Our World, and Welcome to It!; What the 'Smart Money' Knows About China's Evergrande Crisis; Facebook's steps in the right direction; Walter Scott obituary; Feedback on vaccination e-mails

1) Here's my friend Doug Kass of Seabreeze Partners with a clever missive:

Our World, and Welcome to It!

Uber (UBER) and Lyft (LYFT) have no cars.

General Motors (GM) has no chips.

Airbnb (ABNB) has no real estate.

Evergrande has no money.

Robinhood (HOOD) has no shareholder equity.

Bitcoin has no intrinsic value.

Tesla (TSLA) has no auto-based profits.

Zoom (ZM) and Peloton (PTON) have no physical plant.

Precious metals have no friends.

ARK Invest (ARKK) may soon have less liquidity.

Congress and the Fed have no discipline.

"Talking heads" have no humility.

The Emperor has no clothes.

This is the new economy.

This is the new stock market.

Oh, and... investors have no brains.

2) Here's the Wall Street Journal's Jason Zweig with some smart comments and, I think, likely the right conclusion: What the 'Smart Money' Knows About China's Evergrande Crisis. Excerpt:

In my opinion, the Wall Street belief that Beijing is bound to move toward free capital markets is based on shaky evidence.

Chinese governments have been meddling in the stock market since the 19th century. Again and again, the authorities inflated bubbles with cheap credit, planted government officials on corporate boards, micromanaged daily operations, and subverted the rights of outside shareholders. Even in the early years of Communism under Mao Zedong, the government ran, and ultimately wrecked, several stock markets.

Today, China constitutes about 4% of total value within the MSCI ACWI index of 50 developed and emerging markets around the world. In theory, an investor should have that much China, but no more, in a global stock portfolio. If, for instance, you have 10% of your assets in an emerging-markets fund which, in turn, has one-third of its holdings in China, then you're looking at about a 3% total exposure.

Until Beijing stops using the stock market as a plaything, that's plenty. Anyone who tells you that you need to invest more than a tidbit in China is asking you to bet that the future will be nothing like the past.

(I originally sent this as well as a number of other articles about Evergrande to my China-focused e-mail list, which you can join by sending a blank e-mail to: china-subscribe@mailer.kasecapital.com.)

3) It's good to see that Facebook (FB), under pressure from the recent five-part series by the WSJ, The Facebook Files – which I've covered in recent e-mails – is taking some steps in the right direction.

This is a good example of how high-quality journalism can really make a difference... Facebook Oversight Board Launches Review of Company's XCheck System. Excerpt:

Facebook's Oversight Board said it is reviewing the company's practice of holding high-profile users to separate sets of rules, citing apparent inconsistencies in the way the social-media giant makes decisions.

The inquiry follows an investigation by the Wall Street Journal into the system, known internally as "cross-check" or "XCheck." The Oversight Board, an outside body that Facebook created to ensure the accountability of the company's enforcement systems, said it has reached out to the company and expects a briefing in coming days.

The XCheck program was initially intended as a quality-control measure for actions taken against high-profile accounts, including celebrities, politicians and journalists. It grew to include millions of accounts, according to documents viewed by the Journal. In addition, some users are "whitelisted," meaning they were rendered immune from enforcement actions, the documents showed.

A 2019 internal Facebook review found that the practice of whitelisting was "not publicly defensible."

And: Facebook to Halt Instagram Kids Project Amid Pressure From Lawmakers, Parents Groups. Excerpt:

Facebook said it would suspend plans for a version of its Instagram app tailored to children, a concession after lawmakers and others voiced concerns about the photo-sharing platform's effects on young people's mental health.

Instagram head Adam Mosseri said Monday that the social-media service is pausing its work so that it can listen to concerns and do more to demonstrate the value of the kids version, which was to be ad-free and allow parents to monitor children's activity.

4) I never had the pleasure of meeting Walter Scott, but as a long-time Berkshire Hathaway (BRK-B) shareholder, I admired and appreciated him: Walter Scott, Buffett's Friend and Business Partner, Dies at 90. Excerpt:

Walter Scott Jr., the Omaha businessman and philanthropist who made a fortune teaming up with his friend Warren Buffett to buy electric utilities, has died. He was 90...

While Buffett put Omaha on the map for investors, Scott was in many ways the city's leading patron. He parlayed the money he made in the construction, telecommunications and energy industries into civic amenities, including the zoo and the local campus of the University of Nebraska, which was named after him.

"You have to give something back to your community that will allow people in the future a better education, a better opportunity, a better start in life," Scott said in a 1997 interview for the Horatio Alger Association of Distinguished Americans. "Wherever we are today as a society is built upon the past experiences of people and what they did to create a better world."

Scott had a net worth of more than $6 billion, according to the Bloomberg Billionaires Index...

In 1999, Scott approached Buffett about making an investment in MidAmerican Energy, a sleepy electric utility in Des Moines. The two businessmen had known one another since they were teenagers; the headquarters for Buffett's conglomerate, Berkshire Hathaway, was in Kiewit Plaza, an office building in Omaha; and Scott had served on the board of Buffett's company since late 1980s. But the purchase of MidAmerican would deepen their ties.

"From the start, the idea of being in partnership with Walter struck me as a good one," Buffett wrote in a letter to shareholders in 2000.

Berkshire went on to bankroll a takeover of MidAmerican with Scott, and it eventually formed the foundation of a vast energy empire. With Buffett's backing, the company bought utilities in the U.S. and Canada, snapped up natural gas pipelines and invested billions in wind and solar power.

5) Every time I encourage folks to get vaccinated (as I did on Friday), I get a bunch of e-mails like these:

• "I am not an anti-vaccination guy but having everyone vaccinated does not solve the problem – just look at Iceland. I believe people have the right to do their own research and make their own medical decisions. After all they are the ones who will have to live with the consequences of their decision. Freedom is what this country was founded on." – Michael S.
• "A large number of people are getting COVID after they are vaccinated, the facts are out there from credible sources. Implying being vaccinated will keep you from getting COVID is just wrong and adding the BS about erectile dysfunction is just too much. Because you are smart and wealthy doesn't make you an expert on anything, let alone a complex virus issue." – Mike V.
• "I thought I was getting financial advice. You really need to advertise that along with the small part of investing advice. I don't need you to keep harping on the fear aspect of COVID!... Sorry we have to part ways, I was looking for only financial advice!" – Don E.

So why do I periodically continue to send out information and arguments in favor of getting vaccinated? Because of e-mails like this one...

• "Whitney: After readings this morning's daily, I wanted to let you know your head banging is not in vain. I got my 2nd shot earlier this week; my wife gets her 2nd next week. Your logical, factual presentation had much to do with it.

"Why the hold out? Several reasons. One, we both had COVID last year over the holidays and still tested positive for antibodies in June. Two, the vaccines WERE experimental; changing that to approved made a difference, although the skeptic in me knew that after administering that many doses, there was no way in hell they would do anything but approve it. Three, encounters with people who would rage about being vaccinated and wearing masks and then walk off with a 'mask' (often a handkerchief, balaclava, or bandana) over their mouth and not their nose did nothing to bolster their arguments with me. And lastly, frankly, the government's insistence that vaccines were and are the only way to prevent and protect us. I take very little comfort in such blanket assurances from either the Trump or Biden administration. The old punch line, 'I'm from the government and I'm here to help' resonates with me.

"I don't believe there aren't other treatments out there. Misinformation is not only the purview of the anti vaccine side of the coin. I'm not saying they're better or cheaper or anything but to say there are none? Gotta call bullshit on that one.

"And yet, here I am, recovering from my 2nd shot, largely because of information from you that I evaluated the same way as I do your financial recommendations. You showed me the facts and gave your recommendation, I evaluated and made my decision. Sometimes it's a no-brainer, sometimes it's not, but at the end of the day, it's my call. Thanks for helping me make it." – Mark J.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.