A few recent thoughts on international trades, investing and life in general

By | July 16, 2018

Trade: tariffs are always a mean to the end and it should never be the end

Despite various headlines lately on tariffs, and for a while, it seems that US is “picking a fight” with the rest of the world (or at least with the countries that are running a trade surplus against US), such things are just techniques to force parties back to negotiation table and should never be an end game and become permanent. Of course in the heat of the negotiation or fight, no parties will declare that we are just showing the other party a temporary punishment and we will remove soon. All parties will declare this is the right thing to do and it will be set once and for all, especially when lawyers are involved.At the end of the day, true leaders should make important move to de-escalate the situation and that’s how we have truce in war. It may be a forced-action – certain development within their country forced the softer tone, or it may be a result of behind-the-curtain negotiation that is not hyped by media and other bystanders.

Any panic in the market due to trade frictions will provide value investors opportunity to buy something for a good discounted price, however, after 9 years of strong bull run in equity market, strong caution is advised on something that appeared to be cheaper than last month, but not really cheap on the intrinsic value basis.

Investing: there are not a lot of bargain stocks around the major markets we cover

In last post we talked about Shanghai Composite Index entered into bear market territory. Over the past 5 days, it rallied over 5%.  We still believe that the tariff friction will cause more volatility in Chinese equity markets. We are not top-down investor here and we only focus on individual companies. Through last week, all stocks we tracked in Chinese equity markets made strong rally that made them further away from the price that we are willing to pay.Therefore, we will patiently stay put and observe.

In US, the technology sector had more than 2.3% rally over past one week and several issues made historical high. That made them further away from their intrinsic valuation and more into speculative pricing range.We will not get involved in any of such issues however, it provides indicators on how market perceives risky assets – something we can take advantage when deciding selling or buying (remember the moody maniac Mr. Market?)

Life: how to have “Grit” in you

One podcast we listened last week from Freakomomics Radio was about how to have “Grit” in your character. I thought it is probably the most valuable advice I heard and it suggested some roadmap on how to put things into actionable plans.

Note: lots of information below is directly quoted from Dr. Angela Duckworth, the professor in University of Pennsylvania who coined this term and led the research in this field.

What is Grit?

Grit is passion and perseverance for long-term goals.

One way to think about grit is to consider what grit isn’t.

Grit isn’t talent. Grit isn’t luck. Grit isn’t how intensely, for the moment, you want something.

Instead, grit is about having what some researchers call an “ultimate concern”–a goal you care about so much that it organizes and gives meaning to almost everything you do. And grit is holding steadfast to that goal. Even when you fall down. Even when you screw up. Even when progress toward that goal is halting or slow.

Talent and luck matter to success. But talent and luck are no guarantee of grit. And in the very long run, I think grit may matter as least as much, if not more.

How to have Grit?

To have Grit, you need to have the following 4 factors/components (comments are mine)

  1. Interest: finding your passion on something, even that means you tried early and failed many times
  2. Practice: putting in enough practices (think Malcolm Gladwell’s 10-thousand-hour rule)
  3. Purpose: in order to improve your pursuit to next level, you need to have a higher purpose and greater aspirations (think targeting qualifying for Olympic trials on some sports passion or become CEO of your company in business area etc)
  4. Hope: there will be ups and downs in anything that you are trying to achieve in life. When something sets you back, remain optimistic and come back stronger

Angela’s work can be found here. Let me know your thoughts around this or any recommended books on relevant topic?



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