Appendix 3

The Investment Translator Practical Strategy

Risk disclosure: this appendix is compiled from the technical-defense viewpoints of “The Investment Translator’s” public teaching materials; it is not the CLEC core mainstream system (whose core is never selling and rebalancing on a fixed schedule). It belongs to an external supplement of advanced defensive practice; the content is a teaching compilation of public historical data and does not constitute individual buy-or-sell advice or a specific entry / exit timing instruction.

The Investment Translator’s Three Major Technical Signals for Reducing Beta in a Bear Market

The whole book’s main line opposes predicting highs and lows and does not rely on technical analysis to time the market; the following is purely The Investment Translator’s external, advanced defensive viewpoint, offered to advanced users with high risk tolerance as a “risk thermometer” — used to check whether you are bearing more Beta than your psychology can withstand, and not as entry / exit commands. In a large-scale bear market, technical indicators can serve as an objective reference (not an iron law). When the market simultaneously shows three major signals of rising risk:

(These moving-average parameters are the values adopted by The Investment Translator’s model — the death cross commonly referred to in the market mostly means a shorter-term moving average crossing below a longer-term one, such as the 50-day crossing below the 200-day; how the neckline is drawn, whether the break is confirmed on a daily or weekly close, and whether it is paired with volume and consecutive confirmation should all be defined clearly in advance, to avoid subjective interpretation.) These signals can only indicate that the price trend and momentum have clearly deteriorated and that risk may have risen; they cannot conclude that “the money has already retreated” or that “the trend must reverse.” This must be distinguished from the CLEC main line: facing a decline, CLEC does not catch a falling knife emotionally, nor does it stop adding on the moment it sees a death cross, but executes the rules according to the original allocation and cash line of defense (adding in batches in down years, funds coming from short-bond cash, and not pledging 00670L); if you adopt this appendix’s technical defense, that is an external tactic of “defining in advance when to reduce Beta and when to restore Beta,” lowering the portfolio’s Beta to a level at which you can sleep. Restoring Beta can reference pre-defined signals such as the 50-day moving average flattening and turning up, or a trendline breakout — but this is only an external tactical rule, not CLEC’s iron law for buying; the CLEC main line is still long-term holding and “buy whenever you have money.”

For advanced investors in the working phase who do not want their cash to lose its opportunity cost and whose risk tolerance is extremely high, one can consider a technical rebalancing of “the underlying (00662) and the 2× leverage (00670L).” The core principle: the funds do not leave the stock market, adjusting Beta only between the underlying and the 2×. But recognize this — it cannot replace the cash / short-bond line of defense: retirees, those who pledge, and the highly indebted still need to keep an independent cash layer, and cannot mistake “dropping to the underlying” for complete defense; and the adjustment happens only inside the “leverage container,” and you must not, because of a technical signal, break through the leverage ceiling of 433 / 442 in the overall allocation.

High-level throttling (2× to underlying, reducing Beta) — the trigger condition is exactly the earlier “three major bear signals” appearing simultaneously:

  1. The 50-day moving average crosses below the 100-day moving average (a death cross).
  2. A break below a long-term neckline support that has been building for more than half a year.
  3. A plunge through the 200-day bull-bear dividing line.

When all three fire together, indicating that the trend momentum has clearly weakened rather than merely oscillating, swap the 2× (00670L) position inside the “leverage container” back into the underlying (00662), lowering that container’s Beta back to 1.0, down to a level at which you can sleep (adjusting only inside the leverage container, not touching other positions, and not disrupting the overall 433 / 442 allocation). The Investment Translator’s original text gives only these three signals and the direction of “reducing Beta,” and does not specify precise entry / exit parameters such as an RSI value, moving-average slope, or SMA6 / 26 / 52; this book does not fabricate thresholds of its own.

Low-level adding on (underlying back to 2×, raising Beta) — The Investment Translator’s “sole iron law for going long again” is: patiently wait for the 50-day moving average to flatten and then turn upward, and act only after the foundation is firmly tamped, rather than rushing to catch a falling knife the moment you see a decline. After confirming this signal, swap the underlying (00662) inside the leverage container back into the 2× (00670L) in batches, pulling Beta back up to the allocation ceiling (still limited to inside the leverage container, not exceeding the overall 433 / 442 leverage ceiling). (The Investment Translator, “All Three Major Bear Signals Have Appeared — Do I Bottom-Fish Now, or Reduce Beta First?”)

The variant for an extreme bear market: if your cash reserve is insufficient and you still want to raise exposure at a low, The Investment Translator additionally offers a “rebalancing that does not consume cash” — without touching a single dollar of cash, directly convert the underlying QQQ into the double-leverage QLD (in the Taiwan version, 00662 into 00670L), raising exposure by increasing the leverage weighting. This method keeps the cash for the survival bottom line, but what it amplifies is leverage risk; it suits only advanced users who can withstand a deep plunge and who strictly hold the line of “not pledging 00670L.” (The Investment Translator, “Advice for Pledge Borrowers: When Your Net Worth Is Only Enough to Repay the Debt, Can You Still Survive This System?”)

If the signal is valid and executed with discipline, this kind of technical rebalancing has a chance of improving the risk-reward profile in a large-scale pullback; but it may also, because of false breakdowns, false breakouts, repeated whipsaws, transaction costs (commissions, securities transaction tax, bid-ask spreads, slippage), and execution errors, lag behind simply holding, and it is no guarantee of excess returns (if you use a US-stock QQQ / QLD account, swapping positions may also trigger capital gains tax). On the maintenance ratio: those without pledging are not concerned with the maintenance ratio; those who already pledge should still follow the CLEC main line — use only 00662 as the main pledge collateral, do not pledge 00670L, and a technical switch cannot be used to mask pledging risk. A final reminder: this is a rebalancing variant at the level of medium-to-long-term moving averages (50 / 100 / 200 days), usually no more than 1–2 times a year; never dimension-reduce it into intraday short-term trading and frequent market-timing; the moment you hesitate over an indicator, immediately retreat to the whole book’s main line of mechanical annual rebalancing.