The Investment Scientist

Archive for the ‘wealth management’ Category


trade-deficit.jpgIn 1971, Nixon ended the gold standard and since then the US has been consistently running a trade deficit. The US has not gotten poorer but instead has benefited tremendously from trade deficits.

Prior to that time, foreign holders of dollars could  redeem the money in gold and ship it out of the country, resulting in the loss of national wealth. That’s why prior to 1971, the US generally had a trade surplus.

After the ending of the gold standard, the US dollar became a fiat money that can theoretically be printed at will. When the trade deficit with China was $350 billion last year, what it actually meant was that China sent us $350 billion worth of goods, and we gave them our printed paper(fiat money dollar) in exchange. The USA is the only country that can do that because the dollar is the world currency! I suspect China is secretly envious of our position. Read the rest of this entry »

trade war .jpgLet’s start with some basic facts. As of 2017, the US imports goods worth about $550 billion from China, while only exporting about $175 billion to China. The trade imbalance is about $375 billion in China’s favor. President Trump believes China is making off with $375 billion of the US’s money every year and he is out to stop that. He announced tariffs on $60 billion worth of Chinese goods yesterday, mostly targeting high-tech imports from China.

The biggest high-tech import item from China is … round of applause …the iPhone, totalling about $70 billion a year since China is the final assembly place of all iPhones using parts from Japan, Korea, Taiwan, the US and China.

If an iPhone sells for $1000 in the US, it is counted as $1000 worth of Chinese imports, but 60% of all its economic value is captured by Apple. China probably captures less than 10% of the economic value. The rest is shared primarily by Japan, Korea, Taiwan. A tariff on the iPhone will harm Apple more than China, and also hurt Japan, Korea and Taiwan along the way.

Read the rest of this entry »


It just caught my attention today that buried deep in the CNBC website was this headline:

Ameriprise Puts Retirement Savers at Disadvantage in High-Fee Funds, Says SEC

As the consequence of getting caught, the billion dollar company agreed to pay a fine of $230,000. If this is not a slap on the wrist I don’t know what is. Is it going to deter Ameriprise or any other brokerages from ripping off their clients? Nah, I don’t think so.

In a statement, Ameriprise pointed out “… It’s important to note that this is a long-standing industry topic and numerous firms have settled with SEC and FINRA on similar matters.”

This is actually a very honest statement that makes it clear that the dishonest practice of costly hidden fees is quite prevalent in the industry. I only take issue with their use of the word “topic” as if no harm has been done.

Read the rest of this entry »

If you go to the Morningstar website to do research on a very popular fund, the Vanguard S&P 500 Index Fund or VFINX, you may find this information after some digging around:

Screen Shot 2018-02-17 at 6.28.32 PM.png
The Investment Return is basically what the fund produces. (If the fund is a S&P 500 Index fund, then its investment return is basically synonymous to what the market produces.) The Investor Return is what the average fund investor receives. So why on earth would the typical investor get less than half of what the fund produces?

The answer is actually pretty simple: most investors just don’t have the mental wherewithal to stay in the market when it drops. They pulled out at the bottom of the market, thereby missing much of the rebound rally in 2009. See this fund flow chart below.

_Enable image display to see chart_

Read the rest of this entry »

Tara and Rance, From left to right, Rance Rizzutto and Tara DeFrancisco, both Comedians & Instructors from Chicago, Photo Credit Tara DeFrancisco.jpg

DC Metro Theater Arts, the largest performing arts publication in the Mid Atlantic region, just did an article about the upcoming improvised musical show I am producing in Bethesda. Tara and Rance, the two performers from Chicago, deservingly got the lion share of coverage, but the publication did say this about me:

Their upcoming show at Imagination Stage in Bethesda will be their first in that venue and in Maryland. This opportunity landed on their radar through Michael Zhuang, a resident of Bethesda, nicknamed “The Investment Scientist” for his founding of MZ Capital Management. Mr. Zhuang has traveled the world and spent countless hours researching, studying, and practicing his love of musical improv. In 2017, he began sponsoring up-and-coming talent from the improv-comedy meccas of New York City and Chicago to perform locally, with the goal to embed musical improv into the fabric of Bethesda’s growing arts and entertainment culture.

“My vision is to see Bethesda’s performing arts scene flourish,” said Zhuang.

Read the rest of this entry »

Here are my 2017 highlights:
  1. I published my first book “Physician Wealth Management Made Easy” and it got  off to a strong start. It was Amazon’s  #1 Hot Release in the Physician category for a month.
  2. I auditioned and was accepted into the cast of the DC production of the Broadway musical, Chess. I even got to sing five lines of solo in the opening scene, “The Story of Chess.”
  3. My business grew 33%. Now $100mm AUM is within reach. I was also recognized as one of Top 100 Influential Advisers by Investopedia on strength of my knowledge


    Enable display to see picture
  4. I performed an improvised musical format called Spontaneous Broadway at San Francisco’s Bayfront Theater. I also performed an improvised musical solo at the Source Theater in DC.

    Read the rest of this entry »

bitcoin.jpgThe Origin
Bitcoin was invented by a Japanese man named Satoshi Nakamoto. Or was it? He has been in radio silence since 2011, and nobody has seen him or has been able to verify his existence. To say the least, the origin of Bitcoin is shrouded in mystery.

The Technology
The underlying technology of Bitcoin is called Blockchain. It is legitimate and it is being adopted by companies as diverse as Alibaba and Walmart. The technology ensures high security and prevents counterfeiting. However, the technology is in the public domain, meaning that anybody can create an alternative to Bitcoin. In fact, there are more than 1300 “cryptocurrencies” out there as I write this.

The Early Adopters
The early adopters of Bitcoin were  anarchists who hate governments and who think fiat monies issued by governments are just means for control and wealth expropriation. They like the fact the Bitcoin is not issued by any governments and is not managed by any “trusted” third party.

The Next Adopters
Money launderers and criminals were  the next adopters of Bitcoin because  it is anonymous and untraceable.

Read the rest of this entry »


Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC. He is also a regular contributor to Morningstar Advisor and Physicians Practice. To explore a long-term wealth advisory relationship, schedule a discovery meeting (phone call) with him.

You may also get his monthly newsletter, or join his Facebook page for regular wealth management insights. Michael's email is info[at]

Twitter: @mzhuang

Error: Please make sure the Twitter account is public.


%d bloggers like this: