Tue, Oct 14, 2025|Whitney Tilson

China and the U.S. are racing to de-escalate the trade war; More on Chinese vs. U.S. companies; Be an investor, not a speculator; Crazy crypto story; Robin Hood Investors Conference tomorrow

1) Financial giants JPMorgan Chase (JPM), Goldman Sachs (GS), Citigroup (C), BlackRock (BLK), and Wells Fargo (WFC) all reported strong earnings today.

Despite that, the S&P 500 Index, Nasdaq Composite Index, and Dow Jones Industrial Average are down this morning.

The reason is that U.S.-China tensions escalated further overnight...

Beijing imposed sanctions on five U.S. subsidiaries of South Korean shipbuilder Hanwha Ocean. And it threatened further retaliatory measures on the industry.

In addition, Reuters reports that China has tightened controls for rare earth magnet export licenses in the last few weeks.

However, I would largely ignore this news. As this story in today's Wall Street Journal details, China and the U.S. are racing to de-escalate the trade war and quell tensions:

In this case, the Chinese are eager to save a summit between [President Donald Trump] and [President Xi Jinping] expected later this month, while Trump's team wants to stem losses in the stock market and avoid a public diversion from his Middle East peace deal, which they have groused about being overshadowed by the latest trade flare-up.

I share the consensus view that the U.S. won't impose incremental tariffs on November 1 and the Trump-Xi meeting will still take place at the end of the month as planned, so the latest kerfuffle won't affect stocks.

2) A friend who founded and runs a venture-backed tech company in Silicon Valley read the Telegraph article I included in yesterday's e-mail, titled "Western executives who visit China are coming back terrified." He commented:

U.S. companies dream of going "virtual," while the Chinese are actually building things – and are the best at it.

U.S. companies have very short-term horizons. I hear again and again stories of companies sacrificing what they KNOW is right in order to make a quarter. In China they are content to invest for years and years, if not decades.

They make smarter decisions than we do, and have real long-term vision – I assume that you have read about their Made in China 2025 strategic plan.

He goes on to detail how American companies are losing out by focusing too much on margins, unlike Chinese companies:

For example, the leader in the pulmonary embolism space was Inari Medical, [a U.S. company] with 90% market share and an incredible gross margin of 92%. But they repeatedly cut research and development projects to make their quarter. They got bought by Stryker for $5 billion (!), but their cupboard is bare – no new projects.

Meanwhile, Chinese companies invest and invest and invest and invest and are content with minimal margins – with gaps covered by the government.

They're creating the industries of the future while we're prioritizing oil and coal over wind and solar. Absolutely absurd. For example, check out these headlines:

According to my friend, venture capital ("VC") has had a role in this:

The Chinese have a novel model – the combination of hardcore entrepreneurs coupled with significant government aid – that's proving effective.

The VC model in America has proven effective (seven of the eight most valuable companies in the U.S. were venture funded!), but VCs typically have a shorter-term horizon and are probably over-selective about which industries they choose to invest in.

If China wins cars – and they are winning cars – the industrial base falls out of Europe, Japan, Korea, and the U.S. The implications are profound.

Thanks for sharing, my friend. My team at Stansberry Research and I will be keeping a close eye on this...

3) Lastly on the subject of China, 60 Minutes had two segments over the weekend on how it's infiltrating our critical infrastructure:

This is a worrying trend that I'll be keeping an eye on as well.

4) I've said it before and I'll say it again: The surest way to get poor quickly is to try to get rich quickly.

I was reminded of this when I saw this sad post on social platform X from three days ago:

This person was wiped out in the crypto crash that took place on Friday and over the weekend...

The crash was especially brutal for the riskiest "altcoins," as this Bloomberg article notes:

Bitcoin fell 13% after a fresh US-China tariff spat. But the damage was far deeper in smaller tokens, many of which fell as much as 80% before a tentative recovery...

Of the $380 billion erased, about $131 billion came from altcoins, according to 10x Research – a sector built on thinner liquidity, speculative narratives, and day-trader hype.

The crash raises doubts about the future of the altcoin ecosystem. Traders and market makers see structural support for these tokens eroding, with fewer buyers and rising risk aversion. The episode – unprecedented in speed and scope – threatens to mark a decisive break from a go-go era when anonymous projects could spike 1,000% with no rhyme or reason.

Speculators were also devastated when Advanced Micro Devices (AMD) surged last week...

According to Bloomberg, exchange-traded fund ("ETF") firm GraniteShares "was forced to shutter its 3x Short AMD" ETF after the stock's surge wiped out its value.

The lessons here are simple:

Don't use leverage, whether it be directly, via options, or through levered ETFs. (Regarding the latter, see this article in yesterday's WSJ: These Funds Can Go to Zero.)
If you feel that you must own cryptos, size your position small and stick to bitcoin and/or Ethereum.

5) Speaking of bitcoin, it plays a central role in one of the craziest stories I've ever read, published in the New York Times:

The young man, George Bachiashvili, had worked for the billionaire, Bidzina Ivanishvili, helping manage his businesses and investments. Over time, as Mr. Ivanishvili secured almost total control over Georgia and Mr. Bachiashvili was drawn deeper into the world of cryptocurrency, things fell apart. Now they face each other as enemies, with one seemingly seeking the destruction of the other...

What I found is a story that tells us so much about our world today. It's about the capture of entire states by individuals, a process unfolding in Hungary, Turkey and – alarmingly – the United States. It dramatizes the possibilities and perils of serving one all-powerful person, where blind loyalty is demanded and initiative punished, and underscores how easily people can become pawns in geopolitical games. But its most revealing feature is the technology underpinning it: cryptocurrency...

Cryptocurrencies are a wild frontier of wealth and power. And they are at the heart of this crazy cautionary tale.

I won't spoil the ending, so be sure to read the whole article for all the twists and turns...

6) A final reminder: The annual Robin Hood Investors Conference, which I helped start more than a decade ago, is taking place at Spring Studios in New York City tomorrow.

Robin Hood is a wonderful charity that fights poverty in NYC, with 100% of ticket sales going directly to organizations that help New Yorkers in need.

And this year's conference lineup includes some of the brightest and most influential policy experts, investors, and innovators – like Jamie Dimon (JPMorgan Chase), Ken Griffin (Citadel), Paul Tudor Jones (Tudor Investment), and many more.

Click here for more information. And to register for the event, click here.

If you'll be attending, please say hi!

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.