I. Theme of the Episode#
The core of this classroom session lies in reiterating and deepening the channel’s highest guiding principle of investment: “Buy whenever you have money, never sell.” Through specific cases and analyses, Teacher James emphasizes the inevitability of long-term holding of high-quality assets represented by the Nasdaq 100 Index. At the same time, he dissects in detail the potential huge risks for non-US residents investing in the US, and provides clear strategic guidance on how to use stock pledging and high-dividend ETFs to build a stable retirement cash flow, aiming to help investors establish a financial system that allows them to enjoy life with peace of mind without being anxious about market fluctuations.
II. Presentation Content#
Personal Health Share: Experience Treating Sleep Apnea#
- Problem & Harm: Teacher James had long been troubled by snoring problems and later realized their severity. Snoring (Sleep Apnea) leads to reduced blood oxygen concentration at night (he personally dropped as low as 83%). Long-term effects can trigger health risks such as insulin resistance, hypertension, hyperlipidemia, heart disease, and even dementia.
- Treatment Plan: Through a dentist specializing in sleep therapy (Dr. Hsu at Caipin Dental Clinic), he underwent corrective treatment using a customized oral appliance (mouthpiece). The cost was about 50,000 to 60,000 TWD. This method does not require surgery and is suitable for moderate-level problems.
- Significant Results: After treatment, sleep quality improved drastically, and snoring almost completely disappeared. Comparing data from the
SnoreLabApp andApple Watch: before treatment, snoring time accounted for 17% of sleep time with frequent awakenings; after treatment, the snoring ratio dropped to 0-1%, with continuous and deep sleep. - Advice: The teacher suggests that friends with similar troubles take this issue seriously. You can use apps like
SnoreLabfor preliminary detection and consult professional sleep specialists; dental correction might be a relatively simple initial solution.
Investment Risks for Non-US Tax Residents#
- Core Warning: Teacher James, in a very serious tone, emphasized again that Non-US tax residents (those without US citizenship or Green Card) must absolutely not open accounts with US brokerages (such as Schwab, IBKR, Fidelity, etc.) to invest or buy real estate in their personal names.
- Three Core Risks:
- High Estate Tax: Once the asset owner passes away, their assets in the US will face an estate tax of up to 40%.
- Account Freezing Risk: US financial regulation is very strict, and accounts can be frozen at any time for various reasons. For example:
- The bank cannot contact the person (emails bounced, phone numbers invalid).
- The actual flow of funds in the account does not match the purpose declared at opening (e.g., large investment sums moving in and out of an account declared for living expenses).
- Extremely Complex Inheritance Procedures:
- The inheritance process is cumbersome, requiring a large number of documents like death certificates and household registers, which need notarization and English translation, and finally authentication by the US Consulate in the local area.
- Inheritance requires going through the US court’s “Probate” process, taking at least six months or more.
- Heirs usually need to hire US lawyers to handle it, which is costly and complex, potentially leading family members to give up inheritance, resulting in the assets vanishing.
- Conclusion: There is absolutely no need to take this risk. Investors should buy ETF products tracking the Nasdaq 100 Index through local brokerages in their own country or region.
High Dividend ETF (QQQI) Interpretation#
- Dividend Source Structure: QQQI’s dividends do not rely entirely on profit distributions from constituent companies. Its composition is relatively complex and stable, coming mainly from three aspects:
- Actual Dividends: Dividends distributed by the 80% QQQ it holds.
- Option Strategy Income: Income (premiums) generated by selling Covered Calls and Call Spreads. This part of the income is usually correlated with central bank interest rate levels.
- Rebalancing & Stabilization Fund: When the held QQQ appreciates significantly due to market rise, fund managers will sell a portion of the stocks to convert profits into cash, used to distribute dividends stably, acting similarly to a stabilization fund.
- Purpose & Trade-off: The goal of QQQI is to provide investors with stable, predictable cash flow. To achieve this, it sacrifices some capital appreciation (since it only holds 80% of QQQ, its Beta is about 0.8). Its total return will be slightly lower than QQQ, but for retirees who need stable living expenses, this is worth it.
Asset Allocation and Stock Pledging#
- Rebalancing After Asset Appreciation: When assets using the 433 allocation grow significantly (e.g., from $1 million to $5 million), the “autopilot system” can be reset to improve quality of life.
- Example: Assets at 5 million, existing loan at 250k. You can take 500k (twice the loan amount) from the 5 million and put it into a Money Market Fund as a new cash reserve. The remaining 4.5 million is then allocated via 433. This way, annual disposable living expenses can be calculated at 2% of the new total asset value, i.e., $100,000 (5M * 2%), significantly improving quality of life.
- Core Principle of Stock Pledging: Borrow But Do Not Repay:
- Wrong Operation: Absolutely do not use your cash reserves (Money Market Fund) to repay the stock pledge loan.
- Reason: Once you use cash to repay, your asset allocation ratio is destroyed. The reduction in the cash portion causes the risk (Beta) of the entire portfolio to rise from the original 0.9 to 1.11, significantly increasing volatility and violating the original intention of asset allocation.
- Correct Mindset: People who pledge stocks should “ignore interest.” Because the interest generated by your cash portion (e.g., 3%) and the returns generated by the investment portion (e.g., 15%) are far higher than the loan interest you pay (e.g., 6-7%). The core function of cash reserves is for rebalancing during market downturns, not for repayment.
III. Q&A Session#
Laurence#
- Share: Previously, her husband was very conflicted about how to build a position, but recently finally allocated all funds. After completion, the whole person became calm and reassured. Family financial anxiety disappeared, and they felt unprecedented freedom. They no longer feel guilty about spending, nor do they feel the need to sell more physical labor (like part-time jobs) to make money. Quality of life and mindset have improved greatly.
- Teacher James’ Comment: This is exactly the goal of our channel—to let everyone have peace of mind and not be trapped by money. The purpose of life is not to work, but to enjoy life. Through investment, let the strongest 100 companies in the US work for us and raise our next generation, while we can live the life we want with peace of mind, enjoying food, coffee, and the company of family.
Adia#
- Question 1: After retirement, there are still individual stocks with high profits accounting for about ten-plus percent of total assets (such as Tesla, Google, Microsoft) in the account. How should they be handled?
- Teacher James’ Reply: There are two options.
- Sell Immediately: Sell it all at once and pay the 15% long-term capital gains tax. The advantage is it’s simple and done once and for all.
- Sell in Batches: Wait until the Roth Conversion is fully completed in 7-8 years. When personal income decreases, sell stocks in batches annually utilizing the tax-free allowance for long-term capital gains (about $60,000 for singles, deducting Social Security and other income) to save on taxes. But this method is more troublesome. The teacher leans towards the first option for simplicity.
- Teacher James’ Reply: There are two options.
- Question 2: Due to high taxes and health insurance payments after retirement, annual expenses have increased, causing total assets to be slightly lower than 33 times annual expenses. Can stock pledging still be done?
- Teacher James’ Reply: Absolutely. You can still borrow via pledging to pay taxes and living expenses. If the required withdrawal ratio is higher than the standard 2% of the 433 allocation, you can adjust the asset allocation appropriately. For example, increase the proportion of high-dividend QQQI in the retirement account. QQQI will generate stable cash flow to replenish your cash pool, which effectively lowers the risk (Beta) of the entire portfolio, thereby allowing you to safely increase the borrowing ratio (e.g., up to 3%).
Shu#
- Share: After learning investment concepts, her mindset underwent a huge shift. She no longer bargains when buying things but feels grateful to merchants, practicing the mindset of a “rich person.” She started teaching her children to save from a young age and invest in 00662 (Nasdaq 100 ETF in Taiwan stocks), using incentives to encourage them to save. She also shared her experience of spreading these concepts to friends, realizing that everyone’s timing for “enlightenment” is different, but insisting on planting seeds always brings hope.
- Teacher James’ Comment: Excellent! This shows you already possess a “free heart” and are no longer bound by money. This open-minded and grateful attitude will actually bring you more unexpected benefits and services in life.
Henry#
- Share: As a doctor, he provided professional supplementation on the sleep apnea mentioned by Teacher James. He explained the three types: obstructive, central, and mixed, emphasized long-term harms (such as Alzheimer’s), and introduced different treatment methods, including oral appliances, CPAP machines, surgery, etc. He advised people with symptoms to see a doctor.
- Teacher James’ Comment: Thanks to Dr. Henry for the professional addition, and emphasized again that everyone should take this issue seriously and seek professional medical help.
- Question 1 (Asked by Su): A friend used a CPAP machine for a year and the problem was solved, but recently the doctor asked him to use it again. Why?
- Dr. Henry’s Reply: CPAP is assisted breathing and usually cannot cure the disease itself unless the problem was caused by obesity and weight loss was successful. If weight rebounds, the problem may recur. If symptoms persist, continuous use or other treatment options like surgery are needed.
- Question 2 (Asked by Houqin): If surgery is needed, what specific part is treated?
- Teacher James’ Reply: (Answering briefly on behalf) Generally, it involves removing excess soft tissue in the throat to widen the airway. However, the specific situation is very professional, and it is recommended to consult a specialist directly.
Tina#
- Question 1: Asked about an ETF with code CPNQ. It has downside protection (max drop to 0) but also capped upside and no dividends. Is it suitable as a substitute for the cash position?
- Teacher James’ Reply: Not suitable. For retirees, stable and continuous cash flow (dividends) is a rigid need. We cannot accept a situation where we don’t get living expenses because the market falls.
- Question 2: Does using the channel’s ChatGPT require a paid version?
- Teacher James’ Reply: No, the free version is fine. The teacher also shared a link to a custom GPT he trained himself. This version’s answers will align more closely with the channel’s investment philosophy and be more precise than the general ChatGPT.
Liu Fry#
- Question: As a new investor from mainland China, with total assets of about 700k RMB dispersed across IB, domestic brokerages, and HSBC Hong Kong. Since the asset amount is small, is asset allocation necessary? How should the leverage part be operated?
- Teacher James’ Reply:
- Account Adjustment: You should transfer assets from IB to HSBC Hong Kong as soon as possible to avoid US estate tax and account risks.
- Asset Allocation: You can buy the Nasdaq 100 2x Leveraged ETF listed in Hong Kong via HSBC, but the leveraged position should not exceed 20% of total assets. Before starting to pledge for living expenses, there is no need to frequently rebalance the leverage part.
- Cash Position: For the cash part in the Hong Kong account, you can consult HSBC to see which money market funds (such as CSOP US Dollar Money Market Fund, 9096 or 3096) are eligible for pledging.
- Teacher James’ Reply:
Lily#
- Share: Shared her insights after watching all the teacher’s recent videos.
- Deeply touched by the teacher’s philosophy of “Formless Investment” (无相投资), considering it a state of liberation where “what had to be done is done, there is no more becoming” (所作已办，不受后有), helping herself break free from the greed of chasing short-term swings.
- Shared her past experience of playing with high-risk pledged leverage, rejoicing that she learned the teacher’s steady allocation method, avoiding the risk of liquidation.
- Shared the different reactions of colleagues to investment concepts, realizing that cognition and choice are the watersheds of class division.
- She considers herself a highly sensitive person, and the teacher’s investment philosophy and outlook on life resonate very well with her.
- Question: If the teacher could go back to being 30 years old, what would he say to himself?
- Teacher James’ Reply: He would unhesitatingly teach his 30-year-old self hand-in-hand to do index investing and to start using leveraged funds and stock pledging as early as possible. Because “investing makes you wealthy, but borrowing makes you a tycoon.” These are two completely different wealth levels. He believes success does not require experiencing hardships; if you know the right path from the beginning, you should walk it directly without detours.
Houqin#
- Share: Shared a story about a Cuban contractor friend who brought his entire family of 27 to the US, bearing all expenses alone, facing huge financial pressure, reflecting the complexity of immigration issues.
- Question 1: Since the investment portfolio (QQQ, QLD, Cash) itself generates dividends and interest, and these cash flows might already be enough for living, why not use this money directly instead of borrowing and paying interest?
- Teacher James’ Reply: This is a core conceptual error. Absolutely do not spend your own money (including dividends and interest)! Your money is a “Golden Goose” that can generate money and should be continuously invested in the market to obtain an annualized return of about 15%. The cost of borrowing is only 6-7%. Spending your own dividends is equivalent to giving up higher returns, which is not cost-effective at all.
- Question 2: After entering the AI society, with a large population unemployed, how will they consume without income? How will society function?
- Teacher James’ Reply: Future society may bifurcate. A large unemployed population will be “kept/fed” (like in a zoo), with basic food, clothing, housing, and transportation guaranteed by surplus products created by AI, but they will have no right to choose. Capitalists who own assets (us investors) can use wealth to buy scarce resources and services, living a life of free choice. From a grander philosophical level, humanity’s historical mission might be to nurture AI, a higher species, as our “next generation.”
Mike#
- Question/Observation: Regarding the Nasdaq 100 Index constituent adjustment, why was Walmart (WMT) added recently, while AstraZeneca (AZN), whose market cap is far larger than the last company, was removed? Does this mean the index is no longer passive investment?
- Teacher James’ Reply: This is indeed unusual. According to passive index rules, the company with the smallest market cap is usually removed. Removing a company with a high market cap ranking might involve human judgment, which contradicts the concept of a passive index. The teacher stated that further research into the specific reasons is needed, but this does not affect our long-term confidence in the index.
- Share 1: Shared the experience of his friend within the “system” in China. Because this friend could not bypass the firewall to get outside information, he listened to his wife and invested in Chinese real estate, resulting in assets falling from a peak of nearly 60 million RMB to less than 20 million; meanwhile, the portion invested in 513100 (A-share Nasdaq ETF) following Mike’s advice performed excellently, forming a sharp contrast. This highlights the importance of accessing correct information and cognition.
- Share 2: Shared that his doctor friend was skeptical about Google AlphaFold (protein folding prediction), arguing that “humans can’t even synthesize artificial starch, how can they analyze all proteins.”
- Teacher James’ Reply: These are two completely unrelated things. One cannot use a bottleneck in one field to negate a breakthrough in another.
IV. Key Quotes#
Investing makes you wealthy, but borrowing makes you a tycoon. – Teacher James
Background: When answering student Lily’s question about “what he would say to his younger self if he could go back,” the teacher emphasized the huge amplifying effect of using leverage early on for wealth growth.
When you have stock pledging, don’t spend a single dime of your own assets. Why spend your own money? Your money can be invested for a 15% return, while borrowing only costs you 6% or 7%. – Teacher James
Background: In response to student Houqin’s question about “why not live off dividends instead of borrowing,” the teacher hit the nail on the head regarding the opportunity cost of spending dividends, which is the core logic of the stock pledging strategy.
Not borrowing is where the risk lies; borrowing is actually lower risk. – Teacher James
Background: Re-emphasizing that borrowing (pledging) under reasonable allocation carries lower risk than using principal (including dividends), because the latter destroys asset allocation and increases portfolio volatility.
We rely on the 100 strongest companies in the US; there is no investment more stable than this. – Teacher James
Background: When commenting on student Laurence’s share, the teacher explained the source of confidence in investing in the Nasdaq 100 Index: trusting the long-term creativity of the top tier of human enterprises.
You are not a US tax resident; do not open an account with a US brokerage to invest, and do not buy assets in the US. Understood? – Teacher James
Background: The teacher used an extremely serious and repetitive tone to emphasize the severe risks of direct investment in the US for non-US residents. This is an important reminder for all overseas investors.
Today, after putting all my funds into QQQ with these asset allocations, I have ‘done what had to be done, subject to no further becoming’ (所作已办，不受后有). That is, there will be no more troubles of greed, anger, and ignorance following me. – Lily
Background: Student Lily shared her understanding of the teacher’s “Formless Investment” philosophy, combining it with the Buddhist state of liberation from afflictions, vividly describing the inner peace brought by index investing.
We humans are not born to work… slowly let money work for us, so we can retire with stability and live what we call freedom. – Teacher James
Background: The teacher encouraged the student couple, explaining that the true meaning of financial freedom is liberating time and life to do what one truly wants, rather than being burdened by work for a lifetime.
When I am old, when I become a grandmother… I want to be a rich grandma. – Shu
Background: Student Shu shared her beautiful vision for the future, hoping that through investment, she will not only make herself wealthy but also benefit her descendants, becoming a generous elder with financial confidence.
V. Summary#
This episode, ranging from personal health to global macroeconomics, from practical investment to philosophy of life, once again builds a complete and firm investment worldview for us. Teacher James’ core message remains consistent: find and stick to the simplest and most essential investment truth—long-term holding and complete trust in index funds composed of top enterprises. He not only provided the methodology of “what to do” (buy indices) and “how to do it” (asset allocation and pledging) but, more importantly, by repeatedly emphasizing the investment risks for non-US residents and the importance of mindset construction, he cleared the most dangerous traps and common ideological obstacles on our investment path. Whether new investors or senior students, everyone can find the guidance and confidence needed for their current stage in this episode, eventually walking towards the path of financial freedom with peace of mind.