Luke

You know its funny, so many people talk doom and gloom about China, what a shitshow their system is, everybody leaving etc whatever, but on the same time we have massive propaganda against Chinas industrial power, military power etc, concerning this, concerning that. I thought china is so weak? Its obvious that china is not weak at all and are on their way to gain as much and more control than the US had the last 100 years.

So the account itself is free, at least thats what i am able to find but you say for realtimequotes you gotta pay up? I guess for someone who doesnt trade derivatives and makes not too many trades the 125 dollars can be disregarded.

Sold half of my remaining TSMC position, added proceeds to FFH. Now 30% of the portfolio.

Thanks a lot for answering, yeah there are some frictional costs but if you are still having a long investing runway and dont need the money for anything else, holding makes sense with a decent Net worth. I will post more later at home, cheers!

I know we have quite some investors here from Germany, since Germany is not ideal for investing, tax wise, one option is to create a holding that reduces the taxes paid: Essentially reducing the capital gains tax from 26.38% to 1,465% and taxes on dividends from 26.38% to 15.82%. If one swings in and out from positions (like we had with meta), this holding would open up quite a lot of opportunities due to having more capital available due to less taxes paid today. When closing the holding and transferring the equity to one's private wealth, that would then create a tax event, essentially enabling one to defer taxes. It's also possible to pay one's own salary through the holding, so some options of getting cash out without paying too many taxes is there. Anybody here in Germany and ever did this? Annual costs to run this shouldn't be too much, costs can be kept low between 500-2000 € annually as far as I understood.

I think @Viking provided tremendous work on FFH in the Fairfax thread. We also discussed Intrinsic Value in a specific threat there quite recently. Just use the search option

Sold some BRK and Nintendo for FFH

Yeah true, lots of juice left to be squeezed!

The 1.5% fee on deployed capital is annoying to calculate precisely but i guess one can say it eats away 1.5% a year. Then the 20% performance fee eating away 2% of the returns on top. 15% Book value CAGR leading us to something around 11.5% returns? Thats how i understood it more or less.

Have to edit

Noam Chomsky recently stated a nice comment in an interview on this whole war with Russia: "The hypocrisy of the west is astonishing"

I just worry that at a 700b Marketcap, outperforming will get harder and harder for BRK.

Could you share how you calculate the 4.2%. I agree that from 20% CAGR to 12.6% seems very wrong. Writeup is from VIC, the 2017 one i believe.

How do they calculate this 7.4% fee going to Watsa? Seems way too much considering 1.5% fees on equity and 20% performance?

https://www.bloomberg.com/news/articles/2023-07-03/china-to-restrict-exports-of-metals-critical-to-chip-production China imposed restrictions on exporting two metals that are crucial to parts of the semiconductor, telecommunications and electric-vehicle industries in an escalation of the country’s tit-for-tat trade war on technology with the US and Europe.

Recently, we discussed Apples current Valuation and the possible 10 year forward IRR. Since Apple uses the majority of its cash to buy back their own shares instead of giving shareholders the cash via dividends, its an important factor for the returns to be made. Buybacks depend on> 1 Volume, shares able to be bought in the open market 2 Purchase price at depressed valuation or exuberant valuation Since it is difficult to model possible depressed valuations, well known Mr.Bloomstran includes multiple valuations with buybacks at certain level of book value, the lower the price to be purchased the higher the return. Considering a rather illiquid stock with less volume, how do you model buybacks? The new increase in buyers will shoot the stock upwards, buybacks are less effective. The obvious decision then would be to pay dividends,given no other capital allocation options inside the business. Just wondering how the board thinks about modelling them over longer periods. Pabrai once posted this nice graph> How hard does it get at these specific checkpoints? What if the shareholder base left doesnt sell enough? Cheers!

https://www.bloomberg.com/news/articles/2023-06-29/chinese-chipmaker-asks-suppliers-to-buy-back-banned-gear “Machine suppliers should buy back the equipment and components we have purchased legally if we can’t use them,” Yangtze Memory chairman and acting Chief Executive Officer Chen Nanxiang said in a defiant speech at an industry event in Shanghai on Thursday. Tough times ahead!

Who can blame the chinese government for trying to regulate this space. In many ways similar regulations will come in europe for multinationals and its only a good thing. Blaming the CCP for regulating this sector and that that is the reason young people do not have jobs is too simple.

I use the free Microsoft Drive where i store few important documents like contracts etc. Rest is saved on multiple hard drives and physically. I refuse to pay for Cloud Storage when i can also set up my own storage server for cheaper.

Joining you as well. Reduced my Berkshire Position and shifted proceeds into FFH and FIH

+1!!!

Huang also worried that Chinese companies, unable to access US products, would start to build their own chips to rival Nvidia's market-leading chips. "If we are deprived of the Chinese market, we don't have a contingency for that," the Nvidia CEO told FT. Most important of all, according to Huang, blocking the US tech industry's access to China would undermine the Chips Act. If losing the Chinese market, the US tech industry would require one-third less capacity, Huang pointed out. "No one is going to need American fabs, we will be swimming in fabs." https://www.digitimes.com/news/a20230628VL203/us-china-chip-ban-ai-chips-nvidia.html This is getting very tense and interesting.

Just hoping this will balance out eventually:

It wont be solved in the next year but if we look back at our discussion here in a decade, i am quite sure it will look much better. 1. People complain about low wages, expensive tutoring, high living costs. 2. People complain about policies that regulate expensive tutoring companies, low wages by JD (forced increase by government), increase in competitive market to prevent monopolies destroying growth. China never does it right according to the west. Also look at the US, the social isolation, the mental health epidemic, huge student debts and what not. Its just not the full picture and macro orientated. If you believe the government will ruin the country then yeah, sell all china stocks. I dont think their track record shows that though. Regarding US control of employees (https://www.truthdig.com/articles/noam-chomsky-america-has-built-a-global-dystopia/ All of this goes, is moving on to controlling people at work. So by now, there’s the beginning–actually it began in Sweden, but it’s now expanded here–of placing chips in working people with an inducement. If you agree to have a chip inserted then you get, you know, free access to the coffee machine, and you can do all these interesting things, so people do it. But it also controls your actions. Like if you’re in an Amazon warehouse, they already have systems–which is backbreaking work–they’ve worked out the quickest routes between this spot and that spot. And if you’re one of these people racing to try to keep up with a schedule, and you deviate from the route, you get a discredit immediately. You get an instant warning if you take off a little time to say hello to a friend, you get a warning. UPS is using it to control truck drivers. So if you back up when you shouldn’t have, you get a warning. If you stop for a cup of coffee when that wasn’t on your schedule, you get a warning. They’ve, in fact, they claim they’ve increased efficiency; these people internalize all this, and you race to keep to the commands, and they can claim they can now have more deliveries with fewer drivers, and so on. Lots of these things are also happening in China, they are not innocent. The bias against them though is so massive. USA has really good PR, its crumbling though if you actually visit New York. Not looking as good as the pictures. They did a really good job making China look like the devil so i give them that. All these articles with Xi Jinping looking like Hitler in Financial Times, New York Post, any other western big newspaper. U.S. multinationals dominate the world. If they had moved to independent development, we’d see exactly what we’re seeing with China today. It’s moving toward independent development; U.S. is trying to prevent it. The policies, shared bipartisan policies, are to try to prevent Chinese [independent] development. So if China, for example–you know, the mantra is “China’s stealing our jobs.” Is China stealing our jobs? They don’t have a gun to the head of Tim Cook, saying invest here. The U.S. multinationals are losing our jobs. But we don’t want China to develop as an economy. That’s why the bipartisan programs are to prevent China from doing the things that make the economy successful–like industrial policy, to have a state industrial policy. We see that that’s successful; we want them to stop it. Kind of interesting, because that’s–economists and others, if they believe a word they’re saying, ought to be cheering. According to their theories, if the state intervenes in the economy, it’s going to harm the economy. But everyone knows the opposite is true. In fact, we ourselves have a massive state industrial policy. That’s why you have things like computers and the internet and so on, it’s mainly public funding. But we don’t want China to have that, because they’ll be successful, they’ll be out of our control; that we don’t want. That’s what the kind of concern was in the fifties. So I think the imperial model has been very successful. It’s led to a situation in which it’s primarily designed for the benefit of U.S. capital, which has succeeded beyond belief. In some way all of those agendas are good for the big western multinationals but if this continues there will be more decoupling as far as it is possible. The US is already doing it themselves, banning Nvidia GPUs soon. Will only take time when there will be problems with Apple. Will be interesting to see who sides with whom, Chinas economy is strong but not as strong as the US yet.

To me this seems to be just macro noise, we like to point out the flaws and problems with chinas system, but problems with the US are not likely to be discussed. And if they are discussed its foreign propaganda. Talking about chinas structural issures as if the US has none. Talking about china making enemies and the US none? What about crime rates in the US? Extreme gatekeeping for education, gatekeeping to leave an inefficient market system where people live paycheck to paycheck, are more and more burned out, more and more on psychiatric drugs. Corrupt political leadership, sleepy leadership. What about the people leaving the US for Europe? The biggest problem are the birthrates, and I am confident that if a country can bring them up, it's china. They also won't light their economy on fire by getting back to a completely state planned economy and I also dont think that Xi is will fail as a leader.