Category: Stocks

Categories
Software development Stocks

Why average investors should pick S&P 500 over picking own stocks

Reading Time: 2 minutes

I have been in the US stock market since 2003. And I observe majority of average investors don’t like volatility. They chase the hot stocks, and they catch the falling knife, and then they sell during panic. And occasionally they watch Jim Cramer’s Mad Money show on CNBC “watching TV and making money”. In other words, they usually buy high and sell low – using the late Charlie Munger’s words a little blunt, please note, “if (many) people are not stupid, how can we make money”.

This is obviously not a winning strategy. And yesterday’s market action is a perfect example. The direct reason for yesterday’s stock drop was due to the below report. I do understand the selling pressure on software stocks from the AI disruption has been there for a while now. Disclosure: I do own some software stocks, and the largest position is the good old MSFT. I joked that I was Bill Gates’ slave 20 years ago. Also – I am an average investor too and I put most of my money into S&P 500 index fund – I told my wife to do that too – if something happens to me.

The mentioned report is below. I suggest read at your leisure time.

But we need to keep in mind the software (SaaS) stocks have been trading at high valuations for at least 20 years. This may be a healthy adjustment of valuation – somewhat like an obese person losing some weight so that he/she can put less stress on his/her body.

Software benefits from larger trend such as the shift to cloud computing, pandemic (working from home), for the users there are usually higher cost of switching (think Oracle DB, or Electronic Medical Records vendor such as Epic, and Cerner now a part of Oracle), and so on. But nothing lasts forever, the recent AI revolution appears (or will likely) causing disruption to the industry. As I also worked in this industry (software and IT) for last 25+ years, and I can see that seismic shift coming. Nothing or no trends last forever.

Back to stocks, below is the S&P 500 compared to some of the popular stocks or assets.

Also the stocks hit 52 week low yesterday. Many are software or tech stocks. The saas apocalypse is real.

Btw, just bumped into my own writing on stocks etc. here, and noticed I wrote it almost 6 years ago. I can see both my kids grew significantly in last 6 years, and I am getting older – hopefully wiser too.

Last but not least, regarding the asset price, JPM’s Jamie Dimon said something yesterday – Jamie Dimon says ‘watch out’ as lofty asset prices add to economic risks: ‘My anxiety is high’ (CNBC).

Categories
401k and Personal Finance Music Stocks

Looking at Visa stock $V

Reading Time: 4 minutes

It seems I should have hold on to my $AXP American Express stocks in last few years, as I just look at the 3 main credit card companies in the US, note Visa and Mastercard are pure credit card networks, while American Express is essentially two companies: one is a bank, another one is also a credit card network (and it’s much smaller than Visa and Mastercard in that aspect). Here is their 5 year stock price comparison chart.

Warren Buffett Talks Visa and Mastercard (2018)

Peter Lynch

Also, I need to review this at 6 minutes mark more often: Peter Lynch: Why 1% Investors Don’t Fail. The Charlie Rose interview was done in 1993, I believe. Because they talked about Bill Clinton a lot, and some other clues.

I agree with Peter Lynch re: the 2 points that he raised.

ONE – Grass is greener on neighbor’s yard. In a recent blog post, I talked about a mechanical engineer chasing hot dot com or telecom stocks in 1999 here. I am guilty of this too.

TWO – Applicable to me very well: patience, $AXP is a good example of the stocks I owned but I traded it away too quickly. There are many similar examples. In the old days we have to pay transaction fees, and basically, it’s harder to make money with all the fees. Now, even without fees, we miss the upside of a stock if we don’t have patience (or faith, or confidence) on a stock. I agree with Peter this “quick trading” is similar to gambling 🎰. Update 11-14-2025: USA Today – There’s a reason you’re so hooked on soda. It’s not entirely your fault. While I usually don’t buy into the conspiracy theories, I do believe some of the promotional tactics that’s being used in the business (including Coca Cola and Pepsi) went a bit too far. Yeah, Robinhood App is included too.

Reference: Peter Lynch Wikipedia

Sell the winner and keep the losers

Something I realized that I was doing a lot recently. The initial reason or one common reason I don’t sell stocks was my long position is under water. But as I think more, I sold the winner instead – although I usually made a little bit of money. This strategy if amplified, would be really bad if the losers keep losing, e.g., $LULU, $WSC and previously $LEG and so on. I really need to re-examine my strategy here. It’s not about the monetary loss, but more about the opportunity cost as well as over-diworsify. I think ideally, I want to own 10 or fewer stocks and have time do research on them. Otherwise, it’s just like gambling: which I want to stay away from, and which is also the one reason I am trying to use less Robinhood App.

The reason I was talking about or reflecting here is because over the time I realized that #discipline is the key to investing success. And I need more of that.

More on discipline: I think it probably means I should reduce the number of stocks I own at one time, as well as the screen time on the stock trading apps.

(Update 11-12-2025) This tweet caught my attention.

If you put 2% of your portfolio into something and it became a 10 bagger, I’m not impressed. But if you put 20% in and it became a 10 bagger, that’s real skill. The difference isn’t just in return, it’s in conviction. How much you allocate before the outcome is known says far more about your investment acumen than the result ever will.

Warren Buffett’s 2 approaches to diversification:

“Very few people have gotten rich on their seventh best idea, but a lot of people have gotten rich on their best idea…”

Deleting the trading apps on my phone?

I actually did it a few times. Last few days I happened to listen to this song – 烟 (许佳豪) – 删了吧『要不你还是把我删了吧，我咬紧牙关命令我发出这句话。』【動態歌詞】 || 何璟昕 (Ayen) – 刪了吧（粵語版）『終於你決定把我刪了吧，如此不上心竟開始應復都無暇，無心的我道出一聲晚安吧 你滿足嗎。』【動態歌詞MV】

Different topic, but same idea. I recall the pre mobile phone days, the life is much simpler, and we don’t have to deal with deleting someone from our WeChat contacts, or text messages and so on. Similar for stock trading too – we only have access to the computer at the brokerage firm, and a lot of people have to share that computer. Unless you really have a lot of money and you will have access to the VIP room at the brokerage firm.

Strategy shift over the years

(Update 11-13-2015) I believe that’s how Warren Buffett did over the years. For example, he did “cigar butt” style of investing, and eventually switched over to Coca Cola, Gillette and American Express “blue chip” types of companies. The recent example is Apple.

I think I need to similar switches for some of my accounts, e.g. the original Robinhood App account.

Plan of attack: I have 27 shares of $V now, and my initial plan is to hold both meaningful number of shares of $V (30?) and $MA (20?), for longer term. That means I will sell some smaller stock positions.

K shaped stock market

I talked about K shaped economy here. Also refer to CNBC – AI stock boom leaves many behind, economist says: ‘It really widens the wealth and income gap’

It seems to me the stock market is also K shaped, in the sense that big tech and AI/semiconductors companies were doing very well in last few years, while the rest of the market, including the rest of the S&P 500 companies were just doing so-so. Per Google AI Overview “how much stock market gain is due to ai”:

Artificial intelligence (AI)-related stocks have been a highly concentrated force in the recent stock market rally, accounting for approximately 75% of the S&P 500’s total returns since the launch of ChatGPT in late 2022. (Source: Fortune; moneycontrol)

Categories
Stocks

Ingersoll Rand

Reading Time: < 1 minute

I happened to receive an IR email from Allegion: upon further look, I realized it’s a spin off of Ingersoll Rand (I talked about IR here and here). That’s probably the time I bought the stock. I sold the IR stock long time ago (I cannot recall and don’t have a record).

Since then, the original Ingersoll Rand spined off Allegion PLC (NYSE: ALLE) in 2013. The tools business of original IR was spined off as Ingersoll Rand (stock ticker is IR). And the remaining business is mainly Trane and Thermo King are called Trane Technologies with stock ticker TT.

So one S&P 500 company essentially become 3. I don’t know if I have hold on to the stock, how much return is that? Recently I had similar experience with Honeywell and they spun off material business as Solstice.

Separately, I recall I had an onsite interview with IR in Feb 2005 (per my yahoo email), in New Jersey. They didn’t extend me the offer after interview.

Categories
401k and Personal Finance Stocks

My quick thoughts on the US stock market

Reading Time: 2 minutes

(Update 11-23-2025) YT – 隐枫视野 – 【第448期】AI泡沫崩盘，死得最惨的会是这个巨头

(blog.wenxuecity.com) 我对最近AI泡沫的思考 by lionhill

(fortune.com) Analyst who called the dot-com bubble says Americans are turning a deaf ear to AI warnings—and a worse meltdown than 2008 looms

(Update 11-06-2025) This indicator hasn’t flashed this red since the dot-com bubble

Shiller PE Ratio – Multpl

(Original) It seems to me the US stock market is defying the gravity and common valuation metrics, and going up higher and higher everyday, with the booming of AI.

Personally I tend to agree with Warren Buffett, the Oracle of Omaha and the greatest investor of all time, that the market is overvalued. He sits on the sideline with over $300 billions cash (technically, it’s the 3 month US treasury bonds). And btw, I own some Berkshire Hathaway B shares – my goal, is to own enough of those for my kids college and my own retirement 🙂

I remember the bubble during the dot com days (1999). The Dot-com bubble. And the burst afterwards. In fact I got my 1st job offer on March 2020, and I remember the Nasdaq hit all time high (over 5,000) in that same month. It took many years for Nasdaq come back to that level, after the crash.

I also remember in 1999, when I was a graduate student in Rolla (now Missouri S&T), once I was traveling with an engineer from DayCo. DayCo is the sponsor of our research project. And this engineer has his training and specialty in mechanical engineering, but he was buying some fiber optics or networking companies left and right. That’s what Greenspan (the fed chair then) called Irrational Exuberance: “The phrase was interpreted as a warning that the stock market might be overvalued.” (from Wikipedia)

Another old story or tale is probably around 1929, when the shoe-shining man started to tell the pros what stock to buy. I had a similar experience recently: not from shoe-shine man, but from a friend whom I believe has more limited experience on stocks and markets. The friend is suggesting buy AI stocks, all-in, don’t use the brain 🙂

Personally I felt we are in the melt-up phase. The recent deals around OpenAI all sound quite fishy. And someday the judgment will come (as said in the Bible, or if we put it in the biblical perspective). I just don’t know when. In the mean time, I will sit tight, save some dry powder (cash), and act when that opportunity presents itself.

Categories
Stocks

Valuation series I: cheap is not same as value

Reading Time: < 1 minute

Below was written in 2008

What is speculation
A stock creates its value by
1) dividend;
2) stock buy back;
3) investing in business, and make much more money compared to the money being poured in.

If it does not fit in the 3 criteria above, we expect the stock price to go up to make a profit.
======

One common mistake new investor (like yours truely, after 4+ years investing in US market) is mistaking cheap with value. Let me explain it by example.

In early 2004 Nokia stock hit a rough patch because it did not offer a flip phone in the US market, and thus losing market share to rivals (Samsung, Moto). The stock first dropped from $22.xx to $17.xx, being a bargain hunter, I bought some shares: thinking $20% discount is a good opportunity. Ten days later, in its conference call, the company lowered the outlook for next Q, the stock dropped to $14.xx. Undefied by the market, I went ahead and added more, only to see the stock dropped as low as $10.xx before recovering, by that time I was all out with a loss.

This is also a lesson of “catch falling knife”. Generally, when a company stock falls, the stock fell and LFT is a good example.

Categories
Stocks

Poor man’s MBA courses

Reading Time: < 1 minute

Below was probably written in year 2008

Background
the substance, the guts, not just the marketing stuff (a good friend of mine attended a famous MBA program in the US, he told me the school asked them to market themselves ever since they joined the program). Of course, one thing you will miss is the classmates you meet in MBA program, as we know business is not just about product and service, it’s also about relationships between people.

A typical MBA program, cost $60,000 and two years full time (2 x whatever salary you earn before quit your job to join MBA).

Charlie Munger: learn a lot things by himself.

MIT Open courses (it includes many courses from other schools too)

Accounting
I suggest people don’t skimp on this. Pay a few hundred bucks to get “Financial Accounting” and “Managerial Accounting” from your local community colleges. Accounting is the language of business, it’s difficult to start learn by oneself.

Finance
CFA program:

Categories
Stocks

You shall seek the truth

Reading Time: < 1 minute

(Below was written on 01-08-2008)

and the truth will make you free. That’s the word adopted from the sign at the main building of UT-Austin.

In investing, I felt my understanding of a stock is sometimes like a blind man’s view of elephant. The main reason, is not because I am not insider. I know many great investors (hint: the old guy at Omaha) have developed their own ways to find and value good stocks, which I do NOT have. So what will I do? I will seek the truth through:

1) Academic study: through CFA program
2) Participate in the market, learn from practice and own mistakes
3) Learn from others’ success and mistakes

=========================================
http://www.mitbbs.com/article/Stock/27936951_4.html (this link no longer exists because the website is gone a few years ago)


很多人喜欢等picks.更多人喜欢千辛万苦的找2 baggers, 3 baggers, 10 baggers.

其实这都不是最重要的. 资金管理和风险控制比什么都重要.

环顾一下, 能够经过很多个牛市熊市生存下来的大牛, 而且越来越富的, 选股不一定第
一. 但是资金管理和交易风险控制肯定是第一.

选股选得再好, 不懂资金管理和风险控制,到最后还是得衰败. 因为没有人能够一直都
对..就算是70%都对也没用. 碰巧那30%是all in 加margin的话, 不被wipe out就很幸
运了.

一举翻好几倍的, 每个牛市都不会少. 但是每一次牛市结束, 生存下来, 继续靠炒股增
加财富的是少之又少.

Categories
Stocks

Still hopeful

Reading Time: < 1 minuteBelow was written in 2008: in the middle of the financial crisis.

Making mistakes in life is innevitable, but to give up is un-forgivable.

Why I am still hopeful?
1) I learned a great deal (risk, value, good business vs. bad business) in past few months: from the market unravelling, to CFA books, to words of wisdom from the great investors (Buffett, Lynch etc.)

2) Knowledge alone can not make money. Discipline is more important, because we as human being have emotions (fear and greed) which can hurt our investing if we don’t know how to control those.

Fallback scenario
I will continue to program for food, gas, my family needs…as long as I am healthy. This is not too bad actually consider I am paid better than many programmers in China (at current time, may change in future if dollar worth less in the future).

This is the 5th year since I invested in the US stock market (started Fall 2003).

Of course, I can buy the index fund. Or better yet, I will buy Berkshire Hathaway (BRK.B), and leave the investing job to the Mr. Buffett.

(Update 04-03-2025) Note today is the 1st trading day since the current US administration announced the big tariffs across the board. Expect a volatile trading day and a lot of paper loss across the board (for me and for many others). But if we control our risk, we should still come out okay.

Categories
Career Stocks

Interview story (a while ago)

Reading Time: 3 minutesOriginally written 2005-02-08

Holiday Inn Clinton

After I picked up the rental car (with GPS) at Newark airport, I was on the way to my destination. I took an exit on I-78 by accident, with the help from GPS I did get back to the road without problem. At about 9:40 PM I arrived the hotel. I could see the snow on the parking lot — it’s colder in NJ than in St. Louis. The hotel looks pretty nice, and the town reminds me of Rolla, a small mid-west town where I spent 3 years for study (1997-2000).

After dinner and shower I began to prepare my presentation for tomorrow (2/04/05). My bro told me run it 4-5 times before the actual presentation. I wrote down what I want to say for my slides. Besides work related stuff, I also put down some light side stuff: where I grow up, hobbies, things/places I experienced in the States. This is my first time to give presentation after I graduate from school in 2000. A bit nervous, but my experience in presenting research in car companies during school days did help a lot. I also ironed the shirt for the big day. Went to bed at 1 AM.

Interview

The presentation went very well, much better then I expected. The participants (mainly managers) were impressed. Then comes the harder part.

HR manager is a middle-aged lady who seems very sharp. She talked about the Chinese employee’s work ethic and China’s growth. She also asked about questions about working availability/eligibility, how I heard about the opportunity, and some other behavior type questions. I think it went OK.

Manager 1: this is the make-or-break time. Because he is going to be my boss if I get the position. I heard from HR manager he is a very aggressive person, and he moved around a few times inside the company to get his current position. He asked many technical questions (Qns), some of them I am not comfortable with. At one time I asked why I left my graduate school in China (not get the degree) and come to US. Why not come to US after getting the degree. This is a legimate Qn but I was annoyed by the way he went about the Qn. Finally I told me there is not an ideal way around this, because of visa and financial support issue. He asked if he regretted my decision at that time, I said no. I don’t know if I would be better off or worse off if I made another choice at the time, but I want to look forward. In retrospect, I think I would say there is always things to lose when you try to get something (trade off). This reminds me another Qn I was asked by an interviewer in another company: what I would be if I stay in the same company, and how to work towards to that position. I goofed on that one because I said it just takes time to become a senior engineer/project leader. I took a facility tour with him after the Qn session. General impression was good, the cafeteria and fitness room is much better than my current employer’s. I saw many Indian engineers, later on I learned from Product Mgr they are hired from India on H-1B. In retrospect, I think one reason he is asking tough Qns because he wanted to test my skills to handle the stress situations, which will be very common if I take the position.

Manager 2: he is my would-be-boss’ boss, he, Mgr 1 and I had a lunch together. They’ve all travelled to China on business. He tried to initiate the conversation and asked me a few common things, talked facilities in China. I really regretted with the big sandwich I ordered, but I tried to talk as much as I can. I think it went OK.

Manager 3: he is a product manager, and he seems like a nice guy. His team will rely on our system for new product development, so he wanted to make sure the system is up and running, and the data is not corrupt. He listed an instance that half-a-years’ product data get lost during data migration (from old system to new system). I don’t know if that eventually get resolved or not, but it seems like a common problem.

Ms. C and Mr. D (would-be direct reports): teleconference went not very well. Like Mgr 1, they also prepared a list of technical Qns for me to answer. I think I scored poorly (<50%). It looks like I’m the guy to solve their problems and headache. But again In retrospect, I think one reason they were asking tough Qns because he wanted to test my skills to handle the stress situations, which will be very common if I take the position.

Categories
Stocks

WeChat stock group chat 橄榄村美股群

Reading Time: < 1 minute

Not financial advice. This is the most important thing you need to know.

Your money your decision. Try not to be forever diver 不要做永远♾️的潜水员. 

11-15-2025

I maintained a page for Warren Buffett and Charlie Munger. I understand I need to clean up the page a bit. But the two thanksgiving letters from Warren Buffett are worth to read.

10-31-2025

My personal portfolio allocation: S&P 500 index fund or similar stock funds about 80%, Berkshire Hathaway B share, about 10%, the rest about 10% are other stocks for fun (bigger players include $KO and $OXY).

Also, please note your peace of mind is the most important thing, and it will impact your portfolio performance too.

09-17-2025

一般情况下不要去short 股票，比如S&P 500 index fund, 或者MAG 7的股票。原因主要是the upper side of shorting stocks is limited (100%), while the downside could be unlimited. 打个比方说，最近热炒的 $OPEN (Opendoor Technologies), 如果你在五块钱的时候 （8/22）去short 它，今天 9/17 收盘价 $10.21, 不到一个月就已经亏了100%了（total loss）。如果你不想认输，等它到$15, 就会亏200%。以此类推。反过来说公司股票要清零（公司破产）一般来说没这么快：我看到我家门口的骗子公司Benson Hill 大概最后也花了一年时间破产。

02-21-2025

每个人都可以自己的炒股风格：但是归根结底，不管黑猫白猫，会抓老鼠🐭的猫才是好猫。

要做好风险控制：拿每个人可以接受的钱去炒股票，一般不能all in. 尽量留一部份现金等等。

02-15-2025

1. Be happy; 2. 赚钱是王道：don’t lose money; 3. Refer to rule 1 and 2. 

01-16-2025

My top 3 stock positions (excluding the stocks indirectly hold in various S&P 500 index funds): brk/b, KO and OX. 

Some learning resource: 活到老学到老：这一点也很重要，沃伦巴菲特和查理芒格都是学习机器。

他俩主要的学习手段是读书，读年报，再加上自己独立思考。

Warren Buffett reads a lot of company’s annual reports: mostly to learn. 

I found listening to companies’ Earning call to be educational sometimes – 

EARNMOAR – YouTube 

Fyfull – YouTube  

奶头乐级别: “NaNa 说美股” 每天市场评述，mainly entertainment value –  ; 

“小lin说” various topics, mainly entertainment and education value –  个人感觉小林讲的一般不深奥，主要是入门知识，但是她讲的还是有干货的；

美国年轻人Joseph Carlson Show and Joseph Carlson After Hours 他好像有两个频道 – stocks, food for thought – 比如这个油管视频： 

 Please note one goal for many content creators including YouTubers is getting eyeballs 👀 👁️ and making💰. So keep this in my mind when you consume the online content. 

我又想了一下。我觉得网上多数视频包括CNBC Jim Cramer 的mad money，包括Nana 的油管每天更新，还有其它很多，教育或有启发的东西不是很多。娱乐的成分倒是不少。可能有点这个短视频的”奶头乐”的味道吧。或者相当于麦当劳🍔的快餐。光吃那个或天天吃那个可能不是最健康：因为营养成分不够丰富。还是要自己做饭，或吃一些更健康的食品（少吃垃圾食品，少喝可乐等等）[捂脸][呲牙] 

Together let’s share some 💡 and make some 💰. 

We try to keep the America (US) politics at a minimum here. 

I believe everyone is entitled to her or his opinion including political views and affiliation. 

But those are best kept to yourself. Probably religion too. 

I recall 20+ years ago one golden rule is not to talk politics and religion at work. 

Also, we will try to keep out many fake stuffs on Internet or from social medias.

PS:

Hard core MAGAs may find it hard to stay there sometimes because I am “woke”, or Hua Zuo if you will (I may 🙂

Not directly related to this: but I managed to clean up WeChat contacts today (from 321 to 250). I recall research saying that a person can have meaningful relationship with 150 people – so probably I need to further cut down that number, because this is just my Chinse friends. Most people on WeChat are Chinese, which is not a secret.

Previously like I said on the top, if I join a group, my intension is to learn by joining the discussion. If I feel I cannot contribute or if the vibe in a group is totally out of my comfort zone, I leave 🙂