Tuesday, August 14, 2007
Something Else
Recently I got complains from my friends about the lack of output, asking whether I've given up writing and moved on to something else. Actually I've run out of good investment ideas: the ones I've mentioned I don't wanna repeat (for if people don't like it the 1st time they see they won't like it the 2nd time either), while those which are more speculative I don't wanna mention (for most people don't have problem generating speculative ideas on their own).
The sub-prime storm, as it's called, has created quite a stir in the market but not strong enough to make one declare "buy all you want and all you can". I've also told my views for months so there's nothing substantial to add. Hedge funds losing money is nothing new and only proves again the lesson "don't over borrow on stocks" is timeless.
Instead, I'd share with you two pieces of investment related news.
Last week Mattel and Fisher Price recalled a massive number of China made toys as there's too much lead in the paint. While exposure to lead may cause children health problems in the long run, before that happens we see one human life has paid for the price already. The owner of a Foshan toy factory hung himself in a warehouse after his factory had been identified as one of the toy suppliers and banned from all export by the Chinese government. The factory has been a long term supplier to Mattel and the critical mistake the owner made apparently was to trust the wrong paint supplier, whose owner was his long time friend, making this all more tragic. He was 50 years old and left 5,000 people unemployed.
On a light note, Wynn released latest quarter results last week. I'm never a follower of gambling stocks, on ethical grounds, so I only read the brief from the paper but management's explanation on the Macau operation caught my attention. Quarter revenue there was USD350m and 15% higher than the previous one. The reason quoted was 'winning rate of the VIP tables was 3.3% higher than expected', which was a polite way of saying Chinese gamblers suck! Most of us know the casino wins in the end but even they couldn't predict it'd be that easy.
I remember reading about the game of blackjack where professional gamblers and mathematicians (like those MIT whiz kids) came up with all kinds of methods to count cards so that the winning odd could be increased by 1-2% (to above 50%), and that's already huge advantage and money, so much so that casinos would 'invite' anyone spotted counting cards out of their casinos. Maybe the Chinese aren't really in it for the money. Or maybe there's something really funny going on under the table?
The sub-prime storm, as it's called, has created quite a stir in the market but not strong enough to make one declare "buy all you want and all you can". I've also told my views for months so there's nothing substantial to add. Hedge funds losing money is nothing new and only proves again the lesson "don't over borrow on stocks" is timeless.
Instead, I'd share with you two pieces of investment related news.
Last week Mattel and Fisher Price recalled a massive number of China made toys as there's too much lead in the paint. While exposure to lead may cause children health problems in the long run, before that happens we see one human life has paid for the price already. The owner of a Foshan toy factory hung himself in a warehouse after his factory had been identified as one of the toy suppliers and banned from all export by the Chinese government. The factory has been a long term supplier to Mattel and the critical mistake the owner made apparently was to trust the wrong paint supplier, whose owner was his long time friend, making this all more tragic. He was 50 years old and left 5,000 people unemployed.
On a light note, Wynn released latest quarter results last week. I'm never a follower of gambling stocks, on ethical grounds, so I only read the brief from the paper but management's explanation on the Macau operation caught my attention. Quarter revenue there was USD350m and 15% higher than the previous one. The reason quoted was 'winning rate of the VIP tables was 3.3% higher than expected', which was a polite way of saying Chinese gamblers suck! Most of us know the casino wins in the end but even they couldn't predict it'd be that easy.
I remember reading about the game of blackjack where professional gamblers and mathematicians (like those MIT whiz kids) came up with all kinds of methods to count cards so that the winning odd could be increased by 1-2% (to above 50%), and that's already huge advantage and money, so much so that casinos would 'invite' anyone spotted counting cards out of their casinos. Maybe the Chinese aren't really in it for the money. Or maybe there's something really funny going on under the table?
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Manufacturer's product liability nowadays is unreasonably high. One miss or overlooking may destroy a whole company...or in this case, has killed an OEM supplier.
As a China supplier, working with a dinosaur-scale US counterpart may make you very rich in a year or two but also can kill you in a day. Placing your eggs in several baskets is always safer.
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As a China supplier, working with a dinosaur-scale US counterpart may make you very rich in a year or two but also can kill you in a day. Placing your eggs in several baskets is always safer.
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