Recently, I had a Review and Discovery meeting with a physician in her late 50s. When I first saw her, she looked burnt out and stressed. Who can blame her? She has been dealt a very bad hand in life.
- One of her children suffers from down syndrome and requires lifelong care.
- Her husband, also a physician, passed away several years ago, leaving behind a financial mess
- The financial professionals who were supposed to help her, led her to make disastrous investments. She lost her house and had to declare personal bankruptcy.
- Her father recently passed away, also leaving behind a financial mess.
- Her mother is so dependent on her now that she cannot continue her medical practice.
She told me she almost wanted to pull her hair out when thinking about her responsibility to her patients, her children, her mother and yet she can’t even sort out her own personal finances.
I did not mince words in telling her how dire her financial situation is. When I told her how much she needs to retire, she almost fell off her chair.
I was an amateur pilot. I remember vividly an episode happened during a training class ten years ago.
That was a very windy day. Up to that point, I had only experience flying in calm weather. As soon as my Cessna took off, I immediately felt the difference. My plane was tugged and pulled in all directions by cross winds. I felt like I was losing control of the plane, and fear swelled up from the bottom of my spine to the top of my head. I sat stiffen in the pilot seat and my sweaty palms grabbed tightly at the control handles like a sinking person holding onto a straw.
My trainer sensed my tenseness and she asked: “Are you OK?”. Not willing to acknowledge my fear, I asked her instead: “Is it more dangerous to fly in turbulent weather like this?” The trainer smiled and said: “It is not more dangerous to fly in turbulent weather. The plan was built to withstand any turbulences. But occasionally, an amateur pilot would lose his cool and do something stupid. That’s the real danger.”
According to research by Dimensional Fund Advisors, Inc, only 33% of mutual funds that outperformed the market in the last five years continue to do so in the next five years.
A week from now, there will be a referendum in Great Britain to determine if the UK should stay in EU or should leave for good.
A mere month ago, the stay vote still won by a comfortable margin. Just showing how political wind can shift, the odds are now 50/50 that the leave vote might win.
Here are some consequences I believe a leave vote would entail:
- Copycat referendums in other EU states, and within a few years, EU might not exist.
- London’s reputation as world financial capital on par with New York may be diminished.
- Disruptions to trades and investments, since UK’s relationship with Europe and the rest of the world, will have to be renegotiated.
- Pound Sterling, London stocks, and property prices might go south. Potential capital flights from the UK.
- More volatility in global stock markets.
As an investor, what should you do about it?
Well, all of the above can be called informed speculations. They are not actionable Read the rest of this entry »
On May 27th, 2005, I started MZ Capital Management as a hedge fund with “Double Your Return” as my first marketing tagline.
Shortly after the Enron debacle, Congress passed the Sarbanes-Oxley Act, which requires company insiders to report their trades to the SEC electronically within a day of the trades taking place. I created a computer program to query the SEC’s database in real time. So as soon as, for example, IBM’s CEO reported that he bought 10000 shares of IBM, I would know it right away.
On a typical working day, I would be half naked lying on the beach of Palm Beach and I would get a text on my dumb cell phone (sent to me by my computer working hard on my desk.) I would call my broker right away to follow the trade. Then the news would get to the WSJ one week later, the price of IBM would pop and I would sell for maybe a 5% to 10% gain.
Just like that I was making 20% to 30% return every month!I calculated that at this rate of compounding, I would become a trillionaire in about 10 years. I was so confident, I started the hedge fund to share the wealth.
Lest you don’t know yet, I did not become a trillionaire hack, not even a billionaire. So what went wrong?
A few months into my hedge fund, I noticed a small website, where for a $20 a month Read the rest of this entry »
Recently, I took a one-week trip to China, primarily to thank my English teacher. Since late last year, it had dawned on me that I had been so busy chasing my own success that I had forgotten to properly thank those people who made my success possible in the first place. So my new year’s resolution was to identify those people who had the most positive impact on my life and go thank them personally.
Teacher Huang is one such person. He started the first ever English immersion program in China, and he poured his heart into teaching us English. Without him, I wouldn’t have the language skills to accomplish what I have now
He lives in Guangzhou, China though, which takes nearly 24 hours of travel to get there. No matter, I made up my mind to do that. I wrote him a thank you letter, carried it with me, and I read it out loud in front of him and his family. We both were choked up in tears. This is a picture of me with my English teacher.
I learned that Teacher Huang has kept me in his memory for all these years. He filled me in with many details of my middle school years that I had forgotten.
Seeing his white hair, I felt like I had been an ungrateful student who took 30 years to come thank my teacher. But seeing how happy he was, I also felt like I’d made amends. Read the rest of this entry »
Recently Department of Labor issued a fiduciary rule that requires that financial advisors who manage retirement accounts must act in clients’ best interests.
Here is the quote from a Wall Street Journal report …
About $14 trillion in retirement savings could be affected by the rule, which requires stockbrokers providing retirement advice to act as “fiduciaries” who will serve their clients’ “best interest.” That is stricter than the current standard, which only says they need to offer “suitable” recommendations, a standard that critics say has encouraged some advisers to charge excessive fees or favor investments that offer hidden commissions.
Still, reflecting intense lobbying from the financial industry, which has fought the regulation since it was first proposed six years ago, the final version includes a number of modifications.
This might come as a surprise to many people that financial advisors do not need to act in clients’ best interests up until this day.
Alas, as I explained in this article, there are really two types of financial advisors: Read the rest of this entry »