I. Theme of the Session#
The core of this session is to explore the conflict between the essence of investing and human nature. By reviewing recent market cycle operations, Teacher James profoundly reveals the difficulty and cruelty of investment decisions, emphasizing the importance of being “completely inhuman” and executing decisively at critical moments. He believes that investing itself is simple, but execution is extremely difficult because human greed, fear, and hesitation become the biggest obstacles. For ordinary investors who cannot be absolutely rational, the simplest and most effective strategy might be to “buy when you have money, never sell,” holding for the long term and remaining as steadfast as a mountain.
II. Briefing Content#
The Essence of Investing and Human Nature#
- The Market Has Nothing to Do with Me: Successful investors should ignore market noise, international situations, economic data, and other short-term disturbances, adhering to the long-term strategy of “buy when you have money, never sell.”
- The Truth About Cycle Trading:
- Cycle trading is not easy. Its purpose is to build a bridge over the market’s grand canyon to smoothly navigate downside risks, not to pursue higher returns.
- In this recent cycle operation, most people earned less than they could have, which is a valuable learning experience. Incorrectly performing multiple cycle trades can lead to an accumulated “underperformance” equivalent to experiencing a bear market.
- For ordinary people, “staying put like a mountain” might be the best strategy because the friction and psychological pressure of frequent trading are immense.
- The Inhuman Traits of an Investor:
- Teacher James shared that when he makes decisions, he is in a “non-human” state, meaning he completely excludes emotions and human nature, acting decisively based on information and market signals.
- The hardest thing for an investor to overcome is human nature. If you are swayed by emotions and treat money as money, your operations will be difficult to succeed.
- At critical moments, you need to buy immediately, sell immediately, without any humanity. This is the hardest part of investing.
- Finding a Method That Suits You:
- There is no single right answer in investing. The key is to find an investment method that suits your risk tolerance (beta) and personality.
- The cost of figuring it out on your own can be very high; it might take losing 50% of your assets and 20 years to find a method.
Health, Family, and Life#
- Healthy Diet: Teacher James shared that he found fruits suitable for blood sugar control by asking ChatGPT, such as strawberries, raspberries, blackberries, and guavas, and shared healthy ways to eat them.
- Sharing Cancer Treatment Information: He shared the case of his cousin who was cured of lung cancer through immunotherapy and provided specific hospital and doctor information (Director Guo Zheng at China Medical University Hospital). He also emphasized that this therapy has limitations and must be done before chemotherapy.
- The Importance of Family:
- Family are the only people who can accompany you for a lifetime. Time spent with family is priceless.
- He encourages having children, believing they are the future of the country, and proposed an interesting idea: the state should pay a “salary” to families raising children because nurturing the next generation is a matter of “national security.”
- The Meaning of Life:
- You can live without working, but you need to have things you want to do to find the meaning of life. For example, building a family and raising children is a remarkable achievement in itself.
- For a young person who “retired” early due to a wealthy family background but feels lost, the teacher suggested he find his interests, serve society, or start a family, which would bring sustained purpose and meaning.
Investment Philosophy and Practice#
- The Logic of Holding Cash and Debt:
- Explained why, when you have investments, it is a better choice to retain cash while holding low-interest loans.
- Example: With 1 million in assets and a 10% return, you earn 100,000 a year. If you first pay off a 300,000 loan, you have 700,000 in assets with a 10% return, earning 70,000 a year. The loan interest is much lower than the investment return, and retaining cash allows you to handle emergencies and avoid selling stocks at a low point.
- Don’t Blindly Follow Financial Advisors or Fortune Tellers:
- Investment decisions should be based on your own thinking and judgment, not on handing your fate over to financial advisors or fortune tellers.
- The teacher criticized the behavior of using a financial advisor’s objections or a fortune teller’s predictions to question investment strategies, emphasizing the importance of independent thinking.
III. Q&A Session#
Tina#
- Sharing: After the teacher gave the signal to enter the market, she was determined to overcome her nervousness and various “petty thoughts,” resolutely executing the buy order when the market opened the next day. Although the process was a bit frantic due to the large order size, she ultimately completed the operation. She considered it a valuable experience for developing a “strong heart.” She also shared a story she heard while volunteering, lamenting how a fortune teller’s negative words could affect a person’s entire life, and emphasized that destiny is in one’s own hands and the power of choice in the present is most important.
- Teacher James’s Comment: The teacher affirmed her execution and shared the convenience of placing orders with US brokerage software. He suggested that when you need to place manual orders after the market opens, don’t look at the market’s ups and downs. Just calculate based on the pre-market price and place the order. Once done, don’t look at it again to avoid emotional influence. The teacher strongly agreed with the view of not consulting fortune tellers, believing that “following your fate” means following your own inner thoughts. Destiny is in your own hands, and it is inadvisable to hand it over to others (like financial advisors or fortune tellers).
Kevin#
- Question: His current allocation is 70% QQQ and 30% cash, with his salary going into regular investments. When the teacher previously advised lowering beta, how should he have operated? Should he have sold some QQQ, or adjusted his regular investments? Also, for taxable accounts in the US, is cycle trading applicable?
- Teacher James’s Reply: First, the instruction to lower beta has passed; you should now return to your normal allocation. At that time, the correct action was to sell a portion of your stock holdings (e.g., sell 20% of your QQQ) to convert to cash, thereby lowering the overall beta. Regular investments should continue without stopping. Second, for taxable brokerage accounts, absolutely do not sell for cycle trading purposes, as the taxes would cause a huge loss and not be worth it. In the US, such operations are only suitable for tax-advantaged retirement accounts like IRAs. For investors with taxable accounts, the best strategy is to “stay put like a mountain.”
Howard#
- Sharing: He shared information that Fubon Investment Trust (issuer of 00662) would be holding a vote on an ETF share split (April 10-27). He believes the split has two major benefits: 1. It lowers the entry barrier for purchasing (e.g., from NT$90,000-100,000 per unit to NT$20,000), which can attract more young, small-scale investors and expand the ETF’s size; 2. As the scale expands, the management fee may be further reduced.
- Teacher James’s Comment: The teacher said that if no one has any particular objections, they should vote in favor of the split. A split is good for retail investors.
- Question: The teacher previously encouraged having children in a short video and mentioned that it’s best if one parent (e.g., the wife) can stay home to care for the child. He wanted to understand the thinking behind this and the difference compared to having a nanny or the father take care of the child.
- Teacher James’s Reply: The teacher clarified that his advice was based on a specific case. At that time, the friend lived with his parents, who still had the energy, so he suggested the couple could continue to work while the parents helped with the child. He did not specifically mean the wife must resign; it’s perfectly fine for the husband to be a full-time stay-at-home dad (he himself is an example). The core idea is that whoever wants to retire to be with the child, and can afford it, can do so. Entrusting the child to a nanny or daycare is also an option, but one must closely monitor the child’s emotional state. It’s good for children to experience group life early on.
CF#
- Question: Should one convert all funds from a Traditional IRA to a Roth IRA before reaching the RMD (Required Minimum Distribution) age? Or should one keep a portion (e.g., $100,000) in the Traditional IRA after RMD to pay for long-term care expenses?
- Teacher James’s Reply: There is no need to specifically keep it in a Traditional IRA. When paying for long-term care, whether you withdraw from a Traditional IRA or a Roth IRA, you will need to pay taxes (this should mean withdrawals from a Traditional IRA are taxable, while using Roth funds has no tax issue, but the teacher’s main point is that it’s not necessary to keep a Traditional account for this purpose). Since a Roth account can also be used for payment, there is no reason not to convert everything. It is recommended to complete the conversion before RMDs begin.
Steven#
- Sharing: He shared his experience with the recent cycle operation. At first, he found it troublesome and didn’t want to act, but after seeing that Warren Buffett also held a large amount of cash, he decided to follow the teacher’s instruction and increase his cash position to 30%. When the teacher gave the signal to buy back in, he decisively went all-in at the first opportunity and was lucky enough to catch the subsequent big rally. He realized that once a decision is made, the speed of execution is crucial. He also shared an insight from his work: because of the financial confidence gained from investing, he can handle complex engineering problems at work with more integrity and principle, without having to compromise to keep his job, which makes him feel more empowered.
- Teacher James’s Comment: The teacher was very interested in the industry information Steven shared about NVIDIA’s GB300, data center construction, etc., and used it to explain his logic for judging the market’s turn. He pointed out that the massive amount of information from within the industry (like soaring data center rents, severe shortages of AI computing power, etc.) is difficult for ordinary people to access and understand. It was based on this professional information and a high degree of sensitivity that he was able to make a judgment just as the market began to react. This once again proves the difficulty of investment analysis, and for ordinary people, a simple long-term holding strategy is actually the most reliable.
Chen#
- Question 1: What are the similarities and differences between the teacher’s buy signal this time and the signal in 2009 when he heard the news that “banks cannot fail” and judged the market had bottomed out?
- Teacher James’s Reply: The two signals are completely different. The signal in March 2009 occurred at the bottom of a market that had been in a freefall for over a year, in a state of extreme panic. It was a powerful rescue signal from the central bank, and the market never looked back. This time, the signal occurred when the market had just begun to correct and was far from panic, triggered by a key industry report. Although both were signals that triggered a turn, the market position, signal strength, and context were completely different.
- Question 2: After hearing other students share information about the AI industry, he feels the impact is not deeply felt in mainland China, and the gap seems large. How should he understand this?
- Teacher James’s Reply: This is normal because you are not at the core of the industry. AI is causing a tsunami-like industrial revolution, but it’s hard for outsiders to perceive it. It’s like some people have already gone to outer space while others are still digging rocks on the ground; differences in cognition and environment lead to a huge gap. He encouraged students to try using tools like ChatGPT, for example, by asking AI to help write a web program to calculate investment returns, to experience the power of AI, because now everyone can become a “programmer” through AI.
- Sharing: He followed the teacher’s advice, sold over 40 grams of idle gold jewelry, and invested the entire proceeds of over 40,000 yuan into the market.
Lisa#
- Question: Besides her 4-3-3 allocation, she has a small amount of extra money to invest each month. She plans to pledge a portion of her existing QQQ position (about 20%) to borrow money, which she will invest along with her new monthly funds over 12 months. Is this okay?
- Teacher James’s Reply: No, you will go bankrupt! The teacher sternly pointed out her complete lack of understanding of the risk management of pledged loans. A single emergency loan should not exceed 4% of total assets, and after borrowing, you must rebalance your assets and significantly increase your cash proportion to reduce risk. The recommended annual borrowing for reinvestment is around 2%. In her case, borrowing 8% of her total assets at once (QQQ is 40% of her portfolio, borrowing 20% of that is 8% of the total), she must hold 16% (twice the loan amount) of her assets in cash, and then apply the 4-3-3 allocation to the remainder. Without understanding risk control, pledged borrowing is extremely dangerous.
Shuang#
- Question: She adjusted her position according to the teacher’s instructions but feels very panicked about using a HELOC (Home Equity Line of Credit) because people around her say it’s a “monster.” She would like the teacher to explain again why it’s okay to use a HELOC.
- Teacher James’s Reply: Since you can borrow from a HELOC long-term and you have the ability to pay the interest, then use it. Your investment return rate (10-15% in the long run) is much higher than the HELOC interest rate (5%). The spread between them is your extra profit. Don’t listen to those who don’t understand; they are afraid because they don’t understand.
An Anonymous Student#
- Sharing: She believes this market fluctuation was a great opportunity for learning and testing. She followed the teacher’s strategy, only reducing leverage while keeping her index positions, so she still profited in the market, far better than those who traded haphazardly. She realized that the teacher’s strategies (like holding cash, asset allocation) are the essence of experience and must be adhered to firmly over the long term. Wavering only makes one more anxious.
- Question: She doesn’t understand why after the market fell, the rebound not only recovered the losses but even hit a new high. Where did this extra money come from?
- Teacher James’s Reply: This is a very good question. When the market fell (like in March), the selling pressure was huge (say, a total of 300 billion was sold). But when the market rebounded, because most people were still on the sidelines, the selling pressure was very small. Therefore, it only took a small amount of capital (say, 150 billion) to push the price very high, even past the previous high. The price is determined by the last trade. As long as the buyers’ willingness is strong and sellers are scarce, the price will soar. Looking at the capital flow, much of the money that left the market has not yet returned, which means the market still has potential to rise.
A Student with Child Asset Issues#
- Question: She gives her two children money up to the tax-free gift limit each year, and now their accounts have accumulated about NT$7-8 million. The children are adults but have no plans to study abroad. She wants to invest this money in 00662, but a friend warned her not to let her children have too much money too early and suggested she transfer the money back. She is troubled about what to do.
- Teacher James’s Reply: Money itself does not corrupt children; corruption stems from a deviation in values. You should teach your children that this money is their future retirement fund, not for them to squander now. After graduating from university, they must work to earn money to pay for their living expenses. You can take them to open an account, authorize yourself to manage it, and invest using a 70/30 allocation, while teaching them the importance of long-term investing and saving. The philosophy to convey is: “We have enough money for you to chase your dreams, but not enough money for you to do nothing.”
IV. Highlighted Quotes#
The hardest part of investing is that you can’t have humanity; you have to be inhuman. So if you want to trade, you have to be inhuman. If you are human, then you shouldn’t trade. – Teacher James
This viewpoint is the core of this session’s sharing. Teacher James emphasizes that successful trading requires absolute rationality, excluding all emotional interference. For ordinary people, admitting their human weaknesses and choosing not to trade but to hold for the long term is, in fact, a form of wisdom.
The market isn’t hard, you just can’t have humanity! – Teacher James
This is the most incisive summary of the challenge of investing. The laws of the market are objective, but human greed and fear make it complex and difficult to master.
Destiny is in our own hands, remember, destiny is in your own hands. I find that many friends with bad fortunes have handed their destiny over to others. – Teacher James
When commenting on a student’s sharing about fortune-telling, the teacher emphasized the importance of personal agency. Whether in investing or in life, one should think for oneself and make one’s own decisions, rather than ceding control to others.
We have money for you to chase your dreams, but we don’t have enough money for you to do nothing. – Teacher James
In answering a question about how to handle assets given to children, the teacher proposed this important view on family wealth education. This money is a tool to support them in realizing their life’s value, not a cradle to make them lazy.
If you look at one company or your own company, it may not represent the entire industry. – Teacher James
When discussing the AI industry with Steven, the teacher pointed out the difference between a personal perspective and macroeconomic industry trends. Investment decisions need to be based on broader, more comprehensive data and information, not limited to personal experience.
“Buy when you have money, never sell” — this has been proven and can be corroborated by our historical backtesting data. – Chenfeng
Student Chenfeng verified the effectiveness of the “buy when you have money, never sell” strategy through AI backtesting data. The backtest showed that even compared to “perfectly timing the bottom,” a strategy of regular, dollar-cost averaging and investing in the market as early as possible still yields higher returns, because no one can predict the bottom.
The true masters are usually very honest… I feel that when you have this confidence, your decisions are made with confidence. – Steven
Student Steven shared the change in his work mentality after achieving financial freedom. Financial security allows him to adhere more to principles and integrity, making more upright decisions, which is a higher level of professional attainment.
Cash is your life jacket, that’s such a classic line. – An Anonymous Student
An anonymous student, reflecting on the recent market volatility, deeply understood the importance of “cash is king,” which the teacher has always emphasized. In times of market uncertainty, cash provides a safety net and future opportunities.
V. Summary#
This session was a profound review of investment psychology and practice. Through the recent cycle trading case, Teacher James vividly demonstrated the intense battle between rational decision-making and human weakness. He emphasized that for the vast majority of investors, trying to beat the market through timing is extremely difficult and risky; the psychological costs and operational friction often outweigh the benefits. Therefore, returning to the fundamentals, a long-term holding strategy of “buy when you have money, never sell,” combined with a suitable asset allocation (such as 70% index + 30% cash), is the most stable and reassuring path to financial freedom. At the same time, the lecture also extended to multiple dimensions such as health, family, and personal growth, reminding everyone not to neglect the more important parts of life while pursuing wealth.