Is Europe becoming uninvestable?

[Dalal.Holdings]

2 minutes ago, Sweet said:

 

Many companies, not just the big tech ones, will only allow themselves to repair a device and provide unique set of cables for their devices.

 

I disliked the lightning cable ban... I mean really, we can't have different ways to charge and move data onto our phone?  Imagine if the EU made this law years ago with USB cables, there would be no innovation to USB-c cables without regulation first.  No.

EU regulators do not believe in the invisible hand. Only their hand.

 

The results of EU innovation (their presence in the tech sector, number of unicorns, etc) speaks for itself.

 

If their regulations actually INCREASED competition like they claim, you would see the opposite result and EU would be a bastion of innovation. The fact that it is not tells you all you need to know.

[schin]

On 9/18/2024 at 1:59 AM, LC said:

To put the topic another way:

 

If you had a great business idea - where would you want to start it? 

 

US would be close to the top: low regulatory barriers, strong rule of law

Europe would be towards the bottom: high regulatory burden but you do have rule of law

China would be also be tough: rule of law exists only as long as the CCP wants it to

India? Can't even start there without citizenship/nationality

S. America? Low regulations but also not a lot of faith in the legal system

 

 

 

 

I think it's worthwhile to see how the Unicredit overtures to Commerzbank plays out. If the ECB/German Bundesbank allows a cross border merger, it shows some willingness for creative destruction and efficiencies/layoffs versus socialism/employee first culture.

 

It'll signify a tide not completely turning, but an example of change. EU banks cannot be competitive in the global scale (US/China) in their current stance.

 

US is close to top.. but, Europe is a distant second....  But, China, India, Russia, Africa, etc.... all have huge issues. China has some unicorns, but they can also take them to the shed and shot them too.

 

There's just a lot more rule of law here in the US. But, occasionally, you get seizures like Fannie/Freddie.

[thowed]

33 minutes ago, Dalal.Holdings said:

 

The idea may be good but the implementation is awful.

 

This applies to a lot in life.

[james22]

1 hour ago, Luke said:

. . . but the IDEA itself is good.

 

So?

 

Like Dalal.Holdings (and Milton Friedman) says, judge policies by their results.

 

Like communism, because of Hayek's knowledge problem (specifically the knowledge problem of paternalism), implementation cannot ever be anything but awful.

 

 

[John Hjorth]

I really think we need a new, separate topic in this 'General Discussion' forum here on  CoBF about how 'How EU regulation kills all kinds of innovation', which as topic [theme] is not the same as 'Europe in uninvestable'.

 

It is about causation and logic. Some CoBF members either don't understand the difference between the two, or have simply chosen to ignore that difference here.

[Spekulatius]

EVERYTHING is investable at the right price.

[Dalal.Holdings]

23 minutes ago, John Hjorth said:

I really think we need a new, separate topic in this 'General Discussion' forum here on  CoBF about how 'How EU regulation kills all kinds of innovation', which as topic [theme] is not the same as 'Europe in uninvestable'.

 

It is about causation and logic. Some CoBF members either don't understand the difference between the two, or have simply chosen to ignore that difference here.

If you asked me whether China or Russia were investable, their government and regulatory apparatus would absolutely be relevant. So why is the EU any different? 

[John Hjorth]

2 minutes ago, Spekulatius said:

EVERYTHING is investable at the right price.

 

It's still about causation and logic also. Talking and using as an argument that EU [not to be confused 'European' here] regulation is making what investable? The US big techs are not even listed in Europe?

 

I.e., what or who did cause my personal [luckily] tiny losses on Gazprom, Lukoil & Sberbank? Was it Putin [and his war]? [No, I got screwed by intermediaries, that were forced by political regulation related to the war, to impose and to do things, that screwed me].

[Dalal.Holdings]

13 minutes ago, John Hjorth said:

 

It's still about causation and logic also. Talking and using as an argument that EU [not to be confused 'European' here] regulation is making what investable? The US big techs are not even listed in Europe?

 

I.e., what or who did cause my personal [luckily] tiny losses on Gazprom, Lukoil & Sberbank? Was it Putin [and his war]? [No, I got screwed by intermediaries, that were forced by political regulation related to the war, to impose and to do things, that screwed me].

EU regulation means the tech sector is pretty much uninvestable in EU unless you get such a very cheap price or some special situation.

 

According to EU regulators, the EU should be a thriving place of tech competition and startups thanks to their regulation, but instead the opposite is true.

 

The regulation of that industry has made it uninvestable (or raises barrier on investing in) similar to a country that nationalizes (e.g. natural resources) or regulates into oblivion (e.g. tobacco) certain industries.

[John Hjorth]

3 minutes ago, Dalal.Holdings said:

EU regulation means the tech sector is pretty much uninvestable in EU unless you get such a very cheap price or some special situation.

 

According to EU regulators, the EU should be a thriving place of tech competition and startups thanks to their regulation, but instead the opposite is true.

 

The regulation of that industry has made it uninvestable (or raises barrier on investing in) similar to a country that nationalizes (e.g. natural resources) or regulates into oblivion (e.g. tobacco) certain industries.

 

Thanks, @Dalal.Holdings,

 

Now we're on the same wave length / frequency. Proportions in situ in argumentation certainly matters.

[John Hjorth]

A bit more about European innovation, because it isen't just related to the activities of the American tech companies [versus European tech companies] :

 

The innovation in Europe is directed and contracentrated / focused on other things than the activities of the American big tech.

 

Examples here :

 

European Pharma Innovation : 

 

Novo Holdings A/S - Annual Report 2023.

 

Sweden, a family sphere based, and centered on, industrial innovation :

 

Wallenberg Sphere .

[Pelagic]

The EU already set a precedent for capricious and reactionary tax policy in 2022 with their windfall profit taxes on energy companies, so some discount is warranted to their North American peers. That they came for oil and gas companies in 2022 doesn't mean they won't go after other profitable companies, especially those with "lumpy" returns or what the EU deemed "supernormal". Just a hypothetical here but there's no reason to think pharmaceutical companies are safe from similar tax policy (in Hungary they aren't) where some years they generate significantly outsized returns due to a new drug coming to market. The PBR thread had a lot of similar discussion focusing on Brazil last year when PBR was trading at a 3 PE and investors thought Lula was going to appropriate most of their earnings with the takeaway a year+ later being that, like @Spekulatius said, everything is investable at a price.

 

Just my own opinion but it seems like EU regulators have a goal of constraining corporate results within one standard deviation of what they view as average with the hope that their policies shift the majority of results to the positive side without understanding that those far right tail results are often what drives innovation. For those already in the system and earnings a decent but not excessive return, the EU system works, and they'll defend it. However, if you're planning on taking real risk in the hopes of capturing outsized returns it makes sense to do so elsewhere.

 

A good breakdown on the 2022 windfall profit taxes https://taxfoundation.org/research/all/eu/eu-windfall-profits-taxes-oil-gas/

 

 

 

[Dalal.Holdings]

30 minutes ago, Pelagic said:

The EU already set a precedent for capricious and reactionary tax policy in 2022 with their windfall profit taxes on energy companies, so some discount is warranted to their North American peers. That they came for oil and gas companies in 2022 doesn't mean they won't go after other profitable companies, especially those with "lumpy" returns or what the EU deemed "supernormal". Just a hypothetical here but there's no reason to think pharmaceutical companies are safe from similar tax policy (in Hungary they aren't) where some years they generate significantly outsized returns due to a new drug coming to market. The PBR thread had a lot of similar discussion focusing on Brazil last year when PBR was trading at a 3 PE and investors thought Lula was going to appropriate most of their earnings with the takeaway a year+ later being that, like @Spekulatius said, everything is investable at a price.

 

Just my own opinion but it seems like EU regulators have a goal of constraining corporate results within one standard deviation of what they view as average with the hope that their policies shift the majority of results to the positive side without understanding that those far right tail results are often what drives innovation. For those already in the system and earnings a decent but not excessive return, the EU system works, and they'll defend it. However, if you're planning on taking real risk in the hopes of capturing outsized returns it makes sense to do so elsewhere.

 

A good breakdown on the 2022 windfall profit taxes https://taxfoundation.org/research/all/eu/eu-windfall-profits-taxes-oil-gas/

 

 

 

 

Yep. "Windfall taxes" are basically just theft of private property. I am hesitant to invest in such places.

 

And I echo that they have no idea how positive tail events work and what to do to create an environment to foster them. Rather, Brussels seems intent on strangling positive tail events before they are born.

 

One clear example is the positive tail innovation of shale drilling. There is no way such an innovation could occur in a place like the EU thanks to their narrow & dogmatic views on fossil fuels. This innovation has literally liberated U.S. into energy independence. And look at how Europe is doing with its own energy needs...they're also shutting down their nuclear plants on top of it all. 

 

Edited September 19 by Dalal.Holdings

[John Hjorth]

22 minutes ago, Pelagic said:

The EU already set a precedent for capricious and reactionary tax policy in 2022 with their windfall profit taxes on energy companies, so some discount is warranted to their North American peers. That they came for oil and gas companies in 2022 doesn't mean they won't go after other profitable companies, especially those with "lumpy" returns or what the EU deemed "supernormal". Just a hypothetical here but there's no reason to think pharmaceutical companies are safe from similar tax policy (in Hungary they aren't) where some years they generate significantly outsized returns due to a new drug coming to market. The PBR thread had a lot of similar discussion focusing on Brazil last year when PBR was trading at a 3 PE and investors thought Lula was going to appropriate most of their earnings with the takeaway a year+ later being that, like @Spekulatius said, everything is investable at a price.

 

Just my own opinion but it seems like EU regulators have a goal of constraining corporate results within one standard deviation of what they view as average with the hope that their policies shift the majority of results to the positive side without understanding that those far right tail results are often what drives innovation. For those already in the system and earnings a decent but not excessive return, the EU system works, and they'll defend it. However, if you're planning on taking real risk in the hopes of capturing outsized returns it makes sense to do so elsewhere.

 

A good breakdown on the 2022 windfall profit taxes https://taxfoundation.org/research/all/eu/eu-windfall-profits-taxes-oil-gas/

 

@Pelagic,

 

Thank you for your elaboration above. I just can't follow the reasoning above from you. So much for that, with what it may eventuallly end up with [ to take].

 

 

[LC]

4 hours ago, Spekulatius said:

EVERYTHING is investable at the right price.

 

Yes but the "right price" is the difficult part here. Handicapping the possibility of windfall taxes, regressive policies (with potential far-reaching and long-term effects) is very difficult (at least to me). So it becomes a quick(er) "no" or "too hard" pile type of decision. 

 

Of course there are always going to be exceptions - but as a whole I am more comfortable investing in North America vs. Europe.

[thowed]

Yeah, I mean investing in your home country is always going to be a good place to start, as you know the ins & outs, politically, better.

 

It's funny hearing a bunch of Americans saying negative stuff about Europe and getting some of it wrong, which is probably about the same as all the negative stuff we say about America, some of which we also get wrong.

 

But it feels like some of you are saying Europe is on a par with China governance-wise, which is clearly a nonsense.  Sure European stockmarkets are not nearly as dynamic as they used to be, but there are still some magnificent companies about.

 

I think this topic has run its course, there were some interesting points, but the simple answer to the title is 'No'. 

[John Hjorth]

Damn, you're  good , [ @thowed and @LC ],

 

To me, a major part of the concept of satisfactory compounding - as a stock picker - is to see management actually making - to me - the right decisions a long the way, a head with regard to capital allocation, based on available information.

 

For my part personally, however, it may eventually take me years to judge and assess such decisions, in a forward  looking perspective. Constantly, forward looking perspective. [If you don't already own such a thing to make your life less miserable, then I would say that's about time to look in that direction for your personal part.]

[james22]

. . . the most important economic fact about modern Britain: that it is difficult to build almost anything, anywhere. This prevents investment, increases energy costs, and makes it harder for productive economic clusters to expand. This, in turn, lowers our productivity, incomes, and tax revenues.

 

https://ukfoundations.co/

[formthirteen]

[Dalal.Holdings]

 

 

 

 

[james22]

The European Council on Foreign Relations (ECFR) has published a report warning of the danger that “whiteness” and “Europeanness” pose to the European Union.

 

Titled Welcome to Barbieland: European sentiment in the year of wars and elections, the September 25 report discussed how many people have become “visibly disillusioned with the European project” in a way that has surprised those supportive of the bloc.

 

Rather than citing economic or energy issues faced by the EU, the report blamed, among other things, how “white” the MEPs elected by EU citizens are following the 2024 European Parliament elections in June.

 

https://brusselssignal.eu/2024/09/whiteness-and-europeanness-a-danger-to-eu-ecfr-report-claims/

[Dalal.Holdings]

On 10/4/2024 at 7:19 PM, james22 said:

The European Council on Foreign Relations (ECFR) has published a report warning of the danger that “whiteness” and “Europeanness” pose to the European Union.

 

Titled Welcome to Barbieland: European sentiment in the year of wars and elections, the September 25 report discussed how many people have become “visibly disillusioned with the European project” in a way that has surprised those supportive of the bloc.

 

Rather than citing economic or energy issues faced by the EU, the report blamed, among other things, how “white” the MEPs elected by EU citizens are following the 2024 European Parliament elections in June.

 

https://brusselssignal.eu/2024/09/whiteness-and-europeanness-a-danger-to-eu-ecfr-report-claims/

 

Related:

https://www.bloomberg.com/news/articles/2024-10-05/ireland-s-anti-migrant-rage-lands-on-a-hedge-fund-trader-s-doorstep

 

Quote

Peter McGarry has made tens of millions of dollars betting on how the bond markets would react to one geopolitical event after another. Now he’s being swept up in one: the anti-migrant sentiment roiling Europe.

A senior portfolio manager at Garda Capital Partners in Switzerland, McGarry, 48, is one of the $11-billion hedge fund’s top money makers. Meantime, he has also helped to build a business in his native Ireland that houses asylum seekers on behalf of the government.

It’s been a well-timed investment. As Ireland struggles with an unprecedented surge in the number of people seeking refuge, the government has turned to an increasing number of private companies to house them in hotels, guesthouses and other kinds of accommodation. Townbe Unlimited Co., which McGarry owns with a group of investors, has received €28 million ($31 million) in contracts since last year, according to public data.

 

I'm sure they'll discuss this in World Economic Forum as well.

 

What this crowd wants--whether Brussels or Davos or overseas based hedge fund managers--is to subvert the will of the people by telling them that their grievances are simply "wrong".

 

The Davos and Brussels crowd are, in effect, subverting democracy.

 

Quote

“They don’t care who goes into the community — they don’t care,” Gavin Pepper, a member of Dublin’s local council and anti-immigration campaigner who has called for mass deportations, said in an interview outside the Coolock site, the wreckage of a burned-out digger behind him. “They only care about the check that they’re getting at the end of the month.”

 

Edited October 6 by Dalal.Holdings

[Dalal.Holdings]

What is astonishing is that despite these eye-popping statistics, there is no one in Brussels/EU establishment talking about ways of fixing this. Instead, they are talking about regulating tech even more.

 

"To a man with a hammer, every problem looks like a nail".

 

To a regulator, every problem looks like a need to create more regulations.

 

 

Edited October 6 by Dalal.Holdings

[LC]

17 minutes ago, Dalal.Holdings said:

"To a man with a hammer, every problem looks like a nail".

 

To a regulator, every problem looks like a need to create more regulations.

 

 

Agreed.

 

I am impacted by the EU AI Act and let me tell you, I have never seen a more poorly devised, poorly written, and ultimately useless regulation in my career. It is such a waste of time even reading it, much less complying. 

[Dalal.Holdings]

In light of SpaceX's accomplishment, it's worthwhile to consider how Europe approached rocketry as of late:

 

https://www.politico.eu/article/how-europe-screwed-up-its-rocket-program/

 

Quote

“It wasn’t that we just said reusability is bullshit,” said Wörner of the early talks around Ariane 6 in the mid-2010s, and the consideration of building reusable stages rather than burning through fresh components each mission. “If you have 10 flights per year and you are only building one new launcher per year then from an industrial point of view that’s not going to work.”

 

 

 

 

Thierry and his fellow regulators hard at work on the 300 page regulation Word doc 

 

Meanwhile, his nemesis Elon has been busy...

 

 

 

 

Edited October 13 by Dalal.Holdings