Luca

I recently listened to another podcast looking at why china specifically has been able to catch up with their development compared to other underdeveloped nations, I found an additional interesting commentary, I will link some things I found remarkable: 1. 19th century china perceived themselves superior to the west and ignored the industrial revolution, didnt copy the growth happening in england. 2. Outside spectators often wonder how a communist government was able to make this radical economic move towards industrialization, the important key is that government and capitalism always went hand in hand which makes chinas uprising less surprising. 3. Germany in the 19th century was in a similar situation as china was before it started their industrialization, almost no factories, underdeveloped and mainly agricultural economy. Distance to britain got bigger and bigger and what did they do: Stealing technology, textile machines, railroads, steal production etc. Prussian state sent industrial spies to england to get access to these machines, in around 1870 germans catched up with the british economy. From then they developed their own economic research. 4. China is doing the same as germany did now, combination of legal and illegal industrial copying/stealing by means of: a) Western companies that want to export to china are forced to enter agreements with local chinese companies-->technology transfer. (nobody forces western countries to do that, they could simply not invest into china but if they dont they are losing the scale advantage to competition that does have the chinese market) b) the government in peking coordinates and finances ownership of foreign companies to gain technology knowledge-->invested between 2014-2017 in 175 german companies, majority were car suppliers, alternative engines, energy systems, biomedicine, medical devices. c) the government in peking does not punish industrial espionage in foreign countries, they use every trick, observing phone calls, reading mails, infiltrating computers etc. BUT these tricks are not new, Japan, Taiwan and also southkorea only developed because they used foreign know how. This stealing ends when they reach the technological status of the already developed countries. This is happening now in china--> 2017 they were placed on position 5 in administrating patents with the EU, behind the US, Germany, Japan and France. In order to develop their country and catch up, the local economy HAS to deliver and export to the world market because local demand ist too little that industrial companies would be worth it. China targeted on exports which lead to huge trade surpluses. Normally the chinese yuan would have gotten huge currency upgrades because chinese goods where in such high demand but that would have lead to price increases in these goods so the chinese government artificially pushed the yuan down and bought USD and invested these into US treasury bills. The opposite side of this export surplus was that chinese goods became to cheap and they financed american consumption. They cant sell their USD and treasury bills without losses due to the size. Instead of doing the old strategy china now bets on buying factories in foreign countries and building infrastructure->silk road. Goal of the silk road is of course to increase trade with wealthy country with buying power. Banning semiconductor devices in china is actually leading to more chinese independence because previously they were disfavoured due to the edge nvidia and co still have, local companies will have bigger RnD budgets and more customers->better development.

From an Investors Standpoint the US has rights that are far superior, regulation far more lenient etc. Their businesses are super dominant globally, many still side with the US. So understandable people exiting China.

It's also so strange to hear the US government talk about the strength of their system, freedom and democracy while their OWN universities conducted studies (I shared research from princeton university) that showed that the opinion of the majority does not influence the direction of where the US will develop. There is a serious amount of people not voting in the US: Maybe because it doesn't matter what they vote for, their opinions don't matter? Is china so bad because you cant vote but meanwhile you can vote in the US but it doesnt matter one bit? I wonder what chinese secret service knows about the US, hard to see the full picture. Is china better? Hard to say, certainly both countries have their fingers dirty and are fighting for ressources.

Worth to think about: https://link.springer.com/chapter/10.1057/9781137028303_3 Ha-Joon Chang enlists economic history to mount a provocative critique of the “Washington Consensus” — the standard set of policy recommendations that aim to promote economic development in poor countries. According to the consensus, developing countries should adopt a set of “good policies” and “good institutions” to improve their economic performance. The good policies include stable macroeconomic policies, a liberal trade and investment regime, and privatization and deregulation. The good institutions include democratic government, protection of property rights (including intellectual property), an independent central bank, and transparent corporate governance institutions and financial establishments. These policies have been embraced by the World Bank, the International Monetary Fund, and many mainstream economists, hence the term Washington Consensus. Chang highlights the paradox that many of today’s high income countries did not pursue such policies when they were climbing the economic ladder of success in the nineteenth century. Rather, these countries implemented high tariffs and sectoral industrial policies, lagged in the introduction of democratic reforms, stole industrial technologies from one another, did not have independent central banks, and so forth. Therefore, in Chang’s view, developed countries are hypocritical when they seek to deny developing countries access to these same policy tools and when they urge them to adopt democratic reforms and protect intellectual property. Chang, who is Assistant Director of Development Studies at the University of Cambridge (UK), divides his slim book into four chapters. Each chapter focuses on the policies pursued a century ago by the leading rich countries of today (Britain, United States, Germany, Japan, and other European countries) and compares those policies to the ones that developing countries are urged to adopt the Washington Consensus. Chapter One introduces the book and asks “How Did the Rich Countries Really Become Rich?” Chapter Two looks at trade and industrial policies designed to allow developing countries to “catch up” with industrial countries. Chapter Three focuses on institutions and good governance. Chapter Four concludes with lessons from the past. https://en.wikipedia.org/wiki/Ha-Joon_Chang

Yep!

Pretty bullish sign for all of us

The new rule is primarily aimed at combating online fraud but it will impact on all apps in China, he said. I don't think regulations will ever be over, will just continue to be monitored and interfered with. China is now tight on track with their regulation of tech etc.

Incredible Movie, beware sensitive Viewer! I recommend watching in the original language german with englisch subtitles.

I thought Amazon but no.

Great watch too!

*Posted into the Taiwan thread

Great Watch, highly recommended! Brutal and with good commentary.

xD Correct!

Wrong! I give you a hint:

Peak comedy is the english /China thread on reddit. 95% westerners talking about why China is such a horrible country, why it will fail etc. Its becoming some kind of doom porn for average westerners that have to cope with their own shitty living situation with fantasizing many people in a foreign country being worse off then they are. Whatever you search on the internet now with china, most of it is in a negative light, if there is something positive, its called off as propaganda and people will make the expected comments... Youth unemployment in China is at 20%-->Horrible, country will go back to 0 Youth unemployment in sweden as of today: 25%--> Nobody cares Buddy of mine was at my place last days and visited, we also had the china talk, i made some positive comments about the country, how I am impressed by their developments, level of technology, quality of businesses and even some political interventions that are miles smarter than what my home country has ever done. I received the immediate back lash about the danger of china, the concentration camps etc, basically the only thing we hear in german media as expected... I asked him about one positive thing that he can say about china and that question shocked him

Added to Nintendo and Texas Instruments

Yep, friends of mine who also invest say they don't and cant understand insurance (fair enough, its a blackbox) and the history doesn't look appealing to them which stops them from digging deeper. I shared a lot of things from the board, but skepticism is strong against future underwriting (climate change), they still think rates will come down hard soon and that the interest income leg will fall away for fairfax (they know they locked in rates but are still skeptical)+their equity portfolio is not something where one immediately sees value. Hence the opportunity.

That's absolutely not how we did it, we did not apply some generic PE. We looked at the current earnings for each partially owned business to calculate the earnings for the stock portfolio. Then we looked at the approximate earnings yield of Berkshire with adding those earnings to it. Your statement makes no sense! Yes, makes sense, around that number and i believe you are right with the dividends and taxes!

≡ AAPL - Apple Inc. 46.44 Add 2.28% 915,560,382 $164.90 $150,975,908,000 $182.00 30x earnings ≡ BAC - Bank of America Corp. 9.09 Add 2.25% 1,032,852,006 $28.60 $29,539,568,000 $31.31 10x earnings ≡ AXP - American Express 7.69 151,610,700 $164.95 $25,008,185,000 $165.37 17x earnings ≡ KO - Coca Cola Co. 7.63 400,000,000 $62.03 $24,812,002,000 $60.72 25x earnings ≡ CVX - Chevron Corp. 6.65 Reduce 18.76% 132,407,595 $163.16 $21,603,624,000 $159.29 10x earnings ≡ OXY - Occidental Petroleum 4.07 Add 8.93% 211,707,119 $62.43 $13,216,875,000 $63.51 10x earnings ≡ KHC - Kraft Heinz Co. 3.87 325,634,818 $38.67 $12,592,298,000 $35.28 14x earnings ≡ MCO - Moody's Corp. 2.32 24,669,778 $306.02 $7,549,445,000 $340.06 43x earnings ≡ ATVI - Activision Blizzard Inc. 1.30 Reduce 6.22% 49,439,781 $85.59 $4,231,550,000 $91.59 33x earnings ≡ HPQ - HP Inc. 1.09 Add 15.77% 120,952,818 $29.35 $3,549,965,000 $32.43 12x earnings 90% of the public portfolio is valued at around an average of 20x earnings. Not including undisclosed stocks. Id say its fair to say earnings yield of the portfolio incl undisclosed assets is 15-20b. So at 55b-60b a year->13-14x earnings Still a really good play compared to the market.

Conference Call Q2 FFH.pdf

Got it

Isnt he basically saying they expect book value to compound at around 18% from that value?

Added to FFH via gettex

Very nice numbers guys!