Weekly Highlights: Jack Ma, Tesla EOY Deliveries and Value Investing in Post-2008 Financial Crisis

Jack Ma

"Where is Mr Ma?" This is the news reverberated by the mainstream media recently, probing for clues on Jack Ma's whereabouts since his public "disappearance" for 2 months now. To recall, in October, Jack Ma made a controversial speech critiquing China's "pawnshop financial regulators and state-owned banks"; calling the latter "old people's club" and blaming the same as suppressor towards business innovation. It appears that after he made the CCP off-putting comment, nothing has ever been smooth-sailing for the billionaire, which also adversely impacted the $BABA stock price.

In early November, Mr. Ma's Ant Group IPO, dubbed as the biggest IPO in history with almost 3 trillion investor demand of its shares was rug-pulled by President Xi by postponing the enterprise's IPO. Perhaps, possibly cancelled. Furthermore, $BABA took a 13% haircut in December 24 after the Chinese regulators sniped the e-commerce giant with anti-monopoly investigation. Alibaba has to pacify its investors by expanding its multibillion share buyback programme.
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$BABA is a retail investors favourite stock and as of writing, everyone seems to be looking for the media-savvy billionaire. Maybe Guo Wengui could shed a light?


Tesla EOY Deliveries
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Hate it or love it, $TSLA has been ripping and breaking shorty shorts hearts and bank accounts since April last year. Whilst its goal is to deliver half a milly vehicles, Tesla reported 499,550 deliveries. $TSLA is now trading at $729/share or $3645 pre-split. Insane!
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​Lord Elon says, "Thanks."
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Value Investing in a Post-2008 Financial Crisis Era
​(w/ Grant Williams & William Strong)

​6:52 Talks about his experience in the bond bear market where interest rates did not go down despite recession in '73-'74. One of the reasons was failure to distinguish between real and nominal interest rates. There was an accelerating inflation and the real interest rate was actually not that high, although the nominal IR were.
8:25 Bankruptcy of New York City.
13:25 Bill Ruane had been on the same class with Buffett on Gramham's seminar. Ruane started the Sequoia Fund in '70-'71 which started poorly. In 75-'76, they had the best performing fund in the [US]. This illustrates the cyclicality of value investing.
15:18 Buffet changed from strictly a deep value investor to higher quality business picker with a little higher valuations. They [Ruane and Buffett] were looking for really cheap, but really good business [high returns on capital]. They were also looking for businesses that didn't need to replace capital as inflation grew their revenues - media both TV, newpapers or magazines.
24:10 Value Investing. Bill introduced the book by his friend, Jean-Marie Eveillard, Value Investing Makes Sense. The results of value investor over long periods of time have been excellent. However, this requires patience and discipline. Value investing is buying stocks when it's undervalued, hold it and sell when it is overvalued. It requires a leap of faith that the fundamentals will be reflected on the stock price. But there are exceptions to that like what happened in Japan. Value investors don't believe that markets are perfectly efficient nor perfectly inefficient. However, overtime markets become more efficient and valuations will come back to where they are.
28:34 Patience holding just cash. That at some point, stocks will become cheap again where you can deploy that cash.
33:40 Trade Execution. Faith in Value Investing trumps the sentiment around you. When the rational valuation of things is so out of line with the stock price, that is an opportunity. The negative environment creates an environment that is going to heal the economy, bring down inflation.
34:35 In 2007-09, Bill was short against the housing bubble - homebuilders, mortgage originators, guarantors, banks, investment banks. Short against his broker, Goldman Sachs and had to move assets to Northern Trust. The Longs got destroyed during the collapse. Bill covered their shorts and went from 40% short and 80% long, to 110% long to 5% short in late '08-'09. That became a home-run.
40:25 Lessons in the '90s - Tech bubble. There are anomalies that are too big but that doesn't mean it is going to last. Because in the long run, it comes back to some kind of reasonable level. After the tech rally in 2001, they started to make money going long on companies that were out of favour.
45:50 Asian Crisis.
48:20 Bear markets scare people out of positions because they don't really have confidence in what it is that they are owning or buying. Portfolio managers should also be analysts.
49:55 Arithmetic of value investing. Volatility is not risky. The idea is that as a price of an asset goes down, it is less risk, not more. Whether it goes down quickly or slowly is irrelevant.
58:48 Starting the Eschaton fund.
1:00:00 Canadian and Australian housing bubbles.

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End.