MR Daniel Will

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Daniel Will: Decoding the Varied Landscape of Blockchain Chains

Due to different application scenarios and demands, besides common public chains, private chains and consortium chains have been developed, better suited for enterprise and industry use.

In 2017, the ICO frenzy propelled the market to its peak, drawing public attention to Bitcoin and Ethereum. While Ethereum's smart contract ICOs sparked a trend, slow transaction speeds and fully transparent transaction details raised concerns for businesses and projects entering blockchain development. This led to the consideration of constructing blockchain for different use cases, giving rise to private chains and consortium chains, distinct from public chains.

Today, I'll swiftly clarify the differences and advantages between public chains, private chains, and consortium chains.

Public Chain — FOR EVERYONE

In a public chain, the entire blockchain system is openly transparent, allowing anyone to view its rules, mechanisms, and transaction records. Examples include Bitcoin and Ethereum. Participants can send their cryptocurrencies without restrictions, and anyone can become a node, maintaining the stability of the blockchain.

Advantages: All transactions are transparent; high decentralization. Disadvantages: Relatively slow transaction speed. Representatives: Bitcoin, Ethereum

Private Chain — FOR SPECIFIC INSTITUTION

A private chain is not open to the general public; authorization is required to become a node, making it suitable for confidential value transfers within a single company or organization.

Comparatively centralized, private chains are ideal for companies with sensitive transaction data. Analogously, public chain transactions are like public Facebook posts, while private chains resemble exclusive Facebook groups, ensuring only relevant individuals can access content.

Advantages: Fast transaction speed; maintains internal privacy. Disadvantages: Higher risk of hacking. Representatives: Quorum, LANE

Consortium Chain — For B2B

A consortium blockchain, a B2B architecture, involves companies or institutions acting as nodes, providing a trusted platform for value circulation between businesses.

The decentralization of consortium chains falls between public and private chains. It allows companies to establish common rules and specifications, increasing efficiency and reducing costs for value circulation. Commonly associated with banking, consortium chains enable banks to agree on a universally accepted accounting standard, facilitating secure and efficient value exchange.

Advantages: Fast transaction speed; high scalability. Disadvantages: High setup cost. Representatives: Hyperledger

Summary:

Public Chain: Open to everyone, transparent.

Private Chain: Typically for specific individuals within a private company.

Consortium Chain: Formed by a group of similar companies; members of the consortium can use it.

Their differences lie in the "allowed users and nodes," tailored to different application scenarios and objectives.

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Daniel Will: Recognizing Warning Signs in Stock Market History

If you have only been involved in the U.S. stock market in recent years or the past 15 years, you might think that the U.S. stock market only goes up (even the significant drop in 2020 due to Covid was very brief). However, if we extend the time-frame, after every period of frenzy, the U.S. stock market has experienced a major decline of 40%-90%. While the U.S. stock market certainly holds long-term investment value, if you enter at the wrong time, there's a significant chance of encountering a market crash, requiring a decade or longer to reach new highs. Here are some well-known examples of stock market crashes/asset bubble bursts:

Tulip Mania in the Netherlands (1636-1637): Tulip Mania is one of the earliest recorded speculative bubbles, occurring in the 17th century in the Netherlands. Tulip bulbs became an extremely coveted commodity, with prices skyrocketing to astronomical levels. However, the market eventually collapsed, and bulb prices plummeted. The specific percentage of the decline is challenging to determine, but many investors suffered significant losses.

South Sea Bubble (1719-1720): The South Sea Bubble occurred in the United Kingdom and had a significant impact on American investors. The South Sea Company gained a monopoly on trade with South America, leading to a surge in its stock price. However, the company's assets and profits were inflated, and when the bubble burst, many investors suffered substantial losses. It fell approximately 98% from its peak.

Mississippi Bubble (1719-1720): The Mississippi Bubble, also known as the Royal Bank Bubble, was another significant speculative bubble that occurred in France. It was driven by the promotion of the Scottish economist John Law, who founded the Mississippi Company and hyped the potential profits of France's colonial ventures in North America. When the bubble burst, the company's stock price plummeted significantly, estimated to have fallen by over 90%.

Railway Mania (1840s): Railway Mania occurred in mid-19th century Britain. It was a period of intense speculation in railway company stocks, driven by the belief in the transformative power of railway transportation. However, excessive speculation led to a market collapse, and many railway companies went bankrupt. The extent of stock price declines varied, but some companies experienced drops of over 40%.

Great Depression in the United States (1929-1932): The Wall Street stock market crash of 1929 is one of the most famous stock market crashes in history, marking the beginning of the Great Depression. Excessive speculation, overvaluation of stocks, and margin trading all contributed to the crash. The Dow Jones Industrial Average fell approximately 90% from its peak in 1929 to the trough in 1932.

Nifty Fifty Bubble (1960s-1970s): The Nifty Fifty bubble refers to the period in the 1960s and 70s when investors enthusiastically purchased stocks of 50 large, high-quality American companies, considered "one-decision" stocks. These stocks were believed to be safe and reliable, leading to overvaluation. However, the bubble burst in the early 1970s, and many Nifty Fifty stocks experienced significant declines, ranging from 40% to 90%.

Oil Crisis and Stagflation Period (1972-1974): The 1973 oil crisis was triggered by an oil embargo from the Organization of Arab Petroleum Exporting Countries (OAPEC), leading to a significant disruption in global oil supply and a sharp rise in oil prices. This event overlapped with a period of stagflation characterized by high inflation and economic stagnation. The combination of these factors had an adverse impact on global stock markets, with declines exceeding 40%.

Japanese Asset Price Bubble (1986-1991): The Japanese asset price bubble was a speculative bubble that occurred in Japan in the late 1980s. It was driven by excessive lending, real estate speculation, and inflated asset prices. The bubble burst in the early 1990s, leading to a prolonged economic stagnation in Japan. The Nikkei 225 Index declined by approximately 80% from its peak in December 1989 to its trough in February 2003.

Dot-Com Bubble (1997-2000): The Dot-Com Bubble formed in the late 1990s, driven by the rapid growth of internet-related companies. Investors heavily invested in internet startups, often overlooking their profitability. Stock prices reached unprecedented levels, but the bubble burst in 2000, triggering a significant market correction. The NASDAQ Composite Index declined by approximately 78% from its peak in February 2000 to its trough in September 2002.

U.S. Subprime Mortgage Crisis (2008-2009): The stock market crash of 2008 was one of the most severe financial crises since 1929, known as the Subprime Mortgage Crisis or Financial Tsunami. The crisis originated from issues in the U.S. subprime mortgage market and subsequently spread to the global financial system. Many financial institutions faced the risk of bankruptcy, and stock market indices experienced a sharp decline. The Dow Jones Industrial Average fell by approximately 54% from its peak in October 2007 to its trough in March 2009. This collapse caused significant damage to the global economy, triggering a worldwide financial and economic recession.

These significant stock market bubbles highlight the risks of excessive speculation and the consequences of market collapses. Investors should exercise caution and adopt prudent risk management strategies when faced with market over-exuberance. Drawing lessons from past bubbles can help guide investment decisions and reduce potential future losses. Currently, I see the most significant crisis in the U.S. stock market among various global markets. I will continue to analyze relevant content and share it in the Artificial Intelligence Wealth Club community group. I hope it brings substantial meaning to your investments.

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Daniel Will Explores the Impact of Stock Splits

Thousands of stocks are traded on exchanges around the world, each with a different price. Some stocks are worth a few cents, while others are valued in the hundreds of thousands of dollars. Due to the significant price disparity, investors face a dilemma: whether to buy a few high-priced stocks or a large quantity of low-priced stocks. Investors with less capital often opt for the latter, as it offers higher liquidity and requires less commitment for each purchase.

Nevertheless, businesses have a strategy to overcome the psychological hurdle associated with acquiring expensive stocks – it's called a stock split. The mechanics of a stock split resemble dilution, wherein the per-share value decreases, yet the company's overall value stays constant. This approach enhances liquidity, enabling shareholders to engage in more extensive stock trading.

— Stocks maintains an equivalent overall value.

Stock splits also don't have a fixed number for splitting. The most common stock split ratios are three-for-one (3:1) and two-for-one (2:1). Essentially, this implies that for each share held before the split, every shareholder will possess two to three shares after the split.

How does a stock split work?

Assuming a company's current stock price is $200 per share and it plans to undergo a stock split. Despite there being no fundamental difference between 100 shares of $20 stock and 10 shares of $200 stock (20 x 100 shares = $2,000 market value versus 200 x 10 shares = $2,000 market value) given the same financial condition, there is a psychological barrier to buying such stocks, and the upfront cost for investors is also higher. In this example, the company could perform a ten-to-one stock split, meaning their $200 stock price would be split into ten $20 stocks. As mentioned earlier, the overall value or market capitalization of the entire company will remain unchanged.

To understand, it must be noted that market capitalization is calculated by multiplying the number of outstanding shares by the current market price per share. Using our previous example, if the company splits its stock ten-to-one, each share is now worth $20. Then, after the split, each share held will be equivalent to ten shares (200 x 1 share = $2,000, while 20 x 10 shares = $2,000). The total value of the company remains unchanged.

For simplification, visualize it like a pizza. When cut into ten slices, each slice is smaller than the original whole pizza. However, if you put them back together, the size of the pizza remains the same.

Key indicators per share, such as Earnings Per Share (EPS), are affected by stock splits, particularly when more shares are in circulation. This will proportionally reduce future per-share earnings numbers based on the split ratio. A two-for-one split earnings per share by two, a three-for-one split earnings per share by three, and so on.

Reverse stock split

A stock split involves multiplying the outstanding shares by the split ratio of the stock price. A two-for-one split will double the outstanding shares. As you might guess, reverse stock splits operate in the opposite process. For instance, a reverse stock split of two-for-one will reduce the outstanding shares by half and double the current stock price.

One of the most common reasons for a reverse stock split is to ensure that the company's stock does not get delisted from the stock exchange. Delisting may occur when the stock falls to unprecedented new lows. It may start to be considered a penny stock, diminishing investor confidence in the company's stability. A reverse stock split has the potential to restore investor confidence in the short term and provides the company's management with time to improve the business fundamentals.

Similarly, a reverse stock split still does not change the market value. However, for example, since earnings can be divided into fewer shares, earnings per share will increase. Nevertheless, in the long run, this is not a sustainable strategy, as total earnings must grow at some point. Investors are also not easily deceived. Artificially boosting stock and other per-share metrics is often perceived negatively by many.

Unless there is genuine internal growth within the company, a reverse stock split typically only serves to offset the possibility of being delisted from the stock exchange.

Enthusiasm of retail investors

Although the fundamentals of the company remain unchanged after a stock split, the enthusiasm of investors often shifts. When the stock price becomes more affordable (in terms of price rather than valuation), retail investors can purchase more shares than before. Investors who previously couldn't afford to buy a single share of the stock may now have the opportunity to become shareholders at the post-split adjusted price.

A relatively recent example of this phenomenon is Amazon (NASDAQ: AMZN). On June 6, 2022, Amazon conducted a twenty-one-for-one stock split, making its existing shares, valued at approximately $2,500 before the split, now priced at only $125 per share. Despite the unchanged valuation, the stocks became more accessible than before.

To convey investor excitement, data from Google Trends, accompanied by illustrations, showed a significant surge in search queries for "AMZN" during the highly anticipated stock split week. However, Amazon is not the only stock attracting attention due to a stock split. Google, Tesla, and Shopify have also split their stocks in 2022, making it easier for investors to access their shares. Some investors may argue that these stock splits are unnecessary since many stocks have now fallen to 52-week lows anyway.

Stock splits are straightforward, as only the total number of issued shares and the price undergo changes. However, delving into more technical details, especially per-share metrics, can be confusing.

The occurrence of stock splits may have several reasons, such as increasing the number of issued shares and making stocks more accessible. However, as mentioned above, there are many reasons for initiating a reverse stock split, with the most common being to prevent delisting.

The split ratio is typically three-to-one and two-to-one, but for companies with exceptionally high stock prices, larger split ratios are certainly possible. Regardless of how cheap the stock may appear after the split, it must be remembered that the fundamentals and valuation remain unchanged.

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Daniel Will's Guide to Smart Stock Selection in Bull Markets

Compared to a bear market, investing in a bull market is indeed easier. The continuous bull market in U.S. stocks has led to substantial profits for many investors. The fundamental operating strategy in a bull market is to hold onto stocks. As long as the market situation for stocks remains bullish, one should not easily sell stocks. When trading in U.S. stocks during a bull market, every dip in stock prices is an excellent buying opportunity. Once the stock price is rising, let it continue to rise to levels beyond your belief. If you arbitrarily sell stocks during an upward trend, not only will you lose potential future profits, but you will also waste more funds when re-entering.

Throughout the entire process of a strong market, stock selection is a crucial part of the operating process. Not all stocks can be profitable. Moreover, in a bull market, the first thing to remember is not to be clouded by temporary prosperity.

In the initial stage of a bull market, the rising prices are generally driven by high-quality stocks. If high-quality stocks are not performing well, and instead, there is a speculative surge in low-priced small stocks, it indicates a speculative uptrend. At this point, you should raise your guard and prepare to exit. If the uptrend of first-tier and second-tier high-quality stocks is driven by the rise of speculative low-priced stocks, and most of the trading volume is in speculative stocks, you should doubt the sustainability of this uptrend.

It's important to note that in the early stages of a strong market, there is no need to be overly concerned about the possibility of a decline in stock prices. Generally, a decline occurs when all investors in the stock market are making profits, and the initial decline is very sharp. The decline also brings opportunities for short-term rebounds. However, this rebound is your last chance, and once done, you should exit the stock market as quickly as possible.

In the middle stage of a bull market, second-tier high-quality stocks with a smaller market capitalization tend to rise more significantly, especially small-cap quality stocks with favorable themes. When the bull market enters the main rising stage, it is the best time to buy and hold small-cap quality stocks. When selecting small-cap quality stocks, try to choose those whose stock prices are constrained by relative price relationships. Stocks with fixed relative price relationships often lack the momentum for subsequent rises.

The final stage of a bull market involves the participation of third-tier low-priced stocks, creating a stage of frenzied speculative fervor throughout the entire stock market. While we do not oppose participating in this enthusiastic speculative game during this stage, remember not to chase after those third-tier stocks that have already been hyped, or you will suffer a heavy loss. Additionally, in the last stage of a bull market, be prepared to sell stocks and exit the market at any time.

Furthermore, during a bull market, be vigilant against the danger of a market top. When stock prices continue to rise, and the trend of increasing trading volume lasts for some time, pay attention to whether stocks have begun to reach the top. One of the most typical signs of a top is when the trading volume remains high, but the overall market rise shows signs of stalling. You can judge the top by studying the daily chart and other chart patterns of stocks. If typical reversal patterns such as "double tops" or "head and shoulders" appear on the chart, be prepared to retreat at any time.

Of course, during the entire upward trend, stock prices will experience a few adjustments or declines, which are normal. These adjustments are mainly reflected in stocks with large increases in a short period; high-quality stocks with smaller increases generally do not experience significant declines. Additionally, the time for adjustments or declines is not too long.

If a prolonged consolidation lasts for a long time at high levels, it indicates that there is very little capital chasing high prices in the market, and there is a high likelihood of a downward development in the future.

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Daniel Will Dives into The Washington Post Case

When a bull market arrives, everyone talks about how to make money easily, but a bear market brings panic and uncertainty. The shift between bull and bear markets creates an extremely emotional cycle, often causing investors to overlook the importance of a stable investment philosophy amid fluctuations. The current Hong Kong stock market is undergoing a severe adjustment, and this bearish atmosphere necessitates the establishment of a robust investment system and emotional management strategy.

Today, I will share with you the legendary acquisition case of Warren Buffett and The Washington Post. I hope everyone can stabilize their emotions in the bear market, adhere to their investment principles, and maintain confidence in future prosperity.

Warren Buffett's Investment Journey In 1972, The Washington Post gained prominence for its in-depth coverage of the Watergate scandal, receiving important awards that highlighted its journalistic professionalism, quickly becoming one of the most famous newspapers in the United States. However, by 1973, the company faced significant challenges. The Washington Post was under pressure from the White House, and there were rumors in the market that the White House might revoke the newspaper's operating licenses for two television stations in Florida. This segment of the business contributed nearly one-third of the company's profit income. These unfavorable factors led to a consecutive decline in the stock price.

But precisely when the company was experiencing panic selling, Buffett went against the trend and began continuously buying shares of the company in 1973. By the summer of 1973, Buffett held a 9.7% stake in The Washington Post. Buffett firmly believed that the market value of the company should be between $400 million and $500 million. However, at that time, the market value was only $100 million, and in the following years, the company continued to be affected by the "Watergate scandal" and the bear market, causing Buffett to incur losses of up to 20% in the short term.

It was not until 1976 that the stock price returned to the level at which Buffett had purchased it.

Why Buffett Was So Resolute At that time, The Washington Post owned four television stations and two radio stations, and these licenses were very difficult to obtain. Moreover, the company's owner, Katharine, maintained close relationships with numerous U.S. dignitaries, ensuring The Washington Post's influence across the United States.

Simultaneously, the company had a 63% market share, with over two-thirds of adults reading it. The company's subsidiary, "Newsweek," reached its peak advertising revenue of $72.5 million in 1972, and the magazine was sold in over 150 countries and regions worldwide.

The extensive circulation meant that advertisers preferred The Washington Post, indicating enormous growth potential for the company's advertising revenue in the future.

Therefore, Buffett was determined to bypass conventional investment doctrines (such as his mentor Graham's value investing philosophy: net current assets should be at least 30% higher than the stock price) and focus more on the company's future profit potential, adopting a more forward-looking and growth-oriented investment strategy.

The cost of his investment in The Washington Post eventually reached $10.6 million, and by 2005, the value of this investment had grown to $1.3 billion, excluding dividend income. Buffett eventually sold this portion of assets after 2000, as the rise of the internet limited the growth of traditional newspapers.

What can I learn

The Washington Post's market value at that time was $100 million. However, the company had franchise rights and a large user base, which, understood from today's internet perspective, means "having a substantial traffic that can be monetized." Therefore, even with just $100 million, Buffett believed that this value had a strong margin of safety.

If we look at a three-year time-frame, Buffett's investment return rate is 0, and The Washington Post has clear market advantages but still lacks market recognition. However, if we extend the timeline to 27 years, The Washington Post's average annual return rate is 19.5%.

From a 27-year perspective, The Washington Post is a good company, but for a good company to become a good stock, it may take the market a long time to adjust.

In the era of the internet, the pace of change in the world has accelerated. No matter how good a company is and how good its business is, it cannot outpace the changes brought about by the times. Even a good company's business needs to move with the times.

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Daniel Will Explores the Intricacies of Blockchain and Cryptocurrency

Cryptocurrency - Meaning and Definition

Cryptocurrency, sometimes referred to as crypto, is any form of currency that exists digitally or virtually and employs encryption technology to secure transactions. Cryptocurrencies have no central issuing or regulatory authority; instead, they use decentralized systems to record transactions and issue new units.

What is Cryptocurrency?

Cryptocurrency is a digital payment system that does not rely on banks to verify transactions. It is a peer-to-peer system that allows anyone, anywhere, to send and receive payments. Cryptocurrency payments are not physical currencies carried and exchanged in the real world but rather exist as digitized entries in an online database describing specific transactions. When you transfer cryptocurrency funds, the transaction is recorded in a public ledger. Cryptocurrencies are stored in digital wallets.

Cryptocurrencies derive their name from the use of encryption to verify transactions. This means that advanced coding is involved in the process of storing and transmitting cryptocurrency data between wallets and to the public ledger. The purpose of encryption is to provide security.

The first cryptocurrency is Bitcoin, established in 2009 and still the most well-known today. Much of the interest in cryptocurrencies revolves around trading for profit, with speculators occasionally driving prices to surge.

How Does Cryptocurrency Work?

Cryptocurrency operates on a distributed public ledger called the blockchain, which is a record of all transactions that currency holders update and hold.

Units of cryptocurrency are created through a process called mining, involving the use of computer power to solve complex mathematical problems that generate coins. Users can also purchase cryptocurrencies from platforms provided by brokers like AI Wealth Club, then store and spend them using cryptocurrency wallets.

If you own cryptocurrency, you do not possess anything tangible. What you have is a key that allows you to move records or units from one person to another without the need for a trusted third party.

While Bitcoin has existed since 2009, applications of cryptocurrency and blockchain technology continue to emerge in finance, with more anticipated uses in the future. Transactions, including bonds, stocks, and other financial assets, may eventually be conducted using this technology.

Cryptocurrency Examples

There are thousands of cryptocurrencies, with some of the most notable being:

Bitcoin:

Established in 2009, Bitcoin is the first and still the most traded cryptocurrency. Developed by Satoshi Nakamoto, widely believed to be a pseudonym for an individual or group, the exact identity remains unknown.

Ethereum:

Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency called Ether (ETH) or Ethereum. It is the second most popular cryptocurrency after Bitcoin.

Litecoin:

Similar to Bitcoin but with faster action in developing innovations, including quicker payments and processes to allow more transactions.

Ripple:

Founded in 2012, Ripple is a distributed ledger system. Ripple can be used to track various types of transactions, not just cryptocurrencies. The company behind Ripple has collaborated with various banks and financial institutions.

Cryptocurrencies other than Bitcoin are collectively known as "altcoins" to distinguish them from the original cryptocurrency. An example is the AIW token from our AI Wealth Club.

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Daniel Will's Take on Charlie Munger's Strategies

As Warren Buffett's partner and a close friend known for his insightful remarks, Charlie Munger is an undisputed investment master. Buffett himself once praised Charlie Munger by saying, "Charlie pushed me in a different direction, the power of his thinking expanded my horizons. I evolved from an ape to a human at an extraordinary speed, or else I would be much poorer now." As an exceptional investment master, how does Charlie Munger navigate through market downturns?

How Investment Masters Deal with Market Crashes

"If you live long enough, sometimes you won't need to chase investment trends." This statement is attributed to Munger during the late 20th century when Wesco Financial stocks under Berkshire Hathaway experienced a significant decline.

Munger has encountered four major bear markets throughout his investment career, with the most severe occurring in 1973-1974. During the "Nifty Fifty" market, where the market granted a high valuation premium to a group of leading companies with moderate growth but strong profit stability, Munger had 61% of his funds invested in blue-chip, stamp-worthy companies. Following the collapse of the "Nifty Fifty," which led to a maximum 48% decline in the S&P 500 index, Munger incurred losses of 31.9% and 31.5% in the respective two years. In that worst bear market since the Great Depression, this portfolio inflicted serious damage on his investment portfolio.

The second occurrence was during the third oil crisis in 1990. With the Middle East region in continued turmoil, the U.S. stock market experienced a significant downturn. Berkshire Hathaway's stock price dropped from $8,625 per share at the beginning of the year to $5,600 in October, marking a 35% decline. Despite this, Berkshire Hathaway displayed optimism, as articulated in that year's shareholder letter: "The primary reason for the depressed stock prices is pessimism, sometimes widespread and at other times limited to specific industries or companies. We look forward to doing business in such an environment, not because we are naturally pessimistic, but because it allows us to acquire more good companies at favorable prices."

Another factor that sets Munger apart from most of us ordinary individuals is that he is never enticed by investments outside his circle of competence. He once stated, "We have three baskets: in, out, and too tough. We have to have a special insight, that we think is not generally true or obtainable by the average investor, into a business where we think we have a competitive advantage." Investors should heed his advice: "If an investment is too difficult to understand, we pass on it and go on to the next. After all, there are a lot of things that are easier." This mindset enabled him to steer clear of the bursting of the dot-com bubble from 2000 to 2002. During that period, the S&P 500 plummeted by 40%, with a maximum decline of 49%. Munger and Buffett, facing the irrational exuberance of the internet bubble in 1999, refrained from investing in internet stocks. They referred to it as an "irrational boom." Following the burst of the internet bubble, Munger and Buffett avoided substantial losses by adhering to their investment principles focused on the intrinsic value of companies rather than market prices.

In the pessimistic market of 2008 during the subprime mortgage crisis, Buffett published "Buy American. I Am." Five months later, the U.S. stock market began to rebound, marking the start of a decade-long bull market. Buffett and Munger emphasized the importance of emotional stability at the subsequent year's shareholder meeting, highlighting that investors should use the market rather than be used by it.

Based on historical experience, my approach to downturns primarily relies on:

1. Avoiding speculative sectors; staying away from crowded places.

2. Emphasizing solid fundamental companies; focusing on the value of the company.

3. Maintaining a positive mindset when facing the future; selling high and buying low.

One of the best lessons investors can learn from past history is that there is no good time without bad times. In a prolonged investment journey, there often exists significant short-term losses during certain phases. If you cannot accept short-term losses, it becomes challenging to reap long-term market returns.

"If you cannot calmly navigate through two or three market declines of over 50% within a century, you are not suited for investing. In comparison to investors who can rationally handle market fluctuations, your investment returns are likely to be relatively mediocre."

"Maintain a positive mindset and use leverage cautiously. In my view, the greatest risk in investing in the stock market is not the fluctuation of prices but whether there will be permanent losses in the future. In fact, those prepared to buy stocks should anticipate price declines because as market volatility increases, there is a greater chance of encountering exceptionally low prices in some good companies."

Regarding leverage, Munger advises that most people should avoid using it:

While leverage can magnify gains during market upswings, it can also amplify losses during market downturns, potentially leading to the complete depletion of capital. Financial leverage increases the risk and uncertainty of investments, and prudent investing should be based on rational analysis and risk control. He suggests that investors should focus on growing intrinsic value rather than relying on external borrowing to ensure long-term wealth accumulation and capital safety.

After all, "No one wants to get rich twice."

Investing is a matter of choices, and, of course, it is also about how to face changes with what kind of attitude after making those choices. Munger believes that, "Many people with high IQs are terrible investors because of their character flaws. I think excellent character is more important than the brain; you must strictly control those irrational emotions. You need calmness, discipline, be indifferent to losses and misfortunes, and, likewise, not be intoxicated by excessive joy."

Therefore, restricting investments to alternative projects that are simple and easily understandable for oneself, while continuing to pursue wisdom and patience in the unpredictable market, becomes particularly crucial. During market downturns, focusing on assets with sufficiently high safety margins, using leverage cautiously, closely tracking fundamentals, and persisting through bull and bear markets will eventually lead to success.

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Daniel Will Combines Kelly Criterion and Bayes' Theorem

The most important aspect in investing is when to commit significant capital.

The essence of substantial losses lies in placing heavy bets on assets where they shouldn't be placed!

In 2022, the U.S. investment firm Archegos Capital Management incurred massive losses of billions of dollars due to misjudged investments. The founder, Bill Hwang, overestimated the valuation of Chinese internet companies, leading to significant losses. Placing too many chips on a single overvalued asset ultimately resulted in a margin call due to China's internet anti-monopoly actions.

In 2008, the U.S. investment bank Lehman Brothers suffered substantial losses of billions of dollars due to misplaced bets. The bank undervalued subprime mortgage-backed securities during its investment, leading to massive losses.

These cases highlight that the essence of substantial losses lies in misjudging investments. Investors should carefully assess the value of investment targets and avoid excessive bets.

The Kelly Criterion, proposed by John L. Kelly Jr. in 1956, initially designed to address signal noise in the telecommunications industry, was later found applicable to gambling and investment, especially in determining bet or investment sizes.

The core of this formula is to maximize long-term growth rates, aiming to balance risk and reward, avoiding bankruptcy from overly large bets while maximizing capital increase.

In essence, the Kelly Criterion calculates the proportion of funds one should wager to maximize the long-term expected growth rate of the investment portfolio. If the result is positive, one should place a bet; if negative, one should avoid betting.

The significance of the Kelly Criterion is that, during each bet, investors should allocate funds to assets with a win rate higher than the odds.

In investing, investors can use the Kelly Criterion to calculate the optimal bet size. However, the Kelly Criterion has a drawback: it assumes investors are entirely rational. In reality, investors are often influenced by emotions, leading to irrational decisions.

In the investment field, the Kelly Criterion helps investors decide how much capital to invest in a single asset or gamble, considering odds and win rates to reduce risk and increase potential returns. However, in practical application, there are several points to note:

1. Accuracy of estimation: The output of the Kelly Criterion highly depends on accurate estimates of win rate (p) and odds (b). If these parameters are inaccurate, the suggested values by the Kelly Criterion may not be optimal.

2. Long-term application: The Kelly Criterion is designed for long-term growth. Short-term fluctuations may involve significant volatility, requiring investors to have corresponding risk tolerance.

3. Fractional Kelly: To reduce volatility and risk, many investors and gamblers opt for a fractional Kelly strategy, investing only a portion of the recommended amount (e.g., half or one-fourth).

While a powerful theoretical tool, the Kelly Criterion is not always the best practical choice, especially when an individual's risk appetite, capital amount, or ability to estimate probabilities does not perfectly match the assumptions of the Kelly Criterion. Therefore, many investors consider the Kelly Criterion as one reference among several, rather than the sole investment decision tool.

Let's interpret the Kelly Criterion through a simplified investment example:

Suppose you have an opportunity to invest in a stock with a 60% probability of rising, providing a 50% return when it rises and a 50% loss when it falls. Now, we need to decide the proportion of your total capital to invest in this stock.

First, define the parameters in the Kelly Criterion:

· b is the net gain rate of the bet, here 50% or 0.5.

· p is the probability of winning, here 60% or 0.6.

· q is the probability of losing, here 40% or 0.4.

Plug these values into the Kelly Criterion:

As the result f∗ is negative, following the Kelly criterion, you shouldn't invest in this stock because it is expected to incur losses in the long term.

Now, let's alter the conditions. If the probability of the stock rising remains at 60%, but if it rises, you can gain a 100% return, and if it falls, you lose 50%.

Now, the parameters for the Kelly Criterion are:

· b is 1 (or 100% return).

· p remains 0.6.

· q remains 0.4.

Plug in the values:

The result f∗=0.2 indicates that to maximize your long-term growth rate, you should invest 20% of your total capital in this stock.

Remember, the Kelly Criterion provides the theoretically optimal solution for maximizing capital growth. However, in practice, factors such as risk tolerance and liquidity must also be considered. Many investors may choose to invest less than 20% of their capital to reduce risk.

The Kelly Criterion and Bayes' Theorem are both important decision-making tools in investing, although they address different types of problems. Let's explain their applications in investment decisions through examples.

Investment Application Example of the Kelly Criterion:

Suppose you are considering investing in a startup technology company. This company will either succeed, bringing substantial returns to investors, or fail, resulting in a total loss. After analyzing the company's business model, market potential, and team background, you estimate a 30% probability of the company's success. If successful, the return on investment will be three times the initial investment; if it fails, you will lose the entire investment.

Here:

Investment Application Example of Bayes' Theorem:

Bayes' Theorem is a method for updating prior probabilities based on new evidence or information. Suppose you are investing in large-cap stocks in an industry typically closely related to macroeconomic indicators. Initially, you might have a prior belief (probability) based on historical data and analysis that, in the current economic environment, the probability of this stock performing well in the next quarter is 60%. However, the latest employment data unexpectedly improves, a strong indicator of the stock's positive performance.

Using Bayes' Theorem, you can update the probability of the stock performing well. If historical data shows that, when similar employment data is announced, the probability of the stock performing well is 80%.

Therefore, considering the new employment data, with the Bayesian update, you now believe the probability of the stock performing well this quarter is 96%.

In investment decisions, the Kelly Criterion helps you determine the optimal investment ratio based on your win rate and odds, while Bayes' Theorem helps you update your probability assessment of an event based on new evidence. Both are powerful tools in investment decision-making, aiding investors in making more informed decisions amid uncertainty.

From a probability theory perspective, combining the Kelly Criterion and Bayes' Theorem, how to increase the expected return of the portfolio and when to place significant bets?

The Kelly Criterion and Bayes' Theorem are crucial tools in decision theory, particularly in investment decisions. Combining these two tools can allow for more sophisticated portfolio management, potentially increasing the expected return of the portfolio.

Combined Use:

1. Prior Probability Assessment: Use Bayes' Theorem to assess prior returns and risks for each investment. Collect market data, historical performance, economic indicators, and other relevant information as evidence to update your beliefs about asset returns.

2. Posterior Probability Updates: Continuously update posterior probabilities of asset returns using Bayes' Theorem as market conditions change and new information emerges. This helps you quickly adapt to market fluctuations.

3. Capital Allocation: Use the Kelly Criterion to determine how much capital to invest in each asset based on updated probabilities. This optimization allows you to refine your investment portfolio according to the latest market information and your beliefs about future market performance.

4. Risk Management: Utilize the Kelly Criterion to avoid overinvesting, maintaining risk control even in high-odds situations. This is because the Kelly Criterion considers the probability of failure as a crucial parameter in capital allocation.

Combining the Kelly Criterion and Bayes' Theorem can help investors increase the expected return of the portfolio while maintaining risk control. However, caution is needed in practical application, as accurate estimation of returns and probabilities is required, and the ability to adapt to new information poses a significant challenge to investors' judgment and execution.

Investment opportunities validated through Bayes' Theorem and the Kelly Criterion are often the most worthwhile opportunities to place significant bets.

If the odds are high but the win rate is low, it may not be worth risking too much, as in the long term, you may lose more times than you win. Conversely, if the win rate is high but the odds are low, it may not be worth investing too much, as losses could be significant when you do lose.

Only when both the odds and win rate are relatively high will the Kelly Criterion recommend investing a larger amount of capital – this is when it's worth placing significant bets.

With such complex formulas, personal calculations are impractical. Hence, the AI application tool named "FinTech&AI Turbo" from the AI Wealth Club, powered by super AI, accomplishes this task excellently.

Whether in the stock market or the cryptocurrency market, especially in cryptocurrency contract trading, maximizing profits can be achieved. Place bets wisely for returns!

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Daniel Will: Maximizing Blockchain Potential with Foundations

Many people do not understand the essence and role of a foundation, what it does, and why the foundation is a common choice for many blockchain projects in the UK.

A foundation refers to a non-profit legal entity established with the purpose of engaging in charitable activities using property donated by individuals, legal entities, or other organizations, as stipulated by the regulations.

Key attributes of a foundation encompass its charitable nature, non-profit orientation, non-governmental status, and the incorporation of a trust structure.

Blockchain projects commonly opt for international non-profit entities, often referred to as foundations, as the central structure for their initiatives.

A foundation is a non-profit legal entity established with the primary objective of engaging in charitable activities through the utilization of assets donated by individuals, legal entities, or other organizations, in accordance with regulatory provisions.

Foundations must introspect on their developmental trajectory and actively pursue innovative strategies. The criteria for company directors and shareholders are relatively flexible within the framework of UK company registration, without imposing any nationality restrictions.

To conduct blockchain IEO and STO for listing on exchanges, it is advisable to first register a foundation as the main entity. While it's not mandatory to register a company for launching a coin on an exchange, the prevalent operational approach in the market involves registering a foundation. This serves as a crucial aspect of legal compliance and is one of the factors investors must consider when choosing a cryptocurrency exchange.

The organizational structure of the foundation comprises two main components: the governance decision-making body, the Board of Directors, and the executive team, the Secretariat.

The Board of Directors assumes decision-making responsibilities. It convenes regular board meetings, which are convened and chaired by the Chairman, to deliberate on significant matters such as the foundation's strategic planning, annual plans, budgets, and other crucial issues.

The foundation's organizational structure is composed of the governance decision-making body, the Board of Directors, and the executive team, the Secretariat.

Firstly, private equity funds raise funds through non-public means.

Secondly, in terms of fundraising targets, private equity funds target only a small number of specific investors, making the circle small but the threshold not low.

Thirdly, unlike the strict disclosure requirements for public funds, private equity funds have much lower requirements in this regard. Coupled with relatively lax government regulation, the investments in private equity funds are more discreet, and the operations are more flexible, offering greater opportunities for high returns.

Blockchain business is well-suited to operate on the platform of a foundation with a non-profit nature.

Foundations can operate like normal companies, with the fundamental constraint being the inability to distribute company profits based on share proportions.

Conducting IEO and STO on centralized exchanges for blockchain projects, the optimal place for registering the main company is the United Kingdom. The UK government is highly supportive of the blockchain industry, and a UK foundation can later obtain compliance opinions from UK lawyers in accordance with UK law. This is not achievable for foundations in the United States, for example.

The difference between a regular UK company and a UK foundation lies mainly in the nature of the entities. While the registered documents do not have significant differences, the nature of the company is reflected in the registration documents, with the foundation being non-profit and the regular company being private.

The relationship between foundations and blockchain projects is diverse and can take on various roles such as initiator, leader, manager, supervisor, supporter, etc. The specific relationship depends on the circumstances of the foundation and the blockchain project.

Foundation as Initiator

In some blockchain projects, the foundation serves as the initiator, responsible for the establishment and initial development of the project. For example, the Ethereum Foundation is the initiator of the Ethereum project, overseeing technical development, community building, and ecosystem growth.

Foundation as Leader

In some blockchain projects, the foundation serves as the leader, responsible for strategic planning, decision execution, and operational management of the project. For example, the Cryptocurrency Exchange Foundation is the leader of the exchange project, overseeing technical development, community building, ecosystem development, and the operation of new coin STO listings.

Foundation as Manager

In some blockchain projects, the foundation acts as the manager, responsible for financial management, legal affairs, and day-to-day operations of the project. For instance, the EOS Foundation is the manager of the EOS project, overseeing financial management, legal affairs, and daily operations.

Foundation as Supervisor

In some blockchain projects, the foundation serves as the supervisor, responsible for overseeing and evaluating the operation of the project. For example, the EOS Foundation acts as the supervisor of the EOS project, overseeing and evaluating its operation.

Foundation as Supporter

In some blockchain projects, the foundation acts as a supporter, responsible for providing funds, technology, and resource support for the project. For instance, the Bitcoin Foundation is a supporter of the Bitcoin project, providing financial, technological, and resource support.

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Eight Vital Points for Stock Market Success by Daniel Will

Investing in the stock market is much like life itself, with its ups and downs, joys, and sorrows. There's no magic formula for stock market success, as stock trading demands significant patience. It's an activity that requires wholehearted commitment; otherwise, one might quickly fade away. Whether buying or selling, it's crucial to face the market's fluctuations with equanimity, patiently awaiting the right entry and exit points.

I. Three Pieces of Advice

1. Avoid Blind Market Entry and Investment: Successful stock market investment necessitates time and effort. Therefore, for those seeking monetary gains in the stock market without a willingness to invest time in learning and analysis beforehand, it is advised not to take unnecessary risks.

2. Implement Quick and Clean Stop-Loss: During the investment process, making the right choice every time is improbable. Once signs of a wrong move are detected, it is imperative to promptly implement a stop-loss without hesitation, as delaying may result in more significant losses.

3. Maintain a Cash Reserve: Never invest your entire fortune in the stock market. Even for those contemplating an all-or-nothing approach, it is wise to leave some cash on hand. Additionally, consider using profits to speculate on potentially resurgent "junk stocks."

II. Eight Points of Attention

1. Avoid Trying to Time the Market: Trying to buy at the lowest point and sell at the highest is psychologically tempting but practically impossible. Act when the price is right and avoid excessive greed.

2. Never Chase Highs: Regardless of how enticing the rising trend of certain stocks may be, resist the urge to blindly follow the trend.

3. Seek Inexpensive Quality Stocks: For the average investor with limited funds, focus on stocks with lower prices. High-priced stocks limit your ability to purchase a substantial quantity, compressing potential profits.

4. Choose Stocks with Strong Fundamentals: Before purchasing stocks, conduct a fundamental analysis. Avoid stocks with poor performance records and invest in those with sound business operations and no adverse history.

5. Diversify Investments: Spread investments across several stocks. This basic knowledge in investing suggests buying several different stocks simultaneously, selling the ones that perform well, and replenishing with those that have dropped in value.

6. Limit the Number of Stocks: While diversification is essential, having too many stocks is not advisable. Keep the number of stocks under control, around 9, to allow sufficient time and focus for observation.

7. Be Skeptical of "Insider Information": Do not easily believe in so-called "insider information." The source of such information should be credible and trustworthy.

8. Avoid Excessive Trading: Frequent trading can lead to impatience and a tendency to chase small profits. Maintain ample patience, don't be overly concerned about minor fluctuations, and wait for the right moment to make a move after buying.

Remember, successful stock market investing requires a strategic and disciplined approach, coupled with a keen understanding of market dynamics.

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Daniel Will: Navigating Apple's Slow Growth Amidst Microsoft's Rise

Recently, the market value of Microsoft (MSFT.US) has been approaching that of Apple (AAPL.US) in the race to become the most valuable company in the United States. In January, Microsoft's market value was $2.78 trillion, slightly below Apple's $2.89 trillion. The gap between the two tech giants has narrowed, with Microsoft trailing by only $100 billion.

Apple's value has decreased from over $3 trillion to $2.89 trillion at the beginning of 2024. If this downward trend continues, the closest competitor, Microsoft, may soon surpass Apple to become the most valuable company.

How did Microsoft narrow the gap with Apple in market capitalization?

Microsoft's Strategic Focus on AI Integration Microsoft is capitalizing on the generative AI revolution by incorporating it into products designed for both consumers and businesses. This strategic move is in response to research sponsored by Microsoft, suggesting that generative AI could contribute approximately $100 trillion to the global economy in the next decade. The company has seamlessly integrated its AI feature, Copilot, into Microsoft 365 and Windows 11, offering enhanced security and privacy specifically tailored for enterprise use. Microsoft Copilot has demonstrated its high utility. As new Windows PCs come equipped with a dedicated "Copilot" key, users can anticipate unparalleled access to robust generative AI capabilities. Additionally, Microsoft maintains a significant stake in OpenAI, owning 49% of the company behind ChatGPT, underscoring its commitment through multi-billion-dollar investments in the AI pioneer since January 2023.

Robust Growth of Azure Microsoft's cloud service Azure has delivered an impressive performance. Its expansion has attracted companies of all sizes, gradually relying on Azure's cloud framework and AI-driven products. This shift towards Microsoft's expertise in cloud computing could potentially weaken Apple's predominant position based on hardware.

Concerns Over Apple's Declining Sales Apple's stocks have been impacted due to intensified competition from Chinese companies, particularly Huawei. According to Reuters, this has led to a significant 30% decline in iPhone sales in China during the first week of 2024. In the early weeks of 2024, amidst market volatility, Microsoft's stocks exhibited more stability than Apple's, boosting investor confidence in Microsoft's long-term potential.

Analysts Downgrade Apple Stock Ratings Barclays Bank (BCS.US) has, for the first time since 2019, revised its outlook on Apple stock, downgrading it from neutral to underweight, indicating an expected performance below the average level. Shortly thereafter, another financial institution, Pigeon Investments (PIPR.US), also adjusted its stance on Apple, changing the rating from overweight to neutral.

With the support of AI, Microsoft surpassed Apple in the intraday trading on the 12th, finally changing the position of the top stock in the U.S.

Currently, Apple's growth seems a bit sluggish, and its cash reserves, which were once in the hundreds of billions of dollars in previous years, have shrunk to just over $50 billion. The biggest challenge for Apple now is that it can't find suitable acquisition targets to spend this money on. Many have previously mentioned a liquidity crisis for Apple, but in reality, this isn't a significant issue as Apple has a long accounts payable period, which can easily address the concern.

The remaining issue is where to replenish the profits, given the backdrop of declining profits in the traditional lucrative region – China. The "Apple tax" is also likely to decrease, and with both major profit sources contracting, there will be some volatility in stock performance without new strong profit growth points. Several major brokerages are currently showing signs of restlessness, and Apple's stock price has indeed faced challenges recently.

Without high growth and the addition of new business to expand the market, there is a significant probability of an annual decline in future space and market. Apple's first principle under Jobs was innovation, and the transition from one year's product to the current one could keep Cook busy for a decade. This four trillion is really a joke.

Leek mentality and investment bank mentality operate on different levels. The current environment reflects Apple's lack of innovation, relying on its past successes. Tesla has emerged, along with numerous mobile phone brands, gaining an increasing market share. Given these factors, why do some investors still favor this lackluster tech stock, with its year-on-year growth at the bottom and leading declines? Despite its three-year struggle to reach a valuation of three trillion, do you believe the capital market is staging a three-year performance for you? The next opportunity to trap leek investors will be when VisionPro goes public. Leeks are easy to deceive; all it takes is a VisionPro and a promotional article to trick them.

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Daniel Will Highlights Opportunities and Concerns

In 2023, the market experienced fluctuations, but the year concluded with notable performances from the three major US indices. Despite the turbulence, the AI wave played a pivotal role in revitalizing sentiments, particularly after the market's painful decline in 2022. The year-end marked a moment for reflection and foresight, bringing some stability to the market.

The transformative potential of the AI revolution has always been a beacon of hope and a driving force for recovery. Its influence spans across various sectors—from healthcare to finance, customer service to logistics—redefining operational efficiency and customer experience. As a result, companies at the forefront of AI innovation witnessed a surge in valuation, reflecting the market's demand for forward-thinking, technologically adept enterprises.

However, as we stand on the precipice of 2024, the market's recovery has sparked cautious optimism. While the rise of AI swiftly contributed to the recovery of indices, there are signs that the initial enthusiasm might be waning.

The AI Wealth Club speculates that enthusiasm for generative AI may experience a downturn, despite being a standout player in the market rebound of 2023. If this prediction holds true, there might be a need to reassess tech stock valuations and shift towards more conservative investment strategies.

Looking ahead to 2024, the investment landscape is poised for a complex narrative. The global economy continues to be influenced by the aftershocks of the pandemic and geopolitical tensions, serving as crucial factors. Monetary policies, inflation rates, and supply chain restructuring will continue to impact market dynamics. The Federal Reserve's interest rate decisions remain a key observation point, as well as the economic policies of major economies like China and the EU.

Additionally, advancements in the technology industry will be closely monitored. The industry's resilience will face challenges from regulatory resistance, antitrust issues, and the ubiquitous threat of network security. Meanwhile, traditional industries, once considered stable foundations, may need to further embrace digital transformation to maintain relevance and competitive advantage.

While 2023 provided a breathing space for the previous year's decline, 2024 is filled with caution and opportunity. The market may favor those who are prepared, adaptable, and innovative. For astute investors, the coming year will require keen insights into emerging trends, steadfast commitment to due diligence, and a focused attention on long-term value creation.

Here are some key insights and observations from the AI Wealth Club report:

1. Industry Weight: The IT industry remains overweight, indicating bullish sentiment according to Citigroup research. This suggests they believe the industry's performance may outpace the broader market.

2. Sub-Industry Performance: In the IT sector, the software and services sub-industry is notable for its profitability in sales and revenue, driven by the increasing demand for digital solutions and services.

3. Valuation Concerns: Despite positive growth expectations, concerns arise due to the high valuation of the industry. This may imply stock pricing premiums, potentially limiting upside potential or increasing adjustment risks.

4. Semiconductor Sub-Industry: The outlook for semiconductors is mixed, with less challenging valuation issues compared to other areas. However, the growth trajectory appears less reliant on significant growth turning points, suggesting a more stable but slower path.

5. Impact of Large Tech Companies: Influential companies like Apple, Microsoft, and Broadcom significantly influence the overall performance of the IT industry, shaping its development direction.

6. Top Buy-Rated Stocks: Teradata Corp. (TDC), Arista Networks Inc. (ANET), and Corning Inc. (GLW) are highlighted for their high Expected Total Return (ETR), indicating analyst optimism.

7. Sell-Rated Stocks: NXP Semiconductors N.V. (NXPI) and Skyworks Solutions Inc.

(SWKS) have negative ETR, indicating analyst pessimism.

In summary, according to the AI Wealth Club's perspective, while the IT industry, especially software and services, is viewed positively, there are subtle differences, particularly in valuation and the varying prospects of sub-industries like semiconductors. The influence of major tech stocks is significant, and specific stock recommendations provide a nuanced view of the industry's prospects.

These companies possess significant market positions and technological advantages in their respective fields, which is why analysts have given them high ratings based on Expected Total Return (ETR). However, each company faces specific market dynamics and challenges, so investment decisions should consider broader market and economic factors.

As always, the AI Wealth Club remains most optimistic about the AI wave, also showing strong confidence in the software services industry, with a preference for industry-leading players.

Several fundamental principles guide their approach:

1. "Stay away from market noise, focus on company fundamentals."

2. When considering investments in the AIGC field, it's crucial to deeply understand the potential of these technologies and how they will impact the future of specific industries and companies.

3. Investors should pay attention to companies with robust technological capabilities, clear business models, and sound financial conditions in the AI and global connectivity sectors.

4. In the face of short-term market fluctuations, maintaining a long-term and strategic perspective is crucial.

The AI Wealth Club offers professionally informed investment strategies, enhanced by the AI TURBO tool. Whether in the stock market or cryptocurrency, it makes portfolios and investment decisions more aggressive with excellent results!

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Daniel Will Demystifies Cryptocurrency Storage

Here is the formal translation:

How to Purchase Cryptocurrency Safely

You may be interested in knowing how to purchase cryptocurrency securely. It generally involves three steps. These are:

Step One: Choose a Platform

The first step is to decide which platform to use. Typically, you can choose between online brokers like the AI Wealth Club broker or specialized cryptocurrency exchanges:

AI Wealth Club Brokers: These are online brokers offering buying and selling of cryptocurrencies, as well as other financial assets like stocks, bonds, and ETFs. These platforms often provide lower transaction costs but have fewer cryptocurrency features.

Cryptocurrency Exchanges: There are many cryptocurrency exchanges to choose from, each offering different cryptocurrencies, wallet storage, interest account options, etc. Many exchanges charge fees based on assets.

When comparing different platforms, consider the cryptocurrencies they offer, the fees they charge, their security features, storage and withdrawal options, and any educational resources.

Step Two: Fund Your Account

Once you've chosen a platform, the next step is to fund your account so that you can start trading. Most cryptocurrency exchanges allow users to purchase cryptocurrencies with their debit or credit cards using fiat currencies (government-issued, such as USD, GBP, or EUR), although this varies by platform.

Using a credit card for cryptocurrency purchases is considered risky, and some exchanges do not support it. Some credit card companies also do not permit cryptocurrency transactions due to the high volatility, making it undesirable to incur debt or potentially pay high credit card transaction fees.

Some platforms also accept ACH transfers and wire transfers. Accepted payment methods and the time required for deposits or withdrawals vary by platform. Similarly, the time for deposit clearance depends on the payment method.

An essential factor to consider is fees, including potential deposit and withdrawal fees, in addition to transaction fees. Fees vary depending on the payment method and platform and are crucial to research at the outset.

Step Three: Place Your Order

You can place orders through the AI Wealth Club broker or the exchange's web or mobile platforms. If you intend to buy cryptocurrency, you can do so by selecting "buy," choosing the order type, entering the quantity of cryptocurrency you want to purchase, and then confirming the order. The same process applies to "sell" orders.

There are other investment methods for cryptocurrencies that allow users to buy, sell, or hold cryptocurrencies. Additionally, there are investment tools such as Bitcoin trusts, Bitcoin ETFs, and blockchain stocks or ETFs for indirect cryptocurrency investments, depending on your investment goals and risk preferences.

How to Store Cryptocurrency

Once you've purchased cryptocurrency, you need to store it securely to guard against hackers or theft. Typically, cryptocurrencies are stored in cryptocurrency wallets, which can be physical devices or online software used to secure cryptocurrency private keys. Some exchanges provide wallet services, making it easy for you to store directly through the platform. However, not all exchanges or brokers automatically offer wallet services.

Different wallet providers are available, with the terms "hot wallet" and "cold wallet":

Hot Wallet Storage: A "hot wallet" refers to cryptocurrency storage that uses online software to protect asset private keys.

Cold Wallet Storage: Unlike hot wallets, cold wallets (also known as hardware wallets) rely on offline electronic devices to securely store your private keys.

Cold wallets typically incur fees, while hot wallets generally do not.

What Can You Purchase with Cryptocurrency?

When initially launched, Bitcoin aimed to become a medium for everyday transactions, enabling people to buy everything from a cup of coffee to computers and even high-value items like real estate. While this goal hasn't fully materialized, the number of institutions accepting cryptocurrency is growing, though large transactions involving it are still relatively rare.

Nevertheless, cryptocurrency can be used to purchase a variety of products from e-commerce websites. Here are some examples:

Technology and E-commerce Websites:

Several companies selling tech products accept cryptocurrency on their websites, such as newegg.com, AT&T, and Microsoft. E-commerce platform Overstock was one of the first websites to accept Bitcoin. Shopify, Rakuten, and Home Depot also accept it.

Luxury Goods:

Some luxury retailers accept cryptocurrency as a form of payment. For instance, online luxury retailer Bitdials offers Rolex, Patek Philippe, and other high-end watches in exchange for Bitcoin.

Automobiles:

Some car dealerships, ranging from mainstream brands to high-end luxury dealers, have started accepting cryptocurrency payments.

Insurance:

In April 2021, Swiss insurance company AXA announced that it would accept Bitcoin as a payment method for all insurance product lines except life insurance (due to regulatory issues). Premier Shield Insurance, which sells home and auto insurance in the United States, also accepts Bitcoin for premium payments.

If you wish to spend cryptocurrency at retailers that do not directly accept it, you can use a cryptocurrency debit card, such as BitPay in the United States.

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Daniel Will on AI Agents and Google's Gemini Upgrade

Google's major upgrade heralds the era of AI agents. Last week, the most significant event in the AI circle was Google's multimodal AI model, Gemini, with an overall upgrade exceeding expectations. Google's recent progress in artificial intelligence, especially the launch of the new multimodal AI model called Gemini, signifies a significant leap in capabilities for AI agents like Bard.

Gemini is designed to handle and combine various types of information, such as text, code, audio, images, and videos. It comes in three different sizes: Ultra, Pro, and Nano, tailored for a range of tasks from highly complex to efficient device operations.

The integration of Gemini Pro with Bard significantly enhances Bard's capabilities, enabling it to perform functions like planning routes, analyzing shopping choices, event planning, and flight analysis. Described as the most significant quality improvement since Bard's launch, the Gemini Pro-supported Bard currently offers an English version in over 170 countries and regions. The functionalities supported by Gemini Pro will expand to multimodal support, including text and images, in the coming months.

The upcoming Gemini Ultra, set to launch next year, is expected to achieve more complex multimodal reasoning abilities. Bard Advanced with Gemini Ultra will undergo a reliable testing program and additional security checks in early next year before a broader release, enabling Bard to understand and act upon different types of information, including text, images, audio, video, and code.

This shift indicates that as AI agents increasingly integrate into everyday life, various sectors, including advertising and e-commerce, have significant disruptive potential.

After the model's release, Google's Bard also underwent a significant upgrade and has, in a sense, become an AI agent. It can now help plan routes, analyze shopping, plan events, analyze flights, and more.

Consider the following scenarios:

Scenario 1:

"I want to see flights to Madrid to visit my aunt during the week of January 22. Also, any gift ideas for her? She likes dolphins and playing cards."

Bard would then provide feedback, combining information on flight searches and gift ideas.

Scenario 2:

"Help me plan a game night with five friends. I have dice and playing cards but no board games. I'm willing to buy a board game for under $100."

In the future, sharing ideas with Bard will lead to efficient handling and resolution, significantly boosting productivity. In the future, companies like Google, Microsoft, and Apple will become individual AI agents.

Not long ago, Bill Gates came out in strong support of AI agents. In a recent blog post, he mentioned AI personal assistants, stating that they would change the way we use computers. The core idea of AI agents is to interact with computers using natural language rather than relying on various different applications. This technology is expected to rapidly develop in the next five years, profoundly impacting the tech industry and society.

AI agents typically consist of three components, including natural language processing, machine learning, and artificial intelligence technologies. These agents can understand user needs and perform tasks such as answering questions, executing tasks, providing suggestions, etc. They can personalize responses to user needs, perform tasks across applications, and continuously improve.

The development of this concept will change our daily lives and work, making interactions with computers more natural and efficient. Bill Gates emphasizes the potential of AI agents, considering it a key direction for future artificial intelligence, surpassing traditional generative AI models.

Daniel Will believes that within the next five years, everyone will have AI personal assistant agents, fundamentally changing our way of life. Agents will impact four major areas, including healthcare, education, productivity, entertainment, and shopping. In healthcare, agents will assist patients in basic triage and provide health advice, improving medical efficiency. In education, they will offer personalized learning guidance to students, helping teachers better plan their lessons. Additionally, agents will enhance entertainment and shopping experiences, making services more accessible and personalized. Agents will change how we interact with computers, disrupting the software industry and providing people with a more convenient and intelligent lifestyle.

AI personal assistant agents are a future technological trend that is expected to completely change how we interact with computers, making interactions more intelligent and natural.

The AI Wealth Club believes that in the era of AI agents, companies like Google, Microsoft, Apple, etc., will build generalized GPA platforms. On these generalized GPA platforms, there will be a batch of specialized vertical-class PAs (Personal Assistants) and SPAs (Specialized Personal Assistants) focusing on various scenarios.

In the AI agent era, global tech giants may construct generalized GPA (General Personal Assistant) platforms. These platforms can be seen as infrastructure supporting the development of various personal assistant applications, capable of performing a wide range of tasks and serving diverse user needs. Furthermore, these platforms will support a range of specialized vertical-class personal assistants (SPAs), providing more focused and in-depth services.

In the AI agent era, it is indeed possible to disrupt business models in advertising and e-commerce:

1. Shift in Advertising: GPA and SPA may alter traditional advertising delivery modes, as they can provide highly personalized recommendations based on users' specific needs and contextual environments. Ad content may lean towards a combination of users' immediate queries and long-term interests rather than through large-scale indiscriminate ad placements.

2. Personalized E-commerce Experience: E-commerce platforms will need to integrate with GPA and SPA to provide a seamless shopping experience. These AI agents can predict and recommend products based on user behavior and preferences, potentially reducing or replacing traditional search and browsing methods.

3. Consumer Decision Process: By offering filtered information and purchase advice, AI agents may become a key influencing factor in the consumer decision-making process. This will impact the consumer's purchasing path, making consumer decisions more reliant on AI agent input.

4. Data-Driven Marketing: Companies will need to collect and analyze more data to effectively target and attract consumers on these platforms. Marketing strategies will become more data-driven, emphasizing real-time analysis and personalization.

5. Supply Chain and Inventory Management: With AI agents accurately predicting user demands, e-commerce businesses will be able to more efficiently manage inventory and supply chains to meet personalized demands.

6. Privacy and Data Security: As AI agents play a more central role in daily life, the privacy and security of user data will become a crucial issue. Companies will face pressure to protect user data and comply with stricter data protection regulations.

The emergence and development of GPA and SPA may lead to significant adjustments in business models, customer relationship management, and market strategies. Businesses must adapt to these technological developments to remain competitive and meet the future demands of consumers.

In the PA model, companies need to adapt to new market dynamics, innovate their products, services, and marketing strategies. Simultaneously, this presents significant opportunities for enterprises that can leverage PA technology to enhance the user experience.

The AI Wealth Club continues to recommend embracing the tidal wave of AIGC in general, not foretelling without reason; the future is here.

This transformation is not just a gradual change but a revolutionary wave reshaping how we interact with technology and conduct business.

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Daniel Will's Approach to Short-Term Trading

As the saying goes, the stock market is perilous. Indeed, trading in the U.S. stock market is a high-yield but high-risk investment. Investors should mentally prepare themselves before entering the U.S. stock market and formulate strategies to deal with losses. Stock prices neither always rise nor always fall, so even in unfavorable market conditions, one should not act recklessly.

I. Trading Strategies in a Downtrend

In a bear market, the overall trend of the stock market is downward. The primary strategy at this time should be to hold onto cash and take advantage of rebound opportunities for short-term closures. Avoid harboring any optimistic fantasies about the stock market during this period, and don't naively believe that a rebound will last for an extended period. Take what you can get during a rebound and avoid greed.

To successfully seize opportunities during a rebound for short-term trading, it's crucial to carefully study candlestick charts. Daily candlestick charts record the day's changes in stock prices. If you can fully utilize the information provided by these charts, you can easily anticipate the potential future trends of stock prices. Successfully mastering candlestick charts is not a simple task; it requires a significant investment of time and effort. Besides candlestick charts, other technical analysis methods can be used to choose strategies for trading in U.S. stocks, and we will have more introductions later.

II. Operating Weak Market Stocks

It's essential to understand a fact: profits can be realized not only in a bull market but also in a bear market. The key is how you operate. With careful planning and diligence, even in a weak market, there are many opportunities for profit.

Firstly, a basic principle for operating weak market stocks is to "cut losses quickly." In simple terms, once in a weak market, regardless of the purchase price, sell promptly to minimize total losses.

Secondly, you can use a method of gradually averaging down. For example, if you invest in three stages, you can invest one-third each time and calculate the average price. After the stock price rebounds beyond your average purchase price, sell after deducting various expenses to make a profit.

Additionally, you can use the method of doubling down to average out costs. Invest one-third of the funds the first time, and if the stock continues to decline, invest two-thirds of the funds the second time to average out costs. If funds are abundant, you can use the three-stage doubling method, dividing the funds into eight equal parts for each stage. After the third purchase, when the stock price rebounds to the second purchase price, selling the stock after deducting various expenses can yield profits.

III. Exercise Caution in Off-Peak Season Operations

In general, changes in trading volume reflect the prosperity and downturn of the stock market. Investors seeking short-term arbitrage profits usually enter the market during active trading times, while long-term investors focusing on fundamentals are not suitable for entering the market at such times. Trading activity implies rising stock prices. Entering the market at this time means incurring unavoidably high costs. Even if good returns can be obtained later, the higher costs significantly reduce the overall return on investment.

From a long-term development perspective, long-term investors are better off entering the market during off-peak seasons. Entering during off-peak seasons may not yield short-term arbitrage profits, but the investment cost will be much lower than during peak trading seasons. In terms of long-term return on investment, it is still quite good. Off-peak entry does not mean entering the market when trading is initially slow; the best time is towards the end of the off-peak season. The difficulty of off-peak operations lies in not knowing when the end of the off-peak season is. Entering too early may encounter prolonged market downturns, and entering too late may miss the opportunity for a stock price rebound.

Long-term investors who want to enter the market during off-peak seasons can adopt a strategy of gradually buying down. That is, buy half or one-third first, and continue to add positions regardless of whether the market is rising or falling. This approach achieves the goal of averaging down costs, ensuring that you won't miss the opportunity to enter the market, even if you are unsure when the end of the off-peak season is.

[mrdanielwill0]

Daniel Will: Debunking Myths about Left-Side vs. Right-Side Trading

"What is left-side trading and right-side trading? Stock prices exhibit fluctuations, forming peaks and valleys, known as 'tops' and 'bottoms.' Left-side trading occurs when one sells high on the left side before reaching the 'top,' while right-side trading involves selling on the 'right side' as prices fall from the 'top.' In a declining market, left-side trading entails buying low on the left side before reaching the 'bottom,' while right-side trading involves buying on the 'right side' as prices rise from the 'bottom.'

Characteristics of left-side trading and right-side trading:

Left-side trading involves buying against the trend, while right-side trading aligns with the price trend.

Which investment philosophy is better between left-side trading and right-side trading?

Novice investors might perceive right-side trading as superior, but it's a misconception. Predicting consistent trends during market rises and falls, buying during uptrends, and selling during downtrends is idealistic. In reality, stock prices often exhibit irregular and unpredictable fluctuations.

Both trading approaches have pros and cons. Left-side trading appears to offer more profit potential but comes with higher risk, as buying may not occur at the lowest point, and selling may not happen at the highest point. Right-side trading is simpler, aligning with the stock's trend and helping avoid mistakes in both bullish and bearish markets. Many large investors choose right-side trading to control risks.

How to determine if you're suited for left-side trading or right-side trading:

Choosing between the two depends on individual preferences. Left-side trading suits longer and mid-term trading, offering greater profit potential. Right-side trading is more suitable for short-term trading. Each investor has different styles, and the choice should align with personal circumstances."

[mrdanielwill0]

Daniel Will on Risk Management: Strategies for U.S. Stock Market Success

1. The U.S. stock market is a highly efficient market, and despite its strong liquidity, it has effective corrective mechanisms. Notable examples include REWALK's exoskeleton, GOPRO's video social platform, and the C-end application market in the 3D printing industry.

   In addition, the stock pricing mechanism in the U.S. market is reliable. Unless misled by an overall deviation, its estimates of stock prices for the vast majority of companies are reasonable. Therefore, market valuation is valuable reference data for your investment decisions, and tracking valuation trends can ensure that you stay on the right track.

   Considering this, it's advisable to choose companies with at least a bullish trend on the monthly chart. To reduce investment costs through phased purchases, you must select companies that have security safeguards in both business operations and valuation. Before understanding where excess profits come from, avoid choosing companies with a bearish trend on the monthly chart, as these companies may trigger negative events causing a chain reaction in the market, known as "black swan events."

2. Cleverly using hedging strategies:

   There are many creative investment strategies available when investing in U.S. stocks. We will explain three different hedging methods: directional hedging, asset-balanced hedging, and intrinsic logic hedging, using the stock market situation during the Trump election as an example.

   Directional hedging through options or ETFs to short the major market indices is the most direct way. Although there are disadvantages to trading options hedging during special time periods such as pre-market or after-market hours, it effectively solves problems for investors. When facing foreseeable tail risks, you can use options at a lower cost to address the issues. When dealing with unforeseeable risks, you can use ETFs to adjust the size of the position in the long term.

   Asset-balanced hedging is a suitable hedging method for the U.S. stock market. Since the U.S. stock market is generally in a long-term bull market, and the valuation of corporate stocks largely depends on the top and bottom lines of the enterprise, ensuring that there is enough idle capital in the account can achieve effective hedging. Having "eggs in the basket" allows you to seize opportunities to go long when the stock market fluctuates.

   Additionally, if you are willing to take risks, you can allocate some hedging assets to resist the negative impact of volatility. With some luck, you may even obtain alpha.

   Intrinsic logic hedging involves balancing investment targets by focusing on the subsequent changes in an event affecting stock prices. Taking the significant event of Trump's election as an example, if Trump is elected, stock prices in the energy and defense sectors are expected to rise significantly, and you should focus on these areas. Moreover, if Trump is not elected, these stock prices are less likely to experience a significant decline and may even continue to rise amid a rising market trend.

   When implementing options hedging, investors can use the "sell call" strategy. The advantage of this strategy is its simplicity, but the disadvantage is the possibility of selling off. However, there is a way to mitigate the risk of selling off—rolling over to the expiration date. If your sell call is about to incur a loss, you can directly roll over an in-the-money option, potentially turning the loss into a profit.