Nov 18, 2024

Marc Faber on China's rise as a manufacturing superpower (2002)

I'll start with emerging markets, where valuations are attractive and expectations are very low.  Since 1990 the markets in the developed countries of Western Europe and the U.S. are up, say, five times.  In emerging economies most markets are down 80% in dollar terms, and earnings are bottoming out.  Money has been flowing out of emerging-market funds for 2-3 years. 

One concern is that Chinese competition will continue to erode the market share of other Asian exporters to Western Europe and the U.S.  In the long run, very few emerging economies will be able to compete with China.  I wouldn't rule out, in 5-10 years' time, the possibility that China becomes the workshop of the world, the way Lancashire [England] did in 1830s.  But China will also become the customer of other emerging economies.  China has a population of 1.2 billion people.  Today less than 1% of the population is outbound, but 5%-10% could be traveling over the next 10-15 years.  That would mean a meaningful influx of tourists into the surrounding countries of Asia, and Australia, New Zealand, the United States and Western Europe.  Food and plantation companies will benefit from Chinese demand.  Companies that cater to domestic consumer demand -- cigarette companies, pharmaceutical companies, software companies -- will also be helped.

~ Marc Faber, "Past and Presents Four pros speak their minds on history, science and compelling stocks," interview by Laura Rublin, Barron's, January 21, 2002

(Emphasis mine.)



Nov 17, 2024

Richard Lawrence on active investing

We're just going to keep doing what we're doing.  There's no real reason for us to change.  My dad was a stockpicker, John Bush [my mentor] was a stockpicker, I'm a stockpicker, my younger colleagues are stockpickers.  In 20 years, the world is going to need stockpickers.  The financial market, Wall Street, might want to turn us all into obsolete things with AI and ETFs and whatnot, but I can tell you it's not going to happen.

~ Richard Lawrence, "Betting Big on China & Lessons from Bear Markets," We Study Billionaires, 1:11:20 mark, September 19, 2024



Richard Lawrence on China's competitiveness

In the U.S., there's a certain arrogance that China's weak and has been brought to its knees and doesn't have technology and is massively overlevered and I think that's not really realistic.  If you look carefully at the semiconductor [industry], which is something I've been tracking for nearly 24 years, we can try to restrict advanced semiconductors from China, but China takes a very long view of this stuff.  And I guess in 8-10 years they're going to have similar levels of technology.  And that will have happened faster than if we had really sat down and talked about what are the uses in China for the advanced technology, the advanced chips, how to keep them out of the military.  

Well, if we ask them to keep the advanced chips out of the military, well then they're going to ask us to keep our chips out of our advanced military.  So that just hits loggerheads because our military in the U.S., there's a certain arrogance that comes with it.  So those are complicated problems that need to be resolved.

But to me I would say there are five semiconductor markets and the advanced one that goes into military equipment is really probably the smallest of all of them.  And so let's talk about the other four markets and see what we can do on that.  But there's basically no talking at this point.

~ Richard Lawrence, "Betting Big on China & Lessons from Bear Markets," We Study Billionaires, 59:30 mark, September 19, 2024





Richard Lawrence on the macro situation in China

Q: How would you describe the current macro situation in China?

A: Let's start off with the stuff that really matters, which is things like balance sheets.  They've got $3 trillion of Forex reserves.  The household bank deposits are double the size of market capitalization of the stock markets and it nearly tripled the size of annual retail sales.  So the individual Chinese consumer has a lot of firepower in the bank deposit...  Loan-to-deposit ratios are conservative, the capital adequacy ratio at the banks is okay.  So those balance sheet items are all in very good order.  Current account surplus, small government deficit.  So that's not the problem.  The problem is really a lack of confidence.

~ Richard Lawrence, "Betting Big on China & Lessons from Bear Markets," We Study Billionaires, 54:30 mark, September 19, 2024



Nov 15, 2024

Edwin Dorsey on the importance of long-term thinking in business

The single idea, and we've touched on this a little bit, is I believe there's a lot of things that businesses can do to make the numbers better in the short-term, but hurt the long-term value.  You can raise prices, you can make it more difficult to cancel, you can make it more difficult to get refunds, you can cut corners on content moderation.  All these things help the numbers in the short-term, so they make the stock more attractive in the short-term while harming long-term value.  And seeing that disconnect when it occurs is where I think a lot of investors can profit.

The final idea is businesses can easily do things that help the short-term numbers and hurt long-term value.

~ Edwin Dorsey, "Simple Yet Powerful Tips for Short Selling - Exposing the Red Flags," Stansberry Investor Hour, 57:30 mark, November 4, 2024



Nov 13, 2024

The Economist on growing anxiety in America

Ordinary Americans are anxious.  Gallup, a polling firm, regularly asks Americans if they are satisfied with how things are going.  From 1980 until the early 2000s, a little more than 40%, on average, said they were.  Over the past two decades that has dropped to 25%.




Nov 12, 2024

Harris Kupperman on the hedge fund business

It's a lifestyle business.  I'm going to be doing this for the rest of my life probably.  I actually enjoy it.  Like I said, this is my hobby.  Made a bunch of money.  I don't do it because I want to make more money.  I make it because I want to be in the game.  I want to beat the S&P 500, but more important, I want to beat all my friends who I think are top-notch, 0.1% hedge fund managers.  I want to beat them, too.  That's what I'm passionate about.

~ Harris Kupperman, "How to Scale a Hedge Fund | Harris Kupperman on Praetorian Capital," The Monetary Matters Network, November 6, 2024