00491 November 16, 2024

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Over the long run, the market only rises

Clubhouse: relaxed conversations about investing, CLEC Investment and Financial Management Channel, November 2, 2024

Market volatility has nothing to do with me!

• Market volatility has nothing to do with me!

• International affairs have nothing to do with me!

• Market analysis has nothing to do with me!

• Financial statements have nothing to do with me!

• Economic conditions have nothing to do with me!

• None of it has anything to do with me!

• Ignore the noise and turbulence of the market!

Investing blindly without learning is dangerous

• Watch our videos and ask specific questions, including:

• The video number and the timestamp where the question came up.

• Asking questions after watching the video is the most effective way to learn.

CLEC has no discussion groups, and we have not authorized anyone to act on our behalf

• We cannot know the membership or purpose of any group, and such groups can easily be infiltrated by people with bad intentions.

The investments we mainly recommend are the Nasdaq 100 index fund QQQ and the corresponding local ETFs issued in each country

• Do not rely entirely on financial consultants, including Charles Schwab financial consultants. They can help with account opening, but we do not recommend fully adopting the ETFs or other financial products they suggest.

• Over the long term, the Nasdaq 100 index fund and the S&P 500 index fund have been among the best-performing investments. Outside of these, individual stocks, funds, and financial products usually do not help investment success and should be avoided.

We recommend investing 100% in a Nasdaq 100 index fund

• United States: We recommend buying QQQ, or QQQM for smaller accounts. Cash can be placed in money market fund SWVXX or short-term Treasury bill ETFs BIL and SGOV.

• Taiwan investors: We recommend Fubon NASDAQ 00662. Cash can be invested in CTBC U.S. Government 0-1 Year Bond ETF Fund (00864B.TW).

• China investors: We recommend 513100/513300/160213/159941/161130/159660.

• Hong Kong investors: You can choose HKD 3086, USD 9086, ETF 2834 (HKD), or 9834 (USD).

• Canada investors: We recommend converting to U.S. dollars and buying QQQ directly, or investing in Canadian-dollar products QQC.TO/ETF (HXQ.TO).

• Australia investors: We recommend buying NDQ.

• United Kingdom investors: We recommend the U.S.-dollar-denominated iShares VII Public Limited Company - iShares NASDAQ 100 UCITS ETF (CNDX.L). In Europe, we recommend EQQQ and CSPX.L.

• Brazil: The recently launched Nasdaq index fund is NASD11.

• Japan investors: You can choose 2568/1545/2631.

• Malaysia and Singapore investors: You can purchase U.S. QQQ through a Phillip Securities POEMS Cash Plus trading account.

• South Korea: The recommended QQQ ETFs are 368590.KS/133690.KS/367380.KS.

Since 2018, we have kept all videos on YouTube so everyone can learn investing in chronological order

• The videos reflect the market conditions and appropriate investment decisions at the time. As time changes, some strategies may no longer apply. They remain valuable learning resources.

• Viewers should interpret each video in the context of the market conditions at that time, and develop their own thinking and judgment.

• Our early investment recommendations included certain individual stocks and regular funds. Although they were good choices at the time, suitable investments must also account for personal risk tolerance and investment strategy.

Investors are always extremely optimistic!

Investors always face the sunshine!

The market will ultimately rise!

Investing requires patience!

Wealth is worth waiting for!

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The market will keep rising forever; it only rises and never falls

The U.S. Treasury is staffed by either top financial-industry executives or highly respected academic professionals

-Taiwan’s taxes are over-levied, and the Finance Minister said that he will not distribute cash, but will have to pay off debts. This really means that he doesn’t know anything about running a country or finance. How could he become the Minister of Finance? It's strange just because he is senior enough.

The U.S. Treasury is staffed by either top financial-industry executives or highly respected academic professionals

• A government actually asks the Minister of Finance to repay debts, claims that the government has no money, and deducts the wages of retirees, while so many things that should be done are not done. Poor children, elderly people living alone, poor elderly people, elderly care issues, and elderly end-of-life issues are not included in the policy at all. Elderly care relies entirely on middle-aged and elderly people to take care of older people. Is this reasonable?

• Taiwan's birth rate is a national security issue. Do you pay a salary for every child born? Do you pay a salary for every soldier to defend the country? If the birth rate is a national security issue, why don't you pay a salary for every child born? If you can support the army, you should be able to support the future masters. If there is no people, if you bring in the army, then a country will have no people. What is the purpose of the army?

In the United States, asset-poor seniors over age 65 are supported by the state

• Children under the age of 18 in the United States are raised by the state in low-income families. You don’t need to worry about not being able to raise your children. When your income is lower than the average level, your children will be supported by the state.

• [Child care subsidies and housing subsidies for low-income families in the United States! ]

• https://docs.google.com/file/d/1mR9jKScAcEYdWEicufyjqDkwbCU8_cTI/edit?usp=docslist_api&filetype=msword

• Some people must have started to say that that is the United States and we are Taiwan. Don’t compare with the United States. Do you want to compare with more backward countries?

Richer than most European countries, yet social assistance is near the bottom: where did the money go?

• In California, the CalWORKs program provides cash assistance to families with dependent children who need assistance. California's Minimum Basic Standard of Adequate Care (MBSAC) is $899 per month for a household of 1 person, $1,476 for 2, and so on, based on 2024 information.

• Taiwan: Living assistance for disadvantaged children and teenagers: For children and teenagers under the age of 18 whose families have financial difficulties, a living allowance of approximately NT$2,197 per person per month is provided.

• Taiwan: Emergency living assistance for disadvantaged children and teenagers: If a family encounters a sudden change and makes life difficult, you can apply for emergency living assistance of NT$3,000 per month. In principle, the subsidy is for 6 months, and it can be extended to 12 months upon evaluation.

• Is this Taiwan the most technologically advanced country in the world? Taiwan’s welfare subsidy is ten times worse than that of the United States. No matter where the money is spent, the Ministry of Finance has to pay off its debts! It’s not enough to eat raw, so it’s dried in the sun.

• Some people must have started to say that that is the United States and we are Taiwan. Don’t compare with the United States. Do you want to compare with more backward countries? Is Taiwan still proud of being at the top of the world's wealth rankings and being Asia's second-richest economy?

• Wealthier than most European countries, but low on social subsidies. Where does the money go?

The wealthy borrow money and never repay it; the wealthy borrow forever and never pay taxes

• The poor make money through hard work. When they receive rubbish paper money like cash, they put it under the bed as a treasure, or deposit it in the bank in the form of cash.

• What is even more sad is that after these poor people earned this garbage, they were deceived by the financial industry into buying toxic assets. The garbage can be sold for a little money, but the toxic assets will completely go bankrupt.

• Most people know how to invest in buying houses and stocks, but they will quickly repay the borrowed money. At most, they are rich and poor who only have enough to live. These people say that I have enough money, but they are actually poor people with assets.

• The rich borrow money and never pay it back. The rich borrow money and never pay it back. They never pay taxes.

• Under this capitalist system, if you don’t understand financial operations, 99.99% of people will be working as laborers and never have a day off, and will eventually be poor when they grow old.

• Our channel is to eliminate poverty, so that everyone who understands us can become rich and have the gift of wealth to take back the control of life and live a happy life.

The NDQ index is QQQ. It has taken 39 years from 117 points in 1985 to 20,271 points today, an increase of 173.25 times. Annualized return is 14.13%. As shown in the picture

1. Without considering pledged loans, there is no maintenance-ratio issue

• [Smart rebalancing magically overcomes this problem. The final average return CAGR distribution is the same as QQQ, but with less MDD. ]

• Hi Teacher James, Hello! I took advantage of the typhoon holiday last week to collect historical data and use the asset allocation in 0005 to run Monte Carlo simulation. There are some differences from the backtest Excel in the course:

• 1. Without considering staking, there is no maintenance ratio issue
• 2. The cash position does not use a fixed interest rate, but is replaced by SHV information.
• 3. In the year of decline, the investment is not 2% of the initial assets, but 2% of the total assets that have peaked.

• Confirmed the historical path and found that the results are similar to the backtest Excel results, so the whole process should be no problem. The link below is a simulated graph. The difference between taking 2000-2023 or 2002-2023 as the sampling matrix is not small, but the trend is basically the same.

• https://tinyurl.com/3v65xtnn

• https://tinyurl.com/3z885xfu

This simulation result does not include a written description; simply put, my takeaway is

• ① Generally speaking, if buy&hold is combined with mindless rebalancing, the longer the time, the greater the maximum drawdown will definitely be encountered. However, smart rebalancing miraculously overcomes this problem. The final average return CAGR distribution is the same as QQQ, but with less MDD.

• ② The 110 minus age rule, increasing the bond ratio with age is equivalent to blindly lowering beta, which makes no sense. Simply use a lower CAGR in exchange for the that comes from less MDD.

• ③ If Lifecycle is followed completely, it will be basically the same as all-in QLD. It is essentially the same as the 110 subtraction rule. There is no logic in adjusting beta.

Peta (@broyay4785)

• ④ I have tried several methods, but unfortunately there is no way to obtain lossless CAGR such as smart rebalancing in beta1.1 or beta1.2, but reduce MDD.

• ⑤ I want to rebalance in a counter-cyclical manner, but there is no specific number, and I can't get any useful results by just guessing it.

• Although investment is simple and does not require as much time as I do to research and simulate, the various discoveries involved are still quite interesting. Regarding the above points ④ and ⑤, I wonder if the teacher has any suggestions?

• Since joining leveraged funds, people on the Internet have come up with various creative allocation methods or rebalancing strategies. If there is no way to backtest or run Monte Carlo simulation, in fact, there are many risks associated with recency bias and hindsight. Recently, some netizens proposed switching to TQQQ after a 2% decline in the year. I think it seems to be of great research value. I will try to simulate it again if I have an opportunity!

• Peta (@broyay4785)

If you cannot understand it completely from top to bottom, any break in the middle means you cannot handle the cycle well

• To understand cycles, this may not come from reading books or studying. I feel that I understand cycles slightly, but this is after 40 years of experience (through a lot of reading and practical experience in the market, whether it is technical analysis, day trading, futures and options practice. You can immediately judge the turning point by looking at the K-line chart.).

• For example, in the past two weeks, I have been mentioning in the video that the market is going to break new highs, and the market is going to break new highs. This understanding of cycles is the same as the short-term understanding. You shorten the cycle of 20 years or 100 years into one day. All cycle judgments are analyzed from large to small. The big part is the economic environment, the elements of the business cycle, and the characteristics of each stage of the business cycle, world finance, international trade, central bank policies, fiscal policies, industry analysis, private consumption technology analysis, until the daily K-line.

• If you cannot fully understand it from top to bottom, as long as there is a gap in the middle, you will not be able to do a good job in the cycle.

• How would you know the conditions on the battlefield without having fought with live ammunition on the battlefield and experienced the battlefield for 40 years? Those who do not go to the battlefield will surely die if they do. Therefore, it may be better for ordinary people not to do periodic performance.

• Doing periodic and short-term operations is almost a gamble.

• If you do not have an Alpha with an 80% chance of winning, you will still take risks after paying the tax, and the total expected value will be negative. This is the same fate as 99.999% of short-term operations and people who don’t understand cycles.

Monthly living expenses of NT$20,000 are really a bit tight

• I don’t think you should get a loan, because you only have NT$20,000 per month for living expenses after getting the credit. There is no need to tie your life so tightly, because we still have to live our lives. If you have a balance of NT$30,000 per month for living expenses and continue to invest, you should be more frugal in your daily life and you can allocate more money for investment. But if you use credit, you may not be able to face risks in life.

• Buying a house at such a young age and under 30 years old is a huge financial mistake. If you want, I suggest you sell the house. Your loan is nearly $50,000 per month, so you can spend $30,000 to rent a house, and the other $20,000 can be invested. And you still have a down payment. After selling the house, the net value of the house will have money to invest, and your assets will grow faster.

• If you can accept selling the house, after you sell the house, you can expand your credit loan and borrow as much credit as you can afford.

• You said that your ambition is to retire as early as possible and go to school to teach financial management and investment on a voluntary basis. Let me tell you a cruel truth. No school will let you teach it, because this is the secret of the capitalist financial industry. They allow schools to teach futures and options (the Financial Supervisory Commission directly goes to schools to teach futures and options. There is no place for you in schools to teach investment.) Short-term operations and how to buy insurance are not something that people like us who tell the truth can get involved.

• I understand what you said that selling the house can reduce the stress of life and get more investment. I will discuss selling the house with my husband again. We have spent a lot of time organizing it. Even though we know that it will be an old, dilapidated and leaky house in 40 years, it is really not easy to act immediately now. This is the worst mistake that I have the hardest time letting go of.

• I know I am very nervous about living expenses, but I have taken out a loan and tied it up for one year. I want to wait for at least one year before making any plans. At the same time, I must reflect on my lack of thoughtfulness.

• At this stage, the financial situation is not ideal and I am not prepared to deal with risks. Since the mortgage loan is still in the grace period, the monthly payment is 10,000. I can still take a breath, and I will try to increase my cash position now.

Do not repay the personal loan. Life may be tighter, but there will be chances for raises every year, and things will gradually improve

• When the grace period for your mortgage payment ends, the principal and interest will have to be amortized together, which will increase the mortgage loan by RMB 20,000. You will then have a cash flow problem.

• I suggest you start studying our stock pledged loan now. In Taiwan, you can only use situation three. You can lend 2% of your assets every year to spend. By then, your stock assets can reach 10 million. If you make a pledge, you can borrow 200,000 a year to pay your mortgage.

Low interest rates

Conditions for bubble formation include:

• Low interest rates.

• Technological or financial innovation.

• at least a few decades since the last craze.

• Abandon traditional financial/financial metrics.

The second typical bubble feature is that many ordinary people abandon secure, high-paying professions to devote themselves full-time to financial speculation

How to spot a bubble!

• First of all, during these bubble periods, the main topics in daily conversations and social activities in society were inseparable from financial speculation, and those topics sometimes even caused uproar among the public.

• The second typical bubble characteristic is that a large number of ordinary people give up their guaranteed and high-paying professions and devote themselves full-time to financial speculation.

• The third characteristic of bubbles is that bubble believers will launch fierce attacks on doubters

• This is also the most constant feature of bubbles.

• The fourth and final symptom of the bubble is the proliferation of extreme predictions

CLEC Investment and Financial Management Education Academy 00451, "2024" First Investment Class: An Investment Life Lecture Worth 100 Million Yuan, December 29, 2023, CLEC Investment and Financial Management Channel https://youtu.be/4FMjmyBpTzw

It is wonderful and joyful when the market rises every day

We have a pinned comment in the YouTube comments area where you can download handouts and find other related links.

• Or email me:

• [email protected]

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