$Netflix (NFLX.US)$ 👍

$S&P 500 Index (.SPX.US)$ $Goldman Sachs (GS.US)$ Goldman Sachs recently released a report stating that the breadth of the stock market has narrowed sharply. Historically, stock market returns have been lower than average and have fallen sharply.
Chief U.S. equity strategist David Kostin said, “Since the end of April, five stocks have accounted for 51% of the S&P 500’s return. $Microsoft (MSFT.US)$, $Alphabet-A (GOOGL.US)$, $Apple (AAPL.US)$ , $NVIDIA (NVDA.US)$ and $Tesla (TSLA.US)$ together accounted for more than one-third (920 basis points) of the S&P 500’s year-to-date return of 26%."
"After contributing twice its initial weight to the index, these stocks currently account for 22% of the S&P 500's market capitalization, an increase of 4 basis points from the beginning of this year." Kostin added.
Kostin believes that after a period of similar market breadth, "stocks have historically shown lower-than-average returns and greater shrinkage." "Historically, it usually takes another 4 months before the breadth of stocks With continued growth, market leadership will shift to the previous laggards." "The record index concentration is both the reason and the symptom of a narrow market."
"In the past 7 years, the market value weight of the 10 largest stocks in the index has been rising, and now it has reached 31%, at least the highest level since 1980."

$LLOYDS BANKING GROUP (LLDTF.US)$ $Lloyds Banking (LYG.US)$ $NatWest (NWG.US)$ $NatWest (NWG.US)$
NatWest (NWG.L) fell out of favour with investors on Friday, falling as much as 5% on the day, despite revealing that pre-tax profit tripled in the three months to September, compared to last year.
The state-backed bank said profits came in at £1.1bn ($1.5bn), up from £355m in the same period a year ago, while revenue stood at £1.8bn. This also beat the £677m forecast from analysts thanks to a jump in mortgage lending.

1. China's regulatory clampdown has left investors bewildered and shocked. Most foreign investors have never experienced such extensive government intervention in other markets before.
2. It has been the way how China operated as they have regulated several industries in the past 20 years and this time isn't any different.
3. For example, some of you might remember the 2008 melamine milk scandal. 21 companies were tainted with excessive melamine including Mengniu and Yili, two largest dairy companies in China today. China government regulated the industry and punished a group of perpetrators to death and imprisonment. Thereafter the industry was cleaned up and you don't hear such problems anymore.   $MENGNIU DAIRY (02319.HK)$  share price went up 10x since 2008 while   $Inner Mongolia Yili Industrial Group (600887.SH)$ went up 40x. China didn't destroy the companies nor nationalise them.
4. I was involved as an investor in the next example. It was during 2016 where China was clamping down on corruption. If some of you can recall, China was very well known for corruption in the past. Now less so. The government arrested many top officials for graft and demand for luxury goods such as   $Kweichow Moutai (600519.SH)$  declined - few want to be accused of graft when they buy such items.
5.   $ORIENTAL WATCH (00398.HK)$ is a luxury watch retailer with majority of the sales coming from China. It got hit because of the anti-corruption drive. I bought the stock at the low and the business and share price recovered after the drive ended. I eventually sold for a 1.5x return. Today, it is up 5x from the price I bought.
6. I was involved in the third example too. In 2019, China regulated the pharmaceutical industry. They introduced a two-invoice policy to reduce the middleman distributors to just two for any drug. China was plagued with rising drug costs which the man on the street could face affordability issues. The key problem was the unnecessary middlemen who marked up the costs. This policy sent the pharma stock prices down.
7. One of which was   $CMS (00867.HK)$  I picked the stock up as the impact wasn't that big to them since they were a key distributor even under the new system. The share price recovered but I sold for a 34% gain because there was a short seller report that came up. Just wanted to err on the safe side. The company is still around today though and the stock went up as much as 2x from the price I bought at one point in time.
8. There were even more industries in which China had regulated in the past but I showed three examples here. Investors can in fact take advantage of these regulations as opportunities to buy stocks on the cheap.
9. Most investment literature is written by the west who operate in a system different from China. We cannot just adopt the same worldview and apply it to China. China is China. If you use other worldview to see China, you will only see what's wrong with it.
10. China is a central planning country and the government has a lot of power. This is unlike the US where legislative, executive and judicial powers are separated. Regulations are more effective in China than in the US (where they deliberate for months and still can end up in a stalemate). The features are cannot be more different.
11. The Chinese has a paternalistic culture where the father is the head of the household and is responsible for disciplining (子不教父子过). This is reflective of how the China government behave too. They see themselves as the head of the country and it is their responsibility to discipline anyone whose actions are deemed as harmful to the society.
12. People don't care about China in the past. But now they are too big to be ignored and they bring a culture that the world may not be accustomed to. Some of the rules will be rewritten inadvertently too.

$XIAOMI-W (01810.HK)$ Waiting for spring!

It is a good practice to examine insider sales for companies that are of interest to investors. Some occasional selling is routine, as many insiders obtain a huge portion of their compensation in the form of stock and therefore have to sell shares to generate cash. While insiders unloading a large portion of their shares can be seen as a red flag, the massive insider selling by CEOs of companies like $Microsoft (MSFT.US)$, $Amazon (AMZN.US)$ do not necessarily indicate that the companies are in trouble. CEOs may sell their shares from time to time for personal reasons that are unrelated to a company's short term or long term prospects. The higher multiple, together with other macro headwinds like supply chain constraints, inflation and the Omicron variant could have convinced the CEOs to sell off some of their shares. In general, investors should be more concerned with insider sales of struggling companies rather than hugely successful ones $Microsoft (MSFT.US)$, $Amazon (AMZN.US)$. Even the massive selling may not indicate that the long term prospects of the company have shifted. As such, it does not make sense for investors to sell off $Microsoft (MSFT.US)$ just because of the recent huge insider sale by the CEO. Instead, investors should pay more attention to the long term growth opportunities in its expansion of the ecosystem and cloud growth.
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$Alphabet-A (GOOGL.US)$
$AMC Entertainment (AMC.US)$
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$Dropbox (DBX.US)$
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$Meta Platforms (FB.US)$
$Pfizer (PFE.US)$
$Tesla (TSLA.US)$
$Walmart (WMT.US)$

$Phunware (PHUN.US)$ If it likes to fall, let it fall enough, we'll wait.

China's Transportation Ministry and 7 other departments have jointly issued the "Opinions on Strengthening the Protection of the Rights and Interests of Employees in the New Transportation Sector" to prevent disorderly capital expansion.
The Ministry of Transportation and 8 other departments have jointly issued the "Opinions on Strengthening the Protection of the Rights of Employees in the New Transportation Sector".
The opinions point out that online car-hailing platform companies are urged to legally ensure that online car-hailing drivers who meet the conditions of labor relations participate in social insurance, and to guide and support online car-hailing drivers who do not fully meet the conditions of labor relations to participate in the corresponding social insurance. It also aims to prevent disorderly capital expansion in the new transportation sector, strictly crack down on low stock price dumping, big data discrimination, and fraudulent inducement and other illegal activities. It is necessary to implement the main responsibility of the new transportation enterprises and guide the enterprises to consciously carry out fair competition, and encourage the enterprises to actively make fair competition credit commitments to society.
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