Luca

What do you mean with "nothing changed"?

So owning strong businesses in either India or China for the next 20 years should turn out in some pretty nice multibaggers for sure!

So which Country sets the global rules then? Will it still be a currently deteriorating europe, i dont think so? The US will be a fine economy but the party will shift to the E7. Yeah and maybe the west or US doesnt like it and there will be wars or sabotage but hey, thats what always happens if we look take the past 2023 years of history. One just cant invest "around" wars. They will happen over time. If one thinks the likelihood of China and US war is high the next 10 years, then one shouldn't own many US stocks neither and maybe focus on some smallcaps in other countries that are unaffected by such an event.

And China industrialized much later than Germany and US etc, they have a LONG runway left. They are around a level of development of a germany in 1985-1990 if you compare GDP per capita. From Pwc: The world economy could more than double in size by 2050, far outstripping population growth, due to continued technology-driven productivity improvements Emerging markets (E7) could grow around twice as fast as advanced economies (G7) on average As a result, six of the seven largest economies in the world are projected to be emerging economies in 2050 led by China (1st), India (2nd) and Indonesia (4th) They estimate GDP of China to be around 50 Tr USD in 2045. China regulates exactly according to studies by as an example the OECD: It follows that policies to reduce income inequalities should not only be pursued to improve social outcomes but also to sustain long-term growth. Redistribution policies via taxes and transfers are a key tool to ensure the benefits of growth are more broadly distributed and the results suggest they need not be expected to undermine growth. But it is also important to promote equality of opportunity in access to and quality of education. This implies a focus on families with children and youths – as this is when decisions about human capital accumulation are made -- promoting employment for disadvantaged groups through active labour market policies, childcare supports and in-work benefits.

Dont forget indirect revenues, If Nvidia has 45% of sales in China and they are a large customer of micron, that pushes the exposure up significantly. And then all the factories and people that developed technical skills to build the products, supply chains etc..

"they cant allow more capitalism because it would potentially take the power away". Away to whom? Will it be for the better if China is controlled by a corporate elite? How did the neoliberal model for the US turn out since the last 30 years?, if I look at the data it turns out to be pretty bleak. Chinas local economy is brutal, turbo capitalism. Many many players, hard competition. Whats important to the administration is that these mega caps dont negatively influence chinas trajectory to become prosperous. Thats why they punish parasitic business practices where wages are getting pushed down, and monopoly practices interfere with healthy competition. Its always surprising by how much investors have exited china for good but IMO based on erratic believes. Xi is not an idiot that doesnt understand markets and capitalism and basically wants to clone Mao now. But something like that spooks around in the head of all the investors that experienced their first hard bear market. We are up sometime 100%+ for many great holdings since those lows in october 2022 and i actually agree with what the administration said: "People will be slapped by reality".

+1

To be fair this is very much related to the conflicts between the two systems of China and the US. I think its important to shine a light on these topics to understand the different perspectives.

I am ready to move in!

Thanks a lot for sharing @John Hjorth @competitive-advantage!!

More growth for all than what the west offers. America had much more time to industrialize than China did. Lets see what happens in China to poor people over coming decades. Not sure about "soft spot" but i agree with quite some things. I would be personally open to a genetically cloned dynasty of platos philosopher kings but thats another topic.

Sleeping well is important!

China wont have "socialism" like mao zedong did it, it will be a hyper capitalistic market still BUT with regular regulation and intervention that fine tunes growth for all. I think we just have to see what the CCP can achieve this decade but the data points to me look still good, despite temporary headwinds and of course as every human: some mistakes will come too.

There are some polls that show that almost half the population feels hopeless on a regular basis or so, China has access to that data too. The use of psychiatric medication is skyrocketing too, in the Netherlands 1 in 16 people take antidepressants. We have some serious problems going on and people are desperate for change, also before covid. Trump indeed mixed things up because he came from his sort of own billionaire pockets and was kind of "unfunded". Thats why democrats hated him, that scene with clinton where he said he uses the tax benefits SHE created, completely bombed her. But i dont think he was THE savior americans wanted. But at least they had some sort of feeling of a mix up and change.

So i built up a position that wont kill me if it goes to 0 although i think that is very unlikely. Now its up to china to execute, how much can they grow GDP over the next decade two decades? There are so many people still poor, so much potential for development and i think the CCP can really do this, with ups and downs. Just own a big strong moaty company in that region, how can it not be worth significantly more with all these tailwinds? Hold it through the ups and downs, regulations will continue but tencent is still rocking, they will still release their games, people will still use wechat, people will still play league of legends, they will continue being a great investor worldwide etc.

Yes because China executes a model that has not been executed in the US but that could end up being superior. Its a real threat, otherwise you wouldnt have had any coverage and constant threatening communication. Nobody cares what some poor peasants in africa do in their countries because they will be economically meaningless. China wont be. And they really are a threat because they are coming to the table with full force and if they continue gaining economic traction, we will fall behind. Yeah thats ought to be expected, just the Temu example shows how disruptive china is. They can seriously mix things up, they are a powerhouse. I think it also depends on your perspective, i think for US investors this feels an edge heavier because the political tensions are severe but cut off from china like with russia is unimaginable lets be serious. It wont ever happen, maybe you will have higher tariffs and blocking of apps etc okay. In case of prosus, do i think the share of tencent they own in their name will be unaccessable? I think thats highly unlikely and id ignore the risk. We will have to live and deal with china, no way around it.

A historic bull market for American businesses while real wealth and wages of American citizens stagnated perfectly coincides. Super high earnings and large buybacks are the opposite of a coin where the workers and average citizens fall behind.

Republicans in the 20th century where actually very much for regulation, they even had slogans against wage slavery, Unions were respected etc. It turned around 180 degree, Bernie Sanders could have easily run as a republican candidate 100 years ago but was called a socialist by many today's republican voters. It doesnt take much, increase funding for public infrastructure, support healthy wage growth (exactly what china is doing, forced wage increases etc), regulate some of the greedy companies that abuse workers and that influence politics too much. Regulate the housing market. The CCP is actually reasonable in many ways they regulate their markets. And of course we need a healthy market, going back to Mao Zedong is bad and the administration knows this 100% i am sure.

I think trump was seen as this sort of saviour for the disenfranchised american that was desperat for REAL CHANGE (where is the change obama)? He did want to implement tariffs etc and was starting to talk to unions, miners etc. But he wont solve it with giving corporations even more free rule because we will end up with the same state as the last decades.

What drove wages in the past and before a "post fordist" capitalism? UNIONS. People of today are mostly atomized, even those sectors that have Unions cant properly fight for better wages (my Uncle works basic construction Job but dropped out because the unions are so useless). If you have no Unions and no pressure for better wages, the corporations can just set wages, especially if you get homeless if you dont work (US). This leads to a growing minimum wage sector (absolutely true for germany and 1/4th of the people gets below 14€ an hour) and little investment from smaller and medium-sized enterprises because they can't compete at all due to lacking demand. Dividends are fat because wages are bad but these dividends mostly get send to few big shareholders. You end up with more and more concentrated markets which have even more bargaining power against higher wages. They influence politics--> And then you have a slow growth, stagnating local economy where the majority of money goes to few owners and a more and more desperate and hopeless population that starts voting right wing. (because all the parties before just executed the neoliberal model). I found this article and i think it sort of describes what i think is happening with western economies: And then you have china, a government that cant be bought, a government that wants REAL big GDP growth, REAL increase in living standards for EVERYONE. colombiaint-15051.pdf

This was a brilliant move by Deng and got China where it is now. Xi never says anywhere that he wants to isolate (see quotes i attached). The economies just have changed so radically that China is not only a manufacturing hub that was able to drive massive expansion of US capital but they are direct competitors and partly even superior. Thats why the tone in relations is changing. Back then we produced our cars in china and sold them our cars. Now they produce their own cars and send them to us and we might even end up producing their cars? Complete change of the reality and thats what Dalio calls changing world order. If i look at the US markets and their administration and at Chinas markets and Chinas administration, i see a LOT of strenght in China. Not saying the US is weak or anything, big amazing businesses, tons of IP and money, technology etc. But its a country id bet on to be a significant player for the future, Xi WANTS China to be a significant player.

I disagree, I think Xi and the administration sees that wages are not growing anymore in the west because the little man gets completely squeezed out by corporations. I said it before: Growing wages for everyone have been the driver of capitalism all along, if profits and wealth gets channeled upwards (which is the case for the whole western hemisphere) you have a small fraction getting richer and richer while the rest stagnates or in a worse case even falls of. The data is clear in my homecountry germany and its true for the US too: 1. Middle class is shrinking 2. Real wages have stagnated more than 20 years, Pie is getting smaller for the majority and larger for the top! 3. Wealth is concentrated in the hands of a few families (45 families owning as much as the bottom 50% in germany) 4. Investment in infrastructure completely lacked, germany doesnt even have a functioning railroad anymore (car industry can lobby political parties): https://www.theguardian.com/world/2018/dec/20/trains-on-time-germans-deutsche-bahn-railway "We are becoming a joke’: Germans turn on Deutsche Bahn 5. Taxes have been severly reduced for high income earners and tax loopholes prevent any taxation of giant wealth piles that do nothing. Its a mess and china doesnt want to end like that.

https://www.scmp.com/news/china/politics/article/3231318/xi-jinping-speech-calling-patience-released-amid-economic-gloom “We should first consider the size of the population and the large rural-urban development gap. We cannot be ambitious and unrealistic, but we cannot simply follow the beaten path,” Xi was quoted as saying by Quishi. “Some developing countries have almost reached the threshold of developed countries in their process of modernisation, but they have fallen into the middle-income trap and been stuck in stagnation for a long time or even backtracked substantially,” Xi said. “One of the reasons is that they have not resolved [social] polarisation and stratification.” Common prosperity – a policy aimed at narrowing the wealth gap – has caused anxiety among entrepreneurs and foreign companies in recent years, but Beijing denies it is seeking to suppress private enterprises. Doesnt sound like a mad men at all, realistic assessment of problems we face also in germany. Also doesnt sound like they wanna leave industrialisation/capitalism. Just that the state has the power and that capital cant just do what it wants.

"A small number of Western politicians and media amplify and hype up the temporary problems existing in China's economic recovery," foreign ministry spokesman Wang Wenbin told media on Wednesday. "They will eventually be slapped in the face by reality," he said.