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It is totally consistent with SHORT-TERM reason The west is focused on quarterly profits (you get what you measure). China is focused on global domination. W

by toss1 5y ago

It is totally consistent with SHORT-TERM reason The west is focused on quarterly profits (you get what you measure). China is focused on global domination. While the west thinks that they are exploiting cheap Chinese labor and shipping, the CCP is exploiting they west's myopic focus on short-term profits. So while the west "wins" for a few years by under-paying poor Chinese workers, China wins over decades and centuries by ensuring they extract maximum intellectual property and manufacturing know-how, and corner key markets, to the level that the supply chain is now a key military threat. This will be recorded as a strategic blunder of historic proportions.

gruez 5y ago
> It is totally consistent with SHORT-TERM reason 1. alternative is that they don't and their competitors do, and they get driven out of business. "Long term" doesn't mean anything when you're bankrupt short term. 2. my point in the previous comment is that the parent commenter explicitly said it was favorable to the shareholder, which contradicts his assertion that it's "not reasonable". >The west is focused on quarterly profits (you get what you measure). China is focused on global domination. The same investors that buy stocks at 34x annual earnings, necessitating more than three decades to make back their investment? https://www.multpl.com/s-p-500-pe-ratio https://www.multpl.com/s-p-500-pe-ratio
- toss1 5y ago
  The point is NOT that given the current system as the leaders of the west set it up that it is irrational. You correctly identify some trees, and miss the entire forest. The point is that the western leaders SET IT UP THIS WAY. Effectively, they externalized the costs of losing the massive geopolitical/economic strategic advantage onto future generations, who will have to deal with the fallout of an authoritarian regime in a very strong geopolitical position. And these "leaders" effectively sold out for a very transient advantage. What could have been done differently? 1) Implement laws preventing transfer of IP to China, to counter their laws requiring it. 2) prevent critical components of defense systems from being made there, both to avoid technology transfer and to maintain onshore manufacturing skills 3)Implement quotas and tariffs that reflect the actual costs of the strategic loss. 4) Encourage investment in other low-wage countries that do not pose the same geopolitical risk. This is just the beginning, and none of it was done. Once those restraints were removed, of course it becomes in the interest of every manager to offshore to the newly opened areas. >> The same investors that buy stocks at 34x annual earnings, necessitating more than three decades to make back their investment? Nonsense, decades is not the typical investment expectation. If they are investing at 34X PE, they expect bigger returns sooner. Amazon is a great example, whee you could invest at effectively infinite PE ratios and double your money within years, or get 10X within 7 years. Recent price $3475. It passed $340 in Q1 of 2015, and at that time the P/E was effectively infinite with negative earnings per share. [1] Your example more even proves the point of short term focus. By your example, if investors lost money really means that they're investing for the long term - preposterous. [1]https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-ratio https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-rat...
  - gruez 5y ago
    >Effectively, they externalized the costs of losing the massive geopolitical/economic strategic advantage onto future generations, who will have to deal with the fallout of an authoritarian regime in a very strong geopolitical position. Where's the line between "massive money sink" and "investments for 'geopolitical/economic strategic advantage'"? Afghan/iraq reconstruction? Belt and road initiative? Hell, you could even argue some of the favorable treatment given to china was for "geopolitical/economic strategic advantage", because the hope was that they'd move away from communism. >Nonsense, decades is not the typical investment expectation. If they are investing at 34X PE, they expect bigger returns sooner. Who are they selling those stocks to? Is everyone on wall street seriously planning to sell all their investments a few decades from now, before everyone else does?
    - toss1 5y ago
      >>Where's the line between "massive money sink" and "investments for 'geopolitical/economic strategic advantage'"? Obviously, it is not drawn by God or nature - it is up to us to draw. Also obviously, not all investments are a sure thing. But we can start by actually bothering to do a reasonable threat evaluation and looking at meta-issues such as authoritarianism vs democracy, expansionist intent, scale, costs being externalized, etc. In this case, it seems that the major drivers were politicians catering to corps wanting to increase their short-term profits, and not to any serious long-term analysis. >>Is everyone on wall street seriously planning to sell all their investments a few decades from now, before everyone else does? NO, they are looking for outperformers, who will create value far faster. And yes, some are playing the Greater Fool theory, and some even succeed at that. But your implied idea that just because someone buys as a valuation that you don't like means that they are therefore long-term investors is, ummm.. so bad it's not even wrong (as physics professors say about the cranks who write them). Someday, at least try to make a cogent point - after multiple exchanges, the only thing that is evident is you don't like something and do like sophistry.

by toss1 5y ago

gruez 5y ago

> It is totally consistent with SHORT-TERM reason 1. alternative is that they don't and their competitors do, and they get driven out of business. "Long term" doesn't mean anything when you're bankrupt short term. 2. my point in the previous comment is that the parent commenter explicitly said it was favorable to the shareholder, which contradicts his assertion that it's "not reasonable". >The west is focused on quarterly profits (you get what you measure). China is focused on global domination. The same investors that buy stocks at 34x annual earnings, necessitating more than three decades to make back their investment? https://www.multpl.com/s-p-500-pe-ratio https://www.multpl.com/s-p-500-pe-ratio

toss1 5y ago
The point is NOT that given the current system as the leaders of the west set it up that it is irrational. You correctly identify some trees, and miss the entire forest. The point is that the western leaders SET IT UP THIS WAY. Effectively, they externalized the costs of losing the massive geopolitical/economic strategic advantage onto future generations, who will have to deal with the fallout of an authoritarian regime in a very strong geopolitical position. And these "leaders" effectively sold out for a very transient advantage. What could have been done differently? 1) Implement laws preventing transfer of IP to China, to counter their laws requiring it. 2) prevent critical components of defense systems from being made there, both to avoid technology transfer and to maintain onshore manufacturing skills 3)Implement quotas and tariffs that reflect the actual costs of the strategic loss. 4) Encourage investment in other low-wage countries that do not pose the same geopolitical risk. This is just the beginning, and none of it was done. Once those restraints were removed, of course it becomes in the interest of every manager to offshore to the newly opened areas. >> The same investors that buy stocks at 34x annual earnings, necessitating more than three decades to make back their investment? Nonsense, decades is not the typical investment expectation. If they are investing at 34X PE, they expect bigger returns sooner. Amazon is a great example, whee you could invest at effectively infinite PE ratios and double your money within years, or get 10X within 7 years. Recent price $3475. It passed $340 in Q1 of 2015, and at that time the P/E was effectively infinite with negative earnings per share. [1] Your example more even proves the point of short term focus. By your example, if investors lost money really means that they're investing for the long term - preposterous. [1]https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-ratio https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-rat...
- gruez 5y ago
  >Effectively, they externalized the costs of losing the massive geopolitical/economic strategic advantage onto future generations, who will have to deal with the fallout of an authoritarian regime in a very strong geopolitical position. Where's the line between "massive money sink" and "investments for 'geopolitical/economic strategic advantage'"? Afghan/iraq reconstruction? Belt and road initiative? Hell, you could even argue some of the favorable treatment given to china was for "geopolitical/economic strategic advantage", because the hope was that they'd move away from communism. >Nonsense, decades is not the typical investment expectation. If they are investing at 34X PE, they expect bigger returns sooner. Who are they selling those stocks to? Is everyone on wall street seriously planning to sell all their investments a few decades from now, before everyone else does?
  - toss1 5y ago
    >>Where's the line between "massive money sink" and "investments for 'geopolitical/economic strategic advantage'"? Obviously, it is not drawn by God or nature - it is up to us to draw. Also obviously, not all investments are a sure thing. But we can start by actually bothering to do a reasonable threat evaluation and looking at meta-issues such as authoritarianism vs democracy, expansionist intent, scale, costs being externalized, etc. In this case, it seems that the major drivers were politicians catering to corps wanting to increase their short-term profits, and not to any serious long-term analysis. >>Is everyone on wall street seriously planning to sell all their investments a few decades from now, before everyone else does? NO, they are looking for outperformers, who will create value far faster. And yes, some are playing the Greater Fool theory, and some even succeed at that. But your implied idea that just because someone buys as a valuation that you don't like means that they are therefore long-term investors is, ummm.. so bad it's not even wrong (as physics professors say about the cranks who write them). Someday, at least try to make a cogent point - after multiple exchanges, the only thing that is evident is you don't like something and do like sophistry.