Author Topic: Not going to end well  (Read 2442 times)

mxt0133

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Not going to end well
« on: January 11, 2015, 10:19:26 PM »
http://www.bloomberg.com/news/2015-01-11/it-s-amateur-hour-in-the-booming-chinese-stock-market.html

This reminds me when I was working at Block Buster, it was a place where you could rent movies for you millennials =), during the tech bubble and a customer told me to put my money in tech stocks because you can make 30% guaranteed.  Even my parents were talking about the stock market.  Then during the housing bubble when my co-worker making 60k a year that still lived at home bought a 400k multifamily and then a another 400k house a year later, because house prices don't go down.

surfhb

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Re: Not going to end well
« Reply #1 on: January 11, 2015, 11:07:56 PM »
I understand your point but buying stocks during the tech bubble and a home in 2004 you intend to live in for an extended period of time was actually pretty smart investing as long as you stayed the course and don't take out equity for stupid shit. 

mxt0133

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Re: Not going to end well
« Reply #2 on: January 11, 2015, 11:27:21 PM »
I guess I was stuck on this quote from the article:

I feel cheap stocks are less risky -- big drops wont result in huge losses for me, Yuan said. I dont know too much about investing, but the stocks my friends recommended have been soaring in the past few weeks.

Where a lot of people were just in way over their heads and not actually educating themselves and didn't fully understand what they were getting into.  And just like the tech and housing bubble most people liquidated their holdings or walked away from houses as soon as it wasn't going up like they were told it would continue to do so.

Indexer

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Re: Not going to end well
« Reply #3 on: January 12, 2015, 05:53:03 PM »
This is about as surprising as a drunk drinking vodka.

China has been growing fast if you use GDP at the country level.  Its been growing really fast if you use the GDP of all the provinces combined(the two numbers rarely match....).  So you have people who have never had a dime before suddenly accumulating wealth.   Too much extra money... what to buy?

1.  Real estate no one wants:  they did this to the point that they don't have empty homes.... they have empty cities.  Giant cities that are pitch black at night with no cars.  They are all investment properties.  Basically when the real estate bubble popped for the rest of the world China printed a bunch of money and doubled down on real estate.  Don't say its a bubble, that's unacceptable. 

2.  Wealth Management Products:  a.k.a loans a bank wouldn't touch.  You put in money, you get good interest guaranteed, the money goes to build XYZ crap.  The rate is good because the bank wouldn't touch it.  Much of it is going to build all that real estate no one wants.

Which brings us too..... 
3.  The Chinese stock market has always been a crap shoot.  Right now its up about 66% in 1 year, and China's growth has been slowing down.  If that actually makes sense to you then you are the perfect candidate to be an investor in China. 
http://www.bloomberg.com/quote/SHCOMP:IND

When the Chinese government, the provinces, and the companies adopt something akin to standard accounting practices... I'll consider investing there.  Until then all I see is a whole bunch of Enron.  On that note even after being up 66% their market is still down about 40-50% from its high in 2007, and only about double where it was in 92.  For reference the S&P is about 5 times higher than it was in 92.