Please find the English translation below, following the original format:

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title: “00549 Investing is Not About Choosing Tickers, It’s About Choosing Systems: Non-US Tax Residents Should Avoid US Accounts, Don’t Blindly Buy the Dip, Young People Should Avoid High Dividends” date: 2026-01-17 description: “In this episode, Teacher James delves into the core philosophy of asset allocation, emphasizing that its primary purpose is to ‘survive’ in extreme market conditions, not to pursue maximum performance. He also shares specific operations regarding retirement planning, high-dividend strategies, and stock pledging, while offering unique insights on lifestyle issues like luxury consumption and children’s education planning.” tags: [“CLEC”, “Asset Allocation”, “Retirement Planning”, “Stock Pledging”, “High Dividend”, “Long-term Investing”, “Risk Management”]

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I. Theme of the Episode

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The core perspective of this episode revolves around “The primary purpose of asset allocation is for survival, not to maximize performance.” Teacher James emphasizes that market performance is determined by the market itself; we cannot predict or plan it. Therefore, the only thing we can do is to construct an asset allocation that allows us to survive in the most extreme scenarios (such as consecutive years of market decline). For retirees, cash is like air. The focus of asset allocation is to ensure that cash is never depleted under any market conditions, thereby guaranteeing a secure life.

II. Presentation Content

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Information Updates and Market Views

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• Listening Platforms in Mainland China: Some students have reposted CLEC’s audio and video content to platforms like Ximalaya, WeChat Video, Weibo, and Douyin in China, making it convenient for friends in Mainland China to listen and watch. You can search directly for “CLEC理财频道” (CLEC Financial Channel).
• About 2x Leveraged ETFs: A friend provided information on LQQ, a 2x leveraged Nasdaq ETF registered in Europe. This may offer an option for investors in Hong Kong or Singapore to avoid US estate tax.
• Comparison of Chinese High Dividend ETFs: The teacher compared two Southern Asset Management dividend low-volatility ETFs with similar names. He found that 008163 pays dividends monthly with a yield as high as around 15%, whereas 515450 only pays semi-annually with a yield of about 6-8%. Since their capital gains over the past year were similar, 008163 might be the better choice.
• Market View: Market volatility, international situations, and economic data are irrelevant to our investments. The only thing investors need to do is “buy when you have money, hold for the long term.” Be patient; there is no market peak, only higher peaks.

Core Philosophy of Asset Allocation: To Survive

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• The Risk of Buying the Dip: For those who have retired or have no fixed income, the “buy the dip” strategy carries huge risks. If the market falls for three consecutive years (accumulating an 85% drop) like during the Dot-com bubble (2000-2003), continuously injecting cash will lead to “running out of ammo.” Cash is air for retirees; it is better to have lower performance than to have no air.
• The Purpose of Asset Allocation: The sole purpose of asset allocation is to ensure you are still alive in the most extreme conditions. It is not to pursue the highest performance, because performance is determined by the market and cannot be planned. We cannot plan performance for an unknown future, but we can prepare for survival.
• Performance vs. Efficiency: Asset performance and efficiency are not determined by our allocation plan. A high Beta does not guarantee high returns (it crashes harder when the market falls), and holding too much cash is not necessarily inefficient (cash is most efficient during long-term market declines). Do not mistakenly believe that a good asset allocation guarantees future performance.

Retirement and Life Planning

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• Retirement Asset Threshold Adjustment: Considering that some find it difficult to reach the target of 50 times annual expenses, the teacher proposed a minimum threshold: 15 times annual expenses.
  • 10x Annual Expenses: Invest in High Dividend ETFs (like QQQI or China’s 008163) to generate over 10% in dividends to cover annual living costs.
  • 5x Annual Expenses: Invest in Growth Assets (like QQQ) to fight inflation and achieve asset growth.
• Warning for Young People: Young people must absolutely not touch high-dividend ETFs. Low returns are the biggest risk for young people. Furthermore, do not convert cash meant for emergencies (like SGOV) into high-volatility assets like QQQI; this is a complete misunderstanding of risk.
• Accompanying Children: Companionship is the best gift for children, far better than material provisions. The teacher shared how he played fighting games, hide-and-seek, and judo with his daughter since she was young, growing together like friends. At the same time, we can relearn the innocent “angelic traits” of childhood from our children, which is also a form of growth and healing for parents.
• The Nature of Housing: A house is the best tool for capitalism to enslave laborers. Once you take on a mortgage, you may be tied to your job for life, and losing your job midway plunges you into a crisis.

III. Q&A Session

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HuanGuZhong

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• Question: What is your take on purchasing luxury goods, such as designer bags or luxury cars? After accumulating wealth to a certain level, how do you balance the sense of ritual (e.g., buying gifts for a partner) with rational consumption? Is there a consumption metric?
  • Teacher James’ Reply: First, distinguish between “Exquisite Poverty” (trying to look rich while poor) and “Financial Freedom.” If your consumption affects your financial status, that is “Exquisite Poverty” and is undesirable. But when your assets reach a certain level where consumption does not affect your financial foundation, this is your “degree of freedom.”
    • Levels of Freedom:
      1. Buying groceries at the supermarket without looking at prices; buying whatever you want to eat.
      2. Buying clothes or gifts for family; if they like it, buy it without asking the price.
      3. When changing cars, you can do as you please because the car price does not affect your retirement assets.
      4. When traveling, booking the best hotels and flights without considering the price.
    • Conclusion: Money needs to be spent; spending money is the morality of the rich. The key is to know which level of “freedom” you are at. Consuming within a range that does not affect your financial health, exchanging material goods for spiritual pleasure and beautiful memories, is perfectly fine.

HanNi

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• Sharing: After encountering the teacher’s course in November this year, I have allocated all my assets to QQQI and 00675L.
• Question 1: I plan to take my 80-year-old mother to Japan in 2028 with a budget of 200,000. If I invest my monthly raise of 3,000 into QQQ, there will be a shortfall of about 80,000 by then. Should I sell QQQ to make up for the travel expenses?
  • Teacher James’ Reply: Do not use your own money. You have over 2 million in stock assets; you should use stock pledging to borrow 200,000 for the trip. Borrowing within 10% of your assets at one time is safe, and do not increase it afterwards. As long as the maintenance ratio is safe, just leave the loan alone; there is no rush to pay it back.
• Question 2: Can the “borrow new to pay old” stock pledging model be executed while still working and not yet retired? For example, pledging a small amount for credit card spending to improve quality of life, investing the cash back, and putting 100% of the salary into the market.
  • Teacher James’ Reply: Absolutely, and this is how it should be done. As long as you can control the risk, anyone with sufficient assets can engage in stock pledging at any time. The borrowed money can be used for travel, household subsidies, or any purpose. In Taiwan, pledged loans can be reinvested; in the US, they cannot. You need to pay attention to clean cash flow to avoid having the pledge account closed.

Liu

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• Question: I am currently in the 35% tax bracket. I expect to move to the 37% bracket when I retire in three years (due to Roth Conversions). Should I increase the Roth Conversion amount now to push my current bracket to 37% as well, thereby reducing the conversion pressure after retirement?
  • Teacher James’ Reply: Yes, your thinking is correct; you should do this now. Complete the conversion as early as possible before age 75.

August

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• Sharing 1: Since having a child, my entire way of thinking has changed. After encountering the teacher’s concepts, I feel a sense of “liberation,” allowing me to focus more on accompanying my family. I have also set up an investment allocation for my child so he won’t be trapped by money in the future.
• Sharing 2: I tried to share the teacher’s investment philosophy with a friend but found they weren’t receptive. I realized the timing might not be right and shouldn’t force it. He believes that people who can accept and execute the teacher’s philosophy need to possess two seemingly conflicting traits: “Flexibility” (open-mindedness to new concepts) and “Persistence” (determination to stick with it). I feel very lucky to have met the teacher and to be on the right path to the “Promised Land.”
  • Teacher James’ Comment: Our information is meant to give everyone peace of mind. The “Tao” (Way) of investing is consistent and unchanging through the ages. We invest in indices because it is the “Tao.” You must view everything with an infinite time dimension to see the truth.

Martin

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• Sharing: I am the student who created the investment backtesting simulation tool. I initially made it to see the performance of different asset allocations. However, after finishing it and reading other listeners’ comments, I deeply understood that the true purpose of backtesting is to determine if you can survive, not to predict how much you can earn. Additionally, this experience shocked me regarding the capabilities of AI. I had no prior contact with web programming, but through dialogue with AI, it helped me write all the code. This makes me feel that my own job (writing technical architecture documents in French) could also be completely replaced in the future. I feel very emotional that our generation is lucky to catch this era; the market will give us better returns.
  • Teacher James’ Comment: Martin’s sharing validates the points of our course very well. First, he only truly understood the importance of risk and survival after doing the simulation himself. Second, he experienced the powerful productivity of AI firsthand. The era of AI has just begun; human productivity will increase beyond imagination, which is also a major reason why we are bullish on the market’s future.

Jenny

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• Sharing: Since allocating in September 2025, returns are already at 20%. I am very grateful.
• Question 1: I have already pledged some money (4% of market value) for living expenses and tuition before retirement. On the day I officially retire, how should I handle this borrowed money? Should I follow the previous lesson: set aside 2 times the borrowed amount as cash and do a 433 allocation with the rest?
  • Teacher James’ Reply: This handling depends on whether you want to increase your annual withdrawal amount after retirement.
    • Unchanged Withdrawal Amount: If your annual living expense requirement after retirement is the same as or less than the average amount you borrowed previously, then no reset is needed; continue with the previous model.
    • Increased Withdrawal Amount: If you want to increase your withdrawal from, say, 60k to 100k due to asset growth, this requires a “Reset.” Only then do you need to multiply your total past debt by 2, set it aside as a cash reserve, and then perform a new 433 allocation on the remaining total assets.
• Question 2: In Canada, the new tax-free account limit is 7,000 CAD. Should I buy HXQ directly with CAD? The Canadian economy is not doing well; will I be affected by the exchange rate?
  • Teacher James’ Reply: Ignore the exchange rate. When you buy HXQ with CAD, you are holding US assets denominated in US dollars. Your assets are already on the “Moon” (US); you should care about the economy of the “Moon,” not the “Earth” (Canada) or the exchange rate. If the Canadian dollar depreciates, your US assets will be worth more when converted back. Therefore, you should buy assets from countries with strong currencies.

Wang

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• Question 1: I heard that buying 2834 is best for pledging at HSBC Hong Kong, but I found its trading volume is very small and I’m a bit worried.
  • Teacher James’ Reply: Don’t worry about trading volume at all. Unless you have tens of billions of dollars, your buying and selling won’t affect the market. Index ETFs have market maker mechanisms that guarantee liquidity. Caring about volume shows a complete lack of understanding of index structures. In Hong Kong, besides 2834, there are other options like 3086; being able to buy one is enough.
• Question 2: Regarding China’s 008163 and 515450, they look like the same type of fund, so why is the dividend difference so large? Recently, the A-share market has risen well, and many people mock this fund as “Low Volatility Green” (implying poor performance).
  • Teacher James’ Reply: The fact is the dividend yields are different; historical data for 008163 shows its payout is indeed around 15%. Do not be swayed by short-term market performance. You invest to get the cash flow you need, not to compare price gains with other tickers. The A-share market lost terribly in previous years; chasing highs and cutting lows is meaningless.

Tracy

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• Question: I am in the US. If I do stock pledging while still working, taking money out for daily consumption (like paying credit card bills) and then investing 100% of my salary into the stock market, is this operation okay? How do I ensure the cash flow is clean so the broker doesn’t think it’s a violation (reinvesting borrowed money)?
  • Teacher James’ Reply: This is the correct approach. The key is that the cash flow must be clean, maintaining a “one-to-one” path. For example, if your credit card bill is $879, transfer $879 from your Pledge Account to your Checking Account to pay it. Your salary goes directly into the Brokerage Account to buy stocks. In this way, money from the Pledge Account never flows into the investment account; the path is clear, and there is no problem.

Michelle

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• Sharing: I also saw the world from a different angle after having a child. Also, I went through a big struggle and finally decided to convert all my existing VTI to QQQ, paying about $80,000 in taxes. During this time, I had to be firm in my beliefs and not be affected by my partner’s lack of understanding.
• Question: I have about $80,000 in a 529 education savings plan, and my child will go to college in 12 years. I worry that my brokerage account assets won’t grow enough by then to pledge out enough for tuition. Should I keep the 529, or withdraw it now (even with penalties and taxes) and move it to the brokerage account for unified investment?
  • Teacher James’ Reply: You should take it out. Regardless of the market, concentrating all funds into QQQ and using stock pledging to pay tuition in 12 years is the optimal solution. 12 years is enough time for assets to grow; don’t worry excessively about the future. With your current 1 million in assets, this 80k is nearly 10%; managing it centrally is better. When tuition is due, you can communicate with your husband to split the cost, rather than letting him fixate only on the 529.

Robin

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• Sharing: There is a concept in the military called “Survive to Win,” which fits the teacher’s investment philosophy perfectly. If you are injured on the battlefield, you drag down two teammates to rescue you, weakening the team’s combat power, so preserving yourself is the top priority.
• Question: Tesla recently announced that FSD is no longer available for buyout, only subscription. Does this mean Tesla is transforming, wanting to become a pure software company like Microsoft and letting others do the hardware?
  • Teacher James’ Reply: I have never considered Tesla a hardware company; it is essentially a software and service company, just like Apple. Apple makes its real money from its service ecosystem. Future Tesla robots will be the same; after buying the robot body, functions like sweeping, cooking, and babysitting might all require different paid app subscriptions. As for the subscription model, it makes the accounting look better for the company, creates continuous cash flow, and helps the stock price rise more easily, just like how Microsoft’s stock soared after Office switched from buyout to subscription. At the same time, this avoids future liabilities and disputes arising from being unable to upgrade FSD on old hardware.

Laoreal

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• Question: I am a mainland investor and want to execute the teacher’s “Elastic Rebalancing 2.0” (QLD/QQQ strategy). However, transferring funds between Hong Kong and US brokers for rebalancing triggers capital gains tax, making it impossible to execute. Is there a solution?
  • Teacher James’ Reply: Since you are still working, there is a solution. When the simulation system prompts you to sell a portion of the Hong Kong 2x leveraged ETF (like 7266) to buy QQQ, do not sell. Instead, directly use your salary to buy the asset you are lacking (QQQ). This avoids the selling operation, and thus, there is no capital gains tax issue.

Jin

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• Question 1: My 21-year-old son has been investing in QQQ for a year and a half. Should I introduce him to QLD now?
  • Teacher James’ Reply: No. QLD is too volatile and not suitable for him to experience so early. If he must try, allocate no more than 20% to QLD in his retirement account (TFSA in Canada) to let him feel the volatility, but emphasize “buy only, never sell” and “no frequent trading.”
• Question 2: The QQC I bought in Canada has a return 4% worse than QQQ. Although I know the teacher says not to worry, I’m still a bit concerned.
  • Teacher James’ Reply: This is likely a difference caused by exchange rates. Ignore it and just keep holding.
• Question 3: Regarding “Resetting” the pledged withdrawal amount after retirement, why multiply the borrowed amount by 2 for the cash reserve instead of 1?
  • Teacher James’ Reply: This is a result derived from extensive market backtesting simulations. The simulations showed that keeping only a 1x cash reserve causes the system to fail in extreme cases. Keeping 2x ensures safety.

IV. Key Highlights

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Asset allocation is not for performance; asset allocation is for survival. – Teacher James

This viewpoint resonated throughout the session. It is the core philosophy of this episode, overturning the traditional asset allocation mindset that targets return rates.

Cash is air; if you use up your cash, you will die. – Teacher James

This sentence vividly describes the extreme importance of cash for retirees, especially in the face of a long-term bear market; cash is the guarantee of survival.

Low returns are the biggest risk for young people. – Teacher James

The teacher re-emphasized that young people have the longest time horizon and should maximize their embrace of growth assets. Pursuing high dividends equates to wasting their greatest capital—time.

A house is the best tool for capitalism to enslave laborers. – Teacher James

A single sentence punctures the restriction mortgages place on personal freedom, reminding everyone to be wary of the risk of being held hostage by real estate for life.

View everything with an infinite time dimension… only then can you see the truth. – Teacher James

This is a profound mental model applicable to various investment and life decisions, helping us step out of short-term fog to make choices most beneficial for the long term.

Backtesting is to ensure you can survive; how much you earn is actually fate. – Martin (Relaying another listener)

This sentence echoes Teacher James’ philosophy, profoundly pointing out that the true meaning of market backtesting lies in risk management and survival testing, not in predicting future gains.

You must learn to survive first, then win. – Robin (Sharing a military concept)

Applying battlefield survival rules to investment: survive first, then you are qualified to talk about victory and returns. This coincides with the philosophy of long-term investing.

Spending money is the morality of the rich; it’s just about understanding how much you can spend and where your degree of freedom lies. – Teacher James

This view redefines the meaning of spending money, encouraging everyone to bravely exchange money for quality of life and spiritual satisfaction on the basis of financial health.

V. Conclusion

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This lecture reaffirmed the cornerstones of the CLEC investment philosophy: the ultimate goal of investment is to pursue a life of peace and freedom, and the prerequisite for achieving this goal is to build an asset structure capable of withstanding any storm. Starting from the fundamental purpose of asset allocation—“to survive”—Teacher James detailed different strategies for retirees and young people and provided clear guidance on practical issues like the specific operations of stock pledging, consumption concepts in daily life, and children’s education planning. The entire sharing was not just a lesson on investment strategy but also an enlightening session on life wisdom and long-term vision, helping students walk more steadily and with greater peace of mind on the road to financial freedom.