UK
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Posts posted by UK
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4 hours ago, Spooky said:
To capitalize on the China growth opportunity I landed somewhere similar to SD - look for investment opportunities / companies in safer jurisdictions that have things China can't acquire or build at home that will benefit greatly from China's growth thus avoiding any CCP risk.
It would be very interesting to know what are those companies? Are they commodity companies or something else?
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I agree China is not the same as US and risks related to government are higher. But not sure if it is only black and white, especially re respect to individual property rights, they still have and produces a lot of billionaires, are they not? Also, while investing, usually you still accept bigger or lesser risk. So it is different, but is the risk is really lower if you invest today in Intel instead of Tencent? Or you invest in smaller companies (or even large) and are being screwed by a management (or majority owners) instead of CCP? Is that somehow better? Destruction of value by management in perfectly fine jurisdictions in largest companies is sometimes quite amazing, just look at things like Bayer's acquisition of Monsanto or Bank of America's of Countrywide. And do you remember circumstances under which BAC acquired Countrywide? It was called shotgun wedding if I recall correctly:), was forced by the government and almost killed the company. Was it uninvestable after that?
Also I would like to ask: If Apple is good enough and safe then? Let say only 1/5 of their sales is China related, so no existential threat, but if you take that out while a company trades at like 40x earnings, I think you can go for a permanent loss of capital situation there also. And in a more nuclear scenarios, Apple is dependable on China for like 4/5 or 2/3 of its manufacturing. So is it investable or not?
Also, because it is related to regulatory risks of a very strong and moaty company in a perfect jurisdiction, I like this example so much, that I will post it perhaps third time:). So forgive me but once again:
"Archie McCardell was named president of the company in 1971. During his tenure, Xerox introduced the Xerox 6500, its first color copier. During McCardell's reign at Xerox, the company announced record revenues, earnings and profits in 1973, 1974, and 1975. John Carrol became a backer, later spreading the company throughout North America.[citation needed] In the mid-1970s, Xerox introduced the "Xerox 9200 Duplicating System". Originally designed to be sold to print shops to increase their productivity, it was twice a fast as the 3600 duplicator at two impressions per second (7200 per hour). It was followed by the 9400, which did auto-duplexing, and then by the 9500, which was which added variable zoom reduction and electronic lightness/darkness control. In a 1975 Super Bowl commercial for the 9200, Xerox debuted an advertising campaign featuring "Brother Dominic", a monk who used the 9200 system to save decades of manual copying. Before it was aired, there was some concern that the commercial would be denounced as blasphemous. However, when the commercial was screened for the Archbishop of New York, he found it amusing and gave it his blessing. Dominic, portrayed by Jack Eagle, became the face of Xerox into the 1980s. Following these years of record profits, in 1975, Xerox resolved an anti-trust suit with the United States Federal Trade Commission (FTC), which at the time was under the direction of Frederic M. Scherer. The Xerox consent decree resulted in the forced licensing of the company's entire patent portfolio, mainly to Japanese competitors. Within four years of the consent decree, Xerox's share of the U.S. copier market dropped from nearly 100% to less than 14%."
It was one of those nifty fifty companies, very expensive at that time (like most US tech companies now) and as you can see, it was killed not even by technological disruption. It was done by a democratic government. How about Xerox shareholders property rights? Are you sure that similar risks today are "virtually non-existent" while investing in some western tech/payment/etc darlings?
Also take for profit education, which is being exterminated now in China, but they were not treated much better in US:
"As for-profit colleges began to falter, for-profit online program managers gained momentum. Under the Obama administration (2009–2017), for-profit colleges received greater scrutiny and negative attention from the U.S. government. State Attorneys General, the media, and scholars also investigated these schools. For-profit school enrollment reached its peak in 2009. Corinthian Colleges and Education Management Corporation (EDMC) faced enrollment declines and major financial trouble in 2014 and 2015. In 2015, Corinthian Colleges filed for bankruptcy. Enrollment at the University of Phoenix chain fell 70% from its peak In 2016, ITT Technical Institute closed, and the US Department of Education stripped ACICS of its accreditation powers. In 2017, the advocacy group the Debt Collective created its own, unofficial "Defense to Repayment App" allowing former students of schools accused of fraud to pursue debt cancellation. In 2017, Harvard Business School professor Clayton Christensen who developed the theory of disruptive innovation, predicted that “50 percent of the 4,000 colleges and universities in the U.S. will be bankrupt in 10 to 15 years.”
So what is risk free? I would argue, that even Coca-cola is not, and its shareholders can be robbed by some kind of sugar tax in the future. But i think it is the wrong question, because the right one, as with all investments, is what risk is already priced in.
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5 hours ago, beerbaron said:
I would say think what is the long term objective of China and how they will want their policies to go with that objective. There is a well documented 50 year plan that aims to put China as the premier economic power by 2048.
After you understand that ask yourself if what we hear contradicts the plan or not.
BeerBaron
https://www.theatlantic.com/international/archive/2017/05/what-china-wants/528561/
If China reaches the first goal— which it is on course to do—the IMF estimates that its economy will be 40 percent larger than that of the U.S. (measured in terms of purchasing power parity). If China meets the second target by 2049, its economy will be triple America's.
What does China’s dramatic transformation mean for the United States and the global balance of power? Singapore’s Lee Kuan Yew, who before his death in 2015 was the world’s premier China-watcher, had a pointed answer about China’s stunning trajectory over the past 40 years: “The size of China’s displacement of the world balance is such that the world must find a new balance. It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.”
Will Xi succeed in growing China sufficiently to displace the U.S. as the world’s top economy and most powerful actor in the Western Pacific? Can he make China great again? It is obvious that there are many ways things could go badly wrong, and these extraordinary ambitions engender skepticism among most observers. But, when the question was put to Lee Kuan Yew, he assessed the odds of success as four chances in five. Neither Lee nor I would bet against Xi. As Lee said, China’s “reawakened sense of destiny is an overpowering force.”
Yet many Americans are still in denial about what China’s transformation from agrarian backwater to “the biggest player in the history of the world” means for the United States.
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14 minutes ago, Gregmal said:
I just try to stick to things that come easy to me. And if they arent easy, things that I understand or can handicap. There's like 8,000 public companies out there that dont have anything to do with China so I dont really see why the average person thinks this is their best playground.
To one his own, I agree and also do not do like zillion things:), also did not owned or even looked at China stocks in the last 20 years before this debacle, except one stock in 2010, but it was a wash:)
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And since question is specifically re CCP, I will repost this chart. Another day read somewhere "No matter how much I disagree with Brussels, I'd sure as rather trust EU over CCP". Now, I live in EU (and am one of the biggest fan on earth of US), but gee, in the last 10 years all EU managed to produce was crisis after crisis: Euro, Brexit, migration, energy policy, etc, while nurtured zero tech champions, now losing EV battery game. China meanwhile went from strength to strength every time and I still should trust EU more? Based on what? Only because it is democracy? Thanks god US has done better and I hope still will do in the future, but only because China's system is different, that does not mean it is necessarily inferior in every way and doomed to fail. It already successfully lasted 50 years.
https://www.nytimes.com/interactive/2018/11/18/world/asia/china-rules.html
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if you can't beat them, join them: https://www.youtube.com/watch?v=DpkCV2Hd62Y
:)))
Seriously thought, I think this is a major opportunity of one in a 10 year kind. I would also agree with Viking, that it is considerably more speculative than investing in similar US companies. But I would argue that a lot of US companies, especially smaller, are more speculative than China big tech companies.
I would answer the question "what causes the fundamental change", that nothing (except maybe for education stocks:)) has changed in big picture in the first place, only valuations, because of this temporary "regulation noise":)
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"The rally is driven less by reflation prospects than a return to the pre-pandemic reality of low interest rates, which leaves no alternative to stocks"
But I would not pay to much attention to such things, better I think, until some real shit hits the fan, just to stay with mostly win-win situations, like BRK:))
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I would ques it is related to this value-growth rotation going on back and forth, which is mostly related to rate expectations, which is mostly related to economy expectations, which is somehow related to maybe delta scare and what not else, and it is only trying to explain past:) and still perhaps nobody on earth knows what will future be:). But I think BRK is quite well positioned, but they are regarded bu market as being more on the short duration side, so lower rate expectations is not as good for BRK valuation (as say for FANGS), but lower valuation is not so bad if BB are going on, so you cannot lose here and god bless BRK BB:)
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The obscure federal regulator that threw a wrench into a $30 billion railroad merger this week could have more in store for the nation’s freight railways—with implications for both business and consumers. Like other federal agencies, the five-member Surface Transportation Board has been tasked by President Biden to root out what it considers to be corporate monopolies that hurt smaller companies and consumers. In a closely watched action, the board in coming months is expected to consider a rule to mandate so-called reciprocal switching, the practice in which railroads can be compelled to share access to their tracks with competitors. That would allow shippers to seek competitive bids for moving freight, which in theory could lower shipping costs and the prices ultimately paid by consumers.
Freight railroads oppose the plan, saying it would be detrimental to their operations and profits. Trucking already serves as a competitive counterweight, they argue. Freight railroads also warn that such a mandate could have unintended consequences, including lower capital investments in infrastructure they are forced to share with rivals.
There are also threats beyond reciprocal shipping. Martin Oberman, who was appointed chairman of the STB by Mr. Biden earlier this year, has also mused about the possibility of the STB moving to regulate storage fees at so-called intermodal railroad terminals—which handle containers across multiple modes of transport, like rails, trucks and ships—to address clogs in the supply chain. Intermodal shipping is currently exempt from STB regulation.
“This is an industry with very few entrants in it, and they tend to be very monopolistic or, at best, duopolistic,” Mr. Oberman said. ”So we just have to live with the existing limited entrants in the field, but at least build in competition where we can.” “The railroad industry is not just about maximizing profits for railroads, it’s also about the public interest in the economy, and the Congress has made that clear,” he said.
Mr. Oberman’s focus on competition and skepticism of some of the railroad industry isn’t a departure from his predecessor, Ann Begeman —but his tone is, said Tony Hatch, a veteran railroad analyst.
Mr. Oberman also established a new passenger rail working group that is preparing to begin enforcing new on-time performance standards beginning next year. Under those rules, which freights, Amtrak, and the government battled over for a decade, freight railroads could face penalties for delaying passenger trains, which run over freight-owned tracks across most of the country. Rulings favorable to passenger railroads in both matters could help make feasible Mr. Biden’s vision of vastly expanding train travel in the country.
Mr. Oberman countered that many of the mergers that consolidated the rail industry 20 years ago included contracts for reciprocal switching among railroads, which have operated without major problems since. “The railroads would prefer that we do nothing ever, except pre-empt everybody else from regulating the railroads,” Mr. Oberman said. “I think the reaction, and I’ve told them, by the way, was way overdone and exaggerated.”
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https://www.wsj.com/articles/how-mixing-hurricanes-with-low-rates-impacts-insurers-11630350607
But there is some rising pressure on recent positive pricing trends for reinsurers, according to industry reviews. A report by brokerage Willis Towers Watson in July said that in the reinsurance market “there are increasing signs of capacity supply outweighing demand. Worries about inflated costs had limited impact on recent renewal pricing, the report said. But the market for alternative capital is booming, with issuance of catastrophe bonds in the second quarter of 2021 outstripping new issuance in 2019, according to Willis. This market tends to be strong when interest rates are low, leading investors to search for alternative forms of yield. Historically this has hit reinsurance pricing through ample supply of funds.
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37 minutes ago, thepupil said:
I actually think we’re a bit fancy bunch, expected to get some shade for my life choices, some mustachians to argue for a 1995 Corolla / Schwinn bike purchased on Craigslist or something.
it’s a bull market when a bunch of value guys are buying year old bimmers and new SUV’s
I used to own old Honda or Nissan, but then changed my mind on this "cigar butt car ownership style" not least due to: https://en.m.wikipedia.org/wiki/Collision_avoidance_system
I don't need or even like any assistance in driving (can even use manual gearbox:)), but this "automatic braking" is really important and it works (have "tried" several times). At night, or if you are distracted, sometimes it just sees and acts faster. It is usual feature for newer (soon will be mandatory for all new cars), but most older-cheaper just do not have it.
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2 hours ago, Parsad said:
The Outback and Forester are great...but we don't have alot of dealer/service support in Vancouver for the brand. Don't know enough about the Q8, but my brother bought a Q7 which is very nice for the family. Cheers!
I am sure Q7 is very nice and good car!
But what else is funny with Q8 is that it shares the same platform with Lamborghini Urus, so one could argue, that Q8 fanciest and most expensive version, which is Q8 RS, is actually cheapest:)). I think it should qualify then for value buy, with approx 50 per cent margin of safety:)))
https://www.hotcars.com/heres-why-the-audi-rs-q8-is-a-better-buy-than-the-lamborghini-urus/
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4 hours ago, LearningMachine said:
How are the the reliability issues with Subarus, e.g. head gasket issues due to the boxer engine, transmission & oil consumption as mileage goes up?
I think, that those issues were related to a very specific engines and years, also boxer diesel, which they already discontinued, but yes I also read that some of their cars from particular years had such issues. Otherwise they are made to be very practical and resilient, dirt proof, etc. But also noisy and very light on materials/fancy/comfort stuff. Probably it is hard not to find similar reliability problem stories with different manufacturers these days, but perhaps then Honda still has very good reputation?
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Subaru Outback or Forester for value, Audi Q8 for growth/quality:)))
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6 hours ago, Spekulatius said:
“Little Miss Sunshine” is similar and also very watchable.
Yes, watched this one twice:)
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10 hours ago, ValueMaven said:
Who made this?? This is awesome - I'm going to frame it!!
It was shamelessly copied (and tweaked a litttle bit) from: https://www.drwealth.com/invest-in-these-3-companies-and-you-pretty-much-own-the-world/
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RE sentiment: https://www.wsj.com/articles/alibabas-u-s-shares-fall-to-lowest-since-2019-as-china-cracks-down-11629240410
Another factor pressuring U.S.-listed Chinese businesses is Afghanistan, said George Ball, chairman at the investment firm Sanders Morris Harris. He said traders worry that China’s potential growing influence might empower the Chinese government to enact even more stringent regulations. “The American inability to deal with the threats in Afghanistan is making traders think that China is going to be all the more stronger,” Mr. Ball said.
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Coronavirus data suggest the U.K. is slowly emerging from the latest wave of the pandemic, even after the government pushed ahead with an almost full reopening of the economy last month. Virus reproduction numbers published on Friday indicate Covid-19 is in retreat in five of England’s seven regions and in the nation as a whole, while the national statistician’s weekly survey showed infection rates broadly stable in England, Wales and Northern Ireland and declining in Scotland.
Dont fight the CCP?
in General Discussion
Posted · Edited by UK
Oh, thanks for reminding these "10 baggers", though I would argue, that they have fucked themselves up well before government came, of course by wonderfully payed "stewards of capital". I was burned so much times (of course self inflicted, in pursuit of "value", usually deep:), so not any governments fault, sometimes they do what they do) by such situations, that I almost forgot some (or maybe do not want to remember?). A lot of situations with utility companies also, especially in EU, water tariffs were changed over night (to a almost no profit), one was nationalized back in my own country (price was calculated based on maybe book value or something:)), or some onerous regulations was introduced on whole sector. If I was forced to name "risk free" (not only from regulations, but also from disruption) company list today, like I said, am not sure I would even put KO in it, surely not V/MA types, but maybe Nestle, Nike and similar. But all of them today trades at least at 25x forward earnings, most more like at 30-40x.