Yet another excellent, insightful article by Jim Sloan at SA.
TL;DR: “Dump China, Buy Japan, Buy I Bonds, Buy Berkshire Hathaway”
His views re China match those of Mungo word for word. Also has something positive to say about Snowflake (in which Berkshire has a small position, as I recall).
"TL;DR: “Dump China, Buy Japan, Buy I Bonds, Buy Berkshire Hathaway”
His views re China match those of Mungo word for word."
Are we looking for diverse views here - pros and cons? Or shall we all just slide down into a Mungofitch echo chamber? Board already has some of these qualities.
No disrespect meant towards Jim.
For a different perspective on China am posting links to a couple of papers by Li Lu on China:
A Discussion of Modernization Part I (2014):
Part II (2018):
A look at the Future of Sino-US Relations from the Historic Lens of Human Civilization
“Tensions between the United States and China have been building since President Trump took office, escalating into a trade war before our eyes. How will this trade war end, and where will China end up? Lost in the fog of confusion created by the relentless 24-hour news cycle, we often find ourselves unable to explain the present, or see the future with any clarity.”
If nothing else, perhaps we can learn some history from a Chinese perspective.
No disrespect meant towards Jim.
None perceived : )
Just a reminder that I’m not bearish on Chinese equities.
I just think that certain downside risks are considerably more meaningful in probability and magnitude than some optimists assume.
They all spring from the CCP, of course. And secondarily the foreign relations it inspires.
I would never bet against the indomitable spirit of the typical Chinese engineer or entrepreneur, but they aren’t in the driver’s seat.
Are we looking for diverse views here - pros and cons? Or shall we all just slide down into a Mungofitch echo chamber?
Of course we are (or at least I am) interested in diverse views. I’ve certainly offered critical perspectives on Berkshire here.
I find Jim Sloan’s views to be quite educative, as I do Mungo’s. Even when I may disagree with them.
"I find Jim Sloan’s views to be quite educative, as I do Mungo’s. "
Wholeheartedly agree. Sloan does great work. One of, if not the, best on SA.
Interestingly, he (Sloan) was bullish on BABA less than a year ago (Feb 16, 2021,BABA Close = $237.70):
"But even if market shares of Alibaba should drop and the growth of the Chinese economy should slow down resulting in much lower growth rates for Alibaba, it seems absurd to imagine Alibaba growing only in the low single digits in the years to come and even in such a scenario Alibaba is fairly valued right now. Alibaba is a great bet at this point and probably one of the best bets in 2022– a risky one, but one with extremely high reward as in my opinion Alibaba continue to grow with a high pace (despite growth rates slowing down over time) is the scenario I would ascribe the highest probability to."
On September 1 (BABA Close = $173.28) , he did an about face on China. It was now “uninvestable”:
The China Narrative Is Broken; China Is Uninvestable For Now
Sloan has obviously “changed his option as the facts changed”.
And now, with BABA now at $117 he reiterates his “Dump China” call.
Am betting that Charlie and others are right in believing that China and BABA (share/ADR/VIE/piece of worthless paper bag) holders will do well in the long term. Of course, I reserve the right to change my opinion as the facts change.
I’ve just sold another chunk of BRK so it’s now 50% of the portfolio. I’ll be buying something Chinesey tomorrow. I’ve also just been allocated some JD.com shares from my Tencent holdings. Im very satisfied with that allocation now. 50% US 50% China given urrent valuation and future growth concerns. This from a previous 95% Brk allocation.
That’ll be it for a year or two.
Wow, I’m not the only one who is bullish on Japan. I see that Jim Sloan is as well.
However, I disagree with his bearishness on emerging markets. Like Japan, emerging market stocks AND currencies are undervalued. While I’m bullish on foreign stock investments in general, I’m especially bullish on Japan and emerging markets.