Tag: Random Thoughts

It’s hard to be top notch in every industry.

The best talents in a country will bring strength to one industry which is tech for the US. If tech gets the smartest minds, of course other industries may not be able to compete at their max potential.

Boeing pleads guilty for 737 Max crashes.

Boeing benefited from its market position and gov contracts, while GM needs to compete in the more fierce commercial world. However the drivers and outcome feel a bit similar to me.

It could be about global competition but that’s limited (Airbus and SpaceX), and Covid is just one-off. Blame China? Sure China is not buying many planes like before, but it’s very early in actually competing in airplane manufacturing. I assume Airbus is not breaking many rules to compete. SpaceX might have some technology breakthrough, but Boeing also has r&d and should have unparalleled industry expertise.

The harder question is what’s Boeing’s (and broadly US manufacturing) competitive advantage over the longer term? Why TSMC didn’t do well in the US?

From a previous post, I touched on this – how to recreate the manufacturing industry in US is a question about how to make this sector attractive compared with other industries for young people and for capital.

Fiscal spending and subsidy is not a permanent solution. Tech didn’t rely much on subsidy to grow.

Maybe there is a negative side effect of being very strong in the technology sector?

Maybe US has evolved over the years so that the nature of this industry didn’t deserve a lot of attention? Maybe Tesla robot is an answer to unleash the manufacturing potential.

It’s tough for small countries to negotiate with big countries, like any single individual is hard to fight a big company.

To protect individual employees, union is needed.

It’s the same for small countries.

It’s different from UN, which INCLUDE big counties. It’s not like BRICS etc., as China is already a super power.

It should be small countries only. And they shall work together and organize a team to fight for their rights in negotiations.

Sure this may cost some money, but the benefit shall outweigh.

They shall need to resist the attempt to make separate deals with big countries – this will undermine the coalition and bargain power collectively.

Prolonged worsening US-China relationship has more indirect casualties it appears.

Recently, a women who defended Japanese nationals from being attacked in Suzhou passed away.

A 30-year girl in Shanghai suicided when facing a declining housing price (~3-4mn rmb of down payment loss) and cut in pay.

We might not feel US-China relationship in our daily life, but it’s around us.

It’s affecting every corner of the world.

Nike stock was a loser last week. Nike is under pressure with fiscal year 2025 to be down mid-single digit in revenue.

However, this is exactly what the US needs right now – weaker consumer, cooler economy.

Lower demand tempers inflation and it’s easier for Fed to see the data it wants.

When Fed gets what it needs and cuts the interest rate, others thing could look for bottoms or better terms – whether it’s commercial real estate or refinancing some low cost CBs.

If you want to get there faster, you better hope for the opposite.

When more people see only one cut or no cut, overall economy will cool a bit. Companies and consumers would tighten their belts, which will be helpful to the Fed.

When the market is pricing in “higher for longer”, multiples come down & stocks drop. Here, the reverse wealth effect will drive down inflation.

Talk bad stuff, so you can get good result in the end.

Just a random thought..

西游记: this is easy – RPG game with many bosses battles. The essence of the book is a group of 4 ppl going the West with many monsters on the road.

三国演义: this is easy – SLG strategy game (turn-based), or RTS game. The book is about a period of Chinese ancient history when three kingdoms fight each other.

水浒传: this can be gacha game like Genshin Impact. The book has 108 characters, each has unique backgrounds and skills.

红楼梦: this one is hard. What makes this book unique is its detailed depiction of lifestyle during Qing Dynasty. Maybe it’s metaverse game, or story-based romance game.

These 4 famous books each has its own appeal to a wide range of audience, which can reflect certain underlying demands. And these books’ popularity is proven over time.

Game developers need to constantly think about what “needs” they are catering to. Any thing that is popular for a long time must have served some pain points well.

In US, we typically hear about gov officials touting x number of high paying jobs are created.

We don’t hear that in China. Internet and finance jobs are considered high wages, but both sectors faced pressure to cut costs thus a decline in wages.

The first rationale seems to be centered around income inequality, which makes sense. Instability is one of the most feared elements in China. If u can’t increase income for all, you decrease income for some.

The second rationale is that many don’t deserve the that high income – they didn’t earn it. It is partially true, especially if someone gets a job by connection or background, or the firm is not providing much value for customers. Sometimes, the latter part is due to the restrictions – there aren’t much room to innovate if there are too many boundaries. Also, there aren’t much incentives to deliver better services if they can’t earn more. People look around and say oh others do poorly and earn similar so why should I do better. This is partially a result of the first rationale.

Thirdly, consumers don’t deserve high quality products / services and they don’t pay for them. Buyers determine the market; if most accept the subpar quality, then what else should the firm do? This is not a standalone issue; this is tied to the second one. The cycle reinforces itself – low-quality products/services tailored to an “accommodating”taste that is trained by mediocre offerings overtime.

When you see pre-spend, you know it’s hot.

When price is fixed, the real supply / demand for some products can’t be gauged easily.

Maybe you can measure the length of a waiting line. This can be observed for a bubble tea shop, or for a Tesla car in the form of waiting time.

The problem is, the company won’t extract more value from a customer even when demand exceeds supply.

How does a company allocate demand when supply is limited?

How does a company do more price discrimination without changing the price?

Certain products from Hermès has implicit pre-spend requirements. Hermès is even sued for this practice.

What company can copy this “pre-spend” strategy? Nvidia.

Buy more previous chips to get the right to buy the next/latest chip.

However, you really need to have a product that everybody wants and they can’t get it from other places.

Don’t pretend to have a huge demand to draw more demand. That’s not a long-term winning strategy. 

I have experienced this – 9% “interest rate” can be risky.

Not to say you can’t do it but be aware of the risk.

When everyone thinks China’s property price can only go up, that’s risky.

It’s hard to call what’s the fair price – most of the time it can be “unfair” for some time and be well above what you think is fair.

Incorrect understanding of risk leads to irresponsible leverage, which might result in an “unfair” pullback.

Collectively, behaviors reinforce each other and the systematic risk is accumulated.

We have seen it in the US stock market, in the US housing market, in the Japan stock market, in the Japan housing market.

This the the first part – “No risk is risky”

The second part is harder.

When to call the reversal could be more art. How much more than “fair” is “fair”?

Nobody can tell you when enough is enough. You have to think independently and get to conclusion. It could be a very lonely journey. But if you make it right, congratulations, you earned yourself a great investor.

How to get to your conclusion? Get more unbiased info, be really reasonable and be patient. Just personal thinking, I am not good enough to give advice.