Berkshire Hathaway Chair & Vice Chair: Warren Buffet & Charlie Munger

Warren Buffett: Advice For Entrepreneurs (2018)

Warren Buffett: Advice For Entrepreneurs (2018). Interview Date: 13th February, 2018.
Event: 10,000 small businesses summit. Investors Archive video published Feb 15, 2018.

A speech by billionaire and CEO of Berkshire Hathaway, Warren Buffett. In this speech, Warren tells three stories of entrepreneurs who against unfavourable circumstances, created successful businesses. These stories demonstrate key principle that Warren sees as necessary for a business to succeed.

Video Segments:
0:00 Introduction
0:38 Giving speeches
2:28 Buying a business from two women
6:42 Lessons learnt from Jack Taylor creating Enterprise
16:22 Inspire others
17:43 Important decisions in life
18:56 Simple rules

Warren Buffett Books:
The Snowball: Warren Buffett and the Business of Life
The Essays of Warren Buffett
Tap Dancing to Work: Warren Buffett on Practically Everything

Warren Buffett's Favorite Books:
The Intelligent Investor: The Definitive Book on Value Investing
Security Analysis: Sixth Edition
Common Stocks and Uncommon Profits and Other Writings

Transcript (auto-generated):

A Conversation with Charlie Munger and Michigan Ross - 2017

The Ross School of Business - University of Michigan video above published Dec 20, 2017: Charlie Munger, Vice Chairman of Berkshire Hathaway, joins Michigan Ross Dean Scott DeRue for a conversation about Mr. Munger's life, career journey, philanthropic legacy, and his thoughts on a few current global trends. Recorded Nov 30, 2017 in Los Angeles as part of an event for alumni of the Ross School of Business at the University of Michigan. Scott DeRue and Charlie Munger are introduced by John E. Conlin, President of NWQ Investment Management Co. To jump directly to the conversation with Charlie, forward to: 2:57.

Bitcoin and cryptocurrency:

"I think it is perfectly asinine to even pause to think about them," Munger said. "It's bad people, crazy bubble, bad idea, luring people into the concept of easy wealth without much insight or work. That's the last thing on Earth you should think about … There's just a whole lot of things that aren't going to work for you. Figure out what they are and avoid them like the plague. And one of them is bitcoin. … It is total insanity."

"You know it is one thing to think gold has some marvelous store of value because man has no way of inventing more gold or getting it very easily, so it has the advantage of rarity. Believe me, man is capable of somehow creating more bitcoin. … They tell you there are rules and they can't do it. Don't believe them. When there is enough incentive, bad things will happen."

Transcript (auto-generated):

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Tech Review | Amazon $AMZN & Apple $AAPL: 'The TAX Man Cometh'

Tech Review (TR 2017-10-07)--Domain Mondo's weekly review of tech news with commentary, analysis and opinion: Features • 1) Amazon $AMZN & Apple $AAPL: 'The TAX Man Cometh', 2)  The Wrong Kind of Entrepreneurs, 3) Investing: Catalonia to Tech (video), Not a Time to Buy Anything, Portfolio Builder, Junk Bond Bubble, Disintermediation, Q3 2017, 4) ICYMI Tech News.

1) Amazon $AMZN & Apple $AAPL & Facebook $FB & Google $GOOG $GOOGL: The Tax Man Cometh--EU orders Amazon to repay $295 million in Luxembourg back taxes--Reuters.com. EU takes Ireland to court for not claiming Apple tax windfall--Reuters.com (up to 13 billion euros ($15.3 billion) of tax due from Apple Inc.). More in the video and text below:

Amazon hit with EU back taxes bill

Financial Times (FT.com) video published Oct 4, 2017: Brussels (EU) handed Amazon on Wednesday a bill for Luxembourg back taxes of up to €250m in the latest fallout from the EU crackdown on tax avoidance by big multinationals.

Germany, France, Italy, and Spain have proposed an ‘equalisation tax’ under which internet giants Google, Apple, Facebook, and Amazon would be taxed where they generate revenues rather than where they are registered. Right now the companies pay minimal taxes in Europe due to locating subsidiaries in low tax rate countries like Ireland and Luxembourg (profits are currently reported where the subsidiary is located, even if revenues are generated in other countries). Under the virtual permanent establishment concept advanced by Estonia, companies would be taxed ‘where the value is created’ rather than where the companies are registered. Existing tax rules are inadequate for the digital economy, say France, Germany, Italy, and Spain, which also maintain that ‘economic efficiency is at stake, as well as tax fairness and sovereignty’. While supporting existing initiatives at the G20 and OECD, these EU 'big four' countries also want to 'move ahead quickly’ within the EU--see DIG.watch (pdf) Sep 2017.

2) The Wrong Kind of Entrepreneurs--"When economists say “rent,” they mean money that one person extracts from another without producing anything of value ... Robert Litan and Ian Hathaway, writing in Harvard Business Review, have a more dire hypothesis. They surmised that many American entrepreneurs are no longer looking for ways to produce more useful stuff, and are instead looking for new techniques for extracting money from each other and from the government ... crony capitalism may be slowly cannibalizing productive capitalism"--Bloomberg.com. See also Special Pump-and-Dump Scheme Spikes to High Heaven | WolfStreet.com. 

3) Investing

Charts that matter: Catalonia to tech

Financial Times (FT.com) video published Oct 5, 2017: The FT.com's markets team on what to watch for in markets this month: US credit, Catalonia bonds, bond covenants, rotation into energy and what the S&P 500 needs.

a. Quick Notes:

• Hurricane Nate Aims At New Orleans--Category One Landfall Early Sunday.
• Coming: another interest rate hike by the Fed likely this year: U.S. Dollar hits 10-week highs, U.S. yields jump on strong wages data | Reuters.com.
• "This Is Not A Time To Buy Anything" --Sam Zell warns retail real estate market is a "falling knife"--"An area that's in this much disarray, with so many weak players, is not an area where I would want to deploy capital at this time. And I'm generally a contrarian but I think what we're dealing with here is very significant."--ZeroHedge.com Sep 26, 2017. WolfStreet.com: Landlord’s View of the Brick and Mortar Meltdown: “We are faced with weekly tenant bankruptcies, defaults, and requests for rent or space reductions ... even the biggest liars you ever met will admit to challenges facing their portfolios."-- (emphasis added).
• Portfolio builder: How To Profit From The Online Data Boom | SeekingAlpha.com.
• World’s Biggest Ever Junk Bond Bubble in Pictures: What Hath Draghi Wrought?--MishTalk.com. 
• Disintermediation: FedEx $FDX and UPS $UPS DOWN on report of Amazon's $AMZN own delivery service--Reuters.com.
• One man's pain is another's gain--Hurricane Stimulus in Auto Sector: "Hurricane Harvey and highest discounts in US history did the trick--GM, Ford, and Toyota were the biggest winners. Fiat-Chrysler and Hyundai got crushed."--WolfStreet.com.
• JPMorgan Updates By-laws In Case Of "Nuclear Disaster" Or World War III--ZeroHedge.com

b. Q3 2017 Earnings Season

• "Our picks for big winners this earnings season: Tech and Financials"--DataTrekResearch.com
•  Domain Mondo's Q3 2017 earnings coverage list: Alibaba Group | NYSE: BABA; Alphabet | NASDAQ: GOOG / NASDAQ: GOOGL; Amazon | NASDAQ: AMZN; Apple | NASDAQ: AAPL; Facebook | NASDAQ: FB; GoDaddy | NYSE: GDDY; T-Mobile | NASDAQ: TMUS; Tucows | NASDAQ: TCX; Twitter | NYSE: TWTR; Verisign | NASDAQ: VRSN.

4) ICYMI Tech News:

• Why Does Sweden Have So Many Startups? | TheAtlantic.com: Sweden's strong safety net, low corporate taxes, and deregulation of industries to promote competition, have aided its thriving startup community.
•  Amazon-Whole-Foods Already Rattles the Grocery Sector | WolfStreet.com: "...  foot traffic of new customers remained at elevated levels through September 16. On that day – a Saturday – the index of foot traffic spiked to one of its highest levels since the price cuts ..."
• Intel and Intelsat partner on plan to free up 5G airwaves | Axios.com.
• India approves Chinese smartphone manufacturer Oppo retail stores, Apple next?--Reuters.com and Manufacturing Smartphones In India Hits Hurdles--lack of skilled labor and part suppliers along with a complex tax regime--Reuters.com.
• Entitled & Tone-deaf: Mark Zuckerberg wanted Facebook employees to work for his separate personal entity "Chan Zuckerberg Initiative" until senior staff complained to board member Marc Andreessen who passed it along to Zuck--BusinessInsider.com. See also Facebook Lies | iain.learmonth.me: Think you can "escape" from Facebook? Think again.
• Foreign government software code reviews 'problematic' says White House--Reuters.com.
• Uber’s path to win back London: data, fines and fees | Reuters.com
• SEC Exposes Two Initial Coin Offerings (ICOs)--"The Securities and Exchange Commission today charged a businessman and two companies with defrauding investors in a pair of so-called initial coin offerings (ICOs) purportedly backed by investments in real estate and diamonds ..."--SEC.gov
• Swiss regulator probes ICOs: "Ten days after shutting down a fake cryptocurrency scam, the Swiss financial regulator said it is investigating the procedures for setting up new companies in the rapidly expanding sector."--SWI | swissinfo.ch. See also Bitcoin “Probably Worth Zero”--MishTalk.com.
• Blockchain: Commerzbank, other banks join UBS and IBM trade finance blockchain--Reuters.com.
• Google Retooling User Security: "Google is preparing to upgrade its security tools for online accounts to better insulate users from cyberattacks and politically motivated hacks"--Bloomberg.com
• Apple iOS 11’s Misleading “Off-ish” Setting for Bluetooth and Wi-Fi is Bad for User Security--Electronic Frontier Foundation | eff.org.
• OK Google, Get Out of My Face | MIT--TechnologyReview.com.
• Yahoo says all three billion accounts hacked in 2013 data theft--Reuters.com
• ChinaInternetWatch.com: Tencent launches digital bank card--"WeBank Card"--on WeChat. 
• Take the politics out of broadband progress reports: "... many consider the Federal Communications Commission’s existing data to be inaccurate and unreliable. With the FCC now having launched its 13th annual inquiry into the status of broadband deployment in America ..."--rstreet.org
• FCC's market-based solution for toll-free numbers: "RespOrgs solicit toll-free numbers from a master database of available numbers, like registrars do for internet domain names. But RespOrgs have incentives to engage in strategic behavior such as warehousing or hoarding the limited supply of numbers, particularly with regard to valuable numbers such as vanity numbers (like 1-800-LAWYERS) and easy-to-remember numbers ..."--aei.org
• Beyond mainstream media's fake news, false narratives, and daily D.C. dramas, Trump begins to alter American life--Reuters.com 

-- John Poole, Editor, Domain Mondo  

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MacroView: World Markets, Global Economy, Central Banks, Trick or Treat?

Domain Mondo's weekly review of  macro economic and investing news:

MacroView Feature •  Just in time for Halloween: World Markets, Global Economy, Central Banks, Trick or Treat?

Halloween in the global economy:

The FT.com's Katie Martin and Anthony Doyle of M&G (domain: mandg.com) discuss current fears in the fixed income market, including negative yields, inflation growth and emerging markets debt. Published October 28, 2016

•  China Gets Desperate About Debt: "China doesn’t need a new debt-for-equity swap program. It needs to cut credit growth."--Bloomberg.com

Why China is worried about its lending:

There is growing concern in Beijing about China’s development lending in risky countries. FT.com's James Kynge explains. Published October 26, 2016. See also Xi Jinping Is China’s ‘Core’ Leader: Here’s What It Means | NYTimes.com.

•  China’s Crown Probe Seen as Warning Shot to Foreign Firms: "... some business consultants in general ... [are] advising foreign executives to steer clear of mainland China for now."--WSJ.com

•  A $1 Trillion Industry Is Finally Going Digital: "The $1 trillion global business of shipping goods and raw materials by rail, ship, or plane has lagged most of the modern economy in both transparency and speed, largely skipping the digital overhaul most other industries have undergone. Now a growing group of well-funded startups is pushing to change that."--technologyreview.com

•  Why the Jobs Aren’t Coming Back: A plant in Michigan had been around for years. It had employed 600 people on two shifts. Then, the Chinese began to undercut the pricing, and the plant was no longer profitable and closed. Two years later, it reopened as a fully automated plant and regained the business because it could now manufacture cheaper than the Chinese--"This new plant is fully automated and runs 24/7/365 with just 14 people."--WolfStreet.com

•  Things I Don't Care About And You Shouldn't Either: "One of the biggest challenges for investors is filtering out bad, useless or even costly 'information.'"--SeekingAlpha.com

•  Faulty Wall Street Assumptions: "Complex markets require complex solutions." To me, this is one of the most damaging myths out there for most investors. The simpler, the better ... There are no extra points for degree of difficulty.--aWealthOfCommonSense.com

•  The New Corporate Power Brokers: Passive Investors: "Index-fund managers such as Vanguard often cast deciding shareholder votes on issues such as mergers and leadership changes."--WSJ.com

•   Bubble Mentality Collapses in San Francisco Office Market: "This is how office markets turn. Activity plunges as demand suddenly fizzles, while new supply floods the market. Exuberance evaporates. Suddenly companies and landlords go into a standoff, and not much happens until rents come down. But once rents start coming down, companies are holding out for even more concessions and lower rents. Rather than bidding wars, tough negotiations set in, now that vacancies are rising for everyone to see. And the whole bubble mentality collapses into something resembling rational and focused business decision making."--WolfStreet.com

•  Financial Ideas vs Marketing Ideas: “There’s one good financial idea every decade or so, and 5 to 10 marketing ideas a week.”--Eugene Fama as quoted in The Art of Doing Nothing--aWealthOfCommonSense.com [Clue: ICANN's new gTLDs are just a "marketing idea"--no real innovation nor financial ideas are involved.]

•  Gundlach Says ‘Look Out’ for Exploding U.S. Deficits | Bloomberg.com Oct 25, 2016: "Bond yields bottomed and prices peaked in July, Jeffrey Gundlach said. Federal Reserve Chair Janet Yellen wants a “high pressure economy” with inflation above 2 percent and the unemployment rate below 5 percent, he said."  Gundlach still believes Donald Trump will win:“Trump would -- and will when he wins -- ramp up the deficit,” Gundlach said." See also Gundlach: Why the “Rates Will Never Rise” Argument Doesn’t Hold Up | WealthManagement.com: “In July, people came on TV and I actually heard the phrase, ‘rates can never rise,’” he said. “One thing I’ve learned is that in the investment business when you hear the word ‘never,’ it’s about to happen.”

•  Gundlach's view on Trump may be vindicated on November 8. There are two indicators that Trump may be doing better than polls suggest in some states, reports the New York Times--If They Google You, Do You Win? | NYTimes.com--1) The main insight from Google searches this year is that African-American turnout may be down in 2016; 2) nationwide, there are more searches that include “Trump” before “Clinton” (where a search includes the names of both candidates, the name appearing first is a known preference indicator in favor of that candidate). Even the latest re-emergence of the Clinton email scandal now favors Trump: more than 3 in 10 voters say the news made them less likely to support Clinton according to a Washington Post-ABC News tracking poll.

• Q3 2016 financial results coverage this coming week on DomainMondo.com:

• Alibaba Group $BABA Nov 2 at 7:30 am ET
• Facebook $FB Nov 2 at 5:00 pm ET
• GoDaddy $GDDY Nov 2 at 5:00 pm ET

•  A Look Back to August 31, 1999: Whatever Happened to Globalization? | Fast Company | Business + Innovation | fastcompany.com: "Overcapacity plagues every industry — from automobiles to computer chips to beer. Quite simply, we are producing more stuff than people can consume. So it's harder to differentiate yourself. It's harder to charge premium prices. And it's harder to innovate — because product improvements get copied at light speed. Channel issues pose an even bigger problem. History teaches us that no old channel of distribution ever adapts quickly enough to the emergence of a new channel. And with the rise of the Web, new channels of distribution — along with entirely new business models — are being created faster than ever before. Traditional assumptions about strategy, pricing, and selling are under fierce attack. The Web threatens to turn every industry upside down and inside out."--Martin Sorrell

-- John Poole, Editor, Domain Mondo 

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MacroView: Gradually and Then Suddenly, How Markets & Companies Fail

Domain Mondo's weekly review of  macro economic and investing news:

MacroView Feature  •  Sometimes you don’t exactly notice how bad things really are. It’s not always as apparent as it would seem.--Sarah Dunn

Gradually and Then Suddenly: In Ernest Hemingway’s The Sun Also Rises, one character asks another how he went bust. The response is a classic: “Two ways, gradually and then suddenly." That's how companies, governments, pension funds, and individuals often fail:

"And it’s how conditions in complex markets shift as well. The underlying circumstances that shape the environment in which you operate can evolve at a snail’s pace, and then shift quickly, either as new actions are introduced, or as the agglomeration of changes reaching a tipping point."--strategy-business.com

Wilbur Ross: U.S. Recession Likely in Next 18 Months:

Video above published on Oct 14, 2016: Billionaire distressed-debt investor Wilbur Ross, chairman of WL Ross & Co., comments on U.S. financial markets and the possibility of a recession. He speaks during an interview with Bloomberg's Matt Miller and Scarlet Fu on "Bloomberg Markets."

Gradually and then suddenly?

•  Goldman Sachs Sees Shock Potential for U.S., European Stocks | Bloomberg.com: "Political risks, exacerbated by a weak economy in Europe and high stock prices in the U.S., make those markets vulnerable to declines in the next three months. The firm projects that the S&P 500 Index and the Stoxx Europe 600 Index will each drop by about 2 percent by December." See also Goldman Tells Clients To Go To Cash As "Growth Shocks" Are Coming | ZeroHedge.com.

•  Next European bank bombshell: DoubleLine’s Jeffrey Gundlach dropped a new name to worry about on the European bank front. He says if “push comes to shove,” the German government will support Deutsche Bank. “But what about Credit Suisse, which has shown a similar decline in stock price? Who’s there to bail them out?”--MarketWatch.com. Italy’s Intesa Sanpaolo is matching Credit Suisse’s year-to-date losses. Spain’s Banco Popular is down 60% year-to-date. Gundlach has also said the ECB’s negative-interest-rate policy is running the risk of bankrupting its lenders, and Deutsche is a poster child for this: “You cannot save your faltering economy by killing your financial system.”

•  Rail Freight Gets Clocked from all Sides in this Economy | Wolf Street: "Total US freight rail traffic, as measured in carloads and intermodal units, fell 6.1% in the week ended October 8, from the same week last year, the Association of American Railroads reported today. It was down 10% from the same week two years ago." See also: Freight Rail Traffic Plunges: Haunting Pictures of Transportation Recession | Wolf Street.

•  ‘Bulletproof’ Public Pensions | NYTimes.com: "The California Public Employees’ Retirement System, or Calpers, said Loyalton had 30 days to hand over $1.6 million, more than its entire annual budget, to fund the pensions of its four retirees. Otherwise, Loyalton stood to become the first place in California — perhaps in the nation — where a powerful state retirement system cut retirees’ pensions because their town was a deadbeat." See also The state government pension crisis: You will be made to care | Washington Examiner.

•  Sheila Bair called the financial crisis but her new nightmare is student loans: "The problem is much worse," Bair replied. "The percentage of [former] students in distress on their student loans is significantly higher than we saw during the subprime crisis."--Bloomberg.com

•  Chinese Property Owners are in for a Very Rude Awakening, but the Damage Will Reverberate around Globe --WolfStreet.com: "The biggest bubble in history." See also: Wall St. Tumbles After China Trade Report Disappoints | NYTimes.com 13 Oct 2016: "Data showed that China’s exports last month fell 10 percent from a year earlier in dollar terms, compared with a 2.8 percent fall in August."

•  Starbucks held $1.2 billion in customer funds loaded onto Starbucks cards and its app as of Q1 2016, according to MarketWatch.com based on data from S&P Global Market Intelligence. Starbucks holds more money than some banks hold in deposits. But Starbucks doesn't have to worry about the most powerful man in banking, Fed governor Daniel Tarullo, who heads the Fed’s Committee on Bank Supervision. Tarullo took office at the Fed in 2009 at a moment of broad public support for a more aggressive tack and has pressed that advantage ever since. His influence ranges over everything from corporate strategy to how many billions of dollars banks must maintain in capital. Through the stress tests he championed to evaluate how banks might fare in another market shock, the Fed wields control over whether banks can raise the dividends they pay to shareholders--WSJ.com. See also: “All organizations with sales goals are going to be susceptible to falsified sales records,” said Kane, who worked at Wells Fargo in the 1980s and ’90s before founding Kane Bank Services, which focuses on bank sales practices.--LATimes.com

•  Canada’s Big Bet on Fiscal Stimulus Drawing Global Attention: "Trudeau’s move to lean on infrastructure spending to boost growth is regaining currency"--WSJ.com

•  Week ahead: U.S. presidential candidates Hillary Clinton and Donald Trump hold their final debate in Las Vegas on October 19, 2016, 9:00-10:30 pm EDT. The moderator is Fox News anchor Chris Wallace, who will question each nominee. Watch LIVE online here. See also: Glenn Greenwald: WikiLeaks Emails Clearly Show Serious Media Impropriety | Mediaite.com and In the Democratic Echo Chamber, Inconvenient Truths Are Recast as Putin Plots | TheIntercept.com by Glenn Greenwald: "... The tactics they [Democrats] are now embracing will endure past the election, making them worthy of scrutiny. Those tactics now most prominently include dismissing away any facts or documents that reflect negatively on their leaders as fake, and strongly insinuating that anyone who questions or opposes those leaders is a stooge or agent of the Kremlin, tasked with a subversive and dangerously un-American mission on behalf of hostile actors in Moscow. To see how extreme and damaging this behavior has become, let’s just quickly examine two utterly false claims that Democrats over the past four days — led by party-loyal journalists — have disseminated and induced thousands of people, if not more, to believe ..." See also: It’s Official: This Election Is Driving Americans Nuts | Bloomberg.com and Most "news" is misinformation | DomainMondo.com.

One more reading recommendation:
•  "In order for investors to beat the performance of an index fund they must have a view that is different than the crowd and they must be right about that different view."--A Half Dozen Things I’ve Learned from Robert Cialdini’s book “Influence” | 25iq/com

-- John Poole, Editor, Domain Mondo 

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Systemic Risk and Asset Management in the Post Crisis Era (videos)

Why the U.S. Can't Go It Alone Anymore on Monetary Policy

U.S. central bankers talk a lot these days. Even their formal statements have gotten much longer. But for all the talk, there's one thing they're still not saying. Bloomberg Gadfly's Lisa Abramowicz tells us why it's important for Janet Yellen and Fed officials to become more transparent about some of their conversations. (Bloomberg.com - June 15, 2016)

Asset management in the post crisis era | FT Markets:

The FT's Philip Stafford and Arjun Singh-Muchelle of The Investment Association discuss how the post-crisis trading reforms are affecting asset managers. (FT.com May 25, 2016)

What is systemic risk?

See also: London School of Economics and Political Science (LSE), collection of videos from the Systemic Risk Centre.

In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system. --Wikipedia

YELLEN: WE DIDN'T SEE HOW HOUSING BUBBLE CREATED SYSTEMIC RISK
Comforting

— zerohedge (@zerohedge) May 27, 2016

CALL FOR PAPERS: Systemic Risk in Derivatives Markets https://t.co/2zgpUY0fMu Deadline 7th June @ESRC #finance #economics

— Systemic Risk Centre (@LSE_SRC) May 27, 2016

#SystemicRisk Tweets
Tweets about "systemic risk"

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Will the Chinese Yuan Lose 30% of its Value? Investing in China (video)

Shanghai Composite Index (source: google.com) 

UPDATE Feb 25, 2016: Lunar New Year post-holiday blues for the Shanghai Composite: the index dropped today 6.4% (see chart above), extending its decline this year to 22%. According to Seeking Alpha: surging money-market rates signal tighter liquidity and the offshore yuan has weakened for a fifth day, while China's vice finance minister warned of pressure on exports, and world leaders gather for a G20 meeting in Shanghai. Current market turmoil and a global economic slowdown are expected to be key topics of discussion.
    

Above: Real Trade Weighted U.S. Dollar Index: Major Currencies (source: stlouisfed.org)

Cash is King! Except when it isn't. The U.S. Dollar (USD) -- the "least dirty shirt" -- has a 38.5% gain in relation to other major currencies since 2011 (see chart above). The decline in the prices of commodities such as oil (which is priced in USD per barrel on major markets), has to be considered in context of the rise in the USD indexed against other major currencies.

How about the Chinese Yuan? China has a major bad-debt problem: "The debt problem in China has already reached the proportions of the U.S. subprime mortgage debacle." --China's Subprime Crisis Is Here - Bloomberg Gadfly (Feb 16, 2016).

Of Two Minds - The Chart of Doom: When Private Credit Stops Expanding... (Feb 5, 2016): "... the sole prop under the global "recovery" since 2008-09 has been private credit growth in China. From $4 trillion to over $21 trillion in seven years--no wonder bubbles have been inflated globally. Combine this expansion of private credit in China with the expansion of local government and other state-sector debt (state-owned enterprises, SOEs, etc.) and you have the makings of a global bubble machine."

"... From roughly 1989 to 2014--25 years--the "sure bet" in the global economy was to invest in China by moving production to China. This flood of capital into China only gained momentum as the yuan appreciated in value against the USD once Chinese authorities loosened the peg from 8.3 to 6.6 and then all the way down to 6 to the dollar. Every dollar transferred to China and converted to yuan gained as much as 25% over the years of yuan appreciation. Those hefty returns on cash sitting in yuan sparked a veritable tsunami of capital into China. Now that the tide of capital has reversed, nobody wants yuan: not foreign firms, not FX punters and not the Chinese holding massive quantities of depreciating yuan. This is why "housewives" from China are buying homes in Vancouver B.C. for $3 million. That $3 million could fall to $2 million as the yuan devalues to the old peg around 8.3 to the USD ... But that doesn't mean the devaluation of the yuan has to stop at 8.3: just as the dollar's recent strength is simply Stage One of a multi-stage liftoff, the yuan's devaluation to 8 to the USD is only the first stage of a multi-year devaluation."--Of Two Minds -Feb 17, 2016- Why the Chinese Yuan Will Lose 30% of its Value:

Meanwhile here's a video from Barron's--"Eric Chow on Investing in the Year of the Monkey" (Feb 3, 2016)--

Value Partners' hedge fund manager Eric Chow discusses with Barron's Asia Isabella Zhong his outlook for China's economy and why a Hong Kong property developer is one of his favorite picks. (2/3/2016)

Value Partners domain name: valuepartners.com.hk

Caveat Emptor!


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LinkedIn Co-Founder: Less Than Half of Unicorns Will Be Successful (video)

LinkedIn (LinkedIn.com) Co-Founder: Less Than Half of Unicorns Will Be Successful - LinkedIn co-founder and venture capitalist Reid Hoffman describes what he's calling a "quasi-bubble," as company valuations fluctuate between the private and public market. He speaks with Bloomberg's Emily Chang. (Source: Bloomberg) Published on Nov 18, 2015

Unicorn: a term in the venture capital industry to denote a start-up company with a valuation (based on fundraising rounds) of at least $1 billion dollars.

See also on Domain Mondo:

• The Unicorn Trap: Sky High Valuations Kill IPOs For Tech Startups
• Are Unicorn Valuations Getting Too High? (video)

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Housing Bubble Like New gTLDs Mania? The Big Short Trailer (video)

"The Big Short Trailer (2015) - When four outsiders saw what the big banks, media and government refused to, the global collapse of the economy, they had an idea: The Big Short. Their bold investment leads them into the dark underbelly of modern banking where they must question everyone and everything. Based on the true story and best-selling book by Michael Lewis (The Blind Side, Moneyball), and directed by Adam Mckay (Anchorman, Step Brothers) The Big Short stars Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt. In US theaters this Christmas.

This looks like a great movie, and also reminds Domain Mondo of the same mindset or mania of those within ICANN, its directors, officers, staff and stakeholder groups, and applicants, for new gTLDs, flooding the market with hundreds of mostly unwanted, unneeded new gTLDs (new generic top-level domains), only to discover that the expected consumer demand and predicted financial success missing--e.g., remember ICANN's estimate that there would be 33 million new gTLD registrations in FY15 (July2014-June2015)--reality: less than 5 million! And then we have all the new gTLD hucksters and suckers who have ended up with new gTLD domain names they couldn't sell or, in some cases, even give away--a good example is the otherwise successful investor Frank Schilling--

"Marketing for .SEXY and .TATTOO begin March 8th [2014].  At $19.99, anything good .SEXY will be gone in a year." --Frank Schilling  27 Feb 2014 (emphasis added)

How many "good" .sexy domains do you think are available? "I think there are probably 200,000 big generics and creative hax. When those are gone, others will be taking FirstLast.sexy."--Frank Schilling 27 Feb 2014 (emphasis added)

Reality check: more than a year later, as of September 29, 2015, total registrations for new gTLD .sexy total only 21,290 (source: namestat.org) and reportedly Frank paid for thousands of those .SEXY domain name registrations himself through his North Sound Names, otherwise the registrations total would be even worse!

"...  I think new gTLD operators like Uniregistry were too close to their product in 2014. We have been living and breathing new gTLDs since 2011, so the official launch in 2014 was the end of a 3 year relay for us, and we were surprised that the consuming public and other registrars were not standing there eagerly to take the baton and run forward with the same zeal that it took us to get that baton to them."--Frank Schilling (January, 2015)(emphasis added)

Key phrase: "We were surprised."

"I do think that Donuts’ approach of having a large portfolio of names is the right model. There is not enough cash flow to sustain a business otherwise. We at Uniregistry are just big enough but I expect that some registries will soon be people operating out of their bedrooms. Many of the new names just don’t work."--Frank Schilling (June, 2015)(emphasis added)

Sound like the kind of domain name extension or TLD (top-level domain) you want to build your business on?--"Oh, the registry operator of our domain name operates out of his bedroom"--what were they (ICANN on down) thinking? Was it really just about greed? 

See also on Domain Mondo: New gTLD Domains, the Walking Dead and Dying, ICANN FY15 Results July 2, 2015

Caveat Emptor!


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DISCLAIMER

Carl Icahn, Danger Ahead, Financial Warning, Video

(source: cnbc.com and carlicahn.com)

Above: Billionaire investor Carl Icahn's new video: "Danger Ahead" in which he warns of the results of interest rates that have been kept too low for too long, saying stocks could go down "a lot more" as the market comes to grips with bubbles exacerbated by the Fed's zero interest rate policy.

Carl's five major worries:

1. Low interest rates
2. Tax loopholes
3. Financial engineering of earnings
4. Stock buybacks that weaken balance sheets
5. The high-yield bond market.

• Icahn told CNBC the US Federal Reserve "may have backed itself into a corner."  Icahn argues the Fed should have hiked interest rates months ago, but doing so now is harder given China's weakness and other emerging markets.
• Corporate earnings are "suspect," driven by low interest rates more than anything else--"Instead of taking the money that they can borrow and really invest it in machinery, in their workers to make them more productive, what they do with the money is almost perverse. They just go in and buy another company to show analysts on Wall Street that earnings are going up, so their stock will go up and it's financial engineering at its height."
• Tax reform is needed on the issue of inversions and the repatriation of foreign profits.

See also on Domain Mondo: 

• Did The Fed Just Signal A Deteriorating Global Economy Into 2016 (videos) Sept 17, 2015
• Wall Street and the World Are Watching: Will the Fed Make Its Move Now? Sept 16, 2015
• ICANN is to Domain Names what Carl Icahn says Marc Andreessen is to Corporate America (video) Oct 10, 2014

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DISCLAIMER

Zenefits COO David Sacks: Tech Stocks Aren't in a Bubble (video)

Tech Stocks Aren't in a Bubble: Zenefits COO David Sacks - Zenefits COO David Sacks discusses the valuation of tech stocks with Bloomberg's Emily Chang on "Bloomberg West," July 9th.

Domain name: Zenefits.com  - Online HR Software | Payroll. Benefits. Compliance: "All your HR. One platform. Payroll, benefits, compliance, time tracking"


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Startups, Valuations, Unicorns, Venture Capital, a16z Slides/Podcast

Unicorn is a term in the venture capital industry, which denotes a start-up company whose valuation exceeds One Billion Dollars (US$). Examples are Uber, domain name: uber.com, a unicorn valued at $41.2 billion, and Snapchat, domain name: snapchat.com, a unicorn valued at $15 billion. Fortune magazine counted over 80 unicorns as of January 2015. According to Wikipedia, a new buzzword, decacorn, is now used for companies valued over $10 billion, such as Airbnb, domain name: airbnb.com, Dropbox, domain name: dropbox.com, Pinterest, domain name: pinterest.com, Snapchat, and Uber.

"While macroeconomic factors like low interest rates play a role, I think a big reason for the quantity of unicorns is the fear of missing out on one of the greatest periods of value creation we have ever seen. However, some of the most valuable opportunities — particularly the aforementioned market-makers — have strong winner-take-all characteristics: this potentially limits the number of quality unicorns. I think it’s this dichotomy that makes the current bubble discussion so difficult: most unicorns may be overvalued, but in aggregate they are probably undervalued. It turns out winner-take-all doesn’t apply just to the markets these startups are targeting, it applies to the startups themselves."--Unicorns - Stratechery by Ben Thompson (emphasis added)

U.S. Technology Funding -- What's Going On? 
From a16z.com - Andreessen Horowitz, venture capital firm - What’s going on in the public markets? What are all these so-called “unicorns”? What’s going on in venture capital?  "This time is different." It is different. Because it's always different... (published 15 Jun 2015)

Below: a recent a16z podcast: Taking the Very, Very Long View on Tech Investing--


It’s called “perpetual” or “eternal” capital, a very large pool of money that is invested on behalf of university endowments, foundations, etc., with a time horizon that extends generations into the future. The people who manage that money are driven by very different forces and thinking than your average Wall Street investor. Liquidity, for example, is not something this category of investors is immediately concerned with, nor are they swayed by your average economic cycle. At least, that’s the theory... how do these investors think in practice? In this segment of the a16z Podcast, Andy Golden of the Princeton University Investment Company, Ben Gomez of Pilothouse Associates, and Edwin Poston and Mel Williams of TrueBridge Capital Partners share their thoughts on tech valuations, liquidity in the markets, and what some in Silicon Valley may have a tendency to overlook.

So what's going on? Fewer IPOs, but more Unicorns that stay private for much longer, with multiple rounds of financing.


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