TheAiGuy

I doubt it's all that complicated. WFC is a crummy bank with a history of fraud and BAC is a big, safe bank that will probably give a positive return. Buffett doesn't have a lot of options, especially with banks large enough to invest in size. MTB, is too small, JPM has too much key man risk, CITI is garbage, GS/MS have very different business models, he's at the regulator limit for AXP, V/MA are too expensive... etc. That leaves BAC.

Yeah, so, aren’t all of their customers on the brink of failure? What do we think the long-term survivability of GE is, say if American Airlines folds? Normally, I would agree with you that the credit quality of RR really matters to it’s long term business prospects for the reason you state. But all of these companies are very close to bankruptcy, so I have a hard time seeing how RR’s credit rating, specifically, will impact its competitive position in the context of the pandemic.

Thinking specifically of Sinoforest as a counter-point, but agree with you on the later. There's a big narrative change with Xi ... I think the HK case is dying as well if China continues to exert legislative influence there. End game is probably just directly opening up Shanghai / Shenzhen. I realize I misread what you originally wrote. I can’t say that I have enough information to agree or disagree but that sounds plausible.

Will be very interesting to watch how this plays out. There already have been grumbles from founders in China that the communist party is installing lackeys at each company and slowly taking over control under the guise of "Chinese Socialism" Secondly, the VIE structure is BS anyways and I suspect we'll see this with LK, which in theory has plenty of value left, but post de-listing I doubt shareholders will have claims to anything meaningful. I actually doubt de-listing in and of itself is all that meaningful to the value of the shares (you still get to keep the shares, even if they have to move to the pink sheets or a different exchange; e.g. hong kong, london), but my concern is that if both the US and Chinese Govt's escalate, both will be willing to screw over US investors down the line. My previous thesis was that the Chinese Govt wouldn't want to harm access to capital markets, but I think that argument is weak now.

https://www.bloomberg.com/news/articles/2020-05-20/senate-passes-bill-to-delist-chinese-companies-from-exchanges This ~was~ a 20% position for me until this morning, when I fully exited the position. I've held this for ~3.5 years, with an IRR of ~20%, but I am quite concerned about this new escalation. I should say that I'm heavily restricted and this is my first trade in several years, and I'm I have to get (rarely granted) approval to buy or sell a security.

Facebook. It’s essentially a monopoly and the CEO is crazy young. It’ll beat the market for the next 30 years.

The notion that a PhD teaches nothing is laughable. There are many, many things that you can only learn in a PhD (Machine learning, for example). Lot’s of people will sell you on the idea that you can learn these things without a PhD (again, Machine Learning), but that’s a nonsense. Some things take years of study and practice in an environment with constant feedback from skilled practitioners, and that’s a PhD program. I tend to agree that you don’t learn much useful in an MBA program, but the course content isn’t really the point of them.

This is abysmal advice. My wife got an MBA from Tuck and it literally changed her career. She went from earning ~$75K in a back-office roll at a reputable mutual fund shop to earning ~$300k in IB. She also made a ton of life-long friends and had the time of her life. Yes, a lot of MBA’s are not worth the money (anything not top-tier), and sure, the value of MBAs to a firm is certainly over-rated. But this is the dumbest piece of advice that people keep parroting Buffet on. (Sorry to pick on you about this, nothing personal).

Probably because the Cold War isn’t about to end again, opening up world wide markets to major American brands for the first time.

The introduction of Starbucks itself on the global coffee seen has probably help Nestle and Dunkin Donuts, among others, by increasing the amount of money people are willing to spend on coffee. (I admit this is difficult to prove, as you would need a counterfactual). I would also argue that the rise of Nike has helped Adidas more that it has hurt it, by growing the market. Same thing for MasterCard to Visa and Visa to American Express. Android has probably helped Apple more that it has hurt it by growing the overall market for smartphones, and thus its ecosystem (I'm thinking wireless providers and manufacturing, not apps) and the size of the market for its products. You can argue any of these, of course. Nope! But I have access to lots of reading materials that I can find on the internets. Sometimes podcasts are helpful. Yes, yes, all things end and billions of years after we die the universe will disperse into an ever expanding, uniform field of entropy. The point is there is no evidence, as of yet, of any decline. I have no opinion on Luckin. Fail, don't fail, who cares? I'm here for the Benjamins. I assume, that like the United States, Europe and Japan, Starbucks will face well funded and run competitors, that are popular and have better coffee at a cheaper price, and Starbucks will nonetheless sell more Frappacinos each year for like the next couple of decades. People like nice things. The presence of cheep knock-off is not a bad thing for luxury products.

Or, alternatively, Luckin helps normalize and spread Coffee drinking in China with a product regarded as (1) cheeper and (2) worse. The entrance of a real competitor can a good thing -- it can mean that there is a real market worth pursuing. And, just checking, SBUX revenue and margins are UP over the last year in China, which suggests the competition hasn't hurt it so far.

The multiples in those valuations are too probably low if you really get 13% revenue growth for five years.... You can look at it like this too:

I've been thinking a lot about Starbucks and I think there are worse ideas than buying this and holding on. I generally think this will do very well over time, but here's sort of a loose outline of what I think: People really like their coffee. You don't, I don't, but millions buy it every day. I like that people make small, nearly automatic transactions everyday. The cost of each coffee, in dollar terms, not relative to other coffee, is low and I doubt too many people pay attention to the price of a single coffee, let alone their run rate costs. I think this is the type of thing that they win a customer at a young age and have them for decades as habits and preferences take root Coffee is mildly addictive with little health risks and low potential for future concerns of adverse effects. There has been a demonstrated ability to raise prices The company is currently quite profitable. I like the management. I think they have shown persistence and strategic focus (e.g. multiple attempts to enter the tea market, multiple attempts to enter higher end coffee shops.) I think they have a good chance of entering and, frankly, dominating the higher end coffee market over time. I like their capital management. I like their returns on capital I think they can continue to grow in Asia and in the US Little to no technological risk Demonstrated ability to scale without brand dilution If you take a look at the competitors in the space, the one I'd worry most about is JAB b/c I don't fully understand their strategy. They have a lot of good brands, but it's going to be hard for them to compete with SBUX outside the CPG space. Dunkin is a regional brand and MCD promise as a brand isn't good coffee, and as such, they aren't a strong competitor (though it is worth their while to try). Third-wave coffee shops are largely small chains and independents, and Starbucks is well finance and has substantial real estate expertise, which can make them a formidable competitor (I don't know about you, but most indy coffee shops are shit, though I would recommend la Colombe if you come across it). The multiple's high but I can't think of anything else that's wrong with the company, and the multiple is only a major concern if there is a risk to the company's perception as a going concern. This isn't like a retailer or fashion brand where purchases are large enough and infrequent enough to promote comparison shopping. Purchases are habitual. It's a high margin product with a low absolute cost and generally affluent customer base concentrated in urban areas. And they own their go to market and have an actual relationship with their customers. I think they get low, double digit EPS growth over the next decade, through a combination of store openings, price increases and share shrink, plus another 1.7% in current yield. Even if the multiple shrinks in half over that period, that's a mid-to high single digit return for what is essentially a consumer stable. I'm calling this one a win. The stocks up ~35-40% from two years ago when I posted this and earnings look good! Healthy revenue growth, healthy SSS, etc.

I don't have an opinion on BABA for a variety of reasons but one doesn't preclude the other. Duopolies can be very profitable. I think of JD.com as an asset play -- the longer their revenue grows at a rapid pace, the larger, more ingrained and more valuable the infrastructure related to the distribution of merchandise. That is to say, I view their revenue growth as fueling the growth of physical infrastructure and the margins will work them selves out overtime if that revenue basis is sufficiently large. It's hard to see economies of scale for things like fulfillment, as this is pretty labor intensive, but marketing, technology and general administration should require less as a percentage of revenue as revenue grows. There is also an argument to be made about gross margins as well.

Look, accusation isn't proof but the base-rate that he was treated with kid gloves because he's a rich important businessman is a hell of a lot higher than the base-rate of some random conspiracy. I didn't put likely-true percentages next to my possibilities. I said that "There are a lot of possibilities". I'm not claiming to know what happened. I do think, however, that whatever really happened that it is not very likely that he ends up in jail. Maybe because there is no evidence, maybe because the accusations are false, maybe because he gets treated with kid gloves because he is a billionaire CEO. It is also almost certain that you and I will never know the truth about what happened. These there are actually statistics on: according to RAINN, about 1/10 people arrested for sexual assault end up in jail, and he's a Chinese national in China, so that probably is more like close to zero. That said, many of the public accusations of the rich and powerful have been followed up by further allegations (e.g. Dominque Strauss-Kahn, Weinstein, Cosby, ...). There maybe cultural/legal differences that prevent that, for example libel and slander laws can limit accusations (e.g. France), so who knows.