Note To Public Community: Semiconductors could be due for a bounce soon. One major issue that could derail my intermediate-term bullish view. China investors need to continue to be patient.
Public Commentary + Latest YT Video
Hey YT Friends, it's your friend & U.S./China Investment Strategist Larry Cheung, CFA. 😊
If you are new to my email list, read my previous email first so that you understand my thought process leading up to this public update. Our email list now has over 2300+ readers, and I’m excited to share with you thoughtful commentary.
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I want to wish you and your families a Happy Easter if you celebrate this holiday.
To celebrate with you, I will be sharing with my public list one of my Bi-Weekly premium reports that I wrote in late March to forecast the first half of April (4.1-4.15). This way, you can understand my thought-process and research during this dangerous market environment.
In return for me sharing this exclusive report with you, my simple ask is that you follow me on Twitter as I’m trying to share quick, short-form thoughts when I have anything to share as well as having friends/family/peers join my email list here.
Click on the image below to get access to the premium Bi-Weekly report for the first half of April that was issued to Patreon Investment Community Members.
If you enjoy this type of research and it fits your style, consider joining my community where I just recently released my 2nd half of April Update to help my members understand what comes next.
Now let’s talk about the the current state of the market. My commentary here is a snippet of strategy discussed in my full 2nd half of April update.
My General Sentiment on Macro:
I’m now more concerned about the U.S. insistent efforts to prolong the Russia-Ukraine crisis. The only near-term beneficiaries I can see happening from this crisis are military contractors (Lockheed/Raytheon), investors who are positioned long commodities, and perhaps precious metal investors.
The recent development of Finland and Sweden potentially joining NATO is a SERIOUS matter. I do not believe Putin is bluffing that he will step up military action if they do join NATO. I will update my communities on the implication of this if this ends up happening.
Although I am positioned for a rising market, I believe that the downside risks if Russia uses nuclear options on neighboring countries are quite large. I sincerely hope this does not happen as we could see even more immense volatility than we did in Q1 2022. I personally believe the energy/commodities trade has sailed, and I refuse to join that trade despite its recent outperformance. I continue to favor high-quality tech and consumer discretionary names, BUT with the right levels of risk management.
I would encourage both my public and private communities to start forming an investment strategy to remain unemotional and objective if significant volatility returns to the market. You must plan your strategy ahead of time, because by the time the emotions run hot, you may not be able to execute properly. I discuss my plans inside my Bi-Weekly updates.
On China
There is a lot of political commentary surrounding how China is not handling the Shanghai COVID cases well. While today’s COVID outbreak is bringing logistical challenges to both companies and real people in Shanghai, I believe this challenging time will be overcome. China is choosing to reduce COVID-related deaths, and in doing so, they have to increase the strictness of their controls.
The geopolitical situation is getting increasingly more complex. Finland & Sweden joining NATO will further provoke Russia, and I believe this potentially could force China to publicly take a side (most likely Russia). I believe China publicly taking a stance would spark the U.S. to enact more punitive measures on the delisting issues as a way to pressure China.
Short-term pressure on Chinese-Internet names continues to be intense, but like I’ve said repeatedly, long-term investors will likely be rewarded by lower prices.
Follow my thoughts in terms of entries/exits & risk management more closely on U.S. & China technology names inside my community.
Quick Announcement: I want to take a moment to thank Morning Brew for being one of my Sponsors on my channel. If you want to support my research efforts, take a moment and subscribe to Morning Brew on Youtube. Their latest campaign goal is to raise awareness of their new Youtube Channel. All it takes to support my relationship with them is to subscribe to their free Youtube channel.
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Check it out - it’s pretty cool. And supporting Morning Brew means supporting me too. Thank you!
My Latest Youtube Video
My latest Youtube video sparked continued skepticism among China Bears. I’m up for a healthy discussion, so long as the commentary is constructive and not illogical. Every market will have bulls and bears - let’s just make sure the commentary is constructive and diplomatic.
If I’m going to take one side, I continue to side on being bullish on China in the intermediate/long term - especially given there is a divergence between weakening share prices contrasting the upcoming macro setup for increased monetary easing. That said, it’s challenging to understand the short-term direction.
Chinese Internet IS NOT a short-term investment thesis. This is an intermediate-term investment thesis.
Here’s what my latest Youtube video is about:
Topic: The most important roadblock halting the Chinese Internet equity rally
Unique Angle: The real issue weighing down Chinese Internet stocks is Zero Covid. NOT Charlie Munger.
Intended Audience: 1.) Investors interested in Chinese Internet 2.) My audience who follow me for my research on China Macro & Equity Strategy
Reason I made this video: To help our Youtube community understand what is the root cause driving true share price performance and to distinguish fact from opinion.
That’s it for this update. Leave a like if you enjoyed this email. Share my newsletter with friends/family/colleagues if you believe they will enjoy/benefit from my work. ❤️
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See you back on Youtube soon,
Larry 😊