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Participant ○○○

I live in a country the geographic size of West Virginia with an economy the size of Oklahoma City's metropolitan area (#100 in the USA). We REALLY feel China's presence here. They built us the best soccer stadium in Central America for FREE. Well not exactly for free. We had to recognize China as China. Not Taiwan. I love that stadium.

I admit. My wife is a bit racist towards the Chinese. She and her friends share all types of conspiracy theories about them. But I'm not. In fact, when my country's lockdown ends I'm going to the Chinese Cultural Center to take Mandarin classes. I had my daughter take them when she was in high school.

The main reason I haven't gone to Asia is because I really don't like to be in an airplane for more than 6 hours. I can barely tolerate a flight to Europe. Asia? Well. Maybe someday. But I won't be going with my wife. She has ZERO interest in visiting China.  

 

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Explorer ○○○

I spent some time in more "rural" mainland China (which means cities of only a couple million) a few years ago where I also spent time with my brother-in-law, who lived in Hong Kong--during the first waves of the protests there.  Speaking purely from my own experience, I learned a lot and it has informed my investment view on the country.

First is that the Chinese people are more similar to the U.S. people than we'll ever admit (socially--forget politics for a moment).  They LOVE money, bling, big cars, and showing off.  They are loud, boisterous, and rude (sound familiar?).  They have a spirit of entrepreneurship, starting businesses, and showing off success.  They regularly dance in public parks.  They don't mind taking shortcuts to make money.  Not too different from us.  I'm talking about Chinese people outside the major cities in China (not tourists) from my own experience in observing, talking with people, and meeting others.  We actually have a lot in common and could be friends.  YMMV.  

They also don't like talking politics--just like a lot of Americans, most of whom don't even vote despite the freedom to.  They also viewed America as some wildly advanced place paved in gold "50 years ahead" (they called us "super-organized" say what?).  But keep in mind that they have surprisingly small social safety nets and must save lots of money to get health insurance, education, etc. I was floored by what I learned--and how deregulated, "free" (in some ways, not politically), but also how "behind" they were.  Don't use public restrooms or trust the food--and please don't get sick.  The hospital systems outside Beijing/Shanghai, etc. are atrocious.  

But contrast the people with the government, just like the U.S.  The government has an actual plan and vision, which we don't, and haven't for a while.  They are building an alternative financial system.  They are creating a tech/internet network that will compete with the West.  They are also forming individual relationships with multiple countries by building stadiums, as noted before, and other roads, infrastructure, etc.  If you agree with the government's vision, then please invest there.  There is NOT ONE investment in China that does not support the Chinese government.  But it's not my vision.

SO what does this mean for my own personal investment purposes?  Well I don't knowingly put a single dime of my own money into China--although I know there are some Chinese investments buried in my foreign-focused funds.  I do the best I can.  I simply don't trust a single statistic or news report coming out of China.  And neither should you.  I watched the censorship in action while I was there.  And yes, the country is growing, but outside the glistening skyscrapers, it's a mess.  The government wants to be a strategic competitor with the West and not emulate Western values--especially the rule of law.  I believe the nation will face a reckoning.  And the Chinese government will not think twice about confiscating MY western money at such a time when they need it. 

Maybe I'll be proven wrong.  But from my own experience, observations, I choose not to invest there.  And sleep better for it.

 

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Frequent Contributor

@unbiased2020 FWIW, almost every (actively managed) large-cap growth fund manager owns Chinese companies. That’s quite a talent pool (Fidelity, TRP, etc.) That inspires some degree of confidence.

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Participant ○○○

@chang folks at Fidelity, TRP are investing in Chinese firms.. how can we be sure they know what they are doing? They might be just following the herd or relying on same false data as others or it could be a low conviction high risk high reward position?

D&C was invested in many of the financials (all in their top 10) that blew up in 2008. I read their letter after the fact and they kept defending their thesis and research in now gone companies. Bill Nygren was big on Wamu I believe.

 

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Frequent Contributor

@waffle wrote:

@chang folks at Fidelity, TRP are investing in Chinese firms.. how can we be sure they know what they are doing? They might be just following the herd or relying on same false data as others or it could be a low conviction high risk high reward position?

D&C was invested in many of the financials (all in their top 10) that blew up in 2008. I read their letter after the fact and they kept defending their thesis and research in now gone companies. Bill Nygren was big on Wamu I believe.


Danoff, Puglia, etc., have 30-year records doing only one thing. They have enormous investigative resources. That’s worth something.

Nygren was never convincing. Nor successful for more than limited stretches of time (after which he gave it all back). I’ve never owned one of his funds.

You’re also comparing growth to value, and value has been breathing growth’s exhaust fumes for a decade. If we’re going to talk about China, I’d keep the comparisons to growth.

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Participant ○○○

Point was these managers do not always know what they are doing. Even US Companies can be so opaque and hard to understand.

Companies in other countries with economies, culture and regulatory environment so different than ours would be even harder to understand and analyze even with analyst teams in Singapore or Asia. That adds another risk. And more risk is added because we cannot trust the data from these companies and economies.

Danoff does not seem to own Chinese/Asian companies at least not in top 10.

 

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Frequent Contributor

You’re right about Danoff / Contrafund

Fund holdings

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Participant ○○○

Hang on to your suspenders!  Flip a coin as to which way the market turns.

Gabe

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Participant ○○○

Also cold war - if new administration comes either this election or next, will they reverse current admin's policies on cold war and trade war with China?

I am not so sure about that. Such plays can span many presidents and usually there is longevity to govt policies. It would be really hard  to make any progress if every president who comes just undoes whatever previous did. Government just like company management tend to prefer continuity.

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Follower ○○

Regarding China, mind of most american, especially politicians still stuck in 30 years ago. But these 30 years, China changed so much, except free election, government has been very open mind toward western countries,  they copied and implemented almost everything from these countries. It's politicians of western countries so ideological now days. 

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Explorer ○○○

Wow lots of discussion here since yesterday.  It's a great topic.  I am also very concerned about the political risk in China--but not because the Chinese would initiate it, but rather as a result of a rapid deterioration of the U.S./Chinese relationship for complicated reasons.  Heck, I even wonder sometimes about overweighting U.S. equities given the state of our polarized nation.  It's an imperfect world.

I hope that does not happen because, like I said from my own experience there, our nations' peoples could be great friends and a strategic partnership could potentially transform the world.

Nevertheless, I don't see us going that way in the near-term, and believe that the fear alone of escalation and of disruptions to supply chains may result in moving away from China globally out of an abundance of caution.  Opportunities in other parts of SE Asia might be more interesting from a long-term investment perspective.

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Frequent Contributor

History of rm posts:

1.) Some news-worthy event happens.

2.) rm posts what seems reasonable concerns regarding said event.

3.) A tweet or something happens making the event more perilous.

4.) Another tweet, or news article makes original concern disappear...for a while.

5.) @chang buys the dip.

6.) Repeat

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Frequent Contributor
LOL! MATFX went up 3% today...

View solution in original post

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Frequent Contributor

MATFX has been on a tear, @rhythmmethod. I’m glad I bought it, but I wish I’d been bolder and more a larger starting position. I added once after my initial buy. On the next dip, I’ll add again.

I always tell myself that I’ll add $X on the next “big dip”, but when that dip comes, I invariably add only around 20-25% of what I told myself I would do.

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Frequent Contributor

At least you bought into the fund.  I been holding back to act at all these past few weeks

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Participant ○○○

Also it is Chinese companies like foxconn which are setting up manufacturing in Vietnam. So even though some manufacturing may move out of China, they will be still done by Chinese multinationals. So should not impact revenues of these Chinese companies. Now what will be impact on people in China in terms of employment if any does not in any way impact the investment thesis. 

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Frequent Contributor

@chang wrote:

MATFX has been on a tear, @rhythmmethod. I’m glad I bought it, but I wish I’d been bolder and more a larger starting position. I added once after my initial buy. On the next dip, I’ll add again.

I always tell myself that I’ll add $X on the next “big dip”, but when that dip comes, I invariably add only around 20-25% of what I told myself I would do.


@chang  Yep, one of my many 'sell the drama' mistakes. I'm glad I re-bought some even though below my original purchase. I've trickled a little more $ on the few slight down days. In general, I'm looking to increase that and VIGI as a potential hedge against possible lower U.S. $. I'm looking for that big dip as well. So, it is also with AAPL, MSFT, AMZN - What a market?!?! Stay well, man!

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Frequent Contributor

@waffle wrote:

Also it is Chinese companies like foxconn which are setting up manufacturing in Vietnam. So even though some manufacturing may move out of China, they will be still done by Chinese multinationals. So should not impact revenues of these Chinese companies. Now what will be impact on people in China in terms of employment if any does not in any way impact the investment thesis. 


Foxconn is a Taiwanese co.   https://en.wikipedia.org/wiki/Foxconn

YBB
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Participant ○○○

That is great to know that foxconn is Taiwanese and not Chinese and that they are moving their operations from China to Vietnam and India. 

Added later: These long term negative economic trends have no correlation with Chinese stock market performance. Though personally chose to not invest in Chinese stocks despite the possibility of gains.

Just read, that in addition to US, UK, Australia and Japan, Now Indian public sentiment is very anti China as well. Looks like there was a skirmish at border. So far Indian PM has been very pro and friendly China but this public sentiment could force him to move to neutral if not very negative China.

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Participant ○○○

India just banned some 60 Chinese apps. Also banned Huewai from govt contracts. More business decoupling in progress. 

My guess - China does not care.

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