“Investors are worrying there is nothing to worry about.” – CNBC senior markets commentator Michael Santoli
At one time or another, Almost DailyBrett owned shares of Boeing, Berkshire Hathaway and TSMC. It’s time to worry about all of them.
These three companies all have a long-term track record of being extremely good at what they do. They know exactly how they make money. They clearly understand their raison d’etre. They appreciate their value-add to global society.
What could go wrong with any of these blue chips? Another Boeing plane crashes to earth. Warren Buffett departs for the Omaha in the Sky. China invades Taiwan.
The first reason to invest in Boeing (BA: NYSE) is the legendary aircraft manufacturer and defense contractor is part of the exclusive duopoly with Airbus, jointly owned by the Dutch, French and German governments. The barriers to entry into Boeing-Airbus total addressable market (TAM) are virtually impossible to break with capital expenditure and R&D requirements in the zillions.
For the longest time one of Boeing’s leading customers, Southwest Airlines even included its supplier’s 737 in its logo. That was then, this is now.
Almost DailyBrett knows that public relations/marketing/corporate communications/investor relations pros working for Boeing, the airlines (e.g., Alaska Airlines) and airports (e.g., PDX) never sleep well. There is always a chance something can go horribly wrong with a Boeing plane, even having a door blown out at 16,000-feet shortly after taking off from Portland. Yikes!
Boeing’s reputation for trust and reliability is broken. Repair will be difficult. Time can heal (e.g., Tylenol cyanide poisoning, 1982). Boeing needs to be boring, real boring for a long time.
Would Almost DailyBrett buy Boeing at this point of time? Sleep is really important to your author.
Succession Planning?
How do you succeed Warren Buffett, 93?
Conceptually it’s possible. Consider how well supply-chain savant Tim Cook has masterminded Apple in the aftermath of the dearly departed Leonardo da Vinci of this time, Steve Jobs?
Also weigh how Disney completely botched the transfer of power from legacy of success under the masterful direction Bob Iger to “incompetent” Bob Chapek. Iger was forced back into the CEO role for the Mickey Mouse company. Will Disney get succession right in the second try?
Earlier this year, Buffett’s long-time co-pilot Charlie Munger passed away at 99-years-young. The image of the two being driven around in a golf cart speaks more than a 1,000 words.
Buffett has forgotten more about Wall Street investing than what most people, including Almost DailyBrett, will ever know. He seems more robust than the leader of the free world (e.g., POTUS), but does that statement mean anything?
Let’s cut to the chase: How does Berkshire Hathaway (BRK.A and BRK.B: NYSE) approaching $1 trillion in total market capitalization reassure investors, there is a future beyond the inevitable ultimate demise of Warren Buffett?
A clear line of succession needs to be communicated well in advance of the departure of the revered chief Sage of Omaha. Apple did it right, Disney not-so-right.
“The Great Illusion”
“The economic cost of war was so great that no one could possibly hope to gain by starting a war the consequences of which would be so disastrous.” — Thesis of Nobel Peace Prize winner Sir Norman Angell’s “The Great Illusion,” first published just five years before the 1914 start of World War I
More than a decade ago, Almost DailyBrett provided PR counsel to the San Jose headquarters of Taiwan Semiconductor Corporation (TSMC). It’s founder Morris Chang pioneered the “foundry” business, making the chips for virtually every semiconductor company on the planet.
Not only is TSMC (TSM: NYSE) incredibly successful, it’s as close to indispensable as any company on the planet (no hyperbole). And there lies the potential nightmare.
Let’s start with the undeniable geographic fact that nine TSMC’s fabs are located right on the seismic Ring of Fire. It’s not question of if Mother Nature packs a wallop, but when. The majority of these operations sit in Hsinchu on the west coast of Taiwan facing toward the Taiwan Strait and … you guessed it … the People’s Republic of China (PRC).
Just as Mein Kampf accurately outlined plans for conquest, China has made no secret for 75 years its plans for recovering — if necessary by force — the “lost province,” namely Taiwan. Time is not a prevailing consideration in Chinese culture.
When asked about the prospect of an invasion, the company pointed to its two fabs in Mainland China and robust cross Taiwan Strait trade. Surely no one would want to disrupt the free flow of commerce? Hope they are right.
When one considers the greatest fabless semiconductor companies on earth (e.g., ARM: NASDAQ) and (e.g., NVDA: NASDAQ) are virtually 100 percent dependent on TSMC, a Chinese invasion of Taiwan would not be a good thing.
Is pretending it will never happen, a 21st Century version of “The Great Illusion?”
Almost DailyBrett Editor’s Note: In the interest of full disclosure, your author presently owns Berkshire Hathaway, the B shares. No intention of selling two Ferraris to purchase one “A” share of Berkshire Hathaway. Yours truly worked directly with TSMC as a customer corporate PR director (LSI Logic), and then later as a PR counselor from 2006-2009.
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