Global Macro Trading Journal
- Thread starter Daal
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Huge mistake by me on SNAP, I wrote that back in early 2018, when shares were bellow $20.
I lost track of the company and now its exploding. I need to do a better job of keeping up with ideas like that
https://journals.sagepub.com/doi/pdf/10.1177/0146167218783195
Great examples are the bear gurus in investing. They sound so smart and convince everyone of their bullshit. If you dig in on how they make their money, often its not from their P&L but rather from leaching fees/money from other people. The study say that they do worse on cognitive ability and academic compentecy but I suspect they do even worse in markets vs non-cynics
I'm looking to add to China stocks today, especially tech
The amount of financial articles talking about the sell-off is exploding not to mention that the price action has accelerated to the downside, which tells me its getting close to a bottom. And its the same old bs regurgitated by journalists they talk about "risks" over and over again but never about return or even consider the possibility that they could be wrong
I say China needs its tech sector as much as the tech sector needs China. Big data is the new gold and they cant destroy their sector (that's stupidity that people bring up during big sell because they are afraid) and leave all the data to non-Chinese firms. More regulation sure, more data controls so the data stays in China, sure, some companies being made examples of, sure but they need their tech sector to flourish. Otherwise they would be shooting themselves in their foot
Its not like people will stop shopping online, leave social media, stop online payments or something. And its not like China wants more people using VPN's so that more data goes to the US
"what about the impact to the earnings"?
What about the fact that tech is down 50%, is my answer
When stocks in a resilient country are down 50%, the onus in on the bears, not on the bulls to make their case
The amount of financial articles talking about the sell-off is exploding not to mention that the price action has accelerated to the downside, which tells me its getting close to a bottom. And its the same old bs regurgitated by journalists they talk about "risks" over and over again but never about return or even consider the possibility that they could be wrong
I say China needs its tech sector as much as the tech sector needs China. Big data is the new gold and they cant destroy their sector (that's stupidity that people bring up during big sell because they are afraid) and leave all the data to non-Chinese firms. More regulation sure, more data controls so the data stays in China, sure, some companies being made examples of, sure but they need their tech sector to flourish. Otherwise they would be shooting themselves in their foot
Its not like people will stop shopping online, leave social media, stop online payments or something. And its not like China wants more people using VPN's so that more data goes to the US
"what about the impact to the earnings"?
What about the fact that tech is down 50%, is my answer
When stocks in a resilient country are down 50%, the onus in on the bears, not on the bulls to make their case
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I suppose the anti monopoly rule will be bad for certain names but that is the beauty of investing in ETF's instead of specific names. One company's pain is another company bonanza. Tencent Music crackdown seem to directly benefit NetEase
My China strategy has been to invest in everything from tech, to A shares to small caps to H shares
My China strategy has been to invest in everything from tech, to A shares to small caps to H shares
The real risk re: China is that escalating tensions with the USA lead the commies to invalidate the VIE dodge, essentially expropriating foreign investors. A full across-the-board seizure doesn't seem too likely, but a softer version involving some sort of forced below-market sale is certainly possible.
How much discount you want in order to be compensated for this risk is up to you.
How much discount you want in order to be compensated for this risk is up to you.
The question is, whether it makes economical sense for them to do so, I dont think it does. It would not serve the interests of the Chinese people to dramatically increase the cost of financing of their corporate sector. It would lead to dramatically higher corporate equity costs and debt borrowing rates and lead them to a recession. It would hurt foreign direct investment as well. It would also lead to a strike back from the US which could include:
-Blacklisting China from the USD global payment system (81% of global payments)
-Criminal indictments against certain Chinese nationals and then using the US global reach to deport them from any country they set foot in
-A bigger trade war
-Banning US citizens and companies from directly investing in China
-As a last resort, hitting that $1T UST stash from China
But more importantly, these sorts of scenarios, while possible, is super easy to be 10 years too early on. And the time to worry about them is at peaks and when everybody is bullish, not after 50% sell-offs
Also, I'm not lawyer but Argentina refused to pay its USD debts (issued in NY) and investors got NY courts to let them take Argentinian assets in the US compensation
https://www.reuters.com/article/argentina-debt-funds-idUSL2E8IK8U920120720
And the US reach is broad, it probably could get countries like the UK and EU to join forces in a compensatory scheme (not to mention that them would face losses themselves)
If China ever were to try to play funny games with VIEs after not doing anything about it (and in fact, allowing their companies to issue ADRs in New York for more than 10 years), it doesnt seem crazy to me that the investors would be able to sue them in US courts for compensation. And the US is where that China $1T stash of USTs is sitting on to be taken and be used to pay investors. I think is unlikely that China can cause huge losses to US, UK and the EU and not face a fight back from the courts
So, I dont think it makes economic sense for China. Unless we are talking about a full blown war, which will probably take a long-time to occur, if it ever happens
https://www.reuters.com/article/argentina-debt-funds-idUSL2E8IK8U920120720
And the US reach is broad, it probably could get countries like the UK and EU to join forces in a compensatory scheme (not to mention that them would face losses themselves)
If China ever were to try to play funny games with VIEs after not doing anything about it (and in fact, allowing their companies to issue ADRs in New York for more than 10 years), it doesnt seem crazy to me that the investors would be able to sue them in US courts for compensation. And the US is where that China $1T stash of USTs is sitting on to be taken and be used to pay investors. I think is unlikely that China can cause huge losses to US, UK and the EU and not face a fight back from the courts
So, I dont think it makes economic sense for China. Unless we are talking about a full blown war, which will probably take a long-time to occur, if it ever happens
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Here is another challenge on this thesis. Dozens of big cap China firms went to NY, filled forms with the SEC showing that the securities they were selling had revenues, earnings, etc. They used these fillings to raise huge amounts of cash. Now all of the sudden they say 'oops, sorry, you dont actually own anything'. Well, that is securities fraud not to mention all kinds of other frauds. And it wouldn't be hard to convince a US jury of that, so these companies would be sued for gigantic amounts. Then it all could be enforced by the USD payment monopoly, Tencent and all of these other firms have to use that system and these payments would be subject to seizure (not to mention the US assets that they own).
I dont think there is a middle ground on this, either you own an economic interest in the company or you dont. No one can force anyone to sell. Even if the US were to implement investment restrictions (which I very much doubt, at least for the next 12 months) these securities trade all over Europe and HK so it would not be hard to replace it
But I find it interesting how people come up with all kinds of 'concerns' when stocks are down a lot, after not having them for months. Just today I read an article where a 'strategist' said it was too early to buy, how there are concerns about this or that. It reminds me of Mohammed El-erian being pissed off at financial gurus who recommended US stocks when ES was at 2400. Right before the market ripped 100% on his face
At the lows, all these 'concerns' always look bigger than they really are (I recall Taleb using the word "extiction" during the covid panic, lmao). Its like a grand conspiracy to prevent people from buying cheap
Most likely the impact to the business sector as a whole will be minimal, this is not to say that some individual names wont be hurt but countries dont routinely destroy their capital stock for no reason. 19 times out of 20 nothing much happens and journalists act like they never predicted armageddon
https://www.bloomberg.com/news/arti...o-restore-market-calm-after-rout?srnd=premium
Surprise surprise, big sucessful countries can't destroy they own markets. I dont think China is doing anyone any favors. If they were to keep hurting its stock market, GDP would fall, interest rates would rise, leading to defaults and they would be pretty much they be staring at debt deflation as the banks get hurt (worsening the feedback loop). But the avg pundit that sold their stocks at the March 2020 lows and in early 2009, wanted to rewrite the rules of economics in order to satisfy their risk aversion so they all said it was armageddon
Surprise surprise, big sucessful countries can't destroy they own markets. I dont think China is doing anyone any favors. If they were to keep hurting its stock market, GDP would fall, interest rates would rise, leading to defaults and they would be pretty much they be staring at debt deflation as the banks get hurt (worsening the feedback loop). But the avg pundit that sold their stocks at the March 2020 lows and in early 2009, wanted to rewrite the rules of economics in order to satisfy their risk aversion so they all said it was armageddon