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#178 - Old Age Demographics


After 2020 the global population will be dominated by people over 65 years old as the population of children under age if 5 will keep shrinking. The higher rate of increase of old people reflects their increasing life expectancy.

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US average life expectancy increased from 63 in 1940 to 78 in 2018. People living until the age of 65 will have an additional 6.5 years to live.

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In 1955 it  took approximately 12 workers to generated social security funds needed to support one person over the age of 65. In 2099 it required at least 2.8 workers to support an old person. This shift in dependency ratios indicates that the productivity of the workforce would have to rise by at least 430% deliver an equivalent old age support level as in 1955.

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#197 Investing in Alibaba

On 11/21/2020 there is a question whether invest in the Alibaba corporation, now traded on Vanguard, to finance future retirement needs. The objective is to diversify depreciating dollar funds into a small share of rising  China equities.

Though Amazon has 4.5x more revenue and started in 1994, Alibaba is more profitable but started in 1999. The big difference is in employees: Amazon has 798,000, Alibaba only 103,690. Alibaba has >755 million customers in >2.5 billion market place as compared with Amazon's >2 million an >0.4 billion. One characterize Alibaba as a tortoise and Amazon as a hare. Fundamental long term investment choice for a conservative investor: Alibaba.

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For a the long run Alibaba investment strategy is fairly valued. Current financial indicators are positive except that the gross margin has been declining.

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At current $270/share Alibaba is fairly priced for long term based on continuation of trend in the future and the absence of US regulators cutting off Alibaba from the NY stock market. Do not buy at a price below trend line (under $277) adopting a conservative approach to rely only on an actual long term appreciation to deliver profits. 

Another view of the short term difference in the spread in Alibaba stock prices is shown below:


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As an added precaution we also examined the trends in revenues and in Alibaba profits:

Short term trend line confirm that both revenue and profits are consistently positive and that past trends are likely to continue.  The only risk arises from government intervention to cut off trading on the NY stock exchange.

SUMMARY: Continue weekly >10 shares purchases of Alibaba if price >$290/share.

SOURCE OF DATA: https://www.gurufocus.com/stock/BABA/summary










#196 China Statistics

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China has recovered +6% of GDP growth since 2020 pandemic

China's trade balance (e.g. Exports minus Imports) as been consistently positive. The current rate amounts to >$400 billions, down from a peak of >$600 billions in 2015. Countries with a positive trade balance are enriched, countries with a negative trade balance are becoming impoverished.

The best way of improving median income and to reduce poverty is for a country to move rural population into urban settings. China's changing its rural population from 90% in 1950 to 40% of total population represents the largest migration of population in the same country.

China has shifted the distribution of its investment capital from private sources to bank loans where the flow of capital is subject to much greater control from the central government. 











#194 A Review of Surprising USA Statistics




The USA birthrate has remained on the average of 4 million/year since 1939. The current birth rate is only 12 births per 1000 people or 0.09%. The population growth rate is 0.6% which suggests that the growth in the population is due to immigration, not birth. Legal immigrants now constitute >14% of the population.
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There are 44.7 million legitimate immigrants in the use or 13.7% of the government recorded population. A large share (40%?) come from impoverished South American countries and constitute a significant share of population in the lowest quintile of income.
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The US labor force participation rate has declined from 51% in 1980 to 35.5% in 2010. The rise from 1962 to 1980 reflects the entry of women into the workforce. The decline since 1980 reflects a decrease in the share of young people in the workforce as the immigrants are of a more mature age and as the distribution by age shifting to older people.
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As the US population increases the savings rate decreases. Increased amounts of government benefits reduces unemployment while low wage immigrants can find employment. 
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The rising optimism and an increasing trust in future by the top earning 1% is reflected in the rising disparity between the stock market and the forward cash earnings of corporations.
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The rise in imports as compared with diminishing exports shows that in terms of international trade some of the USA assets are losing value.
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Since 2001 there has been a large increase in the Federal deficit.
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The disparity in US income shows up as follows: The lowest 20% quintile of the population earns 3% of the total. The next quintile (20-40%) earns 9%.  Next quintile (40 - 60%) earns 14%. The top ranked 20% quintile of households receive 52% of income.

Income-based comparisons are inadequate. The difference in quintiles is much greater when the share of assets is ranked.
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Upper income households increased their share of income from 29% in 1979 to 48% in 2018 while the share of middle income households declined from 62% to 43%. Lower income households declined from 10% to 9%.
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While trend in the share of GDP of personal income declined slightly, the government social benefits compensate persons with grants of social benefits.
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The current administration made up budget deficits by means of a steep rise in treasury debts obligations.
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Investments in USA structures have risen from $220 billion in 1960 to $430 billion in 2020 and leveling off  since 1980. However, intellectual property products have increased during the same time from $25 billion to $1,000 billion and keep rising. Consequently the USA GDP assets are now dominated by intellectual property (soft assets). Hard assets (equipment) is now dependent on intellectual assets that are easily exported.
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Wealth countries (G7) are declining in the  importance of global trade. Emerging countries (mostly the rest of world)) the gainers in global trade.
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The huge decline in fertility rates from an average of 5 children/woman in 1965 to 2 children/woman largely reflects increased  progress in childcare to  rising survivability of born children.
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The world population increased from 2.5 billion in 1950 to 7.9 billion in 2020. That is an addition of 5.4 billion people in 70 years, or a 216% gain. 
For the remainder of this century, or 80 years, the world population will level off at 11 billion. That is an addition of 3.1 billion people, or a 39% gain.
The huge increases in the global population during the past 70 years will never be matched again by increases in the next 80 years.
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As the population ages and the number of people in the workforce declines it will require increased welfare payments for an economy to support the aging population. That will require more taxes and immigration from low-wage countries. 
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