randomep

This always bothered me. If a regular person swims in coins like that, they would look like one of these people on those 'wear a seatbelt' posters. wear a seatbelt poster?? I don't get it

There's also a big discrepancy in the growth. If you look at the top cities, they're already at over $10,000 GDP per capita and growing very quickly. If you take the ones that are above $10,000, that's still over 210 million people. I don't think looking at China as a whole makes sense. Yes, the poor parts will still be poor in 20 years, but the rich coastal parts will likely be just as rich as developed countries. And the engineers in those areas will likely be just as competent by then. I know I am comparing apples and oranges. So we can nip "china as a WHOLE being like eastern europe" in the bud. If you want to talk about the top 200mil out of 1400 mil.... ok. I just want to clarify. At least this thread may make some people think, it isn't preordained that china will go up and up and when you look at the demographic issues, china has unique demographic problems, as is India, S America, other developing countries (like eastern europe) do not have an achilles heel. So comparing is pointless. The richest 200mil of china, well that's a separate beast. But even then I think they are plateauing. I suspect those 200mil are riding on the backs of those 400+mil who make $2 a day, eg. migrant workers. That is very difference from eastern europe, which is doing it with high tech or other value added industries.

This is definitely not a incentive problem. Command economies would love to throw money at people in specific industries and be world leaders. There have been several location designed to copy silicon valley. Shanghai man, their hi tech area is huge, they run it like a car factory of the 1950s. China does try to specialize in high speed rail I think, but I've heard their trains crash more than most....... think about why tin pot dictators cannot just throw money at their armed forces and be a powerful military threat....

The evidence is solid but the magnitude seems a little disappointing. ~6.7% annual, and the borrow rate on the short side would eat up a significant amount of that, What is the borrow rate? There is no borrowing cost to shorting, I thought.

Eventually...... ya you can say any country can eventually get somewhere, I cannot disprove that. But my spiel was about the earlier poster who says China and other emerging countries can get to $20-25k salary in 20yrs. I'll definitely argue that ain't happening. Now you imply 35yrs is just a short time. Well it really isn't that short. 35yrs after WW2 Japan was the top 2 economies in the world. 20yrs after the fall of the Berlin wall, German is dominating europe economically. Now if you say well china is a much bigger ship than other countries that turned around, well that's exactly my point. China will take much much longer to catch up in a per-capita basis. In 50yrs we'll be dead, and so will much of china's old uneducated masses, THEN it'll be a whole new ballgame. But who knows microchips might be obsolete by then!

I think you are underestimating the impact of immigration, the top 1000 engineers in the US are probably the top most engineers born in the US, China, India, Iran, etc. A professional is judged by the things he is done in an interview. In my field which is chip design, if I went to china I wouldn't be able to fill any of the positions. They are all kids with no experience! If you give them a specific task maybe they can do it. But the most valuable people are those who can find solutions when confronted with a problem. In chip design, people like me are hired as the first person who comes in has finds a solution in a project and build a team around it. The approach in my previous company was to have senior people in USA with support from china. But as my experience showed, they weren't worth the trouble. And there were cases were we actually moved work from China to USA. This is the general experience I feel for the whole company and this is a large company that you've all heard of. In engineer the work is accumulative. We don't work in a vacuum. We stand on the shoulder of giants. That is why in my field the companies are so concentrated. Early on I learned from the senior engineers. And now I am imparting knowledge on others. But these people I worked with in china aren't interested, it is a totally different mindset culture. That fella that I mentioned, he was from the best university in shanghai with a masters. But can I really blame him considering who he has for a manager. There is no positive feedback loop that allows them engineers to get better and better in chip design. In chip design, you can say silicon valley engineers have built the modern x86 processor, they built networking chips, virtually all the chips inside your computer or smartphone. If not then they are built in Europe. So at least in chip design, chinese engineers are good? What have they done? I wouldn't hire them! And so I am giving the rationale that they should get 1/5 or salary. Based on what you said, the labour market is hugely inefficient and companies are not taking advantage of salary arbitrage opportunity. Maybe this is different in rocket design or train design but those require less innovation.

This is why I don't invest in large cap companies. So many small caps have annual reports that can be read quickly. If it's taking me an hour to read an annual report I'm not going to be investing in the company most likely. I've invested in companies where I can read 10 years of financials in an hour. +1

It depends on the size of the company, if it is a popular large cap like AIG, I hardly read 10ks at all. I skimmed through the last 10k a bit. Insurance companies are very tough reading. But it was mostly from reading blogs like seekingalpha, Berkowitz's Faireholm Fund writeup ppt, morningstar evaluations.... There is nothing I can find from 10hrs of reading that others have not found already. especially since it was post-2008

There are huge problems with what you said. China is squeezing the population growth artificially. There isn't enough young growth to fill for the aging. China has to make do with their 20yr and 30yr olds for decades to come. And you know... once a person is 20's they have to make do with whatever education they got, nobody goes back to school at 25. So those hundreds of millions of 20-40 yr olds in china living on $2 a day have very little chance of improving themselves. So that will contradict what the original poster said, $20-25k salary in 20yrs, not when you got hundreds of millions living on $2 a day. The 2nd thing is education. Literacy is a world away from making $20-25k a year. Right now that kind of salary is reserved for the best in engineering classes or whatever other profession. I am in engineering so lets talk about that. How many engineers can a university produce? 100-200 a year? and how many of those type of first rate unversities can you have? 5? 10? in the country? You are talking a few thousand to notch grads capable of making 20-25k. And china cannot build unversities the way they build high rises. And this is not even mentioning the law and risk taking culture that is required for innovation which China is sorely lacking. The same goes for South America, like Brazil. When you imagine in your mind a world where those countries can become like the west, you'll see the numbers just don't add up. The last 10-20 yrs for the brics for example has shown that a bit of progress does not project into indefinite growth. Any reason why a competent engineer in China should always make 25k instead of the 100k+ someone with those credentials makes in the developed world? Oh boy do I ever have reasons. I have worked in companies with cooperative teams in China, Korea, Japan, India and Israel. With China, this is my experience. Suppose another team needs something done ASAP. It is sunday. So I ask the manager in china to get her team to help. She has to have a meeting with me and I have to labouriously explain what needs to be done. Then I have to write a document. By tues they may have some idea we need to do this. By wed we probably have another meeting with some engineers and the manager. And then they start working, on thurs. So say they make 1/5 what we make. What I could do in a week, seems like they can only get started on on Thurs. They got 2 days while I have 5. Already you can see how I can be much more productive. The key is that management thinks that since a woman can have a baby in 9 months. They can hire 9 chinese women to have a baby in 1month. Well, it dont work that way. Any I haven't mentioned the politics aspect. Though the engineers are honest and want to do a good job, the key is who is in charge. I had to deal with a female manager, and to call her stupid is being generous. She is in a software/hardware coding group as a technical manager and she cannot write 5 lines of code if her life depends on it. I think only in china can she get as far as she does. Yes she may make 1/5 my salary but it still makes me resentful that technically she was manager in this project. She is also negating the brains of their team of 10. Another aspect is the innovative culture that only exists in north america. I wrote a piece of code, the key to making our company more efficient is to keep this code for future generations of products. I kept telling people, do not cut and paste it, reuse-it. The risk of reuse is that it might break the current application. Now you have one piece of code for two places. It is safer for the engineer to duplicate it to have two pieces of code for two applications. And that's what he did, I realize no amount of convincing can change that. The engineers are just out to do their job w/o caring about the big picture, why bother, when the manager is incompetent. Believe me, our management would love to ship our jobs to asia or texas or anywhere it is cheaper. But you know what, right now I am in an asian company that has moved their R&D to silicon valley. They must have realized in the end we are a bargain! So in the end it isn't IQ or education or training, or culture alone, it is a combination of all that makes one worth that much.

There are huge problems with what you said. China is squeezing the population growth artificially. There isn't enough young growth to fill for the aging. China has to make do with their 20yr and 30yr olds for decades to come. And you know... once a person is 20's they have to make do with whatever education they got, nobody goes back to school at 25. So those hundreds of millions of 20-40 yr olds in china living on $2 a day have very little chance of improving themselves. So that will contradict what the original poster said, $20-25k salary in 20yrs, not when you got hundreds of millions living on $2 a day. The 2nd thing is education. Literacy is a world away from making $20-25k a year. Right now that kind of salary is reserved for the best in engineering classes or whatever other profession. I am in engineering so lets talk about that. How many engineers can a university produce? 100-200 a year? and how many of those type of first rate unversities can you have? 5? 10? in the country? You are talking a few thousand to notch grads capable of making 20-25k. And china cannot build unversities the way they build high rises. And this is not even mentioning the law and risk taking culture that is required for innovation which China is sorely lacking. The same goes for South America, like Brazil. When you imagine in your mind a world where those countries can become like the west, you'll see the numbers just don't add up. The last 10-20 yrs for the brics for example has shown that a bit of progress does not project into indefinite growth.

Adidas' market cap is ~22B$ vs UA's ~10B$, so even if UA catches up to them, it's not going to get you far. I think it is pretty far fetched to find a stock that makes you rich based on buy and hold right now, given, extended valuations and a pretty extended economic cycle (5 years into a recovery). Once we head into a recession and the market turns down 30% or more and some baby's do get thrown out with the bathwater, things will get easier. Yes I get excited just thinking of that day..... someone once said, you make all your money in the bear market, you just dont realize it at the time. HOWEVER, we can spend our lives waiting for the bear, Warren Buffett has said if he was starting over with 1 million he'd be fully invested.....

Oh while I am not necessarily disagreeing with your argument about resources, I will bet my farm that those 3 regions will not reach $20-25k. The reason is that any country like eastern europe, or russia or japan after second world war have a good chance of taking themselves out of their predicament because their people are educated. Japan by the 70's which is just 25yrs after WW2 already was becoming a modern economic power. Today china is 40 years after Mao and the excesses of communism, and still there are 500mil people living in china on $2 a day! The reason is simply education. Today someone who is 10 yrs old living on $2 a day cannot have a decent education, so when that person is 30yrs in 20yrs time, he will make 20-25k? that would be absurd..... not only is he so poor to get an education, there isn't even enough educated knowledgable teachers to teach peope like him..... The demographics is the achilles heel of all large poor populations, even for the educated there isn't enough high level institutions for them, hence many who have the means will send their children overseas... People have been touting china's potential for the last 20yrs, and yes the Shanghai skyline is impressive, but China is still a land of majority poor. China is yet to make value added products in numbers to even create 100mil $20-25k salary population. I am sure the same factors affect India and South America.

4 ??? holdings??? that's the smallest portfolio I have ever heard of..... I bought New Century Holdings HK (HK:0234), see my writeup: http://bovinebear.blogspot.com/2014/05/why-i-bought-new-century-holdings-hk.html

I can't tell you that, I will only tell you when I have safely bought all that I wanted. What we deal with are so often small cap illiquid stocks.

actually most people on this forum seem to have shorter term strategies. i guess trading is the new holding. I've noticed that too, but berkshire (and Fairfax) is about holding good businesses long term, I wonder how the board members can seem to agree with the logic but don't follow through in their actions.... It's a "value investing" board. Greenblatt and Pabrai don't hold stocks "forever". From my perspective, value investing means fundamental analysis is the most important factor in making an investment decision. The time required for an undervalued stock to reach its intrinsic value can take a while so you're forced to hold a stock for a long while (taxes can be a factor too), but this is just an unfortunate part of life, not an important part of value investing I agree value-investing isn't about holding stocks forever, especially if you want say 20% returns. Almost no stock can return 20% in the long term. So you buy something undervalued and then when it reaches intrinsic value in a reasonable time you move on. Thus achieving very high rates of return. Very high rates of return requires holding for short term. I am sure when Buffett got started in the early 50's his holding time wasn't long either. HOWEVER, you have to have a fundamental long term view of the company you are buying. When I see someone buying an option on this board (no offense plz don't flame me) to magnify returns I really think that is short-termism. Peter Lynch talks about investing for the 10 bagger. But someone here talks about an option returning a 10 bagger. That is totally different. An option has 100% downside which happens often, and sometimes you can go 10 bagger. You buy ten options with one 10 bagger and you virtually have broken even. But that's not what Peter Lynch meant, he invests with little downside and then occasionally hits the ten bagger.

Ok my cognitive dissonance from not realizing this is gone.... I feel much better.....

actually most people on this forum seem to have shorter term strategies. i guess trading is the new holding. I've noticed that too, but berkshire (and Fairfax) is about holding good businesses long term, I wonder how the board members can seem to agree with the logic but don't follow through in their actions....

If I knew I'd be a stockmarket genius.... we're all trying to (blindly) guess what it is , that's what this forum is about.....

I hope none of us gets sued if someone loses his shirt buying or shorting whatever is on this thread........

Plus no invasion of Ukraine after Crimea, russia stocks could go up 50% from here in a year......

There's no way you won't regret it. Is that a faux pas? Is that your subconcious telling me that you are a con???? hmmmmmmm I'm going to level with you, randomep. That's a small trick I've developed over the years to weed out the folks who aren't smart enough to make a killing alongside me in the current market. Unfortunately, some individuals just don't have what it takes. On the other hand, you have just proven that this doesn't apply to you and therefore I'm more than happy to have you sign up for this amazing opportunity. I am not worthy! I was feeling so high from your flattery I read that much before I figured out what you were saying..... Nice try though, made me laugh today

There's no way you won't regret it. Is that a faux pas? Is that your subconcious telling me that you are a con???? hmmmmmmm

WOW someone on this board buys these stocks???

Anyone heard of New Century Group? Looks really underavlued......

+1 WEB is pointing this out at every AGM with the ongoing hedge fof vs s&p index bet. how is that going BTW?