Emotions, Keeping up with the APAC, and Morris Chang
Nothing in this world can take the place of persistence.
Welcome to Curated by Kalani! I curate and compress investment topics with a focus on Asia-Pacific, optimizing my emails for maximum return on your time invested. I find, summarize and simplify important information so you don’t have to.
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G’day guys, gals and galahs. A quote from Calvin Coolidge to start:
Nothing in this world can take the place of persistence.
Talent will not; nothing is more common than unsuccessful men with talent.
Genius will not; unrewarded genius is almost a proverb.
Education will not; the world is full of educated derelicts.
Persistence and determination alone are omnipotent. The slogan Press On has solved and always will solve the problems of the human race.
Here’s the format of today’s email:
Part 1: Emotions
Part 2: Keeping up with the APAC
Part 3: Under the Spotlight: Morris Chang
Part 4: Bonus Quirky Content - Something to Read, Watch, and Listen
Emotions
As I get older and a little less dumber (I’m hesitant to use wiser), I’ve come to accept investing is like 90% controlling emotions and only 10% numbers. Seriously. What’s the point in being a math valuation genius, only to be a paper-handed pants pisser when it hits the fan?
Ok, maybe I’m a little dramatic, but if you don’t control your emotions, they’ll end up controlling you. So lets have a looksie at some investors thoughts towards emotions and managing them!
A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.
- Charlie Munger
Committed, but not attached
Druck’s quote below reminds me to be committed in my investments, but not attached:
“You need to be intellectually curious, and really, really open minded, and you need to have courage. When I say courage, you need the courage to bet big, and to bet concentrated, but also the courage to fight your own emotions. I’ve never made a buy at a low that I didn’t just feel terrible and scared to death making it. It’s easy to sell at the bottom. You can home that night and it relieves you of your nerves.”
- Stanley Druckenmiller
And PTJ echoes similar thoughts:
“I try to avoid any emotional attachment to a market...It is important because it gives you a wide open intellectual horizon to figure out what is really happening.”
- Paul Tudor Jones
How Your Emotions Get in the Way of Smart Investing [Link]
A few reasons: We want to play but we also want to beat the market
a classic error of overconfidence. Many assume that playing the market is like playing tennis against a practice wall—when in fact there is an opponent on the other side of the net, in the form of CEOs who move the market by touting stocks and professional investors who take advantage of those swings. Some amateurs recognize that there are pros playing against them but still think they can win.
We want to face no losses
the lessons of regret are overly harsh and the lessons of pride too encouraging. Stocks go up and down for many reasons and no reason at all. We need not kick ourselves with regret every time stock prices go down, and we should not stroke ourselves with pride every time they go up. We can overcome our errors and realize our losses.
We hope for riches and want protection from the fear of poverty
Hope for riches urges us to invest our entire portfolio in a handful of stocks and lottery tickets. Fear of poverty urges us to invest our entire portfolio in government bonds and hold tight to Social Security.
The Behavior Gap [Link]
Full disclosure, I haven’t read the book but this graphic is sick.
Conclusion
The four horsemen of the investment apocalypse: fear greed, hope and ignorance...Only one, ignorance, is not an emotion. Fear, greed and hope have wiped out more portfolio value than any bear market ever, any market crash ever
- Jim OShaughnessy
Keeping up with APAC
How do I keep up with what’s going on in APAC? Say no more. My Google Doc has all the links and info that I use to check what’s been going on. Fair warning, it is my Google Doc. Meaning it may not be THE most comprehensive, but it’s what I find useful and helpful. Feel free to suggest anything I might’ve missed but.
Under the Spotlight: Morris Chang
Every once in a while I provide a little spotlight on an investor or operator I admire. Morris Chang, founder of TSMC, is this weeks focus:
Born in Ningbo, China. A lot of moving around then ensued! Due to the outbreak of the Second Sino-Japanese War, his family moved to multiple Chinese cities before settling in Hong Kong. Then in 1941, the Japanese occupation of Hong Kong began and his family fled back to China. Then in 1948, at the height of the Chinese Civil War, moved back to Hong Kong.
Chang would go on to attend Harvard before transferring to MIT and receiving his bachelor's and master's degrees in mechanical engineering there.
To skip a large portion of his career (listen to the Acquired podcast below for full details!) he was recruited by Sun Yun-suan to come to Taiwan and founded TSMC in 1987, at 56! Now worth more than $3b after starting at 56! 56!
This podcast episode is legit. If you’re going to choose any of my links this week, choose this one. Disclaimer, I’m not super into and knowledgeable about TSMC and semiconductors, so this was all new to me. But it is sooooo good.
Morris Chang's Last Speech [Link]
Covers so much in this speech: a brief history of semiconductors; the importance of them and why they have become a must-have for politicians and geopolitics, Taiwan's advantages in wafer manufacturing, and so much more.
TSMC's business model is that semiconductor companies are our customers, our friends. This is the biggest discovery of this business model. The biggest discovery of a business model is who your customer is and how you make money. Since our customers are semiconductor companies, if they originally make their own wafer but now we make wafer too, then our competitors are those in charge of wafer manufacturing inside semiconductor companies. That's why it's very disruptive. You young listeners haven't experienced this kind of corporate politics —— this is very disruptive.
Something to read: Zhang Yiming’s Last Speech [Link]
For anyone who doesn’t know, Zhang founded ByteDance (responsible for TikTok). This is from a ByteDance annual all-hands meeting in March, his last as CEO.
Two years ago, there was a documentary that was very popular called “Free Solo”. I met the main character, Alex Honnold, when I was in California. Many people shared his story, but the thing that struck me the most was that it was dangerous to go forward and backward, but it was most dangerous to have a weak leg and a confused heart. In the process of rock climbing, you can’t look back too much and be afraid of what’s behind you, or keep thinking about a wrong step taken. Nor can you look forward and realize that there is still such a long way to go. One thing is very worth learning from Alex: he was very focused on the present moment at every moment.
and this:
I really like watching videos on Douyin of sailing in the ocean. I'm not saying that people's work or life is always really difficult, like crashing ocean waves. I just want to use it as an analogy for a state of mind: no matter what challenges and difficulties there are in work or personal life, these are external. What each of us can do is while there are always external waves, maintain an internal calm.
Something to watch: The reason why Korea and Japan cannot reconcile their historical issues - A Korean women debates Japanese panelists back in 1996 [6 mins]
Super interesting. Not super well versed so I’ll keep my opinions to myself.
This issue is like old debt that has not been paid in full
Something to listen to: Russell Napier: Asia, financial repression and the nature of capitalism [Transcript] [Apple Link]
Amazing podcast packed into half an hour. Russell’s insights into the Asian Financial Crisis are unreal.
in 1994, China devalued the renminbi. It wasn't just that it devalued the renminbi, it simultaneously mobilised hundreds of millions of peasants, that's a very impolite term, let’s call them farmers, hundreds of millions of farmers left the land and went into factories and the Chinese exchange rate was lower. And that was a huge competitive problem.
So the idea that all the Asian countries would take this capital, build lots more productive capacity, export more, and the current account deficits would shrink, as ‘95 became ‘96 became ‘97, we began to realise that that wasn't happening. Partly for a big structural problem, which wasn't going to go away. China was competitive, and there were still hundreds of millions of Chinese farmers to come in to the workforce, […]
It's easy to look back in hindsight and say it was really very obvious. But at the time, there were lots of arguments as to why China couldn't be more competitive than the rest of Asia.
Something to listen to (from me): Jordan Schneider on Compounding Curiosity [Transcript] [Apple Link]
Again, another super fun podcast to make. Jordan’s energy was next level and his knowledge even more so. Can’t wait to do this again!
CCP campaigns are very good at orienting the bureaucracy directionally, but aren’t quite as strong at doing it and gauging how far to go. Because once you’ve let loose the dogs from a Chinese regulatory perspective, everyone keeps running in that direction.
And often, over the 75 plus years of CCP rule, you’ve seen that regulation often overshoots the mark of what’s optimal from a, from a societal perspective. So, this new push towards getting the rich to contribute and not necessarily having the country be dominated by the point of 1% is something that echoes a lot of the rhetoric which you see around the world. It’s like a relatively… There’s a way to look at it as kind of like a boring social democrat take on the way society is run.
But when you put that in the hands of a party, which has far more levers at their disposal than a democratic one in the 21st century, there is a real risk of overshooting in a way that could be potentially dangerous to China’s future economic growth.
Bonus links that don’t fit anywhere else:
Inside Huarong Bailout That Rocked China’s Financial Elite [Link]
“Huarong’s finances were so troubled and past dealings so fraught that some members of the Citic team worried they might be blamed for the mess. They wanted assurances that they wouldn’t be held responsible should higher-ups take issue”How Hollywood Sold Out to China [Link]
“obvious pandering to Beijing can backfire in China. Audiences call a Chinese actor who appears in a Hollywood movie but plays a minimal role a hua ping, or a “flower vase”: nothing more than a recognizable face lazily included to help sell tickets.”Ten Lessons of The Gitic Bankruptcy [Link]
Blast from the past, but important lessons. “Empirical and result-oriented approach to reform. Since Gitic's bankruptcy, the Chinese government has effectively forbidden any other major Chinese company from going bankrupt. It has also tried to appease the international banking community with offers of more favorable out-of-court restructuring settlements”
I’ll see ya when I see ya!
- Seagull Scarrott
pffffff that meme at the end lol