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Comment by wmf | Hacker News Reader

It's very hard to lose in the short term, year after year, and hope that a black swan event puts you back into a winning position.

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Unless China's clearly stated policy that recognizes Taiwan as a part of China changes, it isn't really a black swan event.

It's more like an increasingly active volcano. It might not blow up tomorrow, but if you deliberately built a house on its edges, it would be hard to sympathize with you when it finally does go kaput.

How does one appease quarter-to-quarter returns chasing investors with that?

That assumes the only possible way the China-Taiwan issue can be resolved is some kind of event that would disrupt the production, ie. war or at least blockade of Taiwan.

Not the person you're replying to, but if I ran a chip business (or a country with a lot of military/economic tech dependent on chips-- IE most countries), it would certainly be something you'd want to de-risk if you could. Sure it's not the only possible outcome. But it's a realistic outcome, and one that has a ton of downside if it happens.

If I'm running a country or a multibillion dollar business, I'd certainly not want to leave my future wellbeing to the good sense of two powers with a gigantic historical axe to grind.

Not if you’re partially valuing your position in the stock as an option on that black swan event.

If you think there’s a X% chance of this happening, and that this event will be the catalyst for intel’s value appreciating by Y% of TSMC’s market cap, you can value the opportunity cost of investing in intel in the interim as a (dividend-paying) insurance premium covering your TSMC position.

If it never comes to pass, at least you earned a dividend. If you think Intel’s valuation has hit a trough, it’s both a good investment and a lot cheaper than a put option.

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