It is hard for Chinese Americans to support Trump in 2020 given the Covid and deteriorated relationship between two countries, where one is where I was born and grew up and one is where I work and live and love.
China has been opening up since Deng era. I definitely benefited from his policy. My parents and my grandparents suffered greatly in cultural revolution. That’s why I always doubted the political structure of this country, if there is a good leader, lives are good and prosperous. if there is a bad leader, everybody suffered. Those uncertainties and the lack of balance and check makes China a superficially peaceful country on top of ticking bomb.
Especially when China has grown to the second largest economy (if not the biggest), its power has expanded to its neighboring countries and even western countries. It’s suppression of free speech has shown strongly in Hong Kong and for western enterprises with business in China. Due to its totalitarian nature, the government will seize control of everybody in the society. Though it’s efficiency has no doubt, its intention of suppress individual rights for greater good has never changed.
I was wishing a peaceful rise of China but the chance is so dim given what happened those two years. It proves again that a political structure that lacks balance and check, transparency will hurt the people at one point. It will endanger the world.
Trump is not a perfect person and he is not a typical politician either. He even called China virus that caused enormous pressure on Chinese Americans. Why do I still choose to support him? Because I believe he is true believer in American values and constitution and he would defend the country against a dictator that could dominate the world with economic power. And the faith doesn’t exist on the other side who I can see a weak leadership and who would sold the country for his personal gain.
Those are my thoughts as a Chinese American living through a difficult time. I will vote for Trump for 2020.
If everybody was happy with the market return (Beta Return), it would be a very boring world. Just because there are unlimited opportunities, some people do manage to beat the market and make a better return (Alpha Return) and some people fail to win the market thus they lose money. Today I am going to introduce several strategies that are useful.
如果每个人就安于市场回报（Beta 回报）， 这个世界会相当的无聊。正是因为市场上有无穷多的机会，一些人的确能够赢过市场；同时一些人也会输于市场。今天我会介绍一些有用的策略。
First of all, let me introduce Core-Satellite concept: We can assign most of our money into a passive index (e.g S&P 500), let’s say 80% and it is your core position, the rest of money can go to some other investment, such as buying some cool stock like Tesla or Amazon and they are your satellite positions. This composition allows you to gain extra return if the picked stocks are going well, and even if they don’t go well, you still have 80% in the passive index, so downside is limited and you are not going the complete opposite of the market.
先让我介绍一下核心-卫星投资概念：我们可以把大部分钱放到被动管理的大盘（比如 S&P 500), 比如80%， 它是你的核心投资。剩下的钱可以投资一些不错的股票例如特斯拉和亚马逊，这些是你的卫星投资。 这种方式可以让你获得超过大盘的回报, 如果这些股票走势不错，如果他们走势不行，你仍然有80%在大盘里，你的回报不会完全反向市场走向。
There are some options that can be your alpha:
Some good stocks you think will outperform.
Some sector likely to perform (NASDAQ, or QQQ The top 100 stock in NASDAQ).
挑选一些好的板块（比如纳斯达克， 或则QQQ ， 纳斯达克前100的股票）
Add some leverage (There are are leveraged ETF, such as UPRO (3 times of return of S&P 500), TQQQ ( 3 times of return of QQQ)
加一些杠杆（3 倍的大盘回报 UPRO, 3 倍 TQQQ的回报）
Some leveraged Muni fund (Their return are very attractive if your tax bracket is high and it also generates passive cashflow every month)
One of my retirement fund has employed leverage UPRO at certain time, and it beats S&P 500 by 10% for the last year.
There could be other options you can apply, let me know what your thoughts are！
As the most comprehensive, sophisticated capital market in the world, U.S market has provided numerous investment options.
To track the U.S economy: S&P 500 is one of the best proxies because it tracks the biggest 500 U.S company in terms of market value and it is supposed to be the strongest and it has the blend of growth and value in different industries. At the time of crisis, holding S&P 500 is safer than most of investment assuming the sizes of those big company allow them to navigate through the difficult time. There is a broader index: total market index that includes big cap, middle cap and small cap if you want to capture all the aspect of the economy(e.g. ITOT, Fidelity total market fund), but the performance is very close to S&P 500 itself due to those big companies taking more than 90% of the total economy. The representative ETFs for S&P500 are IVV, VOO, SPY (SPY being the most popular one)
跟踪美国经济， S&P500是最好的代理之一， 因为它代表美国最大500个公司，最强而且有各个工业，成长，价值各种组合。在经济危机的时候，手持S&P500是最比较安全的方式，因为这些大公司一般可以熬过困难时期而存活下来。还有一些更广阔的市场指数, 包括大，中等，小公司， 这更加全面的追踪美国经济（举例：ITOT ETF，Fidelity total market fund），但是由于美国大公司占了整个市场90%， 他们的表现非常相似。追踪市场的ETF有IVV， VOO， SPY（SPY是最流通一个）
To capture the bond market, there are some varieties as well, bond issued by Federal, local government and enterprises. There are some longer term treasury bill but 20-year treasury bill (TLT) only yields 1.5% now-days making bond market very unattractive. Muni bonds are attractive to people who are in high tax brackets which allow the return to be exempted from federal and local tax if the bond is issued by the local government. Bond issues by company has different ratings: AAA rating is safer with lower return; Junk bond is not safe but return is high.
Traditionally, people like to hold balance of stock and bond for better risk-adjusted return. Given that it is low rate environment, to achieve better return, there is a strategy called risk-parity trade, which adds leverage to bond, thus the return is similar to stock even with a combination of bond and stock.
一般来说，人们喜欢持有股票和债券的组合，波动性较小。但是最近是低利息时间，为了更好的收益， 有一种投资策略是risk-parity, 在债券方面增加杠杠，收益就可以和股票差不多。
Going with the family, investment-dog has a chance to learn a bit sailing. Rise the mainsail and jib, and go with the winds. when the sail captures the wind, the whole boat is almost tilted and like flying on the water with full speed. Next time I will talk about sailing in more details.
People are usually saying, no risk no return. But I am saying If you don’t know the risk associated with the investment, sometimes you assumed all the risks without the return. I had a painful experience when I invested a lot in gold without knowing its real risk. The price is volatile and it doesn’t pay dividend. It is a speculation and I eventually lost big to learn a huge lesson.
People are buying investment based on their perception of return and sometimes ignored the risk or mis-assessed the risk. Risk is modeled in the financial term as volatility. It is the variation of the trade price over time. In statistics, it is measured by standard deviation. Intuitively to average investor, we can see some stock price jumping up and down, for example, TSLA, which can go from $200 to $2000 in one year and some other investment, like the money market fund, the price doesn’t move.
But if you don’t know the risk, sometimes, you assumed a much bigger risk than you thought. One example is investing in gold. People turned to use gold as a hedge. But often it is not true because there is no direct link of opposite performance. When people used gold to hedge 2016 US election market crash, it was a big fallout. But if you think the future for U.S. economy is good, you should keep investing in U.S. market with total understanding of price volatility and stay in the market. If you want to hedge the market risk, buying put option makes more sense than buying gold.
如果你不明白投资的风险，有时候你背负了比你想象中大很多的风险。一个例子是黄金。人们希望用黄金来对冲市场崩溃，但是这常常是不对的, 这两者并没有直接相反的关联。当人们用黄金来对冲美国2016选举产生市场崩溃，结果是非常错误的。如果你认为美国市场长期看好，你应该持续投资并且长期持有，如果想要对冲市场，买put option比买黄金更直接。
Investing or speculation are two very different ways of thinking. If a person sees the asset valuable and want to hold for a long time, he would like to buy it at the right price and hold it for a long time until the value is not worthy in his opinion. If a person is not sure about owning the asset while he is trying to guess its price will rise or fall and trying to profit from that, it is called speculation.
A lot of people think the stock market is volatile, and it is easy to lose money. I am asking him this question: do you think the stock is worthy? If yes, buy it with smaller amount of money over a long investing period. This way you can smooth out the volatility of prices. And you hold it until your opinion changes. If you are trying to time the market to buy low and sell high, you are more like a gambler, because nobody knows it will rise or fall tomorrow and you are not smarter than all the people trying to gauge the price. The price is hard to be “right” at any moment, because it is all about supply and demand.
This strategy (dollar-cost averaging) is particular useful when investing with index which is diversified to eliminate individual risks. If your answer is yes when investing the US market, using the strategy can help you earn market return.
It is not a negative term at all to invest effortlessly. As we all know, most active investments can’t beat the broad market and the management fee and expense is way higher. A lot of famous hedge funds can’t consistently beat the market either. I bought renaissance hedge fund which claims to be one of the best in the world and its return is rather disappointing compared to the s&p 500.
Maybe as a Chinese old saying: 无为(no-action), in recognizing the market is full of all kinds of investors and traders. They may know some information you don’t know or they may employ complicated models and strategies. To beat the the market is possible with effort, but your effort is likely counter-productive and you could lose to the market.
As a average investor, staying with the market is the best and effortless strategy. The time in the market is more important than timing the market. No to mention spy 500 offers dividends payout as well.
There are several ETF tracking broad market: ivv, spy, voo. And fidelity also offers some 0 fee index fund that tracks market too.
有些的ETF是跟踪大盘的：ivv, spy,voo。fidelity 还有一些没有费用的指数基金。
ETF has a way to capture intraday return, mutual fund has a way to reinvest the dividends on your behalf, so you can completely be off the hook. So the time can be yours completely while the dividends are compounded and gain returns.
So if you want to be completely effortlessly gaining market return, zero fee index fund is your best instrument.
Usually we achieve the financial freedom by generating passive income. Once the passive income can cover the cost of living, people don’t need to work anymore. It doesn’t mean you stop working completely, but actually means you have the freedom to do what you want to do and plan your life with complete control.
Thus the first thing we need to understand what the cost of living is. What is your annual expense on rent，mortgage and grocery, dining, travel .. etc. If your annual cost of living is $50000, then if your asset can generate this income annually, then you don’t have to work anymore.
To achieve this goal, there are different methods to generate the income, each of them is associated with particular risk/return profile.
Financial Products 金融产品
Investment property 出租房
Small business/Freelance 小生意/自由职业