Tag: Random Thoughts

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.

Most people don’t have the concept of ROI on time, although time is the most valuable resource everybody possesses.

Sometimes you feel you are wasting your time. This is a sign of very low ROI of your time.

But nowadays, low ROI activities are concealing themselves with a very short time commitment so that many people are tricked into it.

Just like people don’t feel that bad to buy a small lottery ticket which likely has a negative return, people don’t feel that bad to waste 10 additional seconds.

When your marginal utility of watching one more short-video is low, this 10 additional seconds is a bad investments. What’s worse, you may keep doing this “bad” investments for some time, resulting in low ROI on 30 minutes of an hour.

Additionally, it’s very hard to measure the ROI on one more additional short-video. Someone could argue that the initial few ones are good, as they are likely the good ones based on other people’s feedback, or first few minutes of “taking a break” is good.

But that utility is decreasing gradually for every additional video you watch.

The incremental decline is too small for people to notice. 

The best way to counter the impact for me is to stop at the end of the video and think what you get from it, and what else you want to watch instead of just accepting what the app gives to you.

If you watched short videos today, just try to ask yourself before you go to bed – what do you remember? I bet there is not much valuable info.

Be aware of your ROI on your time before you open the app and when you are using it. Don’t let your habit guide you.

It has been 4 years since Covid-19.

From q2 2020 to q1 2022, China attracted export orders as many parts of the world was shut down. US lowered the interested rate and asset prices surged.

Then a few things happened: the war in Ukraine, the interest rate hikes, and the Shanghai lockdown among rolling lockdown in different parts of China.

From q2 2022 to q1 2024, US has attracted capital with high rates and developments in AI. US started to introduce more targeted policies in maintaining tech leadership (namely AI), from foundry subsidiaries and chip restrictions. China would get rid of lockdowns but started an even more difficult fight with property sector problems.

As of now, after the eventful four years, many things have rebalanced to a point that I think many have achieved their agenda.

US regained global leadership, via global defense partnerships in Ukraine and middle-east, and via LLMs, monopoly in the most advanced chips, and computing power. US has diversified supply chains and TSMC has plans to build 3nm or below to the US.

China recalibrated its growth model and has de-risked this property bubble. China has built out its own chip capabilities although very limited and maybe only up to 7nm (Huawei restarted smartphone business again in China). China now views itself with fewer chock points than before.

Policymakers should be happy? They seem to have gained tremendous power. In first 2 years, they seem to be reacting / pushed to do things, while in the second 2 years, they were definitely more active in setting the tone.

Regular people lost some confidence/freedom in the last two years, after the first two years of gaining lots of bargain power

The goal for supply chain security is probably not the whole picture.

This sounds like ESG to me.

I think a better question to ask is how to create a new class of mfg businesses that can do well in the US.

Or how the US society embrace this type of business and jobs and their families.

Do people love this kind of mfg work?

Can they earn decent wages?

Are companies profitable? Does ROE and IRR make sense?

There are some differences between a chip maker and a toy maker, but the questions would be similar.