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