I. Theme of the Session#
This session delves into multiple dimensions of investment and wealth. The core ideas revolve around three “Seven Levels” theories:
- The Seven Levels of Investment Learning: The journey from initial exposure to forming an unwavering belief.
- The Seven Levels of Wealth Accumulation: The path from understanding investment to maximizing wealth through concentration, leverage, tax savings, and longevity.
- The Seven Levels of Investment Operations: From the confusion of short-term trading to finally embracing the wealthy class strategy of “invest only in indexes, never sell, and live off pledged assets.” The course emphasizes that true wealth stems from correct cognition and discipline, and points out that in the AI era, we should use technology to liberate ourselves and return to the essence of life, rather than becoming busier.
II. Briefing Content#
Market Noise and Investment Mentality#
- Ignore Short-Term Volatility: The market has been highly volatile recently due to events like US-China tariffs and a potential US government shutdown, but investors should ignore this market noise and avoid making incorrect moves. Typically, any action based on short-term predictions is wrong.
- Limitations of Technical Analysis: The accuracy of technical analysis is about the same as a coin toss, roughly 50/50, and should not be the primary basis for investment decisions.
- Personal Responsibility in Investing: Investment sharing is for experience exchange only and does not constitute advice. Everyone’s financial situation is different; final decisions require personal learning and execution, for which individuals are responsible.
The Impact of AI and the Evolution of Investment Philosophy#
- AI Makes the Impossible Possible, But Also Makes People Busier: Technological advancements like AI have made things previously unimaginable (such as quickly creating multilingual videos) possible. However, this doesn’t mean people become more idle; on the contrary, they become busier because there are more things they can do.
- Encourage Using AI to Spread Correct Investment Philosophies: Students can use AI tools like NotebookLM or ChatGPT to translate investment philosophies into articles or videos in different languages, helping to “inform” more people of their right to be wealthy.
- Investment Philosophy is Evolving DNA: Our investment philosophy is constantly evolving and being optimized. For example, it was once emphasized that those who pledge assets “must” allocate to leveraged funds to maintain returns. The current view, however, is that for the sake of stability, one can pledge assets without holding leveraged funds. Students need to keep up with their learning to avoid sticking to outdated knowledge, as the investment world is like biological evolution—ceasing to evolve risks being eliminated.
The Three “Seven Levels” of Investing and Wealth#
The Seven Levels of Investment Learning:
- Hearing: Just encountering the information, possibly thinking it’s a scam.
- Knowing: Beginning to realize there’s substance to it.
- Understanding: Developing cognition after in-depth research.
- Believing: Transitioning from cognition to trust.
- Executing: Putting belief into action, the key being “buy when you have money, immediately, at market price.”
- Enduring: Being able to withstand the pain and hold on when the market drops by 40% or even more.
- Faith: Reaching a state of inner peace where market fluctuations don’t matter. This is usually built on proper asset allocation and sufficient cash flow.
The Seven Levels of Wealth (Differences in Magnitude):
- Knowing How to Invest vs. Not Knowing: This is the first dividing line, separating 90% of the world’s population.
- Investing Correctly vs. Incorrectly: Among those who know how to invest, choosing the most efficient assets (e.g., QQQ vs. VOO/VT) can result in a hundredfold difference in assets over the long term.
- Han Xin Deploying Troops (Concentrating Capital): Concentrating funds in the highest-return assets instead of diversifying into inefficient products like insurance, annuities, and bonds can create another hundredfold gap in assets.
- Pledging and Borrowing: Learning to use stock pledging to obtain liquidity instead of selling assets widens the asset gap again.
- Borrowing Without Repaying: Understanding that a pledge loan is an expansion of assets, not a traditional debt that needs to be repaid. Compared to those who rush to repay, the potential for wealth growth is entirely different.
- Smart Tax Savings: Through legal tax planning (like Roth Conversions in the US), one can save enormous amounts in taxes, further widening the wealth gap.
- Longevity: When all the above are done correctly, the longer you live, the more significant the compounding effect, and the more assets you accumulate. Longevity is the key determinant of ultimate wealth.
The Seven Levels of Investment Operations:
- Level One: New to the market, occasionally making money on individual stocks, thinking investing is easy.
- Level Two: Trying derivatives like options, possibly profiting in the short term, but likely losing money in the long run.
- Level Three: Starting to study financial reports and industry trends, trying to buy low and sell high, but the more you know, the more you lose.
- Level Four: Obsessed with technical analysis and futures, engaging in frantic short-term trading, thinking you’re a stock market guru, but actually being closest to bankruptcy.
- Level Five: Understanding that investing is about sharing in a company’s growth and knowing how to pick good companies, but still suffering from the huge volatility of individual stocks. You work like a dog for mediocre returns.
- Level Six: Grasping the power of long-term holding and starting to make big profits, but still needing to constantly research and switch companies. Having cash on hand after selling becomes a new source of anxiety. It’s still a busy operational life.
- Level Seven (The Ultimate): Investing only in index funds (QQQ). Buy whenever you have money, never sell, buy with your eyes closed. Implement proper asset allocation (e.g., 433), keep enough cash, and fear no market crash. Live off loans from stock pledging and never repay them, allowing assets to continuously generate wealth. This is the true wealthy class.
Life Philosophy and Financial Freedom#
- The Astonishing Power of Compounding: Using the example of investing NT$10,000 per month, at an 18% annualized return, it can grow to NT$547 million in 40 years. This shows that becoming wealthy is achievable for ordinary people; it is a “God-given” right. The key is whether one is informed and takes action.
- The Nature of Work and the Meaning of Life: Our lives should not be solely for work and survival. Viewing one’s job as the entirety of life is a form of enslavement by capitalism. Only after being free from work pressure can one truly understand what “life” is and pursue what one loves, like gardening or enjoying a pastoral life.
- The Risks of Leveraged ETFs: One must deeply understand the nature of leveraged ETFs (like TQQQ). They can bring tenfold returns in the short term but can also drop to zero (a 99.999% decline) in a single major crash. Therefore, their risk must be managed through asset allocation and rebalancing; never go all-in.
III. Q&A Session#
Kate#
- Share: She recently heard a story that Tony Robbins suggests two things for success: first, imitate someone you want to become; second, practice positive meditation daily. She applied this to herself by imitating James, practicing the seven levels of investing step-by-step—from understanding investing and doing it right to pledging assets without repayment—and believes she is on the right path. She also mentioned that Taiwan’s inheritance tax is very low.
- James’s Reply: He agrees that Taiwan’s inheritance tax is low (maximum 20%), so there’s no need for complex trusts or planning. The best “tax avoidance” is to “have many children and grandchildren” and use the annual gift tax exemption to transfer wealth to future generations early, which has an amazing compounding effect. He shared a cautionary tale of a bank deceiving a family into taking out a massive loan to “plan” for inheritance tax, warning that bank promotions can sometimes be scams.
Ola#
- Share: He has opened Custodial Accounts for his three young children, with a portfolio of 60% QQQ, 20% QLD, and 20% SGOV. He plans to invest small amounts regularly. His goal is not to give them a certain amount of money but to “teach them how to fish,” allowing them to see the account grow from a young age and giving him the opportunity to teach them the complete financial system in the future, including Pledge Loans. This is both a transfer of wealth and wisdom.
- James’s Reply: He strongly agrees with this educational approach. He pointed out that gifting early is the best estate planning. For example, giving a daughter $20,000 annually for 40 years could grow to nearly $100 billion at an 18% return, completely tax-free, which is far more significant than worrying about the inheritance tax exemption amount.
Lu#
- Share:
- Reminded everyone to be aware of scam accounts on Clubhouse impersonating James.
- She believes new students should systematically study James’s past lessons from the beginning rather than jumping around, which can lead to confusion. Younger students, in particular, might not understand why some of the advice is conservative, as earlier courses were often geared towards those nearing retirement.
- Suggested creating a more “pure” EACC discussion space to avoid mixing with other investment philosophies.
- James’s Reply: Thanked her for the reminders. He will consider opening a Case Study session, possibly on Saturdays after the briefing, to discuss one or two specific cases to help with “clinical learning.” He will think about the suggestion of a separate room.
Dr. An#
- Share: As a long-time student since 2011, he shared several key benefits:
- Han Xin Deploying Troops: Following James’s advice, he canceled unnecessary investment-linked insurance policies, sold an idle property in Taiwan to invest in US index funds, and did not rush to pay off his mortgage. These three decisions significantly improved his financial situation.
- Evolution of Investment Philosophy: He recalled that he initially only learned to “Buy and Hold SPY,” which was just 1/5 of the entire system. Now, the system has evolved to include a complete solution with QQQ, Pledge Loans, a 2% withdrawal rate, and 433 asset allocation, which makes him feel more secure and at ease. . Unity with Spouse: He and his wife learn together and are in complete agreement on family financial decisions, which makes execution very smooth. This is a great blessing.
- James’s Reply: Thanked Dr. An for his sharing and added that he made another very important decision—the Roth Conversion, which saves a huge amount in taxes. Dr. An was also one of the course instructors.
W.W.#
- Question: Regarding the Traditional IRA, some suggest holding cash in it so the future tax base is low. But she thought if she put it all in QQQ, although the future tax would be higher, the growth would also be much higher than cash. Isn’t that better?
- James’s Reply: This is a balance between risk and taxes. James provided a strategy: suppose you convert $100,000 to a Roth account annually. You could buy $100,000 of TQQQ (3x leverage) in the Roth. To balance the risk of the entire portfolio, you could hold $200,000 in cash in your Traditional IRA. This way, your high-growth component (TQQQ) is in the tax-free Roth account, while the cash in the Traditional IRA hedges the risk. This optimizes the tax structure without reducing the overall return potential.
Ling#
- Share: She shared an experience helping a novice investor friend. The friend initially claimed she could tolerate a 50% fluctuation, but when told the loss could last for 3-5 years, she immediately said she couldn’t accept it; her bottom line was not losing principal for more than 1-2 years. Through this conversation, Ling deeply realized that everyone’s definition of and tolerance for “risk” is completely different. Before taking any investment action (like buying immediately at market price), the first task is to thoroughly understand what level of risk you can truly bear.
- James’s Reply: He highly praised Ling’s clear logic. He emphasized that knowing your own risk tolerance is the first step in investing, more important than any strategy. He used the 2000 dot-com bubble as an example, where QQQ took 15 years to return to its high, which is why he recommends keeping enough cash for 15-20 years. “Survival is more important than making money.” Before you understand yourself, you should keep more cash; the rate of return is not the top priority.
Cocity#
- Question: He raised a macro question about the global “de-dollarization” trend and central banks hoarding gold. He wanted to know if this poses a long-term threat to an investment strategy centered on US dollar assets and whether we need to prepare for it.
- James’s Reply: He acknowledged that this trend is real. However, he offered several counterpoints: 1. The US debt problem could be resolved by productivity gains from AI (e.g., an extra 1.5% GDP growth annually). 2. A thought experiment: If the US government announced a “ban on using US dollars for gold transactions,” the entire dollar-denominated gold market would collapse instantly, and the value of gold hoarded by countries would plummet. The US has many tools left in its toolbox to maintain its hegemony. The disputes between the US and China over chips and rare earths are games between nations and do not affect our long-term confidence in US technological development, which is unrelated to investing in QQQ.
Wang Zhihua#
- Question: As a new student from Beijing, he asked which QQQ product he should buy. Should he buy the US-listed QQQ directly, the Hong Kong-listed 3086/9086, or the A-share listed 513100? Also, he wants to dollar-cost average for his daughter; is a leveraged ETF (TQQQ) suitable?
- James’s Reply: He recommended buying a Hong Kong-issued product (like 3086), primarily to avoid US inheritance tax. Hong Kong also has a 2x leveraged Nasdaq fund (like CSOP NASDAQ-100 INDEX DAILY (2X) LEVERAGED PRODUCT - 7261) and money market funds that can be used for asset allocation. For his daughter’s money, he can buy 513100 in China or a Stock Connect product in Hong Kong. Additionally, James mentioned that a Simplified Chinese version of his “Bible of Financial Management” is available and he can ask for it.
Pella#
- Share: She expressed deep gratitude for James’s patience, even with a “snail” like her who learns slowly. She shared that she has already invested by refinancing her house and has taught her children, who now compete to treat her to meals. She also shared this philosophy with friends doing missionary work in remote countries, and they have started investing. What she is most grateful for is James’s “religious-like spirit” of wanting all beings to be wealthy.
- James’s Reply: He thanked her for sharing and said that everyone contributes to society in their own way. His ability is to spread the concept of wealth to help more people achieve financial security.
Julia#
- Share: She shared her experience using AI (ChatGPT) to research the tax issues of Health Savings Accounts (HSA) in California. She found that AI would “confidently spout nonsense,” with different AIs and online articles providing contradictory information, creating a phenomenon of “mutual contamination.” In the end, she had to return to first principles and personally check the original tax code to confirm the correct information: in California, both HSA contributions and investment gains are subject to state tax, significantly reducing the tax benefits.
- James’s Reply: He completely agreed. He emphasized that current AI is still an “amateur” tool or “toy” and cannot be used for serious professional fields like tax or law. He himself found that AI makes basic numerical errors when creating videos. He reiterated that he does not recommend using HSAs and added a clarification that he might have previously confused HSAs with 529 plans. The beneficiary for withdrawals from a 529 account is a designated beneficiary (like a child), whereas the HSA holder can use the funds themselves.
L. Zhang#
- Share: As a new listener, she said she had benefited greatly but felt she still had a long way to go, so she would be a quiet listener for now. She was very grateful to have found James.
- James’s Reply: He welcomed her and encouraged her to share or ask questions whenever she feels ready.
IV. Highlight Quotes#
Wealth is a natural gift… you have the right to be wealthy, and you need to be informed of this. – James Background: James explained his original intention for starting the channel was that many people don’t know they are inherently entitled to become wealthy through correct investing.
The more advanced technology and AI become… people who use AI don’t become more idle but busier, because there are more and more things you can do. – James Background: When discussing the impact of AI, James pointed out that AI is a tool that expands the boundaries of our capabilities, resulting in us being able to do, and wanting to do, more things, rather than making us idle.
A person doesn’t know what it is to be human until they are without a job. That is what you call a ’life.' – James Background: In explaining his life philosophy, James criticized the idea of “living to work,” believing that only by breaking free from the shackles of work can one truly experience and understand the meaning of life.
Survival is more important than making money. – James Background: When commenting on Ling’s case study about risk perception, James emphasized that survival is the first principle of investing. Managing risk and keeping sufficient cash is far more important than chasing short-term high returns.
Everyone’s understanding of risk can be completely different… You must first figure out what you consider to be risk before you allocate your assets. – Ling Background: Ling shared her experience helping a novice investor friend and discovered a huge gap between the friend’s stated risk tolerance and her actual psychological bottom line, leading to this conclusion.
AI will confidently spout nonsense… In the world today, there is some information… that is prone to this kind of mutual contamination. – Julia Background: Julia shared her pitfalls when using AI to research complex tax issues, finding that AI and incorrect online information form a vicious cycle, mutually citing and amplifying errors.
Invest only in index funds, buy whenever you have money and never sell, buy with your eyes closed… Do your asset allocation… live off loans from stock pledging, and never repay them. – James Background: When summarizing the seventh and highest level of investment operations, James used this phrase to encapsulate the essence of the strategy for achieving ultimate financial freedom.
V. Summary#
This session was a systematic and in-depth review of investment philosophy and life-wealth concepts. Through a clear, three-tiered “seven-level ladder” model, James constructed a complete growth blueprint for listeners, from investment novice to wealthy magnate. The course not only taught “what to do” (invest in indexes, don’t sell, use pledging wisely) but also profoundly explained “why to do it” (understand risk, ignore noise, believe in compounding) and the ultimate goal (achieve freedom in life, not be enslaved by work). The students’ sharing and questions—from practical operations to macroeconomics and the critical use of AI tools—greatly enriched the breadth and depth of the discussion, once again confirming that investment success ultimately stems from continuous learning, deep self-awareness, and a firm philosophical belief.
Disclaimer: This article is for personal study notes only and does not constitute any investment advice.