Thursday, September 15, 2016

On today's news

* Every country lowers the interest rate and depreciates her currency. The news is when it is raised. The impact to the market is huge esp. from the US.

* World Bank, IMF...are controlled by the US. China's new international bank is for infrastructure projects financed mostly by China and Chinese construction companies. In 10 years or so, it could use Chinese currency instead of USD.

* Burma is a poor country. The new US policy will be beneficial to China exporting infrastructures, factories...

* All trade agreements are used to exclude some countries. However, when the members do need goods from other countries, the mutual benefits for the members are gone. Examples: Russia oil for EU, oil and sea food from Norway for EU.

Wednesday, September 14, 2016


The following link from Charles Schwab offers a lot of insightful articles on this topic.

Driverless car

How to fix the problem of consistently changing roads, signs (like one-way sign), blind spots, temporary detours, strategies in finding parking space, getting GPS signals, extra insurance cost, mal engine or software or CPU function...

Some tunnels may have 5 minutes long without GPS signal.
Well, at least we do not have drunk drivers (or stoned) that cause most of the traffic accidents. When they're in court, most are let go free. Why? The entire jury are drunk or smoking weeds. We're in a lazy, permissive culture due to the success of our ancestors.
Another example of my Coconut Theory.

The car manufacturers will give you free life insurance (no kidding) and all the greedy lawyers are smiling.

Well Fargo, Well-managed?

Insider trading if the CEO shorted his own stock?

If you have a choice of not buying milk for your baby or lying, what do you do? If not following the order of your boss, you will be out.

Many questions than answers on today's news

* I bet Mon acquisition by Bayer will not be approved by the US government.
* "Existential threat" or "Exitential threat"? EU is a good idea but not thought out. It should be just a trade union and use USD as its secondary currency (great for tourists). No one took the free consulting service from TP Corp. :<
* MYL is manipulating the drug price but not GILD. A tale of two drug companies?
* $159 for ear plug? Tim Cook is no Steve Jobs and the entire market department must be on vacation.
* As posted yesterday, do not solely blame the first level of bankers as they have to follow the order of higher ups who set up unrealistic quota. Does it sound familiar with Lehman Brothers?
* Since 2013 and after so many launches, China (a country that could not build a reliable bicycle in the 50s) has only one recent crash. It has the most economical and reliable rockets. Depending on Space-X's IT security, China can have the technology to recycle space stuffs soon.

Tuesday, September 13, 2016

Blame where the blame is due

Do not blame solely the first level of the bank employees. They have to meet the quota set up by the top management and the quota are up every year. That's what a real banker told me. Now these folks lost the job and are hard to find another one.

If you have to choose between buying milk for your baby and lose your job, what do you do?

On today's financial news

* Today's volatility must be great for traders. Not being a trader, I still benefited by unloading several stocks at higher prices and buying some at lower prices.
* We need more banking regulations to protect consumers (actually the banks themselves including the defunct Lehman Brothers).
* BA has been fine to me for trading. The order is a queue and it does not have a penalty to cancel the order that are more than a few years away. BA gives the best warranty in their products. The new composite material worries me.
* Too many news on China. Here is my updated article (published in SA a long while ago).

They're lazy but not stupid

Why the Fed employees support a 10-day Thanksgiving holiday when they already have 365.25 already? I know as I was one of them in Fed Reserve Bank.

Am I racist?

When I talked about the problems of the black, I would be likely called racist. If they do not know about the problems, how can they fix them. So, most likely the problems have to be fixed by the black. Despite all this, I have to say they have to start education in the family. With multi-generations of teen age mothers and high % of male in prison, the future does not look good.
If you have a museum for white, you will be called racist. But, one for black is OK.
Same for making racist jokes. Fine with the black on black, but not white on black.
The editor of China Airline magazine had to apologize to the Indians, Africans...of telling her readers not to visit some part of London due to high crime. It is true that many mentioned minorities reside there. It would be very innocent as they've not deal with minorities that much.
Undoubtedly, the white had done sth wrong by slaving the black. But, that is decades ago.
Besides some bad apples, police are doing great job at the risk of their lives.
Do you call me racist or white lover?

Monday, September 12, 2016

Life is full of surprises

Samsung's self-destruct phone may save Apple from going below $80. A new tool for the terrorists? Today we have to rush the new mouse trap to the market without making sure it could hurt the trapper instead of the trappee (new word in P dictionary).
When you do opposite to the institution investors on Apple, you could be a billionaire by now. No kidding but no time to prove it.
Life is full of surprises as I watched the Patriots deflated all the high confidence/hope of the desert folks and the bias of all Pats haters. The chess player (the coach) controls the outcome of a game, not individual chess pieces.

Nurse homes are calling Hillary with the offer "Buy one and get one free".

Sunday, September 11, 2016

When China roars (updated)

"China as a sleeping lion whose roar would one day shake the world." - Napoleon.
Yes, China is roaring in this decade and the roar is getting louder and louder.

The most successful story in the last two decades

When the USA played the China card against Russia, it took away the embargo. Deng Xiaoping started an economic zone to build infrastructure (electricity, road, etc.) in an undeveloped city in South China and the rest is history. It is my Coconut Theory that when hard working folks have a chance to sell their 'coconuts', they will prosper. Lifting millions from starving to death is no small task. To me, Deng and Nixon should receive a Nobel Prize. However, since China has dominated the world, except the last three centuries, it is no surprise to me.

The Myths on China

Sam Walton was a patriot. He preferred to make less money by not selling Chinese goods. He estimated wrongly the profits from the Chinese products. When he died, the company turned into stores for Chinese products making his heirs the richest family and many of his investors millionaires.
Investors should not follow these myths that have been spread by TV networks and even professors.
·         A TV network advocates "Made in USA" in a series.
·         A professor from a prestigious university believed India will replace China as their population is younger.
·         A professor from one of our top universities believed colonization is good using Hong Kong as an example.
·         China is evil and they are communists.
·         They're stealing our jobs, technologies and movies.
·         All Chinese products are inferior products.

All the above are wrong or not totally correct and I will dispute them one by one.


China is one country in the chain of the global economy which promotes free trade. Buy the best product from the country that produces the best product at the least cost. Globalization debunks the myths.

·         China is moving up the product-value ladder. Some manufactured products, such as garments, will be moved to countries such as Vietnam and Burma with wages lower than China. This TV series makes you feel good and hence makes it easy for them to sell their advertising. In reality, manufacturing in many products will not come back to the USA due to our high wages, regulations and taxes. In a sentence, we're hurt by our own success. We need to give up these industries that we cannot possibly compete in and concentrate our efforts on high-value industries and industries we can compete in.

·         Product quality is controlled by outsourcers. Do you find product quality problems in Apple's

·         When you have a new technical product, you may want to assemble in South China, where most other OEMers such as cable and battery are available.

·         In many cases we are copying China’s mobile technology where China depends on.

·         From 2013 to September, 2016, China has only one failed rocket launch. It is the cheapest and most reliable launch platform. We cannot use it due to security argument. However, it provides a good source for the space station that China is building one themselves.

·         China has never wanted to be number one. From Opium Wars to 30 years or so ago, China had been bullied by foreigners helping Brits pushing opium to China. China built the Great Wall to keep the invaders away. They could have colonized many countries in the 1400s, but they did not.

·         China is not stealing our jobs, but globalization does. Most companies can outsource all functions of the company to other countries where they can find the best workers at the least costs.

·         China is polluting the world. Aside from the pollution from factories producing products for export, energy consumption per capita is far less than ours. China is #1 or #2 in most green energy technologies. Unfortunately, China is blessed with coal, but not blessed with the less-polluting gas and oil.
·         China is stealing our movies and intellectual properties. It is the same for most developing countries. China will enforce intellectual properties before it can move up to the next phase to a developed country. Our companies have to protect our secrets as the best defense is a good offense. Even the US had been in that stage briefly. Charles Dickens was so angry that he did not want to visit the US. Did we pay royalty to Hitler for using German rocket technology and other similar technologies?

We can shut ourselves out from all foreign trades, but it will harm us more than help us. We have to enjoy a $50 toaster to start. All the chicken feet, a delicacy for the Chinese, will be dumped into the ocean. Our high-tech companies, farmers, movie industry will suffer.

Communism and China

China is only communist in the second "C" of CCP, China Communist Party. Chinese are more capitalist than us. If you do not work, you do not eat. This simple rule motivates its citizens to work hard. The safety net is improving, but it is a long way from our social security system; our system may be too generous as it has encouraged too many free loaders and cheaters (also in the corporation level too). It explains why they have a high savings rate. Most companies in China do not have unions, inconveniences of labor laws and sometimes even help from corrupt officials. After a taste of capitalism, China will never return to communism, which encourages folks to be lazy.

Human rights and Tibet

When you compare present day China to the China 30 years, 20 years or even 10 years ago, human rights have grown by leaps and bounds. To me, food and shelter come first before human freedom. Human freedom should be allowed gradually and it requires educated citizens that China has, except in the rural areas. Allowing freedom too fast would cause chaos (my thought and is debatable).
Before the 'liberation' of Tibet, only monks could get an education. One-child policy does not apply to Tibetans and other minorities. Their culture is maintained throughout from the experiences in my two visits in the last 10 years.

Hong Kong

Present and past, Hong Kong's wealth depends on its proximity to China, contrary to the colonialism theory a professor had stated. I had bet on the iShares MSCI Hong Kong ETF (NYSEARCA:EWH) (an ETF for Hong Kong) at the start of the Umbrella Protest.  My order had not been executed due to my low price. The reason that the stock market did not drop further could be the plan allowing citizens in China and Hong Kong to buy stocks from the opposite exchanges. It will materialize soon after they finalize the tax and regulation details. Hence, the Chinese have more investment choices instead of investing in ghost cities.


Indians compare themselves with the Chinese, but the Chinese usually compare themselves with the USA. India will not catch up with China in this decade. It is more corrupt than China, more protective than China, and has more social inequality than China. The Tier I cities in India cannot compete with the Tier II cities in China when you compare the infrastructure, high rises, subway, airport, etc.
The growing population of India eats up all the limited resources of the country. As a Chinese saying goes, you get rich by making fewer babies and building more roads.

China's advantages

·         Huge internal market. The scale of economies is quite obvious.

·         An educated and hard-working work force.

·         Relatively low wages for qualified engineers and researchers. The wage of one US engineer is about the same as four Chinese engineers from my rough estimate. It is giving some technology companies problems, such as Cisco.

·         Government incentives and subsidies.

·         Most big projects and major purchases to foreign countries have a clause of technology transfer. If we do not oblige, they buy them from your competitor. The trick is to use the money for research (not bonuses to the management) and hold out the top technology.
·         Bitter tough lessons in the past 300 years starting from the Opium Wars to WW2.

·         One-party political system is not a bad thing. By the time China connects most, if not all, the Tier I cities with high speed trains, we're still arguing about who is on top for the first one.

The success of China is good to the world

After the last earthquake struck China, Chinese and the overseas Chinese helped to rebuild the disaster region without asking other nations for help. If China is as poor as before, you may have 20% of the world population begging for money.

When you need a drug to cure a terminal disease, do you care whether it is from the USA or from China?
It has rescued many US companies such as GM from bankruptcy. So is Volvo. China will buy many bankrupted US companies if we allow them. Some bankrupted US companies do not have much salvage values, but we argue not to sell on national security reason. Most do not make sense.

Vietnam is copying China's model and it is at least 15 years behind. Eventually, many factory jobs will be replaced by robots and countries such as Vietnam with labor cost even far lower than China. Our politicians have to WAKE up and try to solve our problems instead of blaming our problems on China. It already has attracted many industries such as textile that cannot afford the rising wages in China. The latest riot against foreign factories (mostly from Taiwan) is more political and not against the Chinese. The Chinese have been more integrated with the Vietnamese than most other SE Asian countries.

Resource-rich countries such as Brazil and Australia benefit from the demand in China. They will return to the normal trade levels when the global economy improves. Macau and Hong Kong have been benefiting from Chinese tourists. With the suppression of corruption, the gambling industry in Macau will suffer. Due to the recent Umbrella Protest, Hong Kong will suffer from fewer Chinese tourists.

China has become number one in tourist spending in France. It is similar to many other countries. Most companies producing luxury products benefit. The myth of an average Chinese citizen making less than $5,000 is debunked by these tourists. Firstly, the median salary is not $5,000 and secondly the size of the middle class is huge. Most countries benefit with the rise of China today, except Japan, which has an islet dispute with China. Philippines, backed up by the USA, has similar problems with China. Hope they will resolve the problem by sharing resources.

Not too long we will compete with China on higher-value products as we’re competing with Western Europe now. There are many recent examples that worry me more. A Chinese company captures 70% market of the consumer drone that was invented by our military. Chinese military drones cost about one quarter of ours and they have little restrictions to whom they sell to. Chinese has a monster machine to build bridges. They have more than the high-speed rail than all other countries combined. These are a few of many examples. If we ignore Chinese products due to poor quality, then we may have lived in a cave for the last year. When the average Chinese student spends at least two more hours in studying than ours, they will achieve more in life and catch up fast.


Being born in Hong Kong, I am naturally biased. I try to present this article with facts. China has a lot of problems that most developing countries have.
The following data are obtained from Barron’s article dated on Nov. 17. 2014.

GDP Growth
Export Growth
93 M
16 M
7 M
68 M
56 M
Monthly MFG Wage



Thailand is the most developed with a thriving tourist industry. However, political unrest would take it several steps back. This article is dedicated to our beloved Boston mayor Thomas Menino 1942-2014. This article was published in Seeking Alpha on 11-2014, a site for investors.

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This is one chapter of my book "Complete the Art of Investing". If it helps you, envision how 835 pages (Kindle version) would help you. It could be the best $10 you ever spend.

The above is an abstract from my book "Complete the Art of Investing" which is available from Amazon.

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