The Investment Scientist

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 »

According the book “Becoming Seriously Wealthy” by John Bowen and Russ Alan Prince, in a study  of 199 billionaire families, 186 of them had stress-tested their family finances in the last five years. In other words, they had brought in outside experts to examine every facet of their financial situation to make sure everything was  done right. That’s a full 93.5%!

Similar surveys of business owners and physicians have shown that these people are much more careless about their hard-earned wealth. Only 11.1% of business owners and a measly 4.3% of physicians have obtained a second opinion about  their financial situations. See the figure below.


blog_155_it1_roland_berger_tam_artikel_richard_thaler_image_caption_w768.jpgA few days ago I got the news that Richard Thaler won the 2017 Nobel Prize for Economics. If you don’t know about his work yet, you should. He, Danield Kahneman (2002 Nobel Prize) and the late Amos Tversky are considered the founding fathers of Behavioral Economics. His insights have a great deal of practical application and here I am trying to sum it up in one page for you.

Does The Stock Market Over-react?

This is the title of his paper published in The Journal of Finance in 1985. I read the paper for the first time when I was a PhD student at Carnegie Mellon University. The short answer to the question posed by his title is YES. He found that the market tends to overreact and reverse itself. When you look at five year intervals, stocks that did best in the previous five years tend to underperform over the next five years compared to stocks that did worst in the previous five years. What can you learn from that? Don’t be a hot stock (or fund or sector) chaser.

Myopic Loss Aversion
Richard Thaler coined this term to describe a cognitive bias many investors have which causes them to be afraid of short term loss to the detriment of their long term wealth. As an investment advisor, I encounter this a lot. The question I get the most is, “What do you think the market will do in next few months?” Implicit in the question is their fear that the market might drop and their desire to avoid it. The fear of loss causes many investors to abandon the market prematurely. What can you learn from that? Be oblivious to the market. This sounds counter-intuitive, but it’s the same advice given by another Nobel Prize winner, Daniel Kahneman.

Read the rest of this entry »


17724.jpgPresident Trump unveiled his tax reform proposal two days ago. I must say that it by and large follows the contour of my best guess from six months ago. Here is an updated summary:

  • Corporate tax rate will be reduced from 35% to 20%.
  • Estate tax will be eliminated.
  • The number of tax brackets will be reduced from seven to three, with the top rate going down from 39.6% to 35%.
  • The standard deduction will double while personal exemptions and many itemized deductions (with the exception of mortgage interest and charitable donations) will be eliminated.

However, there is one big surprise that will affect many small business owners and maybe even physicians/dentists in private practice.

That is, the tax rate on pass-through earnings will be set at 25%!

I own such a pass-through entity, MZ Capital Management, through which I deliver my wealth management services. The earnings of the firm are not taxed at the firm level, rather they pass through to my tax return as personal income, thereby subject to my personal income tax rate. Since I am in the second highest tax bracket, the marginal tax rate on my pass-through income is currently 35%. (If I had not set up a defined benefit plan for myself, my marginal tax rate would have been 39.6%. This belongs to another article on tax mitigation.)

Read the rest of this entry »


Equifax, one of the three credit agencies, had their computer system hacked. As a result, 143 million Americans (and some Canadians and Britons) had their sensitive personal information, such as their name, address, birthday, social security number and credit card information compromised. You should assume you are one of the victims and take the following steps to protect yourself:

Step 1: Sign up for

By law, you are entitled to one credit report per year from each  credit agency. Since there are three credit agencies (Equifax, Experian and Transunion), you may stagger your requests and get one credit report every four months. is a website jointly operated by the three credit agencies that provides a centralized location for  requesting your annual free credit reports.

Read the rest of this entry »


_Enable image display to see picture_In December 2016, I wrote about how I came to know a little girl in rural China who suffers from thalassemia and decided to pay for her blood transfusions that cost $150 every 40 days. I called that my best investment in 2016 and I truly felt that way.

Since then, I have sent  $150 to them every month and kept in touch with them on WeChat.

Apparently Jia Jia’s homework essay did not touch only me, it also touched many other people. In the end, they received the equivalent of about $50k in donations.

Grandma took her to the best children’s hospital in Tianjin to seek treatment. One week’s stay there set them back more than $3000 and they decided they couldn’t afford that. So they came back to their town to seek treatment in the provincial hospital.

One day I got an essay from Jia Jia talking about how happy her grandma was, more happy than she had ever seen her. It turns out that Jia Jia needed a bone marrow transplant to cure the disease and a donor had been found.

But there was just a little problem. The provincial hospital had only successfully done bone marrow transplants on adults.

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: