The Chengfeng Linghang Practical Strategy

Risk disclosure: the content of this appendix is compiled from the public teaching materials of the Chengfeng Linghang community (the Great-Way-Is-Simple Investing Method) and belongs to the “practical extension” of the CLEC core system; it is not required material for beginners. All data and allocations are teaching compilations of public historical backtests; past performance does not represent any future guarantee, and the content does not constitute individual buy-or-sell advice.

Chengfeng Linghang’s Practical Guide to Technical Rebalancing

Chengfeng Linghang’s “Great-Way-Is-Simple Investing Method” can be seen as an advanced research and practical extension within the 00662 community, helping experienced investors understand rebalancing, backtesting, Taiwan-listed 2× leverage, and fund allocation in extreme market conditions. It is not the CLEC main line, nor required material for beginners, and still less should it replace the whole book’s core discipline of “buy whenever you have money, never sell, and keep a cash line of defense” — the CLEC main line never relies on technical analysis to time the market, but manages risk through allocation and a cash line of defense.

Warning: this strategy suits advanced investors with a foundation in technical analysis and strict discipline. Beginners, please skip this section and go straight to executing the core system of “buy whenever you have money, never sell.”

Chengfeng Linghang’s Advanced No-Brainer Add-On Tactic (Something for Nothing — the community’s nickname, a high-risk contrarian add-on)

This tactic was proposed by Chengfeng Linghang (the Great-Way-Is-Simple Investing Method) and belongs to the community’s advanced high-risk strategies, not the CLEC main line. When the market faces an epic crash (the broad market retraces as deep as -30% or even -50%) and both the underlying and 2× positions are badly battered together, an advanced user can activate the independent “no-brainer add-on tactic”: deploying “pre-prepared off-book reserve funds” to buy 2× ETFs in batches. One boundary must be held — this is not risk-free arbitrage, but a contrarian add-on that trades risk tolerance for high expected return, and it simultaneously bears the risks of the 2× continuing to fall, of having to add more cash, and of psychological collapse. The source of funds should be mainly the pre-reserved off-book reserve; it is not advisable to use brand-new borrowing to buy the 2× directly. If borrowing really is involved, you must first pass a family stress test of salary-based repayment capacity, cash line of defense, debt ratio, and worst-case drawdown, and you must never disturb the original 433 / 442 main account. In execution, do not forecast the macro economy; when the signal arrives, mechanically buy in batches; when the rebound returns to the prior high, do not rush to close out at the top — wait for a clear passive exit signal before taking this swing capital’s profit off the table. (Chengfeng Linghang, “EP06 (20260410) — The No-Brainer Add-On of the Great-Way-Is-Simple Investing Method”)

The Art of Holding Through Dynamic Cost Reduction (Fearless of Highs)

CLEC advocates “buy whenever you have money, never sell,” but those who already hold positions often grow anxious about “whether I bought at the top” when their assets hit a new high, or when a short-term pullback strikes right after they buy. The “dynamic cost reduction” that Chengfeng Linghang proposes in “EP07 — Fearless of Highs” is not a market-timing entry technique, but an “art of holding” — using mechanical add-ons on the way down to smooth the holding cost and settle a mind afraid of heights, so you can hold your positions for the long term and not be shaken off the ride by volatility.

The method is to first set an add-on interval for declines (for example, add once for every 5% drop) and a maximum defensive drawdown (for example, holding down to -20%); dividing the two gives the “N times funds” you need to prepare in addition — taking 20% ÷ 5% = 4 as an example, this means that besides the initial investment, you must also have 4 times the initial investment ready. At each tier, once the price is reached, you mechanically add on, averaging the holding cost down all the way.

This N-times fund is independent of your normal allocation (433 / 442); in essence it is equivalent to a cash-like position, and it must be included together in the review of your total asset ratio — you cannot pretend it does not exist and let your actual Beta be distorted.

You must especially distinguish it from the earlier “something for nothing” (EP06): the two are similar in method and in the concept of the tools, but completely different in goal and in timing. The timing for “something for nothing” is an epic crash (-30% to -50%), using pre-reserved off-book reserve funds for a high-risk contrarian add-on; the timing for “dynamic cost reduction” is the anxiety over new highs or an ordinary pullback in the course of everyday holding, using your own cash to average down the cost and hold with peace of mind. Neither is risk-free arbitrage, and neither should be forced through by borrowing on the spur of the moment. The one shared iron law is this: if you do not have enough buffer room to prepare the N-times funds, do not activate it — honestly retreat to your existing asset allocation.

(This section is compiled from Chengfeng Linghang, “EP07 (20260512) — Fearless of Highs: The Art of Holding Through Dynamic Cost Reduction”; it and “EP06 (20260410) — The No-Brainer Add-On of the Great-Way-Is-Simple Investing Method (something for nothing)” are two independent lessons from two different periods, and for details please rely on the original videos.)

Chengfeng Linghang’s 622-to-433 Cash Calibration Backtest

An early CLEC version once recommended the “622” allocation (60% prototype, 20% leverage, 20% cash). Chengfeng Linghang used a backtest to give the mathematical basis for the revision: putting 622 with no-brainer rebalancing through the deep, prolonged bear market of 2000 to 2008, the 20% cash cushion runs out early, and both the 2× and the cash break down — the whole portfolio “dies” in the backtest. This is exactly why 622 was later changed to 433, raising cash from 20% to 30% — that extra 10% cash is the life-sustaining oxygen in a long bear. (Chengfeng Linghang [EP02 (2024-09-08)] Dao-to-Simplicity Investing — Spreadsheet Operation Walkthrough; this is Chengfeng’s backtest model, not official performance, and actual results vary with the backtest period and parameters.)

Chengfeng Linghang’s Deduct-Twice-the-Loan Recalculation for Pledging

After a large pledged withdrawal, how should you recompute the allocation? Chengfeng Linghang offers a simple safety algorithm: when recomputing the asset weights, first deduct “twice the borrowed amount” from total assets, then allocate by the original 433/442 ratio. For example, with total assets of NT$10 million and a pledged withdrawal of NT$1.2 million (about 12%), the safe base for recomputing is not NT$10 million but NT$10 million − (NT$1.2 million × 2) = NT$7.6 million; spreading the allocation over this shrunken base builds in a cushion for the pledge debt in advance. Chengfeng’s experience is that “deducting twice is enough; there is no need to be as conservative as three times.” This move lets you enjoy the pledged cash flow without making positions too full just because the book value of total assets looks large. (Chengfeng Linghang [EP04 (2025-02-27)] Dao-to-Simplicity Investing — Asset Allocation and Rebalancing; this is Chengfeng’s personal practice and backtest framework, not an official rule.)