I. Topic of the Episode#
The theme of this episode focuses on “True Freedom” and “An Investment Mindset that Ignores the Market.” Teacher James emphasizes that market volatility (such as a 5% rise or fall) and international situations should be irrelevant to investors. True freedom is when daily life is no longer constrained by monetary considerations. Furthermore, as the end of the year approaches, students are reminded to perform “Smart Rebalancing.” The session also highlights the characteristics and use cases of high-dividend ETFs (such as QQQI, JEPQ) and deeply explores how AI technology is changing content creation and future lifestyles.
II. Presentation Content#
1. Investment Mindset and the Definition of Freedom#
- Ignoring Market Volatility: The market fluctuated by 10% over the past two weeks, but this should have zero impact on long-term index investors. If you can manage to be completely unaware of last week’s market fluctuations, or even log into your account only once a year, you are a successful investor.
- Financial Freedom: The definition of freedom is “money is not within your considerations.” Whether dining out, traveling, or buying a house, being able to act as if you are buying a pair of slippers without considering the price—that is attaining the realm of freedom.
- Year-End Operations: It is currently November/December, which is a good time for Smart Rebalancing. If you don’t want to do it now, doing it early next year is also fine.
2. Fraud Warning#
- AI Identity Theft: Fraud groups are using AI technology (such as ChatGPT) to impersonate Teacher James (ID: Chairman1, etc.) and reply in the YouTube comments section, even using AI-generated voice.
- Sole Contact Method: Please recognize Teacher James’s correct ID. All communication should be conducted via Email; do not easily trust private messages within YouTube or Clubhouse.
3. New YouTube Features and Content Dissemination#
- Multi-Language Audio Tracks: YouTube now features AI automatic audio track translation. Uploaded Chinese videos can be automatically translated into English voiceovers, giving future content global dissemination capabilities.
- Setup Method: Select “Audio Track” in the video settings to switch languages. While this increases content reach, it also implies that English content can more aggressively conduct global cultural export.
4. Investment Tools and Asset Allocation#
- China 513100 Premium Issue:
- Do not obsess over the premium. Due to foreign exchange controls, financial institutions cannot immediately arbitrage to close the gap, so the premium may exist for a long time (even 100 years).
- Strategy: Buy immediately at market price. Getting “on the bus” is what matters most; do not miss the market rally while waiting for the premium to converge.
- High-Dividend ETF Analysis (JEPQ, QQQI):
- Target Audience: Those who have retired and need stable cash flow. Young people should not invest in this; they should focus on growth.
- Characteristics:
- JEPQ: Dividend yield approx. 10%, Beta approx. 0.7-0.8 (lower volatility).
- QQQI: Dividend yield approx. 12-13%, Beta approx. 0.9-1.1 (volatility close to QQQ).
- Major Holdings: These funds typically hold about 80% in QQQ and use the other 20% for options strategies (Covered Call, etc.) to generate cash flow.
- Tax Issues:
- US Tax Residents: Primarily treated as Long-term capital gains (preferential tax rate), not ordinary Income.
- Taiwan/Overseas Investors: If the brokerage (e.g., SinoPac re-consignment, with IBKR as the upstream) has QI status, there may be an automatic Refund, allowing for full dividend receipt. Generally, non-US residents face 30% withholding, but products like QQQI may have higher refund ratios due to their structural characteristics.
- Risk Warning: These are not Cash (Money Market); they will still fall with the market (potentially dropping 20-30%) and risk must be considered.
- Leveraged Fund Risks:
- Although leveraged funds (like TQQQ) won’t go to zero, they can face a 99% decline.
- Smart Rebalancing must be executed: convert profits to cash during rises so you have funds to replenish positions during major market crashes (e.g., an 85% drop).
- Leveraged positions must not exceed the prototype fund or cash positions.
5. Real Estate and Life Philosophy#
- Houses are Cages: Young people should not buy houses too early; carrying a mortgage is like locking yourself in a cage. Buying a house should only be considered when it feels as easy as buying slippers.
- Advantages of Stock Pledging: Stock pledging has no upper age limit and is flexible to handle; whereas real estate loans (like reverse mortgages) face increasing restrictions with age. Stocks are better assets than real estate and are easier to divide for inheritance.
III. Q&A Session#
Ray#
- Sharing: Recently listened to a speech by Charlie Munger and learned about holding cash, understanding risk, antifragility, and not being jealous.
- Question: Munger always emphasized “no leverage” and “no borrowing,” but Buffett actually uses insurance float as leverage. Why did Munger advise this? Does it conflict with our concept of “leveraged investing”?
- Teacher James’s Reply:
- Munger opposed borrowing for consumption (e.g., Americans borrowing to buy mansions, luxury cars, paying for travel in installments), which leads to being “exquisitely poor.”
- Munger opposed all-in, unhedged leveraged investment (like going all-in on Bitcoin or a single stock).
- Our borrowing is based on asset allocation and risk control, which is completely different from the gambling-style borrowing Munger opposed.
- Regarding jealousy: Never compare yourself with others; compare with yourself. Win at the finish line, not at the starting line. Be overflowing with confidence and ignore outside noise.
- Teacher James’s Reply:
Jialin#
- Question 1: My firm, which I ran for 15 years, is closing due to hiring difficulties. Although I have enough money, I feel I wasted my youth and feel sad. How do I adjust?
- Question 2: Single, 50 years old, no children, assets approx. 35 million TWD, annual expenses 1.8 million. Previously advised a 3-1-6 allocation; can I now use 18 million to buy high-dividend ETFs (like 0056 or QQQI) and do a 70/30 allocation with the rest?
- Teacher James’s Reply:
- Regarding Asset Allocation: Since you have 35 million, taking 20 million to buy QQQI or 0056 generates over 2 million in cash flow annually, fully covering the 1.8 million expenses with surplus. Keep 5 million in cash and buy 00662 with the rest for long-term growth. You have plenty of money; enjoy it to the fullest.
- Regarding Mindset: Closing the firm is a good thing; it ends the torture. Life doesn’t require “doing things”; it’s okay to contain “idleness.” Establish rituals in life (gardening, keeping fish, pour-over coffee, reading), enjoy freedom, and don’t need work to prove your value.
- Special Advice: Single people need to build a close circle of friends who can “go to the emergency room with you at 2 AM.” This is very important.
- Teacher James’s Reply:
Haoqing#
- Question: I have a retired client couple with few assets, living on Social Security. They own a large house worth about 6 million USD. The wife has an emotional attachment to “home” and refuses to sell, wanting to turn it into an Airbnb while they move back to Taiwan. Is this wise?
- Teacher James’s Reply:
- Very unwise. Keeping a big house (“old hen”) that doesn’t lay eggs is not cost-effective. The maintenance costs (property tax, repairs) for a 6 million dollar house are extremely high.
- Advice: Sell the house, cash out 3-4 million USD, invest in QQQI, and generate 300,000-400,000 USD in annual cash flow.
- Lifestyle: With this huge cash flow, they can rent the highest-end apartments (with pools, gyms, social events) anywhere in the world (including the US) and enjoy true freedom, instead of being an Airbnb landlord dealing with messes. Mindsets must change; don’t be trapped by “poor man’s thinking.”
- Teacher James’s Reply:
BB#
- Sharing: The biggest takeaway from following the teacher is “peace of mind.” I used to feel that not working meant losing, now I understand “it’s okay not to do it.”
- Question: Considering moving back to the Bay Area. No longer obsessed with buying a house or top school districts; thinking renting and mid-to-upper school districts are fine?
- Teacher James’s Reply:
- Strongly support this. Even as a VP, you can “work with one hand”; being less busy actually improves efficiency.
- Renting in the Bay Area ($4500-5000) gets you into luxury apartments with excellent facilities, offering a higher quality of life.
- Regarding School Districts: You don’t need to squeeze children into top school districts that are entirely Asian. Mid-to-upper Mixed school districts are actually better for children to integrate into American society and diverse cultures.
- Teacher James’s Reply:
Washington#
- Question 1: TQQQ recently did a stock split. Is this good or bad?
- Teacher James’s Reply: Neither good nor bad; the essence hasn’t changed at all. It’s like exchanging a 100-dollar bill for two 50-dollar bills. The value remains the same; it’s just a numbers game in accounting.
- Question 2: regarding retirement, some say the brain degenerates if you retire, others say retiring early is good. What’s your view?
- Teacher James’s Reply: The key is Freedom. If you don’t dare to live somewhere because taxes are high (like California), that is not freedom. The goal should be to be unconstrained by money and location.
- Question 3: My son bought a life insurance policy (Whole Life), paying $1000/month. He has paid 130k. Initially told he only needed to pay for 10 years, now the agent says he has to pay until age 100?
- Teacher James’s Reply: This is garbage. I suggest stopping it (Cancel) immediately. Instead of paying $1000 to the insurance company every month, put it into QQQ. Savings/Whole Life insurance for young people usually has low returns, and eventually, even the principal might be eaten up by premiums.
Pei#
- Sharing: Watched a video by Professor Zeng Shiqiang saying that the fate between parents and children is for “separation,” not possession. Shared a story where her father forced her brother to drop out and become an apprentice because he didn’t study well, leading to a lifelong rift.
- Teacher James’s Reply: Strongly agree. Children are independent individuals; studying isn’t the only path. A parent’s responsibility is love and guidance, not control. Do not do things based on traditional concepts that you will regret for the rest of your life.
Billy#
- Question: Saw a YQQQ (Inverse ETF) with a seemingly high dividend yield (30%+). Is it worth investing?
- Teacher James’s Reply: Absolutely do not touch it. This is a toxic asset. Although the yield looks high, the share price may drop 28% or more annually. With principal loss plus tax costs, the total return is negative. Don’t touch things you don’t understand.
Wang Zhihua#
- Question 1: Confirming regarding investing in China fund 513100 from the mainland: should I buy directly regardless of the premium?
- Teacher James’s Reply: Yes, ignore the premium and buy directly at market price.
- Question 2: Bought previously and it dropped 30%. Should I replenish now or wait?
- Teacher James’s Reply: Replenish now. Investing for children looks at a 20-30 year horizon. Buy when you have money; don’t hold cash.
- Question 3: Can mainlanders buy QQQI through Hong Kong brokerages? Is it suitable?
- Teacher James’s Reply: You can buy it. QQQI (80% QQQ + 20% Option Strategy) has both growth and cash flow. If you are retired or need cash flow, calculate the purchase amount based on your required annual income (e.g., if you need 60,000 RMB annual income, buy the corresponding principal amount of QQQI).
Mike#
- Question 1: Michael Burry and others believe AI hardware (GPUs, etc.) depreciates too slowly, actual obsolescence is fast, and there might be financial fraud or a bubble?
- Teacher James’s Reply: This is nonsense. It is normal for tech hardware (like data centers, GPUs) to depreciate over 5-7 years. The release of a new generation doesn’t mean old ones are scrapped immediately; old equipment continues to generate value (Perform). Michael Burry is often wrong on the short side, and his fund performance is not good.
- Question 2: What is the physical entity of the “Cloud” in the AI era? Since the Internet corresponds to the Cloud, what does AI correspond to?
- Teacher James’s Reply:
- AI is Everywhere. In the future, there will be no concept of Apps, only Input (Voice/Vision) and Output (Screen/Execution).
- AI will become your Agent, handling all miscellaneous tasks (ordering coffee, booking doctors, making spreadsheets, buying tickets).
- Companies controlling platforms and entry points like Google and Apple will dominate. Google is currently leading in AI technology (Gemini, etc.).
- Elon Musk launching computing power into space (Space-based AI) is also a trend.
- Teacher James’s Reply:
Rabbit (Tu Baobao)#
- Comment: Everyone selling is wrong.
- Teacher James’s Reply: Correct. Selling at any time is wrong; buying at any time is right.
IV. Highlighted Views#
The definition of freedom is that money is not within your considerations. – Teacher James
This view was presented when explaining the true realm of financial freedom, emphasizing that freedom is not about how much money you have, but that life decisions are no longer constrained by money.
Return rate is not determined by asset allocation; return rate is determined by the future market. Asset allocation determines whether you can survive. – Teacher James
This view was presented to correct students who overly pursue backtested performance simulations, emphasizing that the primary purpose of asset allocation is risk control and psychological comfort.
Don’t buy a house; buying a house is building a cage for yourself and locking yourself inside. – Teacher James
This view was presented when answering questions about young people buying homes and handling real estate after retirement, advocating not letting real estate limit life’s freedom.
The fate between parents and children is not for being together, but for separation. – Student Pei (Quoting Professor Zeng Shiqiang)
This view was cited during a student’s sharing of family relationship insights, emphasizing that parents should respect their children’s independence and learn to exit gracefully.
All selling is wrong, and all buying (at any time) is right. – Teacher James
This view was in response to a comment in the live stream, reiterating the core philosophy of index investing: long-term holding, buy only, never sell.
V. Summary#
In this episode, Teacher James further deepened the core concept of “Financial Freedom”—achieving complete indifference to money and market fluctuations. On the practical side, detailed explanations of high-dividend tools like QQQI were provided for the retired demographic, along with a strong recommendation to sell inefficient real estate assets and switch to financial assets to obtain true freedom and cash flow. Regarding the tech horizon, the teacher depicted a future where AI Agents will replace traditional Apps and reminded everyone to use AI tools to improve efficiency. Finally, regarding family relationships, the importance of respecting independent individuals and emotional connections was emphasized, encouraging everyone to live a “free life” unbound by money.
Disclaimer: This article is merely personal study notes and does not constitute any investment advice.