Advanced Allocation and Rebalancing Tactics

Terminology-boundary statement: In this appendix, “CLEC” always refers to Teacher James’s “CLEC investing and personal-finance channel” and its teaching system. This appendix collects non-mainstream tactics for “advanced allocation and rebalancing”: Sections One to Three are TQQQ 3x-leverage advanced uses that Teacher James once discussed in videos or public settings but that fall outside “regular CLEC recommendations”; Section Four is community member PonPon’s personal idea of “flexible rebalancing” shared on an official CLEC video; Section Five is 00662 community member Kris’s Beta-threshold rebalancing method; Section Six is Chengfeng Linghang’s supplementary guide to Taiwan 2x tickers. None of the above is Teacher James’s personal official opinion; they are for extremely advanced readers only, and beginners and general investors must not apply them. PonPon and Kris are community nicknames and are different individuals; Chengfeng Linghang is a public sharer outside the CLEC system; none are real names or professional qualifications. The material is community and public discussion, not professional investment, tax, or legal advice. All content is current as of 2025-Q4; for specific product policies and rules, rely on the latest official announcements.

One, Teacher James’s “3× Leverage + Cash” Beta Engineering

To obtain a certain target Beta, besides directly holding the leveraged ETF of the corresponding multiple, Teacher James demonstrated another path in videos 00430 / 00431 (the September 2023 seminar “Make Good Use of Leveraged Funds, Keep Cash for Periodic Rebalancing”) using Portfolio Visualizer: using “a small position of 3× leverage + a large position of cash” plus annual rebalancing to synthesize the same Beta.

Taking Beta ≈ 1.0 as an example, he compared three paths:

• 33% TQQQ (3×) + 67% cash (0.33 × 3 ≈ 1.0).
• 100% QQQ.
• 50% QLD (2×) + 50% cash (0.5 × 2 = 1.0).

The conclusion is that the three have similar long-term performance, with the “33% TQQQ + annual rebalancing” group slightly ahead — because the cash position adds to the badly beaten 3× during declines and locks the excess back into cash during rises, capturing a bit of “rebalancing alpha.”

Scaling the same principle up by one multiple can approach Beta ≈ 2.0 (about 67% 3× + 33% cash, 0.67 × 3 ≈ 2.0, corresponding to the exposure of 100% QLD); but to be clear: this is an “extended version” that extrapolates James’s Beta ≈ 1.0 demonstration upward, not the group he actually compared at the time. There is also a set of figures circulating that, using a synthetic backtest over the long 1946 to 2017 interval, claims the “3× + cash” formation’s annualized return (about 20.58%) is slightly higher than pure 2× (about 18.96%) — but 1946 is far earlier than TQQQ (founded in 2010) and QQQ (1999) listing, so this must be a synthetic backtest, heavily dependent on index selection, daily-reset assumptions, financing costs, and fees, and cannot be regarded as a guarantee of the future, so this book does not adopt its specific figures.

Caution: The volatility decay of 3× leverage is far greater than that of 2×, and investors lacking strict discipline will be crushed; this “small 3× position + thick cash + annual rebalancing” is not a loophole that overturns “strictly no full-position 3×,” but a way of using a cash buffer and mechanical rebalancing to bypass the volatility trap of 3×. At bottom, this is Beta engineering, not encouragement for anyone to hold TQQQ. Before executing, you must pass a full comprehension test of the leverage-decay section in the main text. (Video 00430, 00431)

Two, Teacher James’s Cross-Account TQQQ Hedge (For US Roth / Traditional Tax Use)

For US investors with “an overly large Traditional IRA balance and an overly small Roth IRA proportion,” Teacher James once hinted at an advanced cross-account hedging tactic — concentrating TQQQ in the Roth and using the cash position in the Traditional to hedge, thereby changing “which account the asset growth happens in”:

You invest your Roth funds in TQQQ, and because your Roth funds are too low, you can invest in the Traditional IRA an amount equal to twice the Roth TQQQ funds in a Money Market. This way you can get the same rate of return as investing everything in QQQ, and you can also slow the growth of the Traditional IRA, so there is less money in the future taxable account, while the tax-free Roth account grows faster. (Clubhouse Zhuangzi Talks Stocks 294, Teacher James as guest; see also Video 00552)

The specific allocation logic:

• Roth IRA: put US$50,000 in TQQQ (3× leverage, explosive growth).
• Traditional IRA: put US$100,000 in a Money Market (a cash position twice the TQQQ amount, as a hedge).
• The rest of the funds normally hold QQQ.

The mathematical elegance: US$50,000 × 3× Beta = exposure equal to US$150,000 of QQQ; meanwhile the US$100,000 Money Market has no stock-market exposure at all. The whole portfolio’s effective exposure approximates “US$150,000 QQQ equivalent” — but recognize: TQQQ resets daily, its long-term return is not exactly 3× the underlying, and the Money Market is not zero-return either, so the actual result is influenced by rebalancing frequency, path, and Roth qualified-withdrawal rules, is not the same as fully replicating QQQ, and must be confirmed by a CPA / tax advisor. Its strategic focus is that “the location of asset growth” is deliberately arranged — placing the higher-growth-potential TQQQ into the forever-tax-free Roth IRA, while “locking” the Traditional IRA position in the low-growth Money Market, thereby suppressing the tax-base swell of the future mandatory RMD withdrawals.

Three, Teacher James’s Retirement Surplus-Fund TQQQ Small-Amount DCA (An Extremely Specialized Variant)

For the special group who are already retired and possess “an off-market surplus cash flow that never runs dry” (such as a monthly pension, labor insurance, or annuity greater than daily spending), Teacher James also mentioned an extremely advanced TQQQ approach:

In your retirement money, just set aside 5% every month to buy it, your pension will not run dry, and with the money you cannot use up, maybe you use 90% of your pension and save 10% to buy, and you can always squeeze out that 10% and keep buying. Just note that even when it drops 99.99% you still have to keep buying, do not get scared off. (Video 0001 casual talk)

Key limiting conditions:

• You must have an “never-drying” off-market passive cash flow (monthly pension / annuity / labor insurance), and that income must be “clearly greater than” daily living expenses.
• The funds used for DCA can only be “money you absolutely will never need” (such as 5% to 10% of the pension), and you must not touch the emergency reserve or the core allocation position — one criterion in a sentence: if this money going to zero would affect your life, the amount is too large.
• Your psychological makeup must be able to withstand a -99%-level decline of TQQQ in an extreme bear market (TQQQ was only founded in 2010, so this is estimated from a synthetic stress test of the NASDAQ-100’s historical major bear markets × 3, not TQQQ’s actual history), and still keep doing DCA when it drops to the bottom.

Caution: This tactic completely violates CLEC’s core stance of “no standard advice” on TQQQ — it is essentially “using never-drying off-market interest as living water to buy a high-risk lottery position that, even if it goes to zero, does not affect your life,” and the only premise on which it can hold is that “what you invest is absolutely idle money, and its going to zero affects nothing in your life.” Ordinary retirees (those without strong off-market passive income, or whose pension just barely covers spending) must absolutely not apply it, or a single extreme bear market will utterly destroy the retirement plan. This section is offered only as a reference for advanced retirees who possess the extremely special conditions above.

Four, PonPon’s Flexible Rebalancing (Supplementing CH12)

The rebalancing core of CH12 is CLEC’s central “smart rebalancing.” On top of this, community member PonPon, inspired by a passage from Teacher James, developed an advanced variant called “flexible rebalancing,” further subdivided into a conservative type and an aggressive type according to the thickness of the cash-like position.

Source and nature statement: This section is compiled from CLEC Investment and Personal Finance channel video 00538, “Flexible Rebalancing 2.0: Fifteen Years of Cash Without Depletion” (2025-11-01), a personal idea shared by community member PonPon in that episode (the Sergeant Major Lying-Flat Finance Notes separately produced a visualized comparison deck). In the video, PonPon states explicitly, “This is my personal opinion; please do not treat this as a settled conclusion for now,” and the backtest covers only a single historical interval (2000 to 2025), with results differing across intervals. This is a “community advanced variant, not an official CLEC conclusion,” offered only as a reference for advanced readers; readers can follow video 00538 to verify for themselves.

The Watershed — Whether Cash-Like Assets Reach 15× Annual Spending

The watershed of flexible rebalancing is “whether the cash-like (00865B) position reaches 15× annual spending” (roughly equal to a safety cushion of 15 years of living expenses):

• Cash cushion below 15× → conservative type: prioritize building up the cash cushion, and do not touch it during a bear market.
• Cash cushion already at 15× → aggressive type: with the safety cushion prepared, shift growth back into the underlying, and only touch cash to buy the dip during a bear market.

Comparison of the Three-Type Operation

The three share the basic discipline of “judging up years by the underlying position, and not triggering rebalancing if the underlying rises but the leverage falls”; the differences all concentrate on “where the up-year profit-locking goes” and “the source of the down-year leverage top-up funds”:

Design logic: when the cash-like level is not yet thick enough (conservative type) and might not survive 15 years upon entering a bear market, the down-year leverage-top-up funds should prioritize using “the gains accumulated in the underlying position during up years” rather than touching the already-insufficient cash-like assets; when the cash-like assets already exceed the 15× annual-spending safety belt (aggressive type), the up-year profit-locking can shift from “topping up cash-like assets” to “converting to the underlying to keep compounding,” because the cash-like assets are already in excess and need no more, so redirecting the surplus profit-locking to buy 00662 instead can raise the portfolio’s long-term return. (The “2% of initial total assets” in the table is a PonPon model parameter; and 2% only roughly equals one year of living expenses when total assets reach 50× annual spending, so retirees must still guard cash flow and the maintenance ratio before topping up leverage, and should not treat it as a universal rule.)

Pon’s Backtest Validation and the “Synthetic QLD” Methodology

PonPon (community nickname Pon), after 100,000 Monte Carlo runs, further placed “flexible rebalancing” into a finer parameter matrix for cross-validation. The test matrix covers: drawdown rates of 2.2% / 2.4% / 2.8%; retirement terms of 13 / 14 / 15 / 16 years; the three allocation formations 50/10/40, 30/20/50, and 23.3/23.3/53.4 (QQQ / QLD / cash); and rebalancing rules (up-year leverage-to-cash at 0% / half / all; down-year underlying-to-leverage at 0% / 1.4% / 2.8%, scaled by the drawdown-rate proportion).

Three main findings:

• The lower the leverage ratio, the more stable the minimum maintenance ratio — 23.3/23.3/53.4 keeps the maintenance ratio steadily in the 199% to 215% range over the 13-to-16-year interval, almost unaffected by changes in the rebalancing parameters; 50/10/40 lands in the 175.22% to 178.63% range, which is still above the 167% renewal line but far more sensitive to the parameters (these are PonPon model results, not universal conclusions; 175% to 215% is actually still on the tight side for retirees / pledgers, not the same as absolute safety, and is highly influenced by synthetic QLD, financing costs, interest rates, and rebalancing frequency).
• The lower the drawdown rate, the thicker the buffer — 50/10/40 has a minimum maintenance ratio of 178.63% at a 2.8% drawdown, rising to 183.88% at 2.2%.
• The rebalancing parameters’ impact diminishes at the margin — when the leverage ratio is low (10% to 20%), the final maintenance ratio barely changes regardless of whether up-year profit-locking is 0% or 50% and whether down-year leverage top-up is 0% or 2.8%, validating that “sufficient cash level and low leverage ratio” determines life and death more than “rebalancing fine-tuning.”

The methodological contribution is “synthetic QLD historical data”: QLD only listed in 2006, but stress testing needs to cover the 2000 dot-com bubble. Pon uses QQQ daily returns × 2, minus an annualized 2.5% financing cost and expense ratio, to back out a synthetic QLD for 1985 to 2006;

comparing it with the real QLD from 2006 to 2025, the cumulative error to the end of 2025 is about 8.5%, 2010 to 2020 overlaps almost perfectly, and the 2008 crisis drawdown is highly consistent with reality. This synthetic data raises the historical coverage of the stress test for the dot-com bubble period (when QLD had not yet listed); but synthetic QLD is still a model estimate, not the same as real tradable performance, and financing costs, daily resets, fees, taxes, slippage, and actual tracking differences can all cause deviation.

The data source for this section is Pon’s 2026 Monte Carlo and flexible-rebalancing advanced backtest; the parameter matrix and synthesis methodology are advanced research content, so beginners should first master the 433 core before delving in.

Five, Kris’s Beta-Threshold Rebalancing Method (Supplementing CH12)

Community student Kris proposed another concise rebalancing logic — “do not watch the market rise and fall, only watch the change in Beta.” The problem with traditional annual rebalancing is that everyone’s initial allocation date is different (some on 1/1, some on 6/30), which causes “the same market conditions to trigger rebalancing at different points for different people,” producing performance discrepancies. Kris’s method instead uses the degree of Beta deviation as the trigger condition, substantially reducing (rather than completely eliminating) the timing differences caused by fixed dates — as long as it is still a check on a fixed annual date, the check date itself still affects the result.

Operating rules (confirm the current Beta value on the fixed rebalancing date each year):

• When Beta > 1.05 → treat it as an up year, sell 30% of that year’s gains on 00670L (QLD) and buy cash-like assets (00865B) to lock in profits.
• When Beta < 0.95 → treat it as a down year, sell “2% of initial total assets” of cash-like assets (00865B) (Kris notes this is about one year of living expenses) and buy 00670L to top up leverage.
• When Beta falls within the ±5% dead zone (0.96 to 1.04) → treat it as a range-bound market, do nothing, and wait until next year’s rebalancing date.

This threshold was demonstrated by Kris with “4:3:3 = Beta 1.0,” and there are two points to clarify for the reader before adopting it. First, 0.95 / 1.05 is the dead zone for 433 (target Beta 1.0); if you adopt 442 (target Beta about 1.2), the dead zone must be changed to center on its target Beta (about 1.14 to 1.26), otherwise 442 will be judged over target the moment it is set up and will forever be selling. Second, “2% of initial total assets ≈ one year of living expenses” only holds when total assets reach 50× annual spending (at 33× it covers only about 10 months, and even less at 25×); before topping up leverage in a down year, you must still first confirm that it does not breach your cash / short-bond / pledge maintenance ratio and your retirement cash-flow defensive line.

Take the 433 allocation (Beta = 1.0) as an example: 4×1 + 3×2 + 3×0 = 10, target Beta of 1.0; if after one year Beta rises to 1.08, it means the leveraged portion has risen and the proportion has become imbalanced, triggering profit-locking; if Beta falls to 0.92, it means the leveraged portion has fallen, triggering a leverage top-up. The design of the ±5% dead zone is the mathematical version of the CLEC core discipline of “only handle the extremes, ignore the ripples” — avoiding repeated operations every year over tiny deviations, which would create unnecessary tax friction.

▲ Figure A6-1 Kris's Beta-threshold rebalancing three zones, acting only at the extremes with zero trades in the range-bound zone

ChengFeng Navigation backtested four scenarios with the “Asset Allocation and Rebalancing Backtest V1.3.1” model, and the results are excerpted below (these are ChengFeng backtest-model figures, not official performance; the multiples and annualized returns depend heavily on the backtest period settings, and the specific period / instruments / interest rates / fees and the definition of forced liquidation should follow the original model, with the numbers offered only to understand the general direction, not as a guarantee of the future):

Two key observations:

• “The threshold is the key” — by using the “dead zone” to reduce the number of rebalancing triggers, this echoes the direction of CH12’s existing backtest result that “unbalanced > mindless > smart.” In this kind of long-term backtest, reducing unnecessary small rebalances has a chance of preserving more compounding momentum; but the optimal frequency still depends on the market path, transaction costs, and taxes, and it is not that “the less, the necessarily better.”
• “Beta-based judgment fits better than time-based judgment” — the traditional “fixed annual rebalancing on 12/1” runs into the problems of “market conditions changing drastically but the timing not yet arriving” or “market conditions calm but forcing a rebalance because the timing has arrived”; the Beta-threshold method lets you “act only when the proportion truly becomes imbalanced,” and the end-of-period allocation also stays closer to each portfolio’s target Beta (T1/T3 have a target Beta of 1.20, T2/T4 of 1.00; this is a target value, not a precise maintenance of the actual daily Beta over the long term).

This method is a very clean choice for advanced investors familiar with calculating Beta. Beginners who have not yet mastered Beta calculation can still use the CLEC core’s “fixed annual date + smart rebalancing” as an entry-level version.

Six, A Full Guide to Taiwan-Listed 2× ETFs (Chengfeng Linghang — Extended Reference)

The CLEC main line in CH10 of the main text is the QQQ / QLD (or the Taiwan version 00670L) system. This section compiles details on the four homegrown Taiwan-listed 2× ETFs (00631L, 00663L, 00675L, 00685L) as an extended reference for investors willing to place part of their leveraged position in Taiwan stocks; CLEC does not proactively recommend using a Taiwan-listed 2× ETF as the core leverage engine.

These four 2× ETFs originally mostly tracked the “Taiwan Weighted Index,” with differences mainly in the tracked index, replication method, and fees; among them, 00631L, after its 2026 restructuring, has switched to tracking the “Taiwan 50”:

When choosing a Taiwan-listed 2×, there is a common retail-investor trap: seeing that a certain fund’s face value became smaller and its unit price cheaper after a split, and blindly buying it. Face value has nothing to do with growth potential; what you should really compare is the stock-selection logic, the scale, and the internal expenses. The internal expenses and positioning of the four differ noticeably:

• 00631L (Yuanta Taiwan 50 2×): the largest in scale, but a management fee of about 1.00% and a total expense ratio of about 1.16%, the highest of the four
• 00663L (Cathay Taiwan Weighted 2×): pure-futures replication, tracking the Taiwan Weighted; its scale and trading volume are relatively small among the four, and its internal expense ratio should follow the SITE’s latest official announcement
• 00675L (Fubon Taiwan Weighted 2×): its scale steadily ranks second, with ample liquidity, a management fee of about 0.65% and a total expense ratio of about 0.78%
• 00685L (Capital Taiwan Weighted 2×): the lowest management fee (about 0.30%), but relatively lower trading volume

Magnified by twenty years of compounding, the extra internal expenses skimmed off every year become a considerable erosion of wealth, so a “cheap face value” should never be the basis for a choice (internal expenses are only one factor; the trade-offs of drawdown and diversification are discussed below). (Fees are compiled from each SITE and MoneyDJ as of mid-2026; the total expense ratio of a leveraged ETF includes rollover costs and fluctuates year to year, while the management fee is a more stable long-term basis for comparison.)

The Market-Structure Shift of the Taiwan Futures Index from Backwardation to Contango

Taiwan’s 2× Taiwan-stock ETFs historically enjoyed a “backwardation bonus.” Taiwan-listed companies have historically been generous with dividends, and before each ex-dividend date the futures market would pre-reflect the points about to evaporate as a futures discount, causing the Taiwan futures index to sit persistently below the cash broad-market index, forming backwardation. As the settlement date gradually drew near, the futures inevitably converged upward to the cash price, and holders of the pure-futures-replicated 00675L / 00685L could earn this stretch of “convergence bonus” out of thin air; this not only offset their annual fee of about 0.65%, it could also create additional excess returns.

But this “backwardation bonus” is not eternal. After entering 2024, according to Chengfeng’s observation of the Taiwan futures structure, the Taiwan stock market’s structure shifted noticeably: retail long-side buying strengthened, and, combined with a high-interest-rate environment pushing up the cost of holding futures positions, the Taiwan futures index has gradually turned into a “substantive contango” structure, with the contango magnitude once reaching 1%–2% (the actual figure follows the near-month / next-month Taiwan-futures spread and rollover data). For a Taiwan-version leveraged ETF that relies heavily on futures replication, each month’s rollover amounts to “selling low and buying high,” and contango turns directly into a “blood-draining” cost; the original backwardation bonus has basically vanished, or even reversed. When reading historical literature, investors must bear in mind that the “backwardation bonus” was a market-structure feature from before 2024, and that the present must be re-estimated with “contango blood-draining” as the new cost baseline.

The Impact of 00631L Restructuring into the Taiwan 50 2×

On May 19, 2026, 00631L was formally restructured: from the original pure-futures replication, it switched to a physical-futures hybrid structure of “about 40% TSMC physical shares + 160% Taiwan futures index,” and its tracked index also changed from the Taiwan Weighted Index to the “Taiwan 50” (the restructuring date and holding ratios follow Yuanta SITE’s announcement and the prospectus). The benefit of holding physical shares is that each month’s rollover only needs to handle the futures-exposure portion, greatly reducing the impact of contango blood-draining; the price is that it further magnifies 0050’s existing problem of “TSMC’s weight being too high” — after restructuring, the single-company exposure to TSMC reaches about 110% (that is, more than 1.1× the broad market). This is both the source of its explosiveness in a bull market and the single-point deep-loss risk when TSMC hits a headwind.

Chengfeng’s backtest model compiled a comparison before and after the restructuring (the following are Chengfeng A0024 backtest figures, not official performance, only for understanding the framework): the new 00631L, thanks to lower rollover costs, saw its simulated annualized return rise from about 26% to 29.5%, but its maximum drawdown also widened from about -48% to -53.5%; by comparison, the pure-futures 00675L, diversified across the whole market with TSMC exposure of only about 44%, had a simulated annualized return of about 24.5% and a maximum drawdown of about -45.5%. On the choice: those who prefer whole-market diversification and lower drawdown choose 00675L; those who pursue concentrated tech explosiveness and can withstand a larger drawdown choose the new 00631L; retirees return to the underlying ETF or an extremely low proportion of 2×, prioritizing drawdown control. Chengfeng’s model lists the new 00631L as a researchable option; whether to adopt it still depends on your individual risk tolerance and backtest results. (Chengfeng Linghang, “A0024 — Choosing Between the New Taiwan 50 2× and the Taiwan Weighted 2×”)

Clarifying the Delisting Concern for Taiwan-Listed 2×

As for “whether a Taiwan-listed 2× could fall to the point of delisting in a crash,” this concern is actually overblown. The threshold for terminating (delisting and liquidating) a Taiwan leveraged ETF looks at whether “the fund’s net asset scale has been below the statutory floor for a prolonged period,” not how much it fell on any single day; and because 2× leverage resets daily, a crash will not approach zero the way a triple-leverage fund does. 00631L is the largest in scale of the four Taiwan-listed 2×, still far from the termination threshold, and a single-day crash by itself will not directly trigger delisting (the main cause of termination is the fund’s scale being below the threshold for a prolonged period, still per the prospectus and the regulator’s rules). The risk that really needs managing is not delisting, but the “large drawdown + volatility decay” revealed by the earlier data — the new 00631L’s maximum drawdown reaches -53.5%, and a deep plunge of this magnitude is exactly what a Taiwan-listed 2× holder must first think clearly about whether they can withstand. (The exact termination-threshold amount for each 2× fund follows that fund’s latest prospectus announcement.)

Chengfeng Linghang Replacing 00670L with 00675L (Advanced Option)

After a multi-dimensional comparison, Chengfeng Linghang once proposed using 00675L (Fubon Taiwan Weighted 2×) as an advanced substitute. (Chengfeng Linghang, “EP03” and “X000”) The comparison points include total return rate, Sharpe ratio, Sortino ratio, and maximum drawdown. Across some historical intervals, 00675L displayed a better risk-reward structure; but this path is an advanced variant, not the CLEC core standard allocation. Its strategic significance lies in the cross-market diversification of “buy the underlying in the US, buy the leverage in Taiwan”: using 00662 (the underlying) paired with 00675L (the leverage) can, in some cycles, reduce the concentration risk of a single market. If an investor considers switching, it is advisable to adjust in batches at the annual rebalancing point, and not to swap the whole position all at once.

On the core question of “whether 00675L can replace 00670L,” Teacher James once gave a complete answer in the community, with these key points: because 00670L has currency hedging, in the process of a US-dollar appreciation or a Taiwan-dollar depreciation it must pay hedging costs and hedging losses, so its performance will lag QLD, and it may also be unable to achieve the 2× performance corresponding to 00662.

But the purpose of the CLEC system’s use of 00670L for asset allocation, besides obtaining more cash position through a leveraged fund, is also to get close to Beta 1.0; however, “whether it is exactly Beta 1.0” is not the main purpose — the real consideration is “volatility and long-term return.” CLEC’s past backtests simulated using the volatilities of QQQ, QLD, and a money-market fund; if you replace it with a ticker of unknown volatility, or one whose volatility is larger than QLD’s, you introduce an “uncontrollable risk variable” — unless the investor has already redone the simulation using past performance and volatility, they should not rashly replace it.

Looking further at the design purpose of 00670L: besides reserving cash and achieving the ammunition distribution of asset allocation, its volatility is lower than QLD’s; even if the actual Beta is 1.1 rather than 1.0, that is acceptable — as long as the long-term 20-year return reaches twice that of 00662, the performance purpose of the asset allocation is achieved.

So the core the investor must note is the two goals of “long-term performance and low volatility,” and not focus on short-term performance while ignoring the hidden risk of amplified volatility — the latter is the truly dangerous blind spot. Applying this principle to the decision of replacing 00670L with 00675L: if the investor has not done a complete backtest of volatility and long-term return themselves, they should keep 00670L as the standard option; only an advanced investor who has verified it through complete data and can bear the corresponding change in risk should consider switching.

If a backtest confirms the switch to 00675L, the complete Taiwan-US allocation is 00662 (40%) + 00675L (30%) + 00865B (30%) — the US underlying as the base, Taiwan leverage as the accelerator, and the defensive position kept as the 00865B short-bond cash fortress consistent with the CLEC main line, with the cross-market diversification logic as described earlier.

A note on ticker adjustment: Chengfeng’s original article once used the long-dated US Treasury 00679B (Yuanta US Treasury 20-Year) as a “stock-bond balanced” example, taking its high distribution at a low entry point and future capital gains from rate cuts. But long bonds have a duration as long as 16–17 years and are extremely sensitive to interest rates, belonging to a specific timing play of “entering when you are sure rates are at a low”; in a 2022-style inflationary rate-hike environment they will plunge in sync with stocks; and 00679B is not on the CLEC whitelist, unsuitable for beginners and the standard allocation. This book consistently returns to the 00865B short bond as the defensive standard; those who prefer a long-bond strategy should research it themselves and understand how it differs from the CLEC system.

Advanced Self-Managed Futures (Not Suitable for Beginners)

An additional supplement (for futures veterans only, strictly forbidden to beginners): a small number of advanced investors with derivatives experience will simulate a leveraged fund by managing their own margin: as long as the account keeps sufficient margin (for example, 1 futures contract corresponding to 100% or 50% full cash), they can simulate a substantive 1× or 2× exposure. Take the Taiwan Futures Exchange’s NASDAQ-100 futures (original leverage about 11×) as an example: if you prepare about NT$1.1 million cash for 1 contract, the effective leverage drops to 1×, and the exposure is roughly equivalent to holding NT$1.1 million of the NASDAQ-100 underlying (QQQ / 00662); if you prepare about NT$550,000 cash for 1 contract, that is 2× exposure, roughly equivalent to holding NT$550,000 of 00670L / QLD. Note especially: what it tracks is the NASDAQ-100, not Taiwan’s 0050 / 00675L / 00631L. This method can avoid an ETF’s internal expenses, but it requires manual rollover every month, and if a gap opens and the settlement account has not kept enough buffer, it is very easily force-liquidated; it is a specialized tool for veterans, and those who have not verified it through extensive backtesting should consciously stay away.

For most readers, the standard 433 (QQQ / QLD / 00865B) is already excellent enough; this appendix’s Taiwan-listed 2×, the 00675L substitute, and self-managed futures are all advanced variants, and before switching, be sure to backtest volatility and maximum drawdown yourself, and do not swap a large part of your position all at once.

Core reminder: The allocation and rebalancing tactics in this appendix are all “advanced variants,” built on the premise that the main line (433 allocation, annual rebalancing, the cash defense line, Buy-Borrow-Die) is already solid. Get the main system right first, then talk about these non-mainstream optimizations; reverse the order and you only add risk.