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yudeng2004

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Everything posted by yudeng2004

  1. Check out the Investment Ideas board I started a LeapFrog thread there.
  2. The Bezos effect - it's puzzling isn't it, considering that great value stocks today actually have growth, and often GREATER growth than the bubble stocks. I think if someone is crazy enough to pay 100 PE for 50% growth, and say 5-10 PE for 0-10% growth, then it's understandable to some extent. But when they pay 500-1000 PE for 8-30% growth, and 5-20 PE for 20-40% growth. That's when I check if I accidentally took some pills or something. So they want to pay MORE for LESS growth in earnings?? Anyways we probably will get that blow-off-top then our opportunities will emerge. Netflix may move to 210 simply because everyone is looking at it and says "It's in a perfect Pennant Formation!" and it will be a self-created reality. I see a lot of people out there who are saying they will buy Netflix until 200-220 then they'll short it because of the Pennant Formation -> Blow Off Top -> Crash pattern. And it may actually happen because they all believe it.
  3. I noticed some patterns in this current market sentiment, and found it kind of interesting: Look at these particular names and how similar their financial profiles are: Apple (AAPL) - huge cash pile, 8x PE after net cash, low debt, STILL has growth left since the smartphone market itself is not done growing, CRASHED after earnings. Baidu (BIDU) - huge cash pile, 18x PE after net cash, low debt, grew revenue 40% latest quarter, and China's internet penetration is still only at 42%, and search is still by its nature a very wide-moat business, CRASHED after earnings. LeapFrog(LF) - huge cash pile, 4.5x PE after net cash at end of Q1 2013, still the leader in the growing children's tablet market and won more toy awards this year than Mattel/Hasbro/VTech combined, CRASHED after earnings. Notice how the above companies' financial profiles are still insanely good but their growth prospects went from "HOT" to "Decent" but is no longer at the forefront of a "Paradigm Shift". Then take a look at these companies: Netflix(NFLX) - huge debt with boatloads of off-balance-sheet content obligations, creating their own VERY expensive shows (which is a hit-based business), top-line growth actually not that great. LOW return on equity/assets. Amazon(AMZN) - low margin, and actually LESS than 25% growth and slowing, HUGE capital expenditures, low return on equity/assets SalesForce(CRM) - has growth, but it's very expensive growth at the expense of income. But these companies all scream "Paradigm Shift" and now really reminds me of the Internet Bubble craze where no price was too dear to pay for the changing nature of business models. Do you guys feel the market is behaving like VC's right now? They want companies to spend, spend, and spend more to catch the "Paradigm Shifts" and the price paid does not matter. The ironic part is the companies in good financial shape still have decent growth prospects ahead of them, just without the "Paradigm Shift" label. BIDU had more revenue growth rate than Amazon, Netflix, and SalesForce. The capital flows of this market is turning increasingly speculative. It thinks one group of companies is taking over the world, and the other group will soon die. Of course, this trend might diverge further but I think the current state is the most divergent we have seen in years. It'll be interesting to see how much further the divergence will continue!
  4. We all decide at some point to sell portions or all of a particular position in our portfolios, I am curious what thought process you all go through when deciding to do this? Is it purely a fundamental decision for you, or do you look at market factors/events, trends, or a balance of these factors? Here are some scenarios that I have experienced and I'll explain my thought process at the time, and I hope to get your answers as well: 1) [The stock I hold is near 90% intrinsic value, and I have not found other alternatives: case a): market is undervalued or fairvalued: I hold the position and do not increase cash. case b): market is overvalued: I should sell but I still hold most of the time, since the stock has not exceeded fair value (this always bites me). 2) The stock I hold is overvalued: I always sell regardless of market conditions/other factors. 3) The stock I hold is undervalued, but there is a huge looming macro problem such as Europe mess: I sell a portion and buy some hedges. 4) The stock I hold has had a huge run, but it is still undervalued:I don't sell since it is still undervalued even though pull-back is 90% likely (I look back and it seems after huge run-ups it nearly always good to sell, this always bitse me too) 5) The stock I hold is at 70% intrinsic value, I find another stock at 40% intrinsic value. Even tho I should sell here and switch even after tax considerations, I find myself lazy sometimes and do not do this nearly as often as I should. Any other scenerios you think of would be welcome in this thread. I am asking this question because between macro events, fundamental analysis, and also trends(run-ups), I find myself trying to juggle these factors and I wonder if any of you do this or not, and what is the thought process you use when you make a sell decision under various scenarios?
  5. The first person that came in mind for me was also Elon Musk, but I think he leans probably even more toward the revolutionary side of things, and is less pragmatic than Steve Jobs. I think Elon Musk will be more like Nicolas Tesla than Thomas Edison. If you look at the Tesla cars, they are niche items and the sports car is priced too low. He is not making a margin on these products, yet they have limited production and their novelty should allow them to command a higher price (their customers are super rich anyhow, also helps with a premium image). But Musk wants to become the next GM while his products are entirely geared toward the niche, yet he is not commanding a high margin. I don't know how he will reach his goals this way. I remember someone telling me that if you want to create a great company you have to either be "the best"(apple, farrari, etc commands premium pricing) or "the standard" (microsoft, toyota). Musk is trying to reach mass audience with "the best" products among electric vehicles, and he is not commanding a premium pricing. He is in weird position.
  6. I want to hang this on my wall. This is THE key to doing things successfully if you have vision. But there is another under appreciated aspect of this - that some cultures tolerate this behavior more than others. I have ran teams both in China and US, and believe it or not, I have an EASIER time to tell others that their ideas suck in the US. In China, I can just feel in the air that people there RESENT the fact that you could have more insight/is smarter/more talented. I call it "psychological communism". If you think about it, after so many centuries of political suppression in China, they developed this psychology "it's not that anyone is smarter than anyone else, it's just some have higher socioeconomic status because of their political status". Which is TRUE in China even today. But the problem is that they also believe in the reverse "If everyone has the same political status, then everyone will have the same socioeconomic status" which is NOT TRUE. It is still more effective to use political authority in China than to use intellectual/spiritual authority. The psychological shackles and cultural burdens there still exist. In US I would say "I get to decide this cuz I know more than you" because this is an easier sell. In China I would say "I get to decide this cuz am the boss" because this is an easier sell. This is why China won't be able to create an Apple like company for a long long time, geniuses simply have no place there, and even if you are a genius, you would spend most of your time trying to fight for political positions as opposed to trying to create great products.
  7. Hi, I am glad to finally get back to focusing on investing after these years of entreprenuership.
  8. Apple won't slow down immediately, but they are much more likely to miss the next round of innovation without steve jobs. He is a very unique person who has the ability to mold together consumer fashion, art, technological trend, marketing methods all together. This combination of abilities was something he has always had, even when he was young, so I think for someone to fill that shoe is really hard. There maybe people out there who might have some of those qualities, but unlikely all of them - steve jobs is a product of chance too. He is kind of like Michael Jordan - the most gifted natural athlete, the hardest worker, the most ambition to win, the most clutch, the most skilled (lowest turnover ratio despite highest usage rate for some seasons). If you had any 2 of these qualities you would be an all-star; if you had 3 you would be considered a top 5 player in the league at any given period; If you had 4 you would be in the hall of fame; if you had them all you would become a legend. This is how Steve Jobs is - a combination of qualities that have a very small chance of coming together on a single individual. It just doesn't happen that often.
  9. Great article Cardboard, there are other factors to consider for this particular trip: http://www.guardian.co.uk/uk/2011/sep/24/scott-antarctic-lies-race-pole?newsfeed=true It mentioned that Scott also wanted to do more than just go to the pole, he had plans to collect a bunch of natural specimen for research, and those made his mission a lot more complicated. Scott also wanted to find out whether mechanical/horse/dogs were more effective so he was testing all 3, whereas Admunson basically just used dogs and didn't think about much else. I think this is true in investing as well - a few weeks ago I was discussing with a friend about shorting Europe. He started to ask questions like "it would be interesting to know if Europe falls more than America or emerging markets", or "We should care if emerging market falls more than commodities", or "what is the equivalent event in history and how did that unfold?" He is a naturally more scientific and more curious fellow than I am, and we started to do that kind of research but it sidetracked us from just doing the simple - short some indices. We made about 5% return on portfolio instead of the 15-20% if we just executed the most simple plan. At the end I think the lesson is "is your priority to make money or write a book?" I also found out at the end that our reactions to what had happened was very very very different. My reaction was "I cannot darn believe we didn't make as much, that pisses me off so much, it was so clear Europe was going to fall". His reaction was "There will always be plenty of opportunities, at least we found out which theory was correct". I was even more pissed at his reaction than losing potential profits. That to me was even more surprising. I guess it kind of tells you what each person really cares about. So I think the key here is that if your priority is results, then make sure that never falls off the priority list. There are always a bunch of other stuff that can distract from it - theory, intellectual exercises, curiosity, or sometimes, loyalty to a particular intellectual framework. So another lesson from the Scott vs Admunson trip would be this: just get your results and don't apologize.
  10. With all these theories, there are probably ways to just test this. The result of which could have significant ramifications for how you price things in a movie theatre. Munger has read "the plex" and should really advocate the data-driven optimization approach Google uses to gain insights into how things work. That being said, data mining cannot replace intuition, but still, more tools are available to verify theories today than any point in history.
  11. The part I never understood was while many accuse Microsoft of monopolistic practices, in the book "founders at work" the firefox founder said he was not at all intimidated by Microsoft, and he just decided he could make a better browser. To him, Microsoft was driven by competition, not innovation, and that makes them a lot less scary than people who were driven by innovation. It didn't seem microsoft was able to stop Firefox from being developed. Some genius had the gut to develop this thing, and Microsoft had no ability to prevent him from doing so. Also, what did Microsoft do to stop Google from making a page-rank based search engine? Again, the Google founders didn't say, oh my god Microsoft is out there, let's not do research on internet search algorithms. Same with apple, when they decided to dominate mobile devices, Microsoft could do nothing to stop them. Plus, microsoft STILL HAS A MONOPOLY on PC operating systems. It's just the PC is less relevant than it was before, and Microsoft, in their vigiliant pursuit to protect their existing businesses, became a lot less focused on innovation. I don't get how Microsoft delayed any of these other businesses from dominating their current markets, they merely prevented people from dominating Windows and Office, which are in many ways superior products to their competition. There seems to be the belief that in tech someone like Microsoft can do a lot to prevent innovation, which is very ironic because other company's innovation are clobbering them now. When faced against real innovation, the result has been that innovation won. This has been the cycle for many decades, and doesn't just apply to Microsoft. There are plenty of potential "google killers" out there laboring on front of their terminals. Google can do nothing to stop it.
  12. hrm, but microsoft is a software company, has always been one. Apple was revived because apple went back to what apple was about, it went back to its roots, which was making revoluationary, easy-to-use, seemlessly-integrated hardware+software products. the common theme in this thread seems to be what microsoft should be doing with its CASH, but seems to overlook the fact that its most important assets are its employees and its customer base, just like most software and tech companies. Microsoft has losts its focus on making it a place where passionate software developers wants to come to change the world through software, and really stopped focusing on the user experience. That could explain most of its failures imo. I left microsoft, and many of my friends left microsoft, because the place does not have that vibe anymore. If you ask me whether making 20%/year is more exciting or seeing the result of my work be used by many people is more exciting, it most definitely is the latter for me. Microsoft's first priority should be to gain its mojo back, and become a place where passionate developers want to go work at to create great products for its huge customer base. If it doesn't do that, it will fail slowly. To become a conglomerate and putting capital allocation first, sends such a crappy message to its developer employees. It tells them that the company now cares more about capital allocation than developing great products. I remember one of Ballmer's internal emails that started with something like "as a public company, we first and foremost have a duty to our shareholders..." or along these lines. That did not motivate me at all, I would have been 100x more motivated if he said "as a Products company, our first and foremost duty is to our users". Microsoft needs to pay more attention to its users, then employees, not its shareholders first. That's my 2c on it.
  13. Einhorn's problem is that he thinks Ballmer is not in the same weight class as Jobs or the Google top brass etc, but he doesn't name any ALTERNATIVES。 Just because Jobs/Google guys beat Microsoft (and everyone else) in their respective areas, does this make Ballmer a BAD CEO? I have my own reasons for believing why Ballmer is a bad CEO but firing him is not necessarily the best course of action unless you have a replacement that is certain to be better. Ballmer is bad because he has no vision, unlike BillG. His problem is that his entire strategy for new product areas is look at what your competitor does that gets hot, then copy it, but he doesn't even know how to put himself in the best position to acheive that, unlike BillG. BillG always liked tablets, he was constantly talking about tablets back in the day. Ballmer is too MBAish. He is just not in the same weight class as BillG/Jobs etc.
  14. I think the most interesting aspect is the debate on philosophy: 1) is it worth risking derailing 20-100 students' lives by 2 years, to have the chance to find 1 zuckerberg. Does creating 1 revolutionary company make it OK to risk the lives of many students by 2 years? 2) should the management of risk for EACH and EVERY student be the top priority, versus the outcome of having a rare success. I personally think 1) is better for society in terms of net-net, since it most closely resembles how innovative processes work, with lots of failed endeavors and very few successes. but 2) is better for each individual measured in TERMS OF RISK REDUCTION. If a society were to maximize risk reduction for every member, it would be pretty bad for progress. I think the hero-worshipping and risk-taking culture of Silicon Valley, is still more preferable to the alternatives. Lots of failure is the mother of success. Lots of my Ivy League classmates believe that because they have an Ivy League degree, it somehow entitles them to some high paying job. People should get paid the value they provide, nothing more or less. If silicon valley does indeed have a bubble, then it is one of the better kind: in which new industries are born and better technologies and products are invented and brought to the mainstream. This contrasts with the college bubble: in which you produce and army of people who think the world owes them something. we cannot get rid of bubbles, but we can do a better job of making sure that bubbles produce more useful long term assets than liabilities.
  15. Actually if I were to think from Li's or Klarman's point of view - that of a very capable hedge fund manager - there are as many good reasons to not do this job as there are taking it. The job itself would be essentially similar to managing a very large hedge fund portfolio but there are some cons: 1) You kind of have to follow the culture of Berkshire precisely, which may or may not be comfortable to you. 2) You do well, people expect it. You do less than well, people really turn on you. 3) You are going to be judged not only based on your performance but also having high character and a clean personal life. And this bothers some people who just treat investing as a job and nothing holy. 4) You are going to make less than you would staying as a hedge fund manager, and you are already rich so you don't really need another job. I think this automatically rules out people who are managing multi-billions as there is no way the pay can be even remotely close to managing a multi-billion fund. I can understand if some guy is really rich and can take a 30% pay cut, but if you are going to take say a 50-90% pay cut I think that is very hard to swallow. So this means choosing some guy who is very able but not managing such a huge amount right now, and Berkshire is a step-up for their career. I think when faced with personal decisions like this, it is simply that the pros must outweigh the cons to you personally. These people who Buffett considered have not been his lifelong partners like Munger. They are really just there to do a job, granted a very unique one the privilege of which few others can offer. But none of these people need the money and they have a lot more choices than we do in life. Ever since I earned enough to retire, whenever I consider something to do in life, my priorities are generally: 1) personal freedom > 2) privilege and long-term opportunity > 3) money If you had hundreds of millions or billions of dollars, and already work in an environment that you created for yourself, would you work for ANYBODY AGAIN? These are the kind of choice these people face.
  16. If you have a good way to handle the situation outlined I am all ears. The risks you don't consider would end up killing you even if you do not use a model to do allocation, since you are subject to them as long as you bought stock. For every security you buy, you are implicitly making a statement about the downside, upside, and expressing some form of confidence in it. The question is when you have multiple choices, what are good techniques you would use to decide how much to put into each choice? It would be immensely helpful to know how you approached this. For example with Buffett and Korean stocks - he got a basket of them trading at PE of 2-5 and didn't know much about them individually, but that basket did well overall for him. Just because North Korea might attack South Korea(a risk Buffett acknowledged) it still didn't stop him from committing some money. The situation with the Korean stocks was that if North attacked, they would all tank pretty much close to 0. If North did not attack, then they would no longer remain cheap and probably can go up 100-200%. I doubt anyone can really know the chance that North Korea will attack South Korea, but I guess Buffett assumed it was small. The main question is how many % of your portfolio would you put into the Korean stocks if you were in Buffett's shoes? The answer would be a combination of: 1) depends on how comfortable you feel about the Korean situation 2) depends on what your other choices are, and their respective upside/downside/confidence level That's what I am curious about - how people handle allocation so I can do it better. The Kelly Criterion comes into play for us, but it's the last thing we do. It's far more important to understand all aspects of risk. Some risks can be ignored if you like because they may have little relevance to asset allocation, for example, asteroid strike. However, nuclear war is one thing we take into consideration. We have a moderate position in a New Zealand company mainly to help provide a new start if we should flee there if a big war looms. New Zealand would probably be about the safest place to be in that unfortunate event. First degree relatives in our core family have unmortgaged houses. That gives a lot of comfort, especially to the members of the gentler sex. We have zero debt. That's a good way to be, less worry, better sleep. So we build a base of prudent security first, and then it doesn't seem quite so risky to put a third or half of one's investable assets into a really good idea if one thoroughly understands it and the idea is much better than anything else that's well understood. When we have an investment, there is a continual process of calculating and recalculating the estimated weighted probabilities of how the investment will do. This is a Bayesian analysis. It's not perfect, but the ongoing process helps keep the evaluation objective as new information appears and is evaluated. It's much easier to do this with a concentrated portfolio than with a widely diversified portfolio, and the returns will be much better if well executed than with a large portfolio that will be subject to "diworseification". :) You are right, a model cannot substitute good research and stock selection. I mentioned using a model because allocation was the part I struggled with after I had already done my research. Even without paying much attention to allocation, I have already done very well the past few years, and that's from research and calculating risks. But understanding the problem of allocation can improve upon that performance. An allocation model can never be the primary driver of an investment strategy and definitely cannot replace research or even diminish its role - but I think it has its place in an investment strategy. It is a facilitator. Allocation also forces you to re-balance your portfolio after certain positions get very very large - and this is consistent with margin of safety because once the price increases, your margin of safety decreases, so you should be lightening up at some point. Of course with market momentums you should "let a stock run" to get the best results, but I am sure a good allocation model can account for this. Essentially, something has to be in place that forces you to switch a portion or all of your 20% undervalued stock into your 50% undervalued stock after tax considerations, momentum, risk factors, and whatever other factors u wish to consider. And this model also forces you to examine all of your positions simultaneously with rigor. But I suppose this entire exercise is a reflection of my doubt that "buy undervalued security, hold it, and sell it at 80-90% intrinsic value" is really the best one can do. And I have always had trouble dealing with these things just by reacting to them - there has to be a plan.
  17. If you have a good way to handle the situation outlined I am all ears. The risks you don't consider would end up killing you even if you do not use a model to do allocation, since you are subject to them as long as you bought stock. For every security you buy, you are implicitly making a statement about the downside, upside, and expressing some form of confidence in it. The question is when you have multiple choices, what are good techniques you would use to decide how much to put into each choice? It would be immensely helpful to know how you approached this. For example with Buffett and Korean stocks - he got a basket of them trading at PE of 2-5 and didn't know much about them individually, but that basket did well overall for him. Just because North Korea might attack South Korea(a risk Buffett acknowledged) it still didn't stop him from committing some money. The situation with the Korean stocks was that if North attacked, they would all tank pretty much close to 0. If North did not attack, then they would no longer remain cheap and probably can go up 100-200%. I doubt anyone can really know the chance that North Korea will attack South Korea, but I guess Buffett assumed it was small. The main question is how many % of your portfolio would you put into the Korean stocks if you were in Buffett's shoes? The answer would be a combination of: 1) depends on how comfortable you feel about the Korean situation 2) depends on what your other choices are, and their respective upside/downside/confidence level That's what I am curious about - how people handle allocation so I can do it better.
  18. Well, this is expected return but I don't think anyone would put 100% into a situation where there is possibility for 80% loss and say that is reasonable. So that's my main point, that you can't use expected return only and put every egg in a single basket based on that. You have choices, and you may put more of your portfolio into B than A or C. In a realistic optimal allocation scenario, not only do you have to get returns but also guard against the small chance of large losses. Expected return, like using average volatility, or using standard deviation, do not guard against the rare cases of large unexpected losses. So to have a realistic allocation, expected return can only be PART of the consideration. With regard to how do you get to confidence levels - well you are doing this even if you are not using a model. When you put a large part of your portfolio into a security, that implicitly means you must have high confidence for that security. So this model does not really help you with that, it merely takes the confidence level that you already have made a judgement on. There is of course the prudent action of doing more research to increase your confidence level in a security, but that's something you should be doing and not the model. I want to be clear that when I made this scenario, I assumed you only would be thinking about this scenario if you have already done your homework on your risk and return. This is a mental model that is a tool to help you with the next step - how to allocate. So faced with this scenario, how would you guys allocate your capital?
  19. So I had been thinking about this problem for a long time - that if you had 3 variables defined for a set of securities - downside, upside, and odds(confidence), you should be able to figure out how many % of your portfolio to put into each. For example - say I have 3 securities: A - downside 20%, upside 100%, confidence 90% B - downside 80%, upside 600%, confidence 70% C - downside 50%, upside 300%, confidence 75% I am by nature a doubter of using models to describe a situation but in the recent couple years I had a gut feeling that models can help you create a trading plan and do execution a lot better. I know the Kelly Criterion as it applies to single bets, and making these single bets continuously. But we are talking about allocation in a portfolio, so we are really making simultaneous bets. I don't exactly know how the above situation can be described as beautifully as the Kelly Criterion as it applies to single bets, but I tempered around with some optimization models and I did some backtesting, which basically have produced more consistent, better returns than I have achieved and it did so with better diversification. Does anyone know of a good way to describe the above situation? As I feel that covers the essence of what I am trying to do - reducing risk and increasing return. I never really doubted my ability to find good values consistently and my ability to make the odds, but where I usually fail is in how much to bet while facing a myriad of choices. I also fail because I refuse to sell a stock that has run up, but has not reached intrinsic value, while other more undervalued stocks are available. So I decided to create a framework that enforces me create more disciplined trading plans. I would appreciate anyone's thoughts on this subject!
  20. For what it is worth, this is a page in a slide CCME's gives to clients who want to purchase ads. This slide details the rate charged for the Beijing Capital Aiport bus routes and the Guangzhou Airport bus routes, there are other slides but I am too lazy to post them. This appears to be the the 2009 rate. http://i411.photobucket.com/albums/pp199/firehelixmedia/CCME/CCME_client_rate.jpg The rate for Beijing is quited in RMB as follows: 5 seconds is 72k rmb/month, 15 seconds is 180k rmb/month, and 30 seconds is 298k rmb/month. Guangzhou airport is 198k rmb/month per 30 seconds. Fuzhou is 80k rmb/month per 30 seconds. Nanjing is 90k rmb/month per 30 seconds. Qingdao is 98k rmb/month per 30 seconds. These are the 2009 routes and the 2009 rates, so for all their routes they get about 764k rmb/month for each 30 seconds (assuming all commercials use the lowest cost/second just to be safe). I don't know how commercials work on these things, but if each month the buses shows say 20 minutes/day of commercials, then we can get like 20 minutes / 30 seconds * 764k = 30 million rmb/month. That's about 4.5 million USD/month. So the total annual revenue would be like 54 million USD from the airport buses. I am not sure how to calculate the other non-aiport bus route revenue. I don't know if 20 minutes/day of commercials shown on airport buses that run from 5am or 7 am to midnight is a reasonable estimate. These are just all guesstimates. These airport routes are good routes, but it's hard to gauge how many minutes of commercials is shown each day. I found this slide on some random chinese ad broker's website while using Chinese name on CCME and a combination of baidu and google search. You can view these numbers for whatever they are worth and make your own interpretations.
  21. Why would we get to 900$, why wouldn't people STOP purchasing it when it goes to 450$??? There will be reduced demand. Also - if oil gets to 900$, how the hell does China or the rest of the world grow? If the US is screwed on 900$ oil, then so are the rest of the world besides the exporters. At 900$, we will ride bikes and get healthier.
  22. The US is on a decline, but China is not going to take its place for a long time. For the time being, the US will remain the leader in innovation, freedom, and opportunities. I spent a ton of my time in China the past few years, and I do not observe much innovation here. I do observe a lot of GDP growth with the over-production of fixed assets. I talked to many people here and their basic question has been "Ok so we got a ton of GDP growth, what the heck has it done for me? I have higher costs of education/healthcare and I toil longer and longer hours. The K-12 and university system has become hyjacked by greed and does not allow creativity. The doctors treat those who pay them the most and the environment has degraded to a point where I can only see a blue sky 10 times each year. This GDP shit is useless! Most of the bright kids in our country still want to live in the US. The state-owned enterprises are getting larger and larger, the nation's balance sheet is richer and richer and my purchasing power cannot even buy me any basic services!" Further they tell me, "During the opium war, we had a huge proportion of the world's GDP and still got our butts kicked!" I don't think I agree entirely with the way my Chinese friends look at things, but I also think you need to consider multiple perspectives when you draw a conclusion on a country. A lot of people here probably look at GDP/balance sheet/interest and put a lot of emphasis on these numbers (we are finance types afterall), but do realize when the Qing dynasty ended China was ranked much higher in GDP/capita in the world than it is today, yet it was unable to fend off any foreign invaders. The Chinese education system is below-average at best and ruins the talents of many bright kids. The teachers who teach in universities today mostly grew up during the cultural revolution, and they didn't really learn anything useful during that time, so most kids are not receiving good education despite having college degrees. For all its faults, US is still the leader in science and innovation. Post WWI Germany faced inflation that made an apple cost more than a barrel of cash, but rocket science was also invented in Germany afterwards, and Germany is still a respectable country today. I realize we are not going back to a warring era anytime soon, but I do want to emphasize on one point: A country is not a corporation and cannot be evaluated like one. The decline has began and is certain, but to say the US has no capacity to solve its energy problems or create a new industry to restart the economy is again being too pessimistic. The computer industry, the internet, modern space technology - those all came out of the US. I wouldn't bet against the talent of the human race to overcome technological problems - and for the time being, the US still has the greatest asset of human talent capital in the world. Maybe a solution to the energy problem is just around the corner.
  23. I think any genetics that improve the human condition without bad long-term health consequences is a good thing. The question is we also need simultaneously genes that help us process food more efficiently if we were to live longer, else we don't have enough resources on earth to support so many people.
  24. When you are 150 billion fund, and want to do long/short, you would use whatever instruments you can find. He just has to be correct on his macro calls and check his counterparties. The key is to never try to manage a 150 billion fund :) But complexity sometimes work, I used to work on a compiler that was 12 million lines of code managed by 9 developers. our top developer was managing 3 million lines of code (that's about 600k pages of interdependent functions etc written in about 4 different languages). That entire code base had very little bugs in it. It all depended on who was managing it. Yeah...you have IT to thank for increased complexity.
  25. I always end up shorting the right things 20% before they reach their highs :( A few weeks ago I sold my FFH calls ~300 and then got some puts on commercial REITS. I guess I have to increase my position as they move up...
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