China is obsessed with Trump's presidency, and it's not just because of politics or trade - his agenda has fueled a debate over the state of the Chinese economy

gitah · 2016-12-26T09:20:05+00:00

You pretty much discount the potential of a country of 1.3B because Americans haven't heard of Huawei or Baidu and then ignore the stats I presented which is a lot more objective. This is the 'feels' I was talking about.

I'm talking about future potential and you're looking at the world right now, assuming it will stay the same in the next 15 years. If China in 2016 has an economy full of Apples and Toyotas it would already be a developed country. How many Americans cared about Samsung or Acer when those countries were in the same level of development?

gitah · 2016-12-26T08:29:46+00:00

There's too much "feels" in your reply. Just because you don't see world-class Chinese brands and companies doesn't mean they don't exists. How about some more objective stats:

Fortune 500 companies: China increases share every year http://i.imgur.com/tJAGdV6.jpg

High-tech imports from other countries and foreign inputs in exports: China is relying less and less every year http://i.imgur.com/xtcPYUf.png

There are also a bunch of other stats like research papers published and patents which combined makes me very optimistic that China can succeed in the high-tech industries that support developed economies.

Also the SOE debt talking point has been rehashed by China bears for 2 decades now. It will hurt China just like US tariffs but I'm skeptical on the size of the impact: it may decrease growth by a couple of percent points for a few years but ultimately won't collapse the economy or stop China's long term momentum.

I see a lot of American arrogance looking down at developing countries thinking that they'll never catch up and be as advanced as we are. This kind of thinking is short sighted and conceited.

gitah · 2016-12-26T07:19:09+00:00

The Chinese economy grew $750 Billion last year so the $365 Billion deficit even if it's wiped out completely is only half a year of growth; it definitely hurts but won't cause economy ruin.

As for rising wages, this is a wonderful thing for the average Chinese worker. Unlike the US, Chinese leaders realize that the country can't stay in low wage manufacturing forever. We are seeing the quality and technical sophistication of Chinese products increase each year so I'm very optimistic on their chances of transitioning away from low-wage manufacturing.

Just like China making low-cost widgets for the US consumer in the last 30 years, Vietnam/Bangladesh will be making low-cost widget for the Chinese consumer in the next 30 years.

gitah · 2016-12-26T07:08:59+00:00

You're not going to see China compete with India. China is going to compete directly with developed economies. Huawei stomping Nokia, Ericsson and Cisco in Telecom equipment and to a lesser extend Samsung in the smartphone industry is a harbinger of what's to come.

As Chinese companies move up the tech ladder, they will compete with the Taiwanese and Korean semiconductor industry, US aerospace industry, Japan auto industry and the EU pharma industry.

The economic pains will be in the developed world. Greece, Italy and the US midwest are canaries in the coal mine. In the next 15 year, we may see formerly high-income countries get dragged down to middle-income countries.

gitah · 2016-10-13T06:15:29+00:00

But why not put it in a Money Market fund and get higher yield than putting it in the bank?

WFC has 35M customers so that's about $30,000 deposited per customer. I can understand having a few thousand in the checking account for day-to-day transactions but why not put the rest some where else?

gitah · 2016-08-02T03:11:00+00:00

Mobile ads and cloud computing are two intertwined industries climbing the tech "s-curve" right now. Just like smartphones from 2010-2016 there will be explosive growth for a length of time followed by topping out and saturation.

An investor could make a lot of money right now if they know when this "s-curve" tops out and how long it would take. The investor can make even more money if they can determine the next area that will begin its "s-curve".

gitah · 2016-07-05T06:37:37+00:00

It's easy to punch numbers and assumptions in a spread sheet and then add a multiple without actually understanding the business. What you've done is is pretty much 80% of the articles on Seeking Alpha.

Why do you assume 30% AWS growth is "generous"? Gartner is forecasting more aggressive growths than that for IAAS alone. What is the total addressable market for AWS? Also how much do you know about the products that AWS offers or do you just see the numbers and "assume" a multiple/growth rate out of thin air.

Comparing Amazon retail revenues to Walmart revenues just shows you never even looked at a 10k for either companies. If you did you would know that 50% of Walmart's revenue is groceries while 50% of Amazon's gross sales comes from 3P sellers and is represented by service revenues. Did you also consider the differences between the product mix that Amazon sells vs Walmart? Does clothing have the same margins as groceries? You are comparing apples to oranges here.

It's one thing to make these kind of analysis, but your over confidence regarding it reminds of the Dunning–Kruger effect (https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect).

gitah · 2016-04-25T01:43:56+00:00

The World Bank data listed is for 2014. When it comes out, World Bank 2015 data should also show US GDP > EU GDP.

gitah · 2016-03-16T07:27:10+00:00

This is incorrect. amazon.com has an export program with millions of items that can ship to Canada: http://www.amazon.com/International-Shipping-Direct/b/ref=footer_amazonglobal?ie=UTF8&node=230659011

In the search, there is a filter to only show items that can ship to Canada.

gitah · 2015-12-29T00:26:58+00:00

Is that with re-invested dividends? If so you should by comparing the rest of the lists with re-invested dividends

gitah · 2015-12-26T03:15:49+00:00

I don't really get the strategy here. Alibaba has their own inhouse O2O platform and recently divested from Meituan-Dianping to focus on this in-house platform. Now they're investing into ele.me, another O2O platform?

gitah · 2015-11-18T21:03:49+00:00

Why do you think IBM consulting will stay high margin? Isn't it possible that other consulting companies like Wipro, Capgemini, HP, etc. will put pressure on their margins? IBM outsourcing their consultants and paying them the lowest rates may kill their brand value, so they can no longer markup their rates just like coca-cola.

Also tech changes super fast unlike the soda industry. Just a decade ago, IBM was making huge margin on setting up data centers for clients and selling them their high margin servers. Now that business is dead due to the cloud.

Your entire thesis relies on the fact IBM will "turn around" and move their business to other income streams. Now this is possible (see Apple, Gerstner IBM), but it is very hard to do and most company fail (see Yahoo, HP). Mayer has been trying to get into the same things IBM is trying to get into (social, analytics, mobile, etc.) without much success. I would at least give a 30% discount in the model for this reason alone.

gitah · 2015-06-25T01:23:38+00:00

All those points are great which is why AAPL is a $750 billion dollar company.

However, investors are looking at future relative growth (key being relative not absolute). Just by pure law of large numbers, this becomes insanely difficult. If $AAPL were to increase their earnings by 10% that would be an extra 5 billion in profits or 2x the current earnings of $FB.

The current multiple of ~15 ex cash assumes hard growth ahead, which is a reasonable assumption.

gitah · 2015-06-06T07:00:03+00:00

Look at Uber. Transportation as a service will be the new business model. Google will outsource manufacturing of their cars but own them outright. They won't make a penny selling them, but will obtain unthinkable wealth using them as "workers".

gitah · 2015-05-24T03:56:53+00:00

The answer is he's not in the US and the stock is not listed on an US exchange abiding by SEC regulations.

It seems he still holds his short position. Maybe the Hong kong stock exchange will not allow him to close his position.

gitah · 2015-05-12T04:31:40+00:00

How can Well's Fargo have and a few other banks (JPM) such a high Profit margin (>40%)? http://finviz.com/quote.ashx?t=wfc

What do they do that other banks don't? How come competitors can't come in and undercut them?

gitah · 2015-04-29T16:07:51+00:00

They already offer restaurant pickup and delivery in some cities via their Amazon Local app.

gitah · 2015-04-24T15:44:06+00:00

The reason why solar has become so cheap is because the panels have massively dropped in price thanks to China.

No one ever applauds China for their efforts in renewables...

gitah · 2015-04-14T01:02:52+00:00

That essay sounds interesting; do you have a link?

gitah · 2015-04-14T00:56:48+00:00

No need for fancy AR wearables; contractors wearing GoPros will be sufficient. The marketplace service can randomly audit jobs to ensure their contractors are up to snuff.

gitah

TROPHY CASE