQQQ, but it seems no brokerage in Taiwan allows direct purchase, only through a sub-brokerage account. Since I followed the teacher’s advice and repatriated all my money from overseas brokerages, is it okay to buy through a sub-brokerage account now?
- Teacher James’s Reply: Yes, it’s fine to buy through a sub-brokerage account. Just be mindful of controlling the amount to avoid Taiwan’s Alternative Minimum Tax issues.
- Question 2: As my salary and property value increase, should I borrow as much as I can and invest it all in the market?
- Teacher James’s Reply: Yes, you should borrow everything you can to invest. This is a dynamic adjustment process; you can re-evaluate and max out your credit line every year.
W De#
- Sharing: I strongly agree with the teacher’s views on family financial communication. Last year, we shared the QQQ philosophy and charts with our parents. They trusted us completely and sold their land for us to invest. Because of this foundation of trust, we also do our best to care for them. I believe when there is love and trust in a family, many things become easy to handle.
- Teacher James’s Comment: This is great. This is a virtuous cycle.
S#
- Question: After my sister took the teacher’s class, she canceled more than a dozen insurance policies, took out a personal loan, and invested heavily in 00662 (the Taiwanese QQQ equivalent). Our family thinks she’s “gone off the deep end.” Many people around us still advocate for individual stocks. May I ask why the teacher himself switched from investing in individual stocks to exclusively recommending index funds?
- Teacher James’s Reply: I invested in individual stocks for over 30 years. Although my performance was good, after taxes, I didn’t truly beat QQQ. More critically, individual stock trading requires real-time buy/sell instructions. For a community of tens of thousands of students like we have now, I cannot provide timely notifications, which would cause losses for everyone. Therefore, abandoning complex individual stock picking, which may not even yield better results in the end, and turning to simple, transparent index investing with excellent long-term returns is the most responsible and effective method for everyone.
W#
- Question: The teacher mentioned that wealth will become more concentrated in the future, “the big get bigger.” In that case, would an ETF like 00757 (FNGS), which is even more concentrated in tech giants, be better than 00662 (QQQ)?
- Teacher James’s Reply: I don’t recommend it. The biggest problem with 00757 is its “unpredictability.” Its stock selection logic is not transparent (why these 10 stocks?), and its volatility is unknown, which makes it impossible for you to do scientific asset allocation. Its performance is not necessarily better than the predictable QLD (00670L, the 2x leveraged QQQ). The so-called “mean reversion” does not exist between assets of different natures (e.g., apples and oranges don’t revert to each other). Instead of investing in a fund you don’t understand, it’s better to build your own “top ten” portfolio based on QQQ’s holdings, which has a clearer logic.
Ola#
- Sharing: I did a comparison. If you price SPY in gold, you’ll find that its value has barely grown over the past few decades, repeatedly returning to levels from decades ago. This suggests that SPY’s long-term return has largely just kept up with inflation.
Yao#
- Question: I would like to ask the teacher’s view on “history.” How should we view ancient wisdom in relation to modern development?
- Teacher James’s Reply: I divide history into two parts. One part is timeless, spiritual wisdom (like Laozi, Zhuangzi, Socrates). This is eternal, and we should learn and think about how to “take and use” it in our real lives. The other part is humanity’s animal nature (like cruelty, selfishness). I’ve observed that this aspect has not changed from ancient times to the present, despite advances in material civilization. When we study history, the focus should be on drawing lessons and applying them, not just criticizing or admiring.
Wei#
- Question: I use a sub-brokerage account in Taiwan to buy QQQ and then never sell. Is this okay? And if I have a large home equity line of credit, is it good to keep it as an emergency fund?
- Teacher James’s Reply: No, that’s not okay. The problems are: 1. Taxes: When your assets grow to tens of millions, you will eventually need the money, and as soon as you sell, you will face high capital gains taxes. 2. Opportunity Cost: Keeping your HELOC credit line as cash is a huge waste. You should borrow all the money you can and invest it in the market. Even just buying short-term bonds (like 00865B in Taiwan) for arbitrage is better than letting the money sleep in the bank. Don’t be afraid of the debt figure; look at the growth potential of your assets. The market is always at a low point. You must act immediately, right now.
Quan#
- Sharing: I have no questions, I just wanted to come and thank the teacher.
Bing#
- Sharing: I have no questions either, I also wanted to thank the teacher. I am a long-time student who has been following the teacher since 1992.
- Teacher James’s Comment: Hello, thank you.
IV. Insightful Quotes#
Investment hesitation is the biggest mistake. – Teacher James
Context: At the beginning of the session, the teacher emphasized that the market doesn’t wait when it’s rising. The hesitant mentality of not buying whether the market is up or down is the biggest mistake in investing.
Don’t avoid doing the right thing just to save on taxes. – Teacher James
Context: When answering a student’s question about whether to sell SPY/VOO to switch to QQQ, the teacher stressed that even if it means paying taxes, one should decisively correct wrong investment decisions to focus on the correct long-term returns.
You must do a smart rebalance every year with leveraged funds, or you will be wiped out overnight. – Teacher James
Context: When explaining how to hold leveraged ETFs like TQQQ and QLD, the teacher repeatedly emphasized that these products must be managed with an annual “smart rebalance” to lock in profits and control risk; otherwise, long-term holding could lead to returns diminishing to zero.
You’ve read so many books, now put them to use! – Teacher James (quoting a general manager)
Context: When discussing how to learn from history and philosophy, the teacher emphasized that the ultimate purpose of knowledge is practice. If you read the classics, you must think about how to apply them in your life; otherwise, no amount of knowledge is more than just garbage in your head.
The market is always at a low point. – Teacher James
Context: When encouraging students to overcome their fear of heights and invest immediately, the teacher pointed out that relative to the future price (e.g., QQQ potentially reaching 50,000 points), any current price should be considered a low point.
Wealth is a gift, happiness is a human right. – Teacher James
Context: Explaining the philosophy of C-position investment and financial education, the core of which is to help people break free from money anxiety and live a happy, fulfilling life where they realize their self-worth, rather than being slaves to money.
V. Summary#
This session once again reinforced the core strategies and philosophy of C-position investment and financial management. In terms of investment strategy, it irrefutably demonstrated the superiority of QQQ as a core asset through detailed data comparisons, urging students to have the courage to correct past investment mistakes, even if it incurs some tax costs. On the philosophy of life and family relations, the teacher profoundly pointed out that wealth growth must go hand-in-hand with family harmony. The key to achieving this is continuous, honest financial communication built on a foundation of trust. Whether it’s the “constant chatter” sharing between spouses or the patient guidance for parents, the goal is to build a family financial system based on consensus and shared responsibility. Ultimately, the course guides us back to the origin of investing: to use capital as a tool to achieve a happy and meaningful life, free from anxiety about money.
Disclaimer: This article is for personal study notes only and does not constitute any investment advice.