Author: admin

New forms of bank

Banking can be done in forms not like the traditional banks.

How?

1/ crypto / stable coins

Investors/Buyers of stable coins are like traditional depositors.

In return, they can get some interest on their balances.

They can also enter into “staking” which is just like a “formal” version of deposit.

The crypto exchange or custodians are acting like banks. They can use the deposits to buy yield generating assets or lend out.

2/ private credits

LPs are like depositors.

GP setup lending vehicles like banks – LP put money into the vehicle and GP find projects to loan out the money.

China version of German premium cars

It’s weird to me that the BMW 5 Series, Audi A6, and Benz E Series are priced much cheaper than their foreign original version.

The gap can be 1/3 – BMW 5 Series will cost ~$60k (maybe 8% dealer discount) vs slightly above $40k in China.

They don’t look exactly the same, but the China version will be even “longer” / “larger”.

This is weird again as I would assume bigger cars cost more – e.g. BMW 5 Series is bigger than BMW 3 Series.

I can only assume that the components used in China version are different from the original version, thus cost is lower.

But still, it’s hard to imagine a good things is priced lower in China vs abroad.

Typically, a “real good thing” can be priced higher in China due to large population base and thus is short in supply.

Update

China’s BMW 525Li is weaker than German BMW 520i.

Audi’s and Benz’s is similar performance across China and German.

Why yield has been less relevant to stocks?

1/ top companies are cash rich and don’t rely on debt – interest rate doesn’t directly affect interest expenses. And these companies have bigger weight in the index.

2/ top companies have huge pricing power – when real yield doesn’t change and nominal yield mostly reflects inflation, top companies will have higher earnings if inflation is high. So higher nominal yield or discount rate is offset by higher free cash flow.

Investing in AI age (2)

Look for the “contexture” – unquantifiable traits.

You don’t want to compete with AI on quantifiable data. Same as news, AI should be able to record and analyze data at amazing speed.

In order to know what’s unquantifiable, you need to be on the AI side first. AI would want to make more info quantifiable. If you are on the AI side, you will know what kind of traits is hard to quantify.

Investing in AI age (1)

Don’t trade on news.

Human won’t be able to compete with AI on speed (of reading news) and breath – AI can consume a lot of news in a second.

What should human investors do?

Look for any discrepancies vs reality – a) some are just fake news, b) some are partially made up based on leads, c) some are true but not important, etc.

Japan history (3) – Where does power come from?

3/ Government of Meiji Japan

In early 1868, Emperor Meiji declared power to be restored to the Imperial House and the end of shogunal system.

Fighting was needed before and after the declaration.

New administrative system – in 1871, Domain (Han) system was abolished and domains were converted into prefectures, headed by a bureaucratic appointee from the central government. Power is centralized.

New military –

  • In late 1873 and 1874, the samurai were given the option to convert their stipends into government bonds.
  • Nationwide conscription established in 1873

Land tax reform established a uniformly set tax rate at 3% on land bonds, which recognizes private land ownership. A cash-based system replaced payment with crops. In January 1877, the government lowered the tax rate from 3% to 2.5% in an effort to regain support for the land tax.

In 1889, the Constitution was adopted, with recognition of the Emperor. Technically, the power is still from the Emperor.

Things are moving fast… within China’s financial system

Last year, Huarong, now China CITIC Financial Asset Management (2799.HK), bought into Bank of China H-share, becoming a over 3% shareholder. And it took one non-executive board seat of Bank of China right after.

Great Wall AMC, became a over 3% sharehoder of Minsheng Bank and got 1 non-executive board seat.

Xinda, via purchasing convertible bonds, became a over 3% sharehoder of Shanghai Pudong Development Bank.

These shouldn’t be taken lightly, as banks are heavily regulated in China. So there were political decisions made.

Japan history (2) – Where does power come from?

2/ Shogunate

Year 1192

Power established by an organized army (most powerful army, by killing opponents), and the recognition from Japan’s Emperor.

Kamakura Shogunate 镰仓幕府 (first Shogunate)

Minamoto no Yoritomo 源頼朝, born into the Minamoto clan, a prominent samurai family.

Defeated the Taira clan in 1185.

Emperor’s real power had decreased already; in 1192, Yoritomo became Sei-i Tai Shōgun, which have power over other feudal lords while the Emperor becomes figurehead.

Shogunate needs to be financially power to organize the most powerful army.

Imperial court came back into power after some time, but then replaced by Ashikaga shogunate 足利幕府, or Muromachi shogunate 室町幕府 (2nd shogunate)

Japan history (1) – Where does power come from?

1/ Taika Reform

Year 645

Power established by killing opponents (Isshi incident).

Emperor Kōtoku 孝徳天皇

Then the reform divided Japan into 66 “provinces”, the head of which may come from head of powerful families / clans.

Basically, before the reform, each powerful family may behave like its own king, but now the whole Japan only has 1 super / centralized Emperor.

Land is nationalized and taxed.

Emperor will over time focus more on religious work, thus getting power as decedents of God.

So $IBB generated negative return over the past 5 years…

And it probably should be down.

Top weighted companies within $IBB are Gilead, Vertex, Amgen and Regeneron.

Gilead 1q 2022 revenue was $6,590 million and 1q 2025 revenue was $6,667 million – no growth for 3 years.

Vertex 1q 2022 revenue was $2,097.5 million and 1q 2025 revenue was $2,770.2 million (but 1q 2024 revenue was $2,690.6, so revenue growth slowed significantly). Additionally, Vertex shows no growth in non-gaap operating income.

Amgen is better – 1q 2022 revenue was $6,238 million and  1q 2025 revenue was $8,149 million. But growth is smaller in operating income vs 3 years ago – non-gaap operating income grew to $3,599 million in 1q 2025 vs $3,140 million in 1q 2022, or ~15% growth in 3 years.

Regeneron 1q 2022 revenue was $2,965 million and  1q 2025 revenue was $3,029 million – no growth vs. 3 years ago and 1q25 vs 1q24 declined 4%.

Gilead and Vertex stock performance is not bad actually.

In the past 3 years, Gilead stock is up 75% and Vertex stock is up 50%.

However, the index is pressured – only those companies with promising new “story” to tell are up meaningfully. Existing business lines are not sexy as shown above. 

No rising tide that could lift all boats post covid – only dangerous ones like rising interest rate.