Navigating the Trade Tension Tightrope: How Investors Can Thrive in the US-China Tech Dialogue
My notes from a recent Talking Billions episode
In a recent episode of the Talking Billions podcast, I sat down with Rick Carew, a former Wall Street Journal journalist with extensive experience covering Asia's financial markets who now teaches value investing at Fordham University's Gabelli School. From investigative journalism techniques for better investment research to navigating the complex relationship between Chinese government and business, Rick offered valuable insights that transcend traditional investment wisdom. His perspectives on US-China relations and global trade are particularly timely amid recent tariff discussions. Here are six key takeaways from our conversation:
1. Journalism Skills Transform Investment Research
Rick believes the tools of investigative journalism are invaluable for investors seeking deeper insights. "The first that might sound very basic, but is something you learn on your first day as a journalist is the willingness to pick up a phone," Rick explained to me. Many investors shy away from directly contacting management, fearing they'll be influenced by charm or persuasion. Rick considers this "a really lazy way to approach the problem," arguing that combining conversations with documentation creates a robust "mosaic" of understanding.
He recommended two powerful questions investors rarely ask: "What question did I forget to ask?" and "If you had to invest in a company in your industry other than your own, which would you invest in and why?" These simple inquiries often yield surprising insights, as executives reveal information not previously discussed or identify respected competitors. As Rick told me, "If you ask everybody in the industry that same question, inevitably you will get to the answer of who's the best operator in any industry."
2. Value Investing Must Evolve to Incorporate Growth
When we discussed teaching value investing to students, Rick emphasized that the traditional framework has been slow to adapt to growth-oriented markets. "That's one of the things that we're trying to do at Fordham is to push the study of value investing towards incorporating growth within the framework," he told me.
While staying anchored in fundamental business analysis, Rick leaves room for students to explore different approaches, from special situations investing to identifying long-term compounders. The key distinction is focusing on business fundamentals rather than momentum or capital flows. As he shared during our conversation, "The fundamental valuation analysis is what gives you your base for really understanding a company and its value and gives you the conviction to be able to hold that when the market might disagree with you."
3. Understanding China's Government-Business Dynamic
The relationship between China's government, Communist Party, and private businesses represents a complex ecosystem that many Western investors struggle to comprehend. Rick offered me a nuanced perspective: "One of the things I always encourage investors to do when they think about the interaction between government and business is to understand they both have motivations where they wanna work together, but their interests don't always align."
He explained that the Chinese government prioritizes social control alongside economic growth, leading to regulatory cycles targeting different sectors. Rather than avoiding Chinese investments entirely, Rick suggested understanding these cyclical factors while recognizing that great franchises in China can demonstrate the same durability as Western counterparts. As he pointed out during our discussion, "Regulation and the back and forth between businesses and government are generally short-term cyclical issues rather than long-term, as long as the core of the business is still strong."
4. China's Tech Ecosystem Functions as a "Learning Machine"
When discussing China's technology sector, Rick described Chinese entrepreneurs as a "learning machine" studying developments in Silicon Valley while further innovating within their robust supply chain ecosystem. "They're so eager to learn about the cutting edge of what's going on in Western technology," he told me, adding that some investors learn more about Silicon Valley developments from their Chinese executives than from Western sources.
This learning orientation, combined with China's manufacturing prowess and supply chain advantages, enables Chinese companies to adopt cutting-edge technology while continuing to innovate in surprising ways. In our conversation, Rick highlighted how recent developments in artificial intelligence and electric vehicles demonstrate how Chinese firms can leverage these advantages to compete globally despite market access challenges.
5. Current Trade Tensions May Lead to Deeper Globalization
Despite recent headlines about tariffs and trade conflicts, Rick offered a surprisingly optimistic perspective on the future of US-China economic relations. When we discussed the apparent trend toward deglobalization, he shared a different viewpoint:
"I'm personally not quite ready to say that that era [of globalization] is over," Rick told me. "We'll see where that political conversation goes and how it evolves, how much of the current discussion around tariffs is a longer term part of this rolling back of globalization versus negotiating for deeper globalization, which I think could be a surprising outcome that we may not really be able to foresee in our short time horizon."
Rick acknowledged the newfound appreciation for supply chain resilience following COVID disruptions but emphasized the tremendous benefits that global integration has brought to US consumers and businesses. He expressed hope that current tensions represent a recalibration rather than a permanent retreat from interconnected global markets.
"I do hope that what's happening right now in terms of some pushback against the depth of integration of global supply chain does not spread over into a larger conflict or a deglobalization of the world economy," he emphasized. "I just think that that's not gonna benefit the world over the long run."
6. A Three-Part Framework for Personal Success
Beyond investment insights, Rick shared a thoughtful approach to measuring success in life. His framework consists of three elements: enjoying your work, giving back to society, and maintaining curiosity throughout life.
"I really believe that to have a meaningful and a good life and a successful life, you need to put some thought into designing the way you want to interact with the world," Rick explained to me. Finding work that motivates you makes it easier to invest the necessary time and effort to excel. Giving back—through teaching, in Rick's case—provides deeper fulfillment beyond financial success.
Finally, Rick emphasized continuous learning and curiosity: "Being willing and comfortable to engage with people on a topic that you know nothing about and being genuinely curious and continuing to learn, I think creates a lot of richness in our lives." This mindset not only enhances personal growth but also improves investment decisions through broader understanding and perspective.
These insights from my conversation with Rick demonstrate how investment wisdom extends beyond financial analysis to encompass communication skills, cultural understanding, and personal development—valuable lessons for investors at any stage of their journey.
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