nsx5200

https://www.wsj.com/world/china/for-chinese-tech-startups-beijing-fills-a-funding-void-left-by-vcs-deeb0e2c?mod=hp_lead_pos8 "A sharp drop in venture-capital funding for Chinese startups is leading Beijing to be more involved in grooming the country’s tech industry, a strategy that threatens to handicap China’s efforts to catch up with Western technologies in the long run." "State-owned companies with minimal tech connections are joining the push. Kweichow Moutai, a leading producer of baijiu, a liquor served at state banquets, and its smaller rival Luzhou Laojiao recently made investments in chip-related companies. " Source from WSJ, a source with known anti-China bias, so calibrate accordingly. A different dynamic than what we in the U.S. are used to, so maybe it's worth taking another look at those state-owned companies that have bond-like qualities, now with a lottery upshot (or unnecessary drag...).

@Luke brought up Duan in the Prosus post as well. It's seems a bit weird to me that he would chose to hold BABA ADR instead of SEHK:9988. Anybody know why?

IMHO, I think the wise investor would/should use it just like any other screener. Also, the game dynamic changes at certain points of the asset class, so unless that investor is smart enough to realize that, that investor may 'flame out', which we've seen with many past 'great' investors. That's the thing about investment incentives, what worked in the past(small sums) might not work in the future(large sums), and some investors can't make that transition.

PPP of Yuan is roughly 4/1, so $200 USD is ~$800 USD parity adjusted. It's not nothing, but it's roughly 1/2 of a U.S. COVID stimulus check. We saw how it boosted the lowest income group to get them to spend here in the U.S. (and China has a lot more lower income people, according to the Gini index). These fussing over the details on pennies and nickels misses the more important point that the CCP(Chinese government) is finally starting to give more attention/weighting to the Chinese economy, which is more important. The CCP's continuing acts of aggresion continues to be troubling, no doubt.

https://www.scmp.com/news/china/politics/article/3280295/china-tries-rally-risk-averse-officials-ignite-economy-promising-tolerate-mistakes "China’s leaders are again seeking to rally risk-averse cadres to the cause of decisive economic action by stressing the need to “get things done” and its tolerance of mistakes in a policy known as the “three exempts”." "The three exempts policy differentiates between “mistakes” made during reforms, suggesting leniency for those stemming from inexperience rather than deliberate violations of discipline; those made in exploration; and those made unintentionally to promote development rather than for personal gain." From the CCP mouth piece newspaper, so calibrate accordingly. It seems like they realize they've gone top-down too much and are trying to swing it back. Hopefully they can place more clear policies for the business in China to operate as well.

https://www.newsweek.com/china-news-hands-out-poverty-payments-1960190 "China is rolling out a subsidy for impoverished citizens[...]" https://www.reuters.com/markets/asia/china-issue-284-bln-sovereign-debt-this-year-help-revive-economy-sources-say-2024-09-26/ "China to issue 1 trillion yuan of special bonds mainly to stimulate consumption-sources" "In addition to the special sovereign debt issuance to support consumption, Chinese authorities also plan to ramp up financial support for small and medium-sized enterprises in phases, such as employment subsidies and tax and fee relief, to reduce their operating costs, the second source said." The effort looks more broad than the one reported by Bloomberg.

I think I ran across that The myth of Chinese overcapacity article, but didn't quite grasp the Lucas paradox, so I dug into it a bit more, and these are my criticisms: - The author of the article has a heavy anti-American, pro-mainland China slant as seen in another one of his article, China’s rise and the Great American Novel: "Chinese Americans understand best how post-9/11 America’s zeitgeist has moved from heartbreak to anxiety to anger to manically unhinged". [Not just any "Chinese", but Mainland Chinese, in particular]: "The interpretive powers of Taiwanese, Hong Kongers, ABCs or some other extraction of the diaspora in America will be refracted at less consequential angles. Only mainlanders can hold a looking glass above America, backlit by the white-hot ambition of 1.4 billion people on the make." - The Lucas paradox is very interesting, but I'm not sure if its validity has withstood the test of time yet, as seen in a more seemingly unbiased analysis of the theory by the IMF, The Paradox of Capital: "Perhaps the Lucas paradox isn't such a paradox if one digs deeper. After all, many developing countries are beset by a variety of problems—inadequate infrastructure, a poorly educated labor force, corruption, and a tendency to default on debt from abroad, among other factors—that reduce the risk-adjusted returns to investment." "An implication of our analysis is that the seemingly perverse flows of capital from poor to rich countries today are not necessarily a sign of inefficiencies in global financial markets. Rather, they may indicate financial and other structural impediments that limit a poor country's ability to absorb foreign capital." Nevertheless, it is an interesting take on the very pro-Mainland China viewpoints that are commonly seen in the reddit forums: https://www.reddit.com/r/Sino/.

I'm in the middle of transitioning to part-time work as well, and have started applying for a HELOC that I plan to to use as a backup. The thing that I find odd is the interest-only option, where you pay only the interest portion when you tap into it. But with a regular HELOC, can't you just continue to tap/roll into it for the principal and interest portion, and essentially turn it into interest only? In regards to simulating it, I think in a different thread, @bargainman posted two links to FIRE-based simulator/calculators that can reflect SWR probabilistically. If you think doing it full time might increase the return rate, you can run A/B test on a small portion of the asset. That way, you can experiment and validate without too much fear you run out of money if the experiment fails. Baby steps... As I think more about Buffet's investments, they're very conservative with bond-like returns but with a lottery for an upside, and that's probably the best way to invest insurance floats as well as money you think you need for retirement.

I have no doubt China has a lot of fine engineers and doctors, and believe their living standards have increased significantly over the decades, albeit a bit more unevenly than even in the US. There are structural issues in China that are concerning, and are solvable, just like similar issues everywhere else in the world, including the US. Before Xi, a lot of people in the States went to China for better opportunities, but from what I can tell, that is no longer the case. So I will let that evidence speak for itself in terms of why people prefer to continue putting money in S&P500 w/ PE or almost 30 vs single digit in China. We can debate all we want (I don't), and just wanted to bring up an article that theorize the underlying mechanisms and causes behind the bundle of issues that China is currently facing. The purpose is really not to make China look bad, but to see if there are valid criticisms that can poke holes in the theory. At the end of the day, it's irrelevant whether we 'win' debates in forums or not, but whether we're right in our thinking that guides our investment decisions. I welcome new data and theories that can add to the knowledge pool, but will refrain from participating in debates that are subjective in nature.

Whenever I travel, especially to different non-US locations, I pay attention to the economic activities, and general living standards. The question I ask myself is, in a Jared Diamond-ish way, is why isn't this more like Europe/US/Korea/Taiwan/etc? The answer is always that the structure is not set up to allow for the people to maximize their capability. In most countries with high living standards, there are mechanisms for the people to feed back to influence the top-level decision making, so the people can essentially create the best environment for their own growth. These structural advantages are present in pretty much all the high-living standard countries, so I think if you buy basket ETFs from these structural advantage countries, you'd probably do just as well as the S&P. It's just that S&P500 gets so much attention is that a lot of innovations still comes from the US. Just look at ETFs, a financial innovation from the US. Think of it as a first-mover advantage that is across many industries. China is no slouch either, their ability to initially clone and eventually innovate is force to be reckoned with, if the CCP can get out of its way.

https://insideevs.com/news/717977/china-byd-ev-sales-struggling/ "The many Chinese EV manufacturers that had previously been reporting consistent growth are now announcing a drop in their sales and revenue, and there’s a price war between local manufacturers that seem to be fighting for buyers." There are some other more recent articles that I ran across that indicates that some Chinese EV manufacturers actually lose money on every EV sold due to this race to the bottom. The Chines EV market is not controlled/restricted by non-Chinese entities, so this is more evidence in support of the previous article. There are similar stories like that for other industries that CCP cares about, like solar panel. In regards to not able to participate in other markets, IMHO, it's a natural and fair reaction to how the CCP mislead foreign companies into believing they have an fair shot at accessing the Chinese market. We've seen many foreign corporations withdraw from the Chinese market once they realized that fair access to the Chinese market is only a myth. We're starting to see failures from these BRI loans, and so the borrowing countries are starting to become a new form of tributary states to the CCP. To the Chinese government's credit, some loans have been renegotiated and partially forgiven. Despite the articles that I posted, I actually have a decent chunk of my holdings in Chinese-based companies, so I'm actually rooting for the Chinese economy(and for the people) to succeed as well. In my naïve mind, everyone in the world, no matter where they are, should have access to the best products and selection, no matter where they're produced. But unfortunately the reality is that other forces are in play, and so we see the type of restrictions and reactions from those forces. It's possible that my view is restricted by the sources, but if you have different view points, it would be good to supply links to the sources that create those view points so proper calibration can be applied. TIA, and I always appreciate a different view point.

Interesting take on the structural economic issues that China's currently facing. https://www.foreignaffairs.com/china/chinas-real-economic-crisis-zongyuan-liu "Despite vehement denials by Beijing, Chinese industrial policy has for decades led to recurring cycles of overcapacity" "In prioritizing industrial output, China’s economic planners assume that Chinese producers will always be able to offload excess supply in the global market and reap cash from foreign sales. In practice, however, they have created vast overinvestment in production across sectors in which the domestic market is already saturated and foreign governments are wary of Chinese supply chain dominance." "A larger problem with China’s reliance on local government to implement industrial policy is that it causes cities and regions across the country to compete in the same sectors rather than complement each other or play to their own strengths." "These dynamics all contribute to a vicious cycle: firms backed by bank loans and local government support must produce nonstop to maintain their cash flow."

It doesn't help when Xi's been getting rid of dissonant voices with his own party(thus government). It's a typical flaw found in a dictatorship structure, as noted in Jared Diamond's "How To Get Rich": "But because Europe in the Renaissance was divided among 2,000 principalities, it was never the case that there was one idiot in command of all Europe who could abolish a whole technology" [Jared was trying to explain why China, back then, with its enormous head-start in different technologies was not able to reach the industrial revolution before Europe]. We know from biology that diversity makes the system more resilient, and having CCP in power, with its tendency to use top-down control makes China less diverse as seen in their policy of forced assimilation of ethnic minorities. We can only hope that the opaque inner Politburo in the CCP has more room for open discussion and dissent.

I think Charlie Munger said something along the lines that the biggest risk is not to be vested in the market (preferably in something like S&P500, with very low frictional cost). There's a video where the only investment choice in DJCO's company retirement plan is in S&P500 index.

@Dinar, great timing on the COKE position. I was looking the recent run-up, but couldn't figure out what the catalyst was for it? Do you have any insights? TIA

Link to search page: https://di.hkex.com.hk/di/NSSrchPerson.aspx?src=MAIN&lang=EN&g_lang=en

That's a very simplistic way of looking at it. Environment and incentives has a way of influencing personal decisions as well. Who doesn't want to be as healthy as possible, and if so, what's stopping them? Economic incentives has a strange way of distorting personal actions. If we invert the problem such that we try to get the worst health outcome possible, what kind of food would we advocate, and what kind of activities would we recommend?

There are many contributors leading to the obesity epidemic. The farming policy that favors big farm, big sugar, big beef is just a part of it. On the guideline side, there's also the USDA, which has a hand in updating the guideline, and influenced by https://en.wikipedia.org/wiki/Regulatory_capture from big farm. The conflict of interest is obvious when you look at the history to add sugar to the US nutritional label. From Nutrition Facts Label "Some of these changes sparked a major debate between the food industry and public health agencies. The proposal to indicate sugar added during food production, particular, was brought forward by the FDA as a measure to counter the increase in per capita sugar consumption in the US, which over the last decades exceeded the limits recommended by scientific institutions and governmental agencies." When the body creating the nutritional label fights scientific data, you know they've been bought off. The nutritional guidelines propagate down to the school lunches, official recommendations taught in school, and in medical education. Ultimately, it goes towards increasing the consumption of processed foods just so the food companies can make a buck. The gist of it is that if most people ate lightly processed foods, most of the food companies will go out of business since their 'value-add' is in the processing. So they've been steering the regulatory bodies towards stuff they can process, most of which are carbs (think snacks, ready-to-eat stuff, etc.). Walk into a typical American grocery store, and you'll find that most of the floor space that sells food is processed carb/sugar related. The TLDR version is that there are certainly some events and people that have been outed as major contributors in the epidemic, but even without them, the market forces for trying to 'add value' to food would've lead to similar situation that we're in right now. So IMHO, it's a bit unfair to point our fingers at them, when we should be focused on fixing the problem (especially the conflict of interest parts in the systems). These topics can go really deep, and would like to see if a tighter integrated health system like the NHS in UK can have a better outcome. That's just my humble observations, others may (and most likely will) have a different viewpoint.

My experience with a stock that's gone way up beyond expectation is to sell off at least a decent portion of it to lock in at least some(or most) of the profit. If you fear the wife factor, keep the remaining unsold portion so even if it goes to 0, you'll still have something to show for it. If it goes to infinity, what you sold will look insignificant No matter what happens, your brain will mark it as a win, and you'll still look wise to your wife no matter what. Good problem to have. We all wish we were in that situation. Thank you for sharing this fun story.

https://www.wsj.com/health/pharma/rivals-emerge-to-ozempic-and-zepboundbut-with-a-lag-60b555bb?mod=WTRN_pos5&cx_testId=3&cx_testVariant=cx_160&cx_artPos=4 "There are dozens of promising biotech companies developing weight-loss drugs. Among the larger drug companies, Amgen AMGN 0.74%increase; green up pointing triangle and Roche stand out at the moment, and Wall Street is giving them some credit for it." That didn't take long...

Just curious, how does volatility factor into your investment strategy?

If you have to rely on getting the growth rate correct within 5%, you're most likely in trouble. It's more important for you to understand the hidden meaning behind those heuristics. Enduring high ROIC/profit margin can imply wide moat. Enduring growth on top of inflation normally imply the market is not fully tapped yet. A company with both characteristics is generally considered a pretty good company. You're better off learning from Li Liu here (https://roiss.substack.com/p/li-lus-investing-masterclass-at-columbia) than from KCM, IMHO.

The type of material that they stuff into the education is absurd as well. When was the last time you needed to know the different mechanism that cell uses to store and use energy, along with all the nomenclature? They force them to memorize these niche information that are useless outside of the intended field, and use the result to rank the kids. Big picture-wise, it's important to know the ideas like scientific method, math up to at least Algebra, etc... At some point, they might as well use something arbitrary like peeing contest to rank the kids (although, the female would be disadvantaged).

https://www.wsj.com/world/china/chinas-politburo-pledges-steps-to-boost-consumer-spending-f18e6a5b "As the recovery has shown signs of slowing this year, China’s central bank has already jumped into the fray, delivering a string of surprise rate cuts last week that amount to the most substantial easing of monetary policy so far this year." "The Politburo’s downbeat tone indicates that more policy support and stimulus could be in the offing." As much as I dislike the CCCP, they are working on the issues, which is good for everyone inside and outside of China.

Bitcoin mining in the states is exploiting a loophole in the uniform billing of electricity in many parts of the states. In other places, where they have time-of-use (TOU), electricity price changes with the supply-demand, so it's actually worth while to shift energy usage towards the cheaper (less demand) part of the day. Many places in the States have fixed pricing that do not change, and only get adjusted periodically, allowing bitcoin miners to leverage the average of the total demand (including the portion that's outside of bitcoin mining), and essentially spread the actual electricity cost to the whole market. This allows for absurd situations like this one: "Bitcoin mines cash in on electricity — by devouring it, selling it, even turning it off — and they cause immense pollution. In many cases, the public pays a price." https://www.nytimes.com/2023/04/09/business/bitcoin-mining-electricity-pollution.html Your premise that bitcoin mining runs off unwanted electricity is mostly false. If I wanted to transact on the bitcoin network, would I put up waiting for several hours until the electricity demand has died down for the transaction to go through? The answer is obviously no. To provide a near real-time network, bitcoin network must consume electricity, no matter what the aggregate electricity demand is. Even if there are spare electricity, there are better ways of utilizing it. Storing it would be the best, but plenty of stuff can utilize spare electricity like hydrogen production. Yes, there are plenty of waste in the system already, but adding in one more unnecessary waste that has no added benefit to society/human kind really doesn't help advance humanity.