The Investment Scientist

Archive for June 2019


This is actually a response to a client who asked to know what I do regularly that might benefit him. There are many things I could suggest, but I’d like to highlight just three.

Follow academic research

Those of you who have followed me for a while know that I am disdainful of financial news. I liken it to highway noise and I think that listening to it won’t get you anywhere. I am, however, an avid reader of peer-reviewed journals like the Journal of Finance, Review of Financial Studies, etc. These journals contain the best and most rigorous research on the subjects of finance and investment. That’s why I can confidently tell my clients, whatever I do with their money, that I can back up my actions with rigorous peer-reviewed research from the best minds of the world.

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The trade deal between the US and China fell through a few weeks ago. Since then, I’ve read at least three versions of what happened, ranging from Trump applying maximum pressure, to Xi reneging, to Xi wanting to do the deal but not being able to get the politburo to go along. Wall Street is hoping Trump and Xi, who will be meeting at the G20 a month from now, can magically salvage the deal. Based on what I’ve read in Chinese media, I am a lot less hopeful. Prior to Trump’s last-minute maximum pressure surprise, I saw the state media was preparing people for a deal; after that, it was preparing people for a long fight.

Bloomberg recently published a study of the economic impact of tariff escalation (see chart below.) As you know, I generally don’t react to the news, but this is looking like a structural change to the world economy that may warrant a reduction in risk exposure. If you are worried, feel free to schedule a time with me to talk about it:

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Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC.


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