Archive for the ‘Life’ Category
My newsletter “The Investment Scientist” is read by over 4,500 people, representing a growth of 41.5%. This portends well for future growth of the AUM.
I am grateful for the people who support my business, especially Nicole my assistant, Vanessa my editor, John my programer and the Fidelity support team.
I am grateful for this year’s Nobel Economics Prize winners, especially Eugene Fama, upon whose theory I’ve built the investment approach that has served me and my clients so very well.
I have started the process of ghostwriting a book on Physician Wealth Management, as well as redoing my website with a sharpened marketing message around the science of investing.
I have won three storytelling contests in DC and Philly, and have failed to win at least the same number of contests.
I have performed standup comedy to standing ovations as well as stoic reactions in corporate, charity and political events.
I have found a new challenge and passion in improv comedy. I am thankful to my teachers Shawn Westfall and Anna Marie Trester, and my many classmates.
My parents and in-laws stay with my wife and I for extended periods of time, helping us to take care of the kids, allowing me time to indulge in my passions.
My kids are growing up strong, healthy, smart and caring, thanks to their mom who is also my wife. I couldn’t be more proud of them.
What are you thankful for in 2013? Share it with us in the comment section.
Today I sat down with a bunch of professionals for our quarterly wealth management meeting. As the talks turned toward the implementation of the Affordable Care Act, I realized the mal-functioning website is the least of its problems.
In our group there is a professional, Andrea, who specializes in helping small to mid-sized businesses procure group health insurance. Andrea said insurance companies are cancelling old plans and giving their customers “upgraded” plans that cost more and provide less benefits.
This hasn’t just been happening in isolated cases, but is rather wide-spread. Why? For one, the ACA has many mandates, such as covering reproductive health. So if a man’s insurance plan does not cover a pap smear, he just lost his plan! OK, I made this up for comedy, but Andrea did mention a 55 year old woman losing her plan because it did not have maternity benefits.
As far as investment philosophy is concerned, I am solidly in the camp of Nobel Prize winner Eugene Fama and Vanguard founder Jack Bogle. They both believe that the market is by and large efficient, and there is no point in picking stocks.
Most of my money is in broad-based passively managed asset class funds, but I do set aside 5% just to have some fun with and right now I only have three stocks in my fun account.
I bought SWY last November after going to the Chicago Booth Entrepreneur Advisory Meeting. From the meeting, I learned that big retailers routinely write off their inventory at a huge loss. The reason being that they can not control demands as they have little information about the needs of the individual consumer, though they can usually make a rough guess on aggregate needs.
I noticed my wife had been shopping at Safeway more and more. After a little digging, I found out Safeway had set up a technology system to track each individual’s needs and price sensitivities. Then it can make targeted offers to shoppers like my wife that unfailingly brought her back over and over. I recalled my earlier meeting and realized they would save tons of money just from better inventory management.
Seriously! Congress established it in 2008 in House Resolution 1499.
I only know this after getting an email from my estate planning attorney friend. I think you should read it as well.
According to the resolution passed by Congress, “Many Americans are unaware that lack of estate planning and financial illiteracy may cause their assets to be disposed of to unintended parties by default through the complex process of probate.” The resolution goes on to state that “careful planning can greatly assist Americans in preserving assets built over a lifetime for the benefit of family, heirs, or charities.”
Professor Mearsheimer is a geopolitical realist. He has an intriguing theory about global political order which states that there is a 75% chance that the US and China will come into conflict.
I care about this subject because, being a Chinese American, I know that my life would not be too pleasant should that come to pass.
Professor Mearsheimer’s theory is based on the assumption that the global order is anarchic, by that he means there is no higher authority above states, and that each state will fight for a better position in the order.
The US, now being number 1, is not going to willingly give up the top spot, and China, if given the opportunity, is not going to settle for second best.
Professor Mearsheimer explains how the US became #1 in the first place:
I jumped out of my chair in delight when I learned that Eugene Fama and Robert Shiller had won this year’s Nobel Prize in Economics. These are two economists that greatly influenced my investment philosophy and their works have been an integral part of how I help my clients build and preserve wealth.
Let me explain their contributions:
He accurately pointed out, “If I spent like that, I would be bankrupt in a few years.” He believes so strongly that the US is going the way of national bankruptcy that he has moved substantial amounts of his money overseas and has invested a great deal in gold.
I happen to believe that gold is the most unproductive of assets, since it does not generate dividends or interest and it actually costs money for upkeep in a safe in a Singapore bank.
On top of that, by throwing so much money into gold, one could over prepare for a disaster that is very unlikely to happen and thereby miss out on all the opportunities to grow wealth in this country.
But I still need to explain why the US won’t go bankrupt anytime soon. Here are two explanations:
A colleague of hers got a call from her son’s teacher. He had come up to her to complain about chest pain when he suddenly collapsed right there in front of her.
My wife’s colleague ran to the emergency room only to find that her son was already pronounced dead. Doctors there couldn’t figure out how this could have happened to a healthy ten year old.
The child’s mother had refused to give up and gave CPR to her lifeless son for an hour until his rib cage nearly cracked.
My wife and her colleague used to swap stories about their respective children regularly and this son was the one she talked about most often. Now he is gone.
I don’t know her, but my heart is overwhelmed by sadness and I am reminded yet again that money and material trappings mean nothing. Life alone is the real treasure.
Well, that wish will not be granted, at least not by me. But there are ways to make those tasks less overwhelming. I call it ‘The Five Ds’: Delete, Do Now, Delay, Divide, Delegate. Let’s go through them one by one.
Tasks that add no value, just delete them. When I first started out in my career, I used to write a weekly investment column for a local Chinese newspaper. After a whole year of writing, I did not get a single decent client. That task has now been relegated to my delete bin.
This has recently been a subject of discussion with clients of mine. They are a self made millionaire couple. their parents however, are relatively poor. They have enough to live on by themselves, but if they ever got sick, they would be financially dependent on their children for care.
To that end, my clients have set aside $1m just in case.
I suggested they fork over a few hundred a year to pay for their parents’ gym memberships. If their parents actually use the memberships, my clients may never need to spend the million.
He is in his 60s, very comfortable with pen and paper, but now Medicare requires him to record all patients’ records electronically, or he will have to pay a stiff penalty.
So now, in addition to seeing patients for eight hours, he has to spend three hours inputting health records.
I sat down with him and we toyed around with a few potential solutions.
My blog was called ‘The Investment Scientist’, and in marketing materials, I highlighted my academic training and scientific approaches toward investing.
Then, for whatever reason, I stopped doing that. Even the title of my blog has been changed to ‘The Investment Fiduciary.’ (The word ‘fiduciary’ signals my intention to put my clients’ interest first, but few understand its true meaning.)
Over the past year, I’ve rarely heard people call me an investment fiduciary, but sometimes would come across a long lost contact who’d say, “Aren’t you the Investment Scientist?”
There is a lesson here for me. Don’t use obscure words people don’t understand in marketing.
So why am I reverting back to ‘The Investment Scientist’ again?
Last Monday I went to Philadelphia to visit a client. After the meeting, I thought I would give myself a break. I would go check out a storytelling contest organized by First Person Arts at the World Cafe.
When I got there, they asked me if I wanted to participate. Well, I did not have a story, but what the heck, I’d come this far already. I would make up one on the fly. It would be a thrill to take part in a contest totally unprepared.
I spent the next hour preparing a story, which is based on a real-life experience that I’ve kept a secret thus far.
I went on stage, and the crowd loved my story! There was laughter like every ten seconds. In the end, I won the contest hands down. Now, I am a top ten storyteller in Philadelphia! I will have to go back to contest for the title of “Best Storyteller in Philly.”
I was so thrilled by my win, the excitement didn’t even subside after a whole week. This was a seriously cheap thrill, since all in all I’d spent only $10.
Let me elaborate on exactly why I am so thrilled.
A client I visited shared with me that he is very burdened by his debts. He has a primary mortgage, a secondary mortgage and a personal loan. He asked me whether he should pay off the debts and in what sequence. That’s a fantastic question.
Here are the partial details of his debts (I’ve concealed the amounts).
The primary is a 15 year fixed rate mortgage with a rate of 3%.
The secondary is a 5 year ARM with a current rate of 2.5%.
The personal loan has a rate of 5%.
Here are my recommendations to him.
1. “The gross revenues for the financial services industry in 2010 were $1.129 trillion. That year, total US financial assets stood at $50.38 trillion, meaning that the financial services industry as a whole is skimming 2.25% a year out of everyone’s wealth.” This is an excerpt from a post on Wealthcare Capital entitled “Investment Expenses – The Other Millionaire You Make.” How about I help you cut those expenses by half?
2. Shocking! Shocking! Your elected representatives want the financial industry to continue ripping you off!
3. Ike Devji wrote a piece “Investment Fraud Red Flag for Physicians.” It is packed full of useful tips. I have one thing to add though, never work with a broker, regardless how clean his or her broker check record. These people are not legally obliged to watch out for your best interest.
4. A very succinct piece in Physicians’ Monday Digest about How Rising Interest Rates Would Affect You.
5. Taxpayers beware, AccountingToday has a piece on tax deductions expiring in 2014.
Also see Top Ten in July.