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FAANG to MAG 7

Netflix was out, Microsoft, Nvidia and Tesla are in.

 

When FAANG was first coined, it was 2013. Netflix provided significant return in that mobile Internet and cloud era.

ChatGPT was out in Nov 2022 and swept the world in 2023.

 

Netflix doesn’t touch hardware and AI.

Nvidia was neglected as it’s not close to consumers except for the gaming PC. Later people may know it as a crypto mining machine, but not the backbone of an entire era.

Tesla was neglected as people can easily live without an electric vehicle. Now it seems that autonomous driving will eventually serve many people and be deployed in more use cases in the form of robots.

Microsoft was neglected because it was mature and old? Not sexy.

 

Cheap not enough, change in management style is key

Reading Buffet’s early investments in Union Street Railway in the 1950s.

Company’s business is not going well, and its stock is cheap – $30–$35 per share despite roughly $60 per share in cash and bonds.

Simply by distributing dividends, the company can give $50 per share to shareholders.

While the company being cheap is important, the management’s willingness to give shareholder return is even more crucial.

A distant $50 is different from a near-term $50; not to mention other ways to destroy equity value.

Oh btw, Union Street Railway also needed local regulator’s approval to distribute it seems – so ultimately it’s also up to the change of thoughts from regulators.

Equity risk premium?

Why not bond risk premium?

Bonds typically have fixed payments but inflation is uncertain. One dollar 10 years from now is very hard to value.

Instead, you can trust credible companies more. They shall hold their position in the economy and take their fair share.

Isn’t that more “certain” in some way?

Thus, why we have equity risk premium.. there should bond risk premium over high quality companies.

Bizarre Numbers (2)

Detective Conan IP generated less than 1500mn rmb revenue in a year, with film being the largest contribution (~50%).

PopMart’s Labubu generated over 3000mn rmb revenue last year, while most people don’t know Labubu’s stories, its origin, its value, etc.

Bizarre Numbers

UPS and FedEx reported revenue per piece/package is ~$13-$14 (1q25).

SF Express, the most premium express in China, reported ASP of 15.5 rmb in 2024 and ASP of 14.6 rmb in 1q25.

Other express delivery companies in China reported ASP of 2.3 rmb (YTO) and 2.05 rmb (STO and Yunda) in 2024.

Meanwhile, ZTO+YTO+STO+Yuanda+SF -> 330k package per day!

FedEx +UPS is ~40k package per day.

 

Good stock is like iPhone

How much would you need to be paid to switch from iPhone to another smartphone?

For many people, that’s way higher than the $1,000 or so price tag.

iPhone just works.

It’s similar in stocks.

People don’t want to sell good stocks (thus ownership of good companies) even it’s a bit pricer.

They just work.

Why do you want to switch to another company?

Is US trade deficit with China that big?

I don’t think so.

In 2024, US trade deficit with China is slightly lower than $300bn.

To compare, in 2011, US trade deficit with China is at the same level.

Back in 2011, US GDP is $15.6 trillion and that grows to $29 trillion in 2024.

We know the math – the trade deficit with China as % of US GDP is almost halved from 2011 to 2024.

Source: US-China trade deficits over the years.

Lovely and random encounters

I was going to order coffee downstairs.

Met a couple, Cindy and Fab, when they were trying to order. They are in their 60s and on their 4-month vacation. They used to work in Indiana and now live in Florida.

I just realized how lovely these random conversations can be. I feel I used to have a lot of these (I might have exaggerated here) back in the states, but rarely so in China.

Maybe it’s about me.

Maybe I feel the expected outcome from random conversations is less interesting here in China, so I wasn’t intrigued to welcome one.

Maybe my attitude to life has changed a bit – I became less exploratory and want more certainty. This could be due to the distaste of negative randomness in stock market – I was exposed to a lot of it in work and in personal investing.

However, those are temporary, if anything. I felt the impulse again and that’s nothing different from what I could feel years back.

Existing home price index near flattish in Feb 2025 across tier-1 cities

In Feb 2025, the price index of existing home across BJ/SH/SZ averaged is only -1.4% yoy, about flattish.

As of Mar 2025 data, price index of existing home across BJ/SH/SZ averaged has improved for 6 consecutive month (Oct 2024 – Mar 2025), by about 0.44% every month.

The five month from Oct to Feb month has helped the yoy comparison improve 8.6% (from -10% to -1.4%).