The Investment Scientist

What My Clients Gain From My Studies at Oxford

Posted on: October 20, 2021

I gained a lot from my Oxford experience. Some of the gains are for me personally, some of the gains are for my business, and yet others can help me better serve my clients. I would count the latter as my clients’ gains.

The biggest gain undoubtedly came from Professor Sussman’s macroeconomics class. There I learned all the intricacies of macroeconomics, including how monetary policy is conducted. The class helped me understand a language called “Fed speak.” For instance, in March last year, when the entire stock market was in a tailspin, the Fed came out with an announcement of “unlimited” QE. The me without the Oxford education would have not understood what that meant. But alas, after the macroeconomics class, I knew exactly what the Fed was planning to do and understood its implications for the market. Thus in the depth of market despair, I was confidently rebalancing my clients’ money into stocks. Sure enough, the market snapped back quickly and has been rising ever since. 

Back then I wrote a newsletter article where I informed you:

With this much liquidity, an equity market rally is almost certain …

You can read the entire article here, “Fed’s Unlimited Asset Purchases: What That Means for You and Me?

The second biggest gain came from a part of the microeconomic class. I understood micro far better than macro, but I still learned something new from that class. In the past, the consensus had been that firms manifest a decreasing return of scale. That means as firms get bigger, it’s harder for them to make money at the same rate. Thus smaller firms are usually more profitable and often give investors better returns over the longer run. 

However, the latest research has discovered that with the advent of the internet, some big firms achieve the so-called network effect. That is, the bigger they get, the stronger they get and the more money they make. Think of Facebook, Google and Apple. These types of firms achieve the so-called increasing return of scale unheard of before.

This led me to move a substantial chunk of my clients’ money into stocks with the increasing return of scale characteristics. My clients’ portfolios have benefited since. 

The Behavioral Finance class also taught me a lot. It didn’t really teach me anything new, rather it confirmed my belief that our behavior as investors is much more decisive than whatever investments we select. It feels good to get a stamp of approval from Oxford and I’d like to call that the third biggest gain for my clients. 

I have personally benefited from the clarity I gained at Oxford as well. Before I went, I wondered if I should turbo-grow my business to multiple billions of dollars with hundreds even thousands of clients. Now I have the answer. I will keep the business unique, focusing on serving a small number of clients very well. Instead of growing my business, I’d rather grow myself as a person. It is also the best way to grow my clients’ wealth by focusing on them!

Schedule a 2nd opinion financial review, buy my wealth mgmt books on Amazon.

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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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