HJ

The stock that made Ted Weschler's career: WR Grace. It filed for bankruptcy in 2001 due to Asbestos, stock was at something like $1, never delisted, and today it's 70+, having topped $100 a couple of years ago. Asbestos brought down a whole bunch of US chemicals and industrials.

Love to know how they come up with the score. They didn't put any of the mainland Chinese cities on there. Shanghai, Beijing gotta be way up there, if not #1 and 2. The typical explaination: 1) no real estate tax, so virtually zero carry cost, 2) little alternatives to preserve value in RMB denominated asset. NYC has a lot of trophy assets that makes headlines. But they are not bought by the typical New Yorkers. For the typical family, it's often a coop with rules that discourage people from buying real estate just to flip it. The transaction values are quite a bit lower than what they would trade for without these coop rules, flip tax payable to the coop, can't rent out the apartment for any extended period of time, etc.

Your local library may have some of them on file. I know they exist in NY Public Library if you happen to live in NY.

Did you buy the original bonds on the exchange through Interactive Broker? It's actually interesting that they are listed at all. For most corporate bonds, exchange listing, especially on a minor exchange, tends to be a bespoke requirement from a large investor for some regulatory reasons. Real transactions typically don't happen on the exchange at all. But then again you bought the original bond. Maybe call Stuttgart exchange directly and ask about where they got their indicative bid/ask from?

Uh.. Maybe for certain kinds of doctors, like those who have been practicing in tier 1 cities, especially those who specialize surgeries. The Chinese doctors would have actually performed so many more actual surgeries, and dealt with so many more different cases than their US counterparts. The US medicine is better, the US has a more rigid formal educational requirement on the medical profession. But on skills and experience, if you simply put a Chinese doctor into the US system, I actually might prefer the Chinese one(s). Anyway, this is neither here nor there as it relates to the topic at hand. The Chinese economy development over the past 40 years is partly driven by a mercantilistic trade policy, but also by simply absorbing all the technological advancement that occurred in the West for over 200 years. The Chinese is an industrious people and have cut shrewd deals with the western government and corporations for its own benefit. All considered, which government has done the best for its people living standard wise over this past 40 years? The Chinese one by far. And they look at trade through a much more political lens than an economic one, which seem to me, a much more pragmatic approach geared towards solving the problem of that society. Disclosure - I am a Chinese citizen who live in the US, and have had plenty of experience with both US and Chinese doctors. On trade, I wish the US policy makers can take a more pragmatic rather than dogmatic approach for the good of its average citizens rather than just its business class.

Don't think there is a game plan other than simply cope. I'm not sure there is any real solution other than time, which simply gets the aggrieved people used to their circumstance, and accept their lot in life. What I do think is hypocritical, are people who didn't take the pain turn around and lecture those in pain about the merits of free trade, that somehow theirs are "jobs of the past", and they need to move on to the jobs of the future, the silicon valley crowd, the Hollywood crowd and the Washington consensus crowd. I don't worry much about the US's place in this world. For 500 years, humanity has been migrating from Eurasia to the Americas. Why would it stop now? North America continues to be the special place in this world. The US went through its turmoil in the 70's, yet importance technological progress still came out of the US in the 80's and 90's. When the world faced $100 oil, fracking and horizontal drilling still came out of the US. Politics will throttle back and forth, the US may be more open and more closed to the rest of the world, but given time it'll be just fine. The US also simply needs time to recover from an overly aggressive globalist agenda over the past however many years. The "elites" need to recognize that.

This unfortunately falls into the category of slogan solutions that theoretically exist but politically un-attainable. Real life is not a slogan. Will China remove all trade barriers? Tax only Apple and Google? Won't happen. Unfortunately democracy is a b.... Call it the friction in this political economy. Sometimes there's no solution other than to slow down the leap into the utopia and take a step back.

+2. Every administration in the US has their friendly economists or think tank write up some research paper proving free trade is great, that GDP has shown a certain growth over the past however many years, which wouldn't have happened without it (questionable). They do some regression analysis and says econometrics proves that free trade is good and trade deficit isn't caused by free trade. But you go tell that Indiana Carrier worker that the US trade deficit isn't being caused by labor arbitrage underwritten by NAFTA, but technological advancement. Go tell the laid off GM worker that Apple isn't opening a factory in Detroit, and people buying iphones, causing trade deficit isn't a result of tax free trade policies but is caused by new technological advancement that somehow a Chinese farmer with no education is adapting to better than he is. The average US person's living standard and especially their perception of their living standard isn't measured the way economist measure things. If one applies the 20/80 rule, that says 80% of the economic activity is generated by 20% of the most active (wealthiest?) participants in the economy, OK, those people's life have improved, and instead of lording over the 80% of the US population, they get to lord over 80% of the world population. What's not to like about that? But the political divide is getting to a place now that US has elected Donald Trump, and UK has voted for Brexit. Historically the 2 biggest proponent of free trade has democratically chosen to go isolationist. To the average populace, the economic paper are worthless and prove nothing. This political problem is only getting bigger not smaller under the current governance structure. Capitalism needed to adapt in the 19th century to save itself from the political prescription provided by Karl Marx in Das Kapital. So must the free trade theorists before they guide the world into a much darker place!

Once again, the NPV maybe at an aggregate level positive, but one constituency gains while another loses. How does the economist propose that the government balance this? I think it's pretty clear after the past 30+years that the industries of the coasts, finance, software, benefitted from free trade while the middle suffered, incidentally coincided with the electoral map in 2016. Other than some empty "jobs retraining" programs", what else can the government do? Cause those are band aids, and far from compensating for the distortion that its trade policies created. Essentially US government says to the world you can come in to take our industrial manufacturing jobs as long as you let Apple sell their products in your country without taxes. Oh by the way, Apple manages its own affair so that it doesn't pay much of taxes at all anywhere in the world. In the real world, the government is asking one constituency to be the payer in this NPV analysis while a different constituency reap the gains with no effective way to redistribute the overall gains. Economist can argue trade is good. To the group that's being asked to pay, it's Ivory Tower speak. The world simply hasn't worked this way.

One can't treat the US and China as two monolithic aggregated blocks when trying to analyze the effect of trade. It's helpful to certain part of US economy, like the software engineers at Apple, or the consumers who are buying cheaper goods, but harmful to other parts of US, like the manufacturing economy of the midwest. Likewise, it's helpful to certain parts of Chinese economy, like those in the government who controls finance and banking, and can use these reserve to cover up mal-investments that they've directed elsewhere, or those who were able to tap the reserves cheaply through the financial system, like HNA and until recently, Anbang and Wanda, but harmful to others like the factory workers at Foxconn. While the economist may argue at an aggregate level the world is better off with free trade, the people who are asked to bear the cost of such free trade clearly disagree, and will overtime gain a political voice against it. The political system, certainly in the US, is being asked to deal with this discontent sooner than the one in China. What the Chinese government ought to understand is that it's to their own benefit to help the US government deal with the resentment to free trade, maybe revalue some or balance the trade through other means somewhat to relieve the political pressure to their US counterparts. Otherwise the mercantilistic policies will break the current system which they've largely benefitted from. As with a lot of things in economics, the problems morph into a political one, and will be resolved, one way or another, at the whims of politicians rather than by some economic professor pontificating on the laws of comparative advantage.

ukvalueinvestment, Don't know if you had the chance to vet and get a view on the management, or if your basis of investment is based solely on public filing. But several years ago, there was a market wide issue surrounding the life settlement contracts. It turns out that the contracts that were traded underperformed the actuarial table terribly (not a surprise as the contracts that actually traded were sold by the life insurers who have a view on which contracts to sell, and went through a round of adverse selection). Some of the companies that were involved in the business on leverage actually got stressed. Plus, the business of taking out insurance on other people's life invites some shady characters in the business. In any case, I have no view on the specific company, but do want to suggest that without a view on the character of the management, this is a tricky business. As the saying goes, "price is what you pay, value is what you get."

I don't have a strong view whether S&P is fair valued or not against other indices out there. I am curious though, since the lead in question was posed to a fictional pension trustee presumably in the US, how does the principal of asset / liability matching fit in this analysis. i.e. If your future liability will all be in USD, primarily directed towards a group of people who will retire in the US, how much of your assets should be directed towards an emerging market index?

If the goal is to deal with a mad man in North Korea, keeping the whole exercise small and surgical is the most sensible way to approach it. Why play geopolitics when there is consensus between US, China and Russia to sanction North Korea? If the goal is to somehow fight a geopolitical battle against Chinese and Russian influence in the region through dealing with North Korea, I'm afraid the battle will be lost. China's influence in the region will only increase. Economics dictate so, and nothing the neocons can do will stop it.

The best thing to do is to assassinate Kim. Somehow Denis Rodman would have to be involved, and maybe some K-pop girls. :-* Honestly though, keep the involvement at a very small group of people. If an assassination attempt fails, there's absolute deniability from any of the government(s) involved. If he somehow survives the attempt, it only gets him more paranoid about his surrounding with no outlet to release his paranoia, and it doesn't really change the status quo on the greater geopolitical standoff, and may even isolate him from his immediate surroundings further.

Offset by tax deductible, 30 year, fixed rate, non-recourse, refinanceable leverage.

Congratulations!

I think it probably is relates to the lack of cars that are 4-10 years old, which would be otherwise going through their "prime maintenance years", compounded by the tightening of subprime auto credits at the very low end, which is killing used car prices at the very low end, and reducing reasons to fix up a 10 year old car, either by people who will trade it in or by the dealers who will fix it up and on sell. It's certainly industry wide, and likely a problem that is worse than simply 2 consecutive warm winters as explained by the managers, but also not quite as structural as "being Amazoned", ... yet....

I'm in the world of CLO's, bank loan managers. There are not many woman who rise to the top of their respective organizations in the space. However, the ones that do run their own shows are often very good, I'd argue better than their average male counterpart. Likely some survivorship bias there.

That's a great question to ask, another question to ask is what happened in the 60's and 70's to turn NYC into a dump from the Great Gatsby days? It's also not just NYC, all the major cities in the US experienced some degree of "urban decay" until the 80's. Here's Wikipedia on the phenomena: https://en.wikipedia.org/wiki/Urban_decay What happened the past 20-40 years to caused the change in NYC? The booming financial service industry is one, but it's easy to argue globalization is the greater force, perhaps even the force causing the boom in financial services, which disproportionately benefits the coasts vs. mid-west.

The market at large basically changed from a modest deflationary stance to a modest inflationary stance in the US. The political agenda is domestically driven. But US is not the only market. EM's for the most part are down since the crisis, even some commodities has been up, which hasn't always been the case. USD is at multiyear highs. So somewhere in the world this has not been all Santa Claus. Truth is we've been used to the past 8 years in the US of a set of policies (here I'm mostly thinking environmental regulation and financial regulations), not recognizing how much of a wet blanket it has been on growth. With this presumably to be lifted at least somewhat, and a set of policies with the fullest intention of driving US domestic industrial activities, the narrative of the market has changed for now.

It's such a complicated topic and touches on so many different areas of how the Chinese economy works that it's very difficult to figure out how long it can still be sustained, or how the imbalance may be worked off in the future. The way resource is allocated for the society has something to do with it, the way local Chinese governments fund themselves has something to do with it, the closed Chinese currency system has something to do with it, the extraordinarily unequal distribution of Chinese wealth has something to do with it, the cultural mindset has something to do with it, the extraordinary short amount of time it took the Chinese to experience what the West experienced over 200 years has something to do with it, etc., etc. There's very little precedent for it, just like there's very little precedent for the kind of monetary policy the world all over is experimenting with. The two are likely related, and it's also arguable which imbalance is the bigger one.

Think the 2 Todd's were in DTV for a while before its acquisition, and Munger has said positive things about Google at some point, and also Disney in his book.

Thank you for the discussions. Very insightful.

This is from 2013. Today it's 10 bps higher than the low in 2012.

Now that the Panama Canal expansion is upon us, I wonder if anybody has uncovered companies that will benefit or suffer from this. It just feels like this is quite an important event for the transportation / logistic space, and maybe have important implications for broader regional economies as well. BCG and CH Robinson Worldwide has done a joint study, linked below. https://www.bcgperspectives.com/content/articles/transportation-travel-tourism-how-panama-canal-expansion-is-redrawing-logistics/#chapter1 I wonder if anybody has come across good literatures or thoughts on this subject, as well as specific investment considerations. Thanks