Inflation
Inflation yardsticks were more
accurate until the politicians forced the economists to change them so the economy
would look better than it actually is. In addition, it lowers the payment to
entitlements such as social security.
The average inflation rate in the
past for US is about 3%.
Long-term bonds
I have stated many times: Do not
buy long-term bonds today. Yes, you do not lose the value except from inflation
by holding them until they mature. Most are traded before then. Their value is
inversely proportional to the rate change.
If you want to accumulate cash,
buy short-term bonds (1 year or less) and/or CDs (laddered CDs for myself) as
described in my blog.
Copyright
Japan and S. Korea did deliver
cheap products at one time and they did a lot of copying.
It is the same road taken by
China moving to a developed country. It briefly happened to US too in the
colonial days; it made Charles Dickens so mad that he did not want to come to
the US (his loss!).
Japan and tariffs
Our common enemy is China:
military and economy. The military site in Japan helps us to 'contain' China.
Economically we are in the short end of the bargain. Japanese have
commercialized and profited from our inventions.
Japan has a lot of tariffs to
protect their own agriculture. It is beneficial for Japan to give up some farm
products such as rice. It is far expensive to grow rice in Japan. Japan treats
rice divinely.
Some protectionism is not
avoidable. Free trade in farm product would drive the farmers to extinction as
we produce most food cheaply.
Car trade is not an issue to me.
Most Japanese cars are assembled in the US for US consumers. Our car export to
Japan is minimal. Our cars are too big for most Japanese roads plus all the
regulations and road blocks. Car components are treated as import. However,
many are made in China. Japan could lower the cost of engine to reduce tariffs
for assembling in the US.
Tesla’s new plant in China
There are advantages:
1. Huge
local market without tariff. However, they have to face Chinese competitors who
are slow in conventional cars but not in electric cars. Many Chinese still buy
American cars to boost their social standing.
2. To
export from China to countries that are in trade war with us.
3. Better
workers at lower wages. Robots could take some advantages away.
4. More
auto parts and yes Chinese steel without the tariffs
5. Incentives
from China.
5G
We do NOT have the ability to
build an entire 4G network and it does NOT mean we do not hire other countries
to build them for us. From the report we have about 10% of China's network
built since 2015. We do have a lot of components for 4G networks. At one time
we're the only country pioneering in network. Sigh!
HSBC
HSBC stands for Hong Kong Shanghai Bank Corp. It is one of the top 5 banks in the world. It left Shanghai to Hong Kong and now returning to China - a sea turtle? It abandoned a lot of banking services in Europe in 2010. It moved its HQ to Britain during the Hong Kong takeover.
FXI
If the trade war is settled to
any extent, Chinese stocks will be up. Fundamentally, FXI is better than SPY in
my recent evaluation. The simplified version:
Aug 6, 2018.
Buffett’s tax avoidance
With his team of tax lawyers and
accounts, it is possible for Buffett paying less Federal tax than his
secretary.
1. His
secretary has been paid too much.
2. His
funds give him options instead of salary.
3. If
he maintained a 15% tax bracket, his long term capital gains would be Federal
tax free. I did for several years. On the years I did not have enough capital
gains, I rolled over some to Roth IRA (not allowed this year on to my
knowledge).
4. He
trade in Roth IRA only.
5. On
his taxable accounts, he transfers his winners to his children,
grandchildren... but realizes his losses so he can claim the $3,000 loss.
6. He
is not honest. An honest man pays his share of taxes to provide roads, help the
poor... I would give him a pass as he donated a lot to charities.
7. He
could manipulate his business dealings like Trump. I pay more taxes than Trump
even he is counting millions and I'm counting pennies.
Your share of the national debt
Divide US $22T debt by 330M and
you get $66,666 for each of you! A number from hell!
IP transfer for ChinaSteve Dickinson from Seattle wrote:
“With
respect to appropriating the technology and then selling it back into the
developed market from which it came: that is of course the Chinese strategy.
It is
the strategy of businesses in every developing country. The U.S. followed
this approach during the entire 19th and early 20th centuries. Japan and Korea
and Taiwan did it with great success in the post WWII era. That is how
technical progress is made.”
Is the Amazon effect fading?
Walmart has a big surge today.
Utilities, safer stocks in
S&P500, should be doing fine too.
Check out the technical
indicators in my books on market plunge. The current drop is just a concern.
All bubbles have been burst. Almost no exception.
Chips
Chip makers are not looking good.
I bought MU recently. Fundamentally sound. China is the unknown factor but I
believe it is over-blown.
Nividia's 10% after hour drop is
over-blown too. It has been up, up, up for years. Taking a breather on its way
up I hope. The new AI chip will be a breakthrough.
Intel has been changed from a
growth stock to a value stock. It is about 50% better value but about 50% worse
in growth in the same sector.
I bet they will fall further but
the bottoms could be closer. Keep an eye on them cautiously. Aug 17, 2018.
TSLA
TSLA needs to boost up the prices
and/or ask for incentive credits to be profitable. It does not look good. GM,
Ford... are coming with EVs and they have dealers. Do you want to buy a car
with remote support?
Remind me of the stories:
1. I used to work for a regulated
business. I could tell the CEO that I could save the company millions of
dollars a year. How? Just do not start any new businesses which have all been
losing millions every year.
2. I would ask the CEO of Digital
(the largest mini-computer then) to spend more effort on PC.
I did not as I'm sure I would be
shown the door right away.
Two strategies
Buy Low, sell high.
Buy high, sell higher.
The first one is a value
strategy. You need to be patient as it takes time for the market to recognize
the value.
The other one is momentum with
some technical analysis. You need to pay attention when the momentum turns or
loses favor from the institution investors.
Even they seems to be opposite, a
good investor can make money in either strategy.
Chinese trade
Chinese strongest weapon is
depreciating the yuan. Last year I got about 5 yuan per USD and I got 7 a long
while ago.
I predicted ZTE would be settled
as China would counter act with reducing or banning export of the rare earth
elements to the US.
Farm products will be hit first.
Is Trump going to have a permanent subsidy to farmers?
Apple, GM, F, Boeing... will be
affected by the trade war. China would buy all the jet planes from Airbus. I
bet Boeing has a lot of jets to China. Washington state's economy depends a lot
on China.
We're saving a tree (steel
industry) but lose the entire forest (all industries using cheap steel from
imports.
Emotionally detached
I feel great today as most of my
holdings are in CDs.
When the market keeps breaking
records, I feel miserable.
An educated investor (I have to
read my books again) should be emotionally detached as illustrated in my book
Complete the art of investing.
China’s economy
Retail and unemployment reports
from China do not look good. 5.1% means 5.1% unemployment as most want to work.
That's why they need the mega projects.
The past. Train to Tibet (at
least double the living standard of Tibetans), Three Gorges Dam, Water
Redirection from the south to north (2 routes done), highways, many
skyscrapers...
Present. The ocean bridge in
Pearl River Delta opening soon. 60% of the world's high speed rail. Many
skyscrapers.
Future. The new Beijing airport.
Beijing and many cities subway expansion. The Water from Tibet to west China
would make the semi desert there rich farm land.
Search "China mega
project" in Youtube for many.
Tesla again
I would buy one as the first one
in my block. Actually the down payment has given me a boost in social standing
and being green conscious - it would have paid me back already.
For longer trips such as
vacation, I would not use my EV as the vacations are for relaxation and not for
the fear of running out of juice.
China has huge incentive for EVs
as it is one target to cut down oil import and pollution.
Harley
Most US consumers buy Harley for
the romantic image of Easy Riders, not for the bike itself as Japanese build
better ones.
BTW, motor cycling is a slow way
to commit suicide. When you count 10 biker friends, most likely one passes away
or has serious health problem due to accident.
Same logic?
When Toyota or Honda opens a
plant in US, should Japan government boycott them? A plant offshore has no
tariff to the host country plus the countries that do not have tariff to the
host country.
Any action cannot be all good for
all folks. Trump should let go and be more presidential; he is not in high
school any more. Harley losing to Japanese and eventually Chinese competitors
is seeking for survival.
Aug 13, 2018. 08:07 AMLink----
The above is from my book "On Business News 2018" available from Amazon.com. 415 pages (6*9).
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