Fake investor VS Real investor ---- where your money goes matters to you.

The reason I want to write this article about real and fake investors because I see too many fake investors call themselves expert and “educated wealth manager”. It is so sad for people who believe how fake smart they are and loss people’s money again and again. However, they don’t lose money at all because they will charge their clients management fee and get money from that. Many hedge fund and private equity manager will charge 2% management fee even when they have bad performance on market.

Most people will go to school and learn stock market or trading class about investment bank such as M&A. However, 90% of school’s teachers don’t have real experience in stock market or never work with investment bank ever. How can they teach investment? And how could people learn from them? I will give a very good example of trading stock market and fake teacher vs real teacher. Many teachers will tell you to try paper trading which is fake money and image people buy stocks to avoid making mistake. However, good wealth managers are learning from their mistake like Ray Dalio and Peter Lynch. If we don’t make mistake how could we learn from trading and avoid making same mistake to be better? This is fake teacher. Another point is about emotions. Real money and fake money will treat investor different because you probably will lose your lunch meal for next week because you can’t hold your emotions and scared to lose all your or your parents’ money. Fake teacher will lead fake students. And fake students will become future fake wealth managers.

 I started trading stocks three years ago and still make a lot of mistakes. Even Ray Dalio went bankrupt when he was 30 years old. We are humans. We will make mistake, and this is how we could learn more knowledge from our mistakes and change it then make it better.

From the beginning, we think we know more things than we know. Then, we will make mistake and we notice that our actual knowledge. Then we will study it and learn from the mistake and make it better. This is how real-life learning and studying circle. Most people just avoiding mistake and keep move to another part, but they will make the same mistake again and again.

This is the biggest gap between real investors and fake investors. Learning, most hedge fund managers and private equity managers don’t study from their mistake. They try to avoid it and they don’t try to change it. My weakness is financial report. Then, I try to read one report every week and find the most important information in the company’s report and study for it. I am not saying that I am real investor. However, I study hard for my mistake and my weakness. Also, I will keep posting my thoughts on the market and my personal investing life with people.

Diversify--- the investment of my life

This is my second article of my thought thru my time. This time, I want to talk more about investment of diversify. Why we want to diversify our investment? “Don’t put all your eggs to one basket.” This is very famous phrase in Wall Street. Before Wall Street people use it for getting more commission fees because they can make people buy more different stocks and they could have more commission fees for themselves. As the time goes by, diversity is becoming more important strategy for investment. We all know the trade war between China and America. The trade war makes a deep decrease for both Chinese and American stocks and economy. This is very sad news for both. We don’t like that. However, we can’t stop it, and nobody can image this will happen when Trump become the president of the United State.

The trade war between China and America will have good result for both countries. I strongly hold my positive attitude for it. As a Chinese living in America, I wish good for both countries. We will figure it out by win-win situation for the trade war. However, when market is uncertain, we could use diversity investment strategy to avoid big lose for our investment. Many investors are not actually investors (I will explain this in future articles). For example, when Chinese stocks go up, American stock market go down. If investor only hold American stock, they will lose money. However, if investor hold both country stocks, they may get even return or maybe a little profit if up more than down. In my company, we are investing in equity (stocks and bond), we also investing in filming such as bridge loan for secure investment return to make sure we could make profit for our investors.

There are some different investments:

Stocks in the United States. Companies of different sizes should be included. The price of the business is measured by market capitalization. Include in each portfolio small-cap, mid-cap, and large-cap.

Fixed income from the U.S. The best is the United States. Treasuries and shares for savings. The federal government provides these. There are also very secure municipal bonds. You can also purchase short-term bond funds and money market funds invested in these protected securities. Corporate bonds offer higher yields with higher risk. Junk bonds provide the highest returns and risk.

Stocks from abroad. These include both established and emerging-market firms. When you spend domestically, you can achieve greater diversification. International investment can yield higher returns as emerging markets grow faster. But they are more risky investments because they have less central bank guarantees in place, they can be vulnerable to political change.

For our company, we do investment in equity, real estate and loan for filming industry. We diversify our investment to reach highest return and lowest risk for our investor. If there are big and absolute investment, I strongly suggest putting all the bet on that. However, for most people, we could diversify and investment different and more as we can.