Ok, so China had some sort of event overnight that seems to have knocked foreign stocks down for the day. The US market started lower and shrugged it off. I have touched on this before. I think a real meltdown in China would have an effect on other markets but it would be more about emotion than fundamental causality.
The thing behind the thing (and others have said this too) is that the internal modernization and ascendancy to middle class is going to continue regardless of the stock market and what GDP does. A 50% hit to their market may slow things down I am not saying it won't but progress will continue. If so then I would expect things that benefit from China would still benefit but they won't be immune from a correction to be sure.
Earlier today on the network I heard a segment with JJ Burns and Marc Pado about investing in China and China's impact on our markets. They both seemed to agree that retail investors should not own individual stocks.
That an investor should not own a stock from some country because they are an individual or retail investor strikes me as balderdash (Jim Rogers favorite word perhaps?). For a given investor a stock may or may not be appropriate but a blanket statement like this seems incomplete.
I have touched on this a fair bit in the last few days but the risk taken by owning some stock with a heavy weight in the ETF for that country is does not make you a risk junkie if you own the correct proportion. If you allocate 7% to emerging markets and split that 7% into three stocks from different countries that rely on different things that you have researched thoroughly you are not being crazy. The picks could turn out to be wrong but this is far from gambling as the chance of fraud is statistically insignificant and as long as you have some sort of exit strategy.
I disclosed selling Sinopec across the board about a week and a half ago in a video post. At some point I will be back but I am not sure when. Part of being involved with a big, popular, white hot theme is being prepared to sell when you have made a lot and being willing to sit out for a year or maybe even longer.
I am stepping into a meeting I will proofread this post when I get out, sorry.
Wikinvest Wire
9 comments:
I'm sure they didn't mean don't invest in foreign stocks. What they probably meant is, don't choose them yourself, let us do that for you. Go through a Professional. "Retail" investors should not be on their own. They should hire someone to do the picking for them. :>)
sorry i was not clear, their context was don't stock pick, yes.
I tend to think that stock picking, ALTHOUGH CLEARLY NOT FOR EVERYONE, is far from alchemy.
With a little introspection I think one can decide whether they can so the work of picking a stock.
If one goes with a single country fund that is heavy in one name they probably need to study that one name like iShares Brazil (EZA) and Petrobras whose common and preferred are something like 40% of the fund.
Just adding that I believe the event you refer to was China tripling the tax on stock trades to try to slow down buying a bit...it didn't seem to do a whole lot though.
"Well sir Tim, you are obviously a very busy man"
Monty Python quote having nothing to do with your comment.
I specifically did not mention the news item because whatever tips that market into correction, or more correctly the thing they blame for causing the big one won't really matter other than it will be an excuse, if it is this item fine but if not it will be something else, IMO.
I heard a CNBC guest (don't remember who; but I think last Friday) say "I think shorting stocks is un-American."
I doubt that China has the same information infrastructure available to retail investors (though that is not a fact-based comment). That has to have so many IB's slobbering at the opportunity to educate the Chinese investor masses.
Maria--I love your icon.
Roger--Don't worry. You were clear. I was only picking on the analysts for telling us retailers not to stock pick again.
Leisa -- Thanks. Many trial and error drawings...!
http://www.atimes.com/atimes/China/china-map.html
Hey guys. Go to the link above and you can click on all of the China provinces and see some "profile" info. Impress your friends at your next cocktail party or barbeque.
Full disclosure: I only clicked on one of these, but I thought it nifty enough!
Roger,
China did triple the cost in securities transaction but the Shanghai as well as Shenzhen Stock Market rebounded quickly just after dipping for one day.With a population of 100 million retail investors ( and keep growing about 300, 000 per day ), and everyone is crazy and hazy to have a bite in the stock market, I am afraid that unless China is very determined to cool the frenzy ( such as taxing on capital gain from stock ), it would be out of the question to correct the stock market ( the Shanghai stock market quadrupled in about two years time since it took off in 2005 )but Chinese Government is hesitant to do so in the name of social unrest....let's see what happens in the next couple of weeks but personally, I believe a final correction is imminent except that a crazy trend could last longer than what we fundamentally expected it to be.
Steven Soh
last longer than expected? history absolutely supports that contention.
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