Last week I mentioned that China was down a lot and I questioned whether it might make sense to dip a toe back in.
After a couple more down days it has had a couple of very big up days. The move is being attributed to a decrease in a tax that was recently increased to stem stock market speculation.
The government's involvement on both sides belies the relative newness of stock market investing for the country. It seems to me that with newness comes the potential for mistakes. Mistakes of this sort don't necessarily make China any more or less an attractive destination but I do believe creates a visibility for bigger booms and busts to continue into the future.
This all might flow into an idea I have expressed before that maybe buy and hold should be replaced with buy and hope to hold. If you bought just about any Chinese stock in 2004 or 2005 you have made a lot of money. If you still have that same stock you are probably down quite a ways from its peak. Perhaps this is a lesson for the future. There is nothing wrong with taking a little off the table in a stock (or narrow based fund) if it doubles much faster than the market.
Wikinvest Wire
12 comments:
Housing continues to show we are turning Japanese.
Most people including the Chinese will contract as we contract. Things will get better when housing stops diving of a cliff. Sure would like to see Shiller get optimistic, but I think that is more than a year away.
BTW, you need to start saying nice things about Roubini. He seems to be rather accurate so far. No disrespect but you sound as unfairly negative about Roubini as many posters do about you even though you are out performing the market (just trying to add some perspective)
Someone brought up Roubini the other day in the comments, maybe it was you, and answered as follows (pasted in from last weekend)
Roubini started using words like collapse back in 2006 expecting a bad recession to start back then. If I am recalling correctly he felt the magnitude would be very bad but perhaps I interpreted him incorrectly because of the words he uses. Housing is currently down about 10% and technically speaking we do not know if we are in a recession. To be clear I do think there is more to come on both of these fronts but the above for now is factually correct.
I take the word collapse to be much more than 10%--more than 20% probably. He turned out to be very early, too early really, and based on his choice of words, I do not think he will be correct in terms of magnitude.
That being said I have a lot of respect for him, he recognized big problems long before the market began to discount them in. Further he does stick his neck out in terms of giving time estimates and numerical estimates.
Schiff has a good track record for picking foreign stocks but that does not get the attention. What gets attention is his hyperbolic never quantified predictions of doom which I don't agree with and leaves me wondering if the whole thing really is just about selling books. If all he did was talk about stock selection and process for stock selection I would be much more open.
no was not me, but I hope he keeps commenting.
I just think housing will drop more than I had hoped (20 - 25%). The further the drop the more I think depth and duration become and the more we follow the Japanese model.
YTD, China is up approx 50%.
Not too shabby.
YTD China is UP 50%? Do you mean year to date? If so what China?
The Shanghai composite is down more than 40%, FXI is down 25%, GCH is down 45% and the Hang Seng is down 15%.
I suspect your time frame is wrong.
Seems to be some confusion on "down a lot"
for 12 month period FXI is up just under 50%, and for the 2008 year to date, its down about 3%.
According to yahoo finance,
FXI is up 48% from 1 year ago.
i misread the chart on FXI, it closed 12/31 at $170 and closed today at $160.
Your first comment said China was up 50% YTD do you mean for 12 months?
YTD the Shanghai comp is down 40%.
Yes, for the past 12 months FXI (FTSE/Xinhua 25 Index) is UP 50%.
Why are you calling this a bad investment?
I think that after the "window Dressing" for the olympic's that the Chinese economy will come under some real strain. The price of Crude will really effect them.
Banker
So, you missed a 50% runup in China over the past year by being out, and now you want to jump on the bandwagon?
Doh!
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