Map of the USA circa 1839

The current US map looks like this:

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US Map

Source: Wikipedia

But back in the 1800s the country looked much different. All the states were not yet formed and many were simply grouped as territories. For example, the middle of the country had the “Indian Territory”.

The following is a cool map of the USA from 1839:

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US and Texas Map from 1839

Source: University of Texas Libraries via Daily Infographics

The Astonishing Growth of China’s Per capita GDP

China is one of the largest economies in the world with a GDP of over $18.0 Trillion in 2015 based on Purchasing Power Parity. The Per capita GDP is $14,100 and that puts the country at 113 in the world according to CIA’s World Factbook.

The above stats do not however tell how far China has come in terms of economic growth. With a population of over 1.3 billion China used to be one of the poorest countries in the early 20th century. From a rural agricultural-based economy the country has grown exponentially in the past few decades. Though China follows Communism economic reforms helped to to lift millions of poverty.

I recently came across an interesting article by Professor John Ross, Senior Fellow at Chongyang Institute for Financial Studies, Renmin University of China on the economic growth of China. The following table shows the fastest growing economies 1978-2015:

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Table 1

Top Fastest Growing Economies 1978-2015

From the article:

It is also particularly striking that of countries that have gained in per capita GDP compared to the US only a few have gained greatly. Since the beginning of China’s economic reforms in 1978 only six countries or regions with a population of at least five million have closed the gap on the per capita GDP of the US by at least 20% – Mainland China, Malaysia, Taiwan Province of China, Hong Kong SAR, Singapore, and South Korea. All six are in Asia. Of these Mainland China achieved the fastest per capita GDP growth of any country not only in 1978-2015 but over the total period 1950-2015. Four of these economies – the ‘Asian Tigers’ of South Korea, Singapore, Taiwan Province of China, and Hong Kong SAR – all starting from a far higher per capita GDP than Mainland China, have already achieved China’s goal of transition from a ‘low’ or ‘medium’ to a ‘high’ income economy.

Asia’s dominance in rapid growth economies is overwhelming. As Table 1 shows all 10 of the world’s fastest growing economics are Asian – indeed the top 13 are. It is therefore Asian economic development, not the Washington Consensus of the World Bank and IMF, which has been an overwhelming success. It follows that what China has to study to ensure it breaks through to high income status is not the dogmas of the World Bank but the forces which led to China’s own economy outgrowing all others and, after that, what forces produced rapid economic growth in Asia.

Between 1978-2015 China’s total GDP grew by nearly 1,400%. The annual growth rate was 7.4%. This growth rate is much higher than that of other countries including the Asian Tigers.

Indeed China has beat world’s top developed countries in economic growth during the period shown above. Mr.Ross explains the astonishing rate of China’s growth relative to developed countries.

China’s Per capita GDP growth at an annual rate was higher even when compared to advanced economies as shown in the table below:

Table 3

Per Capita GDP Select Countries

Another excerpt from his article:

Table 3 shows that this fundamental model has not changed. Taking the most important advanced economies over the period 1978-2015, annual average per capita GDP growth was 1.7% in the UK, 1.6% in the US, Germany and Japan, and 1.2% in France. China’s growth was approximately five times as fast as all these economies. The result was China’s catch up in terms of per capita GDP. It may also be clearly noted that the major advanced economies all had essentially the same per capita GDP growth rate of under two per cent – the maximum being 1.7% and the minimum 1.2%. As a result, over the period 1978-2015:

  • “China closed the gap in per capita GDP compared to the US from US per capita GDP being 30 times China’s to being four times.
  • China closed the gap in per capita GDP compared to Germany from Germany’s per capita GDP being 26 times China’s to under three and a half times.
  • China closed the gap in per capita GDP gap compared to the UK from 21 times to under three times.
  • China closed the per capita GDP gap compared to France from 25 times to under three times.
  • China closed the per capita gap Japan from slightly under 21 times to under three times”.

Source: To become a ‘high income’ economy China needs to study facts not myths. Key Trends in Globalisation, John Ross

While it is common knowledge that the Chinese economy is one of the fastest growing in the world, when looked at a long-term perspective it is fascinating to see the rate of solid economic progress.

The Top Global Container Shipping Companies

The global shipping industry is dominated by a few companies. With more mergers planned, the industry’s concentration among a few players is going to get bigger. The companies in the industry are huge and are critical to global trade as they operate container ships that transport from one part of the world to another. The world’s largest container operator is Denmark-based Maersk with a market share of about 15% of the total world market. All the major firms in this industry are part of one of the four alliances.

The world’s top container ship companies are shown in the graphic below:

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The Top Global Shipping Companies

Source: Shipping Mergers to Remake Global Alliances, WSJ, April 12, 2016

The four alliances are 2M, Ocean 3, CKYHE and G6. Germany-based operators in the above list are Hamburg Sud and Hapag-Lloyd and CMA CGM is a French company.

It is interesting that just 14 top companies control about three-fourths of the global shipping market.

The world’s largest ship is the latest Triple-E class ships from Maersk. The first Triple-E class ship is Mærsk Mc-Kinney Møller shown below:

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Mærsk Mc-Kinney Møller Ship


Here are some fascinating facts about this ship:

  • “At 400 metres long the Triple-E ships on order by Maersk Line are larger than any vessel of any kind currently on the water. Its capacity of 18,000 TEU is a significant increase on the current 15,500 TEU capacity of the Maersk E-class
  • Maersk Line’s largest ships currently sailing the world’s oceans are the Maersk E-class vessels, which are 396 metres long
  • Other known large vessels include the container ship Marco Polo (also 396 metres long), the super tanker Berge Emperor 380 metres), the cruise ship Allure of the Seas (361 metres), and the war ship USS Enterprise (341 metres)
  • The largest ship ever built was the super tanker Knock Nevis (458 metres). She was scrapped in 2010.The normal operation of the vessel will be similar to the manning of the Maersk E-class vessels (22 crew members). It is, however, possible to operate with a crew of 13. If needed, the vessel can accommodate 34 persons in total.
  • The height (above baseline) of Triple-E is 73 metres, slightly higher than Allure of the Seas (72 metres), which currently is considered the highest.
  • Other principal measures of the Triple-E include:- Beam (breadth): 59 metres- Draught: 14.5 metres- Deadweight: 165,000 metric tonnes- Reefer container capacity: 600- Top speed: 23 knots.”

Source: Maersk

The largest ship in the world requires just 22 or a minimum of 13 people to man it.

Global Auto Brand Owners: Infographics

The global auto manufacturing industry  is competitive with many players catering to every section of auto buyers. However the major players own the top brands. For instance, US-based General Motors (GM) owns the Buick, Cadillac, Chevrolet, GMC, Holden, Vauxhall and Opel brands, Germany-based Volkswagen (VLKAY) owns Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, VW and Skoda, Indian auto-maker Tata Motors (TTM) is also the owner of iconic British-brands Jaguar and Land Rover.

The following graphic shows the major auto makers and their brands:

Global Auto Industry Graphic

Source: Car Industry Explained, Daily Infographics


Disclosure: No Positions

Knowledge is Power: Remain Calm, Gun Laws, Behaviorial Finance Edition

Russia Street Scene in 1890s

Street Scene in Russia in 1890s

Photo Credit: Russian Photo

UK Stock Market: Biggest One-Day Declines And Subsequent Returns

The counting is underway on the Brexit vote. Global markets have already rallied this week on the hope that voters would support the “Remain” group than the “Leave” group. While we wait for the results let’s take a look at how the UK equity market reacts after major one-day declines.

According to a report by Schroders, based on analysis of 25 years of data, stocks have returned positive returns over the subsequent 1, 3 and 5-year periods most of the time as the table shows below:

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The Biggest one-day declines of the FTSE All-Share Index in the past 25 years and subsequent returns:

UK Stock Market 1 Day Declines and Following Returns

Data Source: Financial Express, Schroders , June 2016

Source: 25 years of the UK stockmarket: what happens after the biggest one-day falls?, Schroders

In October 2008, the market as measured by the above index fell 8.3%. But one year later the index returned 26% including dividends. The total returns after 3 and 5 years were 41% and 87% respectively.

So even though the one day loss was huge, investors that held on to stocks and rode the volatile periods were richly rewarded after a few years. The returns assume that investors held the stocks before the large day plunge. For investors that bought stocks right on the day, the returns noted would be much higher. But picking the bottom is next to impossible for most investors.

Another important point to remember is that “time in the market is critical than timing the market”. This is because predicting the future is not possible and no one know when markets would sky rocket one day and when it would plunge hard one day.So for almost all investors the best strategy is to simply stay put. Here is an interesting example quoted by Schroders:

Consider this example. If you had invested in a basket of equities investments in global stockmarkets – the MSCI World index – between 2005 and 2015 you would have received a return of 60%.

But if you missed the 10 best days within that period then you would have lost 5%, according to Financial Express data compiled by Schroders. It’s an extreme example but demonstrates the risks of trying to time markets.

In summary, the following are some key strategies to remember for success in equity investing:

  • Timing the market is a fool’s game and is a sure recipe for disaster.
  • Keeping calm and not taking emotion-driven actions during market meltdowns is crucial.
  • Holding a diversified portfolio of assets is wiser than putting all eggs into one basket or making speculative bets.
  • Keeping investment fees low will help generate higher returns especially over many years. So high expense ratio funds should be avoided at all cost.
  • When there is blood on the street, try to add high-quality dividend paying companies to boost returns.
  • Ignore IPOs.Most IPOs are good only to founders, early investors, underwriting firms, etc.

Related ETF:

  • iShares MSCI United Kingdom Index ETF(EWU)

Disclosure: No Positions


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FTSE Big One Day Declines

Source: Stocks that will soar from Brexit: Don’t panic! Keep calm and use market turmoil as an opportunity, This is Money