China in a Bubble? 50 comments
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There's been a lot of talk lately about various Chinese asset markets being bubbles. Let's take a look.
1) Industry and Commodities
China's industrial sector is growing quickly, and many are arguing, unsustainably. Iron ore imports are up 65% year over year. Imports of most commodities and manufacturing of basic goods are far higher than one would expect given China's GDP growth. This appears to be a bubble driven by stockpiling by the government as well as by speculators. Peasants have stockpiled an estimated 50,000 tons of copper in a bet on rising commodity prices. If the world economy has a robust V-shaped recovery, global demand may catch up to China's stockpiling, but that's a big "if". While there's no obvious limit to how much more stockpiling the Chinese government and people can do, commodity imports and manufacturing are indeed in a bubble. It would probably take 3 years for world demand to catch up to the artificial Chinese demand for commodities.
2) Real Estate
China’s property values appear dramatically inflated. With a price to income ratio of over 12 in the major cities compared to a 5 to 1 ratio that the World Bank considers affordable, the Chinese people can't afford the new construction. Over the past year, completed real estate is up about 25% while sales are down about 22%. That’s a huge disparity that developers are starting to remedy – new construction is down about 1% year over year. These numbers are from the official Chinese statistics, but it's hard to know what we can trust. While China’s real estate market does appear to be in a bubble, it's no longer a growing one as you can see from the graph of real estate prices below.
The economist Andy Xie makes the point that,
China's urban living space is 28 square meters per person, quite high by international standards. China's urbanization is about 50% and could rise to 75%...so China's urban population may rise by another 300 million people. If we assume that all can afford property, Chinese cities may need an additional 8.4 billion square meters of space. China's works-in-progress covers more than 2 billion square meters...The construction industry has production capacity of about 1.5 billion square meters per annum. Absolute oversupply - not enough people for all the buildings - could happen quite soon.
The Chinese government has started reducing the flow of easy credit which has put a lid on prices. The question is will real estate remain stable until demand can catch up, or will prices collapse violently?
3) Credit
Loans in the first 9 months of 2009 totalled 8.7 trillion Yuan vs 3.5 trillion Yuan in 2008. M2 (measure of the broad money supply) was up 29.3% over the previous year. Despite this massive money growth, the official statistics show that China is facing deflation because of tremendous overcapacity. I’ve seen estimates suggesting that China really faces inflation of around 10%; it’s not easy weeding through the competing data.
Banks were basically ordered by the government to increase loans over the last year and there's lots of anecdotal evidence that banks were throwing money at businesses with no investment prospects and even businesses that didn't want the loans. The situation is widely acknowledged - chairman of China Merchants Bank, Qin Xiao, says China must urgently tighten monetary policy to avoid inflating bubbles. China has recently moved to tighten credit, but we will likely see non-performing loans rise sharply over the next few years. Below is a graph of Chinese M2 (broad money supply).
4) Equities
Chinese equities are still 13% off their highs with GDP more than 15% higher. Simple metrics like P/E and P/B suggest that Chinese stocks aren’t cheap, but nor are they in a bubble. While many if not most Chinese companies commit accounting fraud, they are still growing quickly. No bubble here.
5) Are We The Mongolians?
The longstanding myth of the Chinese Wall was that it was built in the 3rd century BC. Most of whatever existed at that point was destroyed before the 12th century; the great wall we think of today was built by the Ming Dynasty in the 14th-17th century. The Great Wall was a great failure as the Manchu warriors entered China in 1644 and conquered Peking, establishing the Ch’ing dynasty, which reigned for three centuries. Today, China has established many economic controls to protect and preserve the pseudo-capitalist economic climate of mainland China. These new walls are likely to prove similarly ineffectual over the next few decades as western powers again impregnate China with their culture. Hopefully the modern invaders will be more beneficial to China than the Mongols were.
Conclusion:
The large current account surplus and the influx of foreign direct investment led to a bubble in real estate over the past decade. More recently, the explosion in bank lending and fiscal stimulus have produced a commodity and manufacturing bubble. However, the tremendous attention that these bubbles are receiving suggests that they are not particularly severe. In severe bubbles, the final spike occurs dramatically and with almost no one mentioning that it's a bubble. Rather, regulators, analysts, and speculators all bend over backwards to justify the rally fundamentally. With a surfeit of bubble watchers today, we're less likely to get the classic conclusion to bubbles - the violent bursting.
For this issue I drew upon insights from Michael Pettis, Victor Shih, and John Mauldin. Many thanks to them.
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This article has 50 comments:
Hard to draw a distinct conclusion outside of a potential commodity bubble.
Also, not at all sure where you are getting that equities are only 15% below highs. SSE composite is still below half of the 2008 bubble price. I'd say they're slightly under-priced right now, but only slightly.
i won't count big bears, since they think most everything's a bubble anyway ;-)
which it might....
On Nov 01 02:49 PM adan wrote:
> i don't know (really) - but i don't get the impression the possible
> bubble is being acknowledged as such by most market bulls -
>
> i won't count big bears, since they think most everything's a bubble
> anyway ;-)
>
> which it might....
Important history lesson: why bother with any defense against the external enemy, if you have enemy within?
If you think China's stockpiling of critical industry material is a bubble think again. The stockpiling is a strategy to divest the US dollar and strengthen China's strategic security. It's just the beginning. China still has a long way to go. China has too much worthless paper US dollar, but not enough physical stockpile of strategic materials.
Let's say in the unfortunately event there should be a war between China and the USA. What should the Chinese soldiers bring to their battlefields? They probably should bring suitcases full of US dollars. When they run out of munitions they should probably go across the fire line and ask: Hey, fellas, sell me some munitions, I will pay you the double price, see I have whole suitcae of the green bucks!!! Isn't it a joke? But that's the thinking of those who think China should not buy commodities and should continue to buy US treasury bonds, including Mr. Andy Xie.
Read on China's Commodity Carry Trade:
seekingalpha.com/artic...
seekingalpha.com/artic...
The only bubble that exist today is the bubble of fiat currencies.
U.S. stocks, especially financials -- are 100x more overvalued than most Chinese stocks.
But a little less so after Bloody Monday... coming your way in tomorrow.
Very similar to usa problems and bogus numbers I think except china has less deficit.
good article overall.
He said:
"China's urban living space is 28 square meters per person, quite high by international standards. China's urbanization is about 50% and could rise to 75%...so China's urban population may rise by another 300 million people. If we assume that all can afford property, Chinese cities may need an additional 8.4 billion square meters of space. China's works-in-progress covers more than 2 billion square meters...The construction industry has production capacity of about 1.5 billion square meters per annum. Absolute oversupply - not enough people for all the buildings - could happen quite soon."
Let me help him out correcting it, starting from the last sentence and then go backward:
"Can't happen fast enough - not enough buildings for all the people - ridiculously undersupply. The construction industry has a production capacity of only 1.5B square meters per annum. But they are working overtime to produce more than 2B square meters per year. Still far below 8.4B square meters per year needed just to provide for the 300M new urban population a year. Even if all they can afford property there is simply not enough for them to buy. And that has not counted in the INCREASED demand from existing urban population, due to improvement of income level. There is no way China's urbanization could raise to 75% because there is simply not enough buildings to host all the people. China's average living space is quite high according to international standard? Was it a joke? 28 square meters living space per person? Oh yeah if you really believe the official government data, which is always bloated."
(Read for example here why the numbers are bloated)
blog.ifeng.com/article...
There is an acute shortage of living space in China's cities. That is a reality. Not even one can afford housings. Most can't. But that is because there is simply not enough housing for every one. The high price is not a bubble, but merely reflect the imbalance between supply and demand.
China has 1.3B people, not 130M, mind you, Mr. Andy Xie. That's a gigantic demand on everything even if the material demand is still far below the global average level.
As well, please note readers that I can't help but think that some of the comments here might just be those in the 50 cent army (en.wikipedia.org/wiki/...). Be cautious!
With all due respect you clearly are out of your league. Andy Xie is a well respected economist - very well educated, well informed, articulate, and well balanced in his opinion. The property market is a massive bubble - there are literally thousands of empty residential building throughout China, from 1st tier to fourth. Take a look at night at all the buildings without lights on.
Find further support for Andy's arguments at: www.pivotcapital.com/r...
On Nov 01 08:01 PM Mark Anthony wrote:
> "Economist" Andy Xie's report on Chinese real estate was so ridiculously
> wrong. As a matter of fact every single centence needs to be reversed
> to reflect the reality.
>
> He said:
> "China's urban living space is 28 square meters per person, quite
> high by international standards. China's urbanization is about 50%
> and could rise to 75%...so China's urban population may rise by another
> 300 million people. If we assume that all can afford property, Chinese
> cities may need an additional 8.4 billion square meters of space.
> China's works-in-progress covers more than 2 billion square meters...The
> construction industry has production capacity of about 1.5 billion
> square meters per annum. Absolute oversupply - not enough people
> for all the buildings - could happen quite soon."
>
> Let me help him out correcting it, starting from the last sentence
> and then go backward:
> "Can't happen fast enough - not enough buildings for all the people
> - ridiculously undersupply. The construction industry has a production
> capacity of only 1.5B square meters per annum. But they are working
> overtime to produce more than 2B square meters per year. Still far
> below 8.4B square meters per year needed just to provide for the
> 300M new urban population a year. Even if all they can afford property
> there is simply not enough for them to buy. And that has not counted
> in the INCREASED demand from existing urban population, due to improvement
> of income level. There is no way China's urbanization could raise
> to 75% because there is simply not enough buildings to host all the
> people. China's average living space is quite high according to international
> standard? Was it a joke? 28 square meters living space per person?
> Oh yeah if you really believe the official government data, which
> is always bloated."
> (Read for example here why the numbers are bloated)
> blog.ifeng.com/article...
>
> There is an acute shortage of living space in China's cities. That
> is a reality. Not even one can afford housings. Most can't. But that
> is because there is simply not enough housing for every one. The
> high price is not a bubble, but merely reflect the imbalance between
> supply and demand.
>
> China has 1.3B people, not 130M, mind you, Mr. Andy Xie. That's a
> gigantic demand on everything even if the material demand is still
> far below the global average level.
I do not think any major power is in any position to launch a global war. That's just physically and logistically impossible. America can't handle an Africa, can it handle a China? China's own economy could crumble down within a month if all its sea port imports are cut off. Not only that, in today's world, any one can knock out any one's a few key bridges and highways and everything is immediately crippled. You do not need nukes for ensure mutually assured destruction, a conventional war would be enough to knock out each other.
So no, no one is in any position for a global war. But yes, China is deeply worried that it must hasten its stockpiling of strategic materials. There are historic reasons that China negnected the need to establish its strategic stockpiles. Under Mao, and under several Chinese leaders after Mao, China's policy was to emphasize "self-sufficient" so it never occured to them that they need to rely on importation and rely on stockpiling. As late as 1993 China was still an oil exporter. But things have completely changed.
On Nov 01 09:48 PM mikemilken wrote:
> stock piling materials ~ sounds alot like they are preparing for
> a war!
"The property market is a massive bubble - there are literally thousands of empty residential building throughout China, from 1st tier to fourth. Take a look at night at all the buildings without lights on."
What you write is true, but does not explain the full picture. The reason for the empty buildings is that there has been a build-out of large high-end luxury apartments. Most folks that can afford these buy one to live in, and several for speculation. As housing prices drop and/or lack of buyers, they are content to sit on the empty property rather than take a loss, and are not buying more. However, there is a supply shortage of new "normal smaller sized apartments" the kind the average worker wants and can afford, which in turn pushes up the price of smaller and second hand apartments. From the developer's view, luxury apartments make more money so that is what they build. An analogy for this dislocation would be if all of the sudden the only new cars available for purchase were ferarri and mazerati, hence the problem. This problem will only go away with more government-subsidized affordable housing projects.
All we need is centralized governments to allow their markets and fiat currencies to be uses as casinos and speculation vehicles.
If things go wrong, use taxpayer money to fix things because you can always get more money from the oppressed masses.
Raise taxes, raise banking fees and interest rates, raise insurance premiums, raise food costs. What are they going to do, revolt?
We can now control the masses with mass media and make them work so much to survive within the system they don't have time to revolt.
No bubble at all!
Let me cite one example I found in a brief review. Page 7, top paragraph:
"....USA and Germany count every town of more than 2,500 people as “urban” .... We would speculate that by such definition China would be one of the MOST urbanised countries in the world. ... only 100mn actually would need to be urbanised."
WOW! I never thought China could be classified as the world's most urbanized country! By that token why not just lower the urbanization standard to any village that's more than 100 people. Then China is 99.999% urbanized already and hence no more houses need to be built.
When you see absurd conclusions like that, you can throw out the whole article as craps.
On Nov 01 09:42 PM China Interest wrote:
> Mark Anthony
>
> With all due respect you clearly are out of your league. Andy Xie
> is a well respected economist - very well educated, well informed,
> articulate, and well balanced in his opinion. The property market
> is a massive bubble - there are literally thousands of empty residential
> building throughout China, from 1st tier to fourth. Take a look at
> night at all the buildings without lights on.
>
> Find further support for Andy's arguments at: www.pivotcapital.com/r...
>
Unfortunately people like John Paulson and George Soros don't share your view, as they've got huge positions in gold and oil companies.
> Mark Anthony With all due respect you clearly are out of your league. Andy Xie is a well respected economist - very well educated, well informed, articulate, and well balanced in his opinion. The property market is a massive bubble - there are literally thousands of empty residential building throughout China, from 1st tier to fourth. Take a look at night at all the buildings without lights on. <
China Interest, with all due respect to you as well, many of us know who Andy Xie is, and would agree that he is well respected and accomplished. I have also followed Mark Anthony, and have read many, many of his comments. I do it simply because it never ceases to amaze me what a fountain of real genuine knowledge this guy is. He has a way of explaining situations and economics out of pure intellect and truly brilliant perspectives. He sometimes sees situations from angles that most of us would never have even dreamed of. In short, he actually has a lot of real life, true facts and figures knowledge.
Mark Anthony has more factual knowledge and expertise on more subjects, than most people on SA. He's definitely the "go to guy" if anybody wants information on rare earth elements. I mean, there's nobody else on SA who knows as much about REEs as MA, except Jack Lifton. I dare say that most participants on Seeking Alpha, myself included, wouldn't have a snowball's chance down under of keeping up with this guy. I urge you to take some time to read Mr. Anthony's comments for a week or two. Follow him around a little bit and I think you might come to the same conclusion many of us have. And as an added bonus, I guarantee you'll learn something of value for your efforts. Mark Anthony isn't out of his league with many who participate on SA, nor is he out of his league with the respected Andy Xie.
I'll tell you who's out of their league. You and me, at least with Mark Anthony we are.
If this isn't a bubble, I cannot imagine what else a bubble would look like.
On Nov 01 11:09 PM Mark Anthony wrote:
> Wow! That Pivot Capital report is one of the most absurd thing I
> have seen in a while. There was no author name and no citation of
> data source. The only information source it ever mentioned are from
> main stream English medias. The article is not even logical.
>
> Let me cite one example I found in a brief review. Page 7, top paragraph:
>
>
> "....USA and Germany count every town of more than 2,500 people as
> “urban” .... We would speculate that by such definition China would
> be one of the MOST urbanised countries in the world. ... only 100mn
> actually would need to be urbanised."
>
> WOW! I never thought China could be classified as the world's most
> urbanized country! By that token why not just lower the urbanization
> standard to any village that's more than 100 people. Then China is
> 99.999% urbanized already and hence no more houses need to be built.
>
>
> When you see absurd conclusions like that, you can throw out the
> whole article as craps.
>
> On Nov 01 09:42 PM China Interest wrote:
On Nov 01 11:54 PM Albertarocks wrote:
> On Nov 01 09:42 PM China Interest wrote:
On Nov 01 09:42 PM China Interest wrote:
> Mark Anthony
>
> With all due respect you clearly are out of your league. Andy Xie
> is a well respected economist - very well educated, well informed,
> articulate, and well balanced in his opinion. The property market
> is a massive bubble - there are literally thousands of empty residential
> building throughout China, from 1st tier to fourth. Take a look at
> night at all the buildings without lights on.
>
> Find further support for Andy's arguments at: www.pivotcapital.com/r...
>
In reference to his comments on urban growth and population trends in relation to house buidling activity I would like to bring everyones attention to the fact he did not substantite his calculations. His conclusion was that enough property capacity could be built in a few years to house every chinese person. Having read the entire reserach report, I would like to once again state he did not substantitae this. It can not be substantiated, as in 10 years China;s population will be larger than it is now. And it will take an awful lot of building to house China's population if the government wishes to improve living conditions.
Having been involved in the property market in Shanghai, i would like to make it very clear that higher middle class chinese can afford to buy property in good areas of Shanghai and do so with 50% LTV mortgages. Of course the rich have built up a lot of speculative inventory but this is perfectly normal. One needs to be clear that private ownership is relatively new, so there will be extreme price inflation at the start of the private property reform. especially based on the fact China has gone from 'sick man of Asia' to the worlds creditor. Make no mistake property prices in Shanghai and Beijing are in line with China's financial and political power. Shanghai is still a lot cheaper than Mumbai, Hong Kong, Singapore, New York, London, Paris etc etc. Stating that wages are low and justifies that property prices are overvalued is incorrect. China will shortly have second biggest economy on GDP basis, the government holds 2.3 trillion USD of reserves and the Chinese people are sitting on 2 trillion USD of personal savings. This amount of wealth has to be somewhere. The bottom line is the middle class and upper class have amassed a fortune during the last 30 years. Property prices are where they should be. And will grow at around 10% per year on average for the next 10 years.
Those that are on low wages in the rural areas already have been prescribed land that they can build their homes on. They are not homeless, they have their own homes (without the right to sell). Those that are city-dwellers on low wages can not afford to buy property and as a result are an underclass but this does not fuel the arguement of a property bubble. It fuels the arguement that there is serious and very disturbing social inequality and as a result the risk of sever social unrest. The government is above scared of such social risk and as a result is building low cost homes. In effect subsidising property for low wage people. They are only doing this to reduce risk of social problems, but be clear this is happening.
As infrastructure is improved more property will be built in suburbs. This will have the effect of releasing more property to the public at lower prices. Anyone familar with Shanghai will know this has already happend in areas such as Nanhui.
So as we stand, forgot about a property bubble bust. There is no bubble in the property market or the stock market. There IS a credit loan bubble, which if it bursts could hamper the functioning of the banking system and cause property to fall. But with savings on local and government level and the banking system being an organ of the Chinese government. The loan situation would have to be very serious. The Chinese government could pump 500 billion into the banking system quite easily. (it would cause the Yuan to rise in value however).
If property goes up in value past the 10% per annum increase, then it could be said that property prices are being removed from fundamental reality. But as they stand are about fair value.
There was an interesting article in Business Week last week which examined China's manufacturing and R&D sector and it was quite sobering, but not in favor of China as one might expect.
what i do sense though is, both bears and bulls have extreme views on either side, which, i would think, probably means increased volatility -
On Nov 01 03:20 PM Brian McMorris wrote:
> Funny!! What is in a bubble right now is Bearish sentiment.
On Nov 01 12:01 PM Ricard wrote:
> Good thoughtpiece.
>
> Hard to draw a distinct conclusion outside of a potential commodity
> bubble.
>
> Also, not at all sure where you are getting that equities are only
> 15% below highs. SSE composite is still below half of the 2008 bubble
> price. I'd say they're slightly under-priced right now, but only
> slightly.
On Nov 01 11:33 PM mna wrote:
> Also, the author's the first I've come across to argue that hard
> commodities are in a bubble. In this day and age of fiat money printing,
> one would normally expect that it's the paper currencies that are
> overvalued, not hard assets like commodities. You certainly have
> an interesting perspective, to say the least.
>
> Unfortunately people like John Paulson and George Soros don't share
> your view, as they've got huge positions in gold and oil companies.
On Nov 01 12:01 PM Ricard wrote:
> Good thoughtpiece.
>
> Hard to draw a distinct conclusion outside of a potential commodity
> bubble.
>
> Also, not at all sure where you are getting that equities are only
> 15% below highs. SSE composite is still below half of the 2008 bubble
> price. I'd say they're slightly under-priced right now, but only
> slightly.
On Nov 01 02:25 PM Alphameister wrote:
> Nicely balanced article. I would only comment that Chinese stocks,
> valued relative to reasonably projected growth over the next five
> to ten years, are not overpriced in general. Many are deeply undervalued.
On Nov 01 04:17 PM Mark Anthony wrote:
> Calling the Chinese Great Wall a failure is a completely joke, reflecting
> the ignorance of the author. As a matter of fact the Great Wall was
> the world's most successful military defence project ever throughout
> recordered history. It successfully fended off norther invations
> for thousands of years. Can you cite another military defence that
> sustained attempts of attack for even a couple of years, let alone
> a few thousand years. The successful invation of the Manchurians
> was due to a traitors who opened the doors for the invaders, NOT
> due to the fall of the Great Wall itself.
>
> Important history lesson: why bother with any defense against the
> external enemy, if you have enemy within?
>
> If you think China's stockpiling of critical industry material is
> a bubble think again. The stockpiling is a strategy to divest the
> US dollar and strengthen China's strategic security. It's just the
> beginning. China still has a long way to go. China has too much worthless
> paper US dollar, but not enough physical stockpile of strategic materials.
>
>
> Let's say in the unfortunately event there should be a war between
> China and the USA. What should the Chinese soldiers bring to their
> battlefields? They probably should bring suitcases full of US dollars.
> When they run out of munitions they should probably go across the
> fire line and ask: Hey, fellas, sell me some munitions, I will pay
> you the double price, see I have whole suitcae of the green bucks!!!
> Isn't it a joke? But that's the thinking of those who think China
> should not buy commodities and should continue to buy US treasury
> bonds, including Mr. Andy Xie.
>
> Read on China's Commodity Carry Trade:
> seekingalpha.com/artic...
>
> seekingalpha.com/artic...
>
>
> The only bubble that exist today is the bubble of fiat currencies.
Every country in the world is now on fiat currency thanks to the combination of the Federal Reserve, the Bildenburgs, World Bank, etc. We, China and the US are welded at the hip! Ya! China could dump the dollar, but when they do this the consequences will be uninmanageable for the Chinese! The majority of China's growth is through their exports to the US and when WE, as the number one debtor nation no longer purchase Chinese goods, i.e. decrease in consumer spending, trade tariffs, or US protectionism via labor unions in the US; China will experience a great deal of pain! The only time countries "stock-pile goods" is for the preparation of war! Remember all the stockpiling of the Japanese government from the 1920's! NOW, there is troubling news that our military is starting to see a Chinese build-up in their military and increase in military manuevers! Whenever a country feels threatened in that their economy will die......or because there is too much inventory and not enough consumption......there is planning toward war! China is NO different! Check history, and you will see this!
I've been to China over 30 times since 1998 while working for 3 multinationals. It's amusing to see "experts" who has not been to China or spent few days in the big Chinese cities recommending Chinese stocks... Wonder if they ever spent weeks at a time in gritty factory towns or poor interior areas...
And Xie is right - Chinese market is indeed a ponzi scheme and gambling den where the "house" is CCP (Chinese Communist Party).
Some sober FACTS:
1. China is a communist country ruled by 1 party with iron grip. CCP party bosses appoint the national/regional/local politicians and many private company managements since many private companies are ex-SOE (state owned enterprises).
2. Corruption in China is prevalent, rampant and one of the worst even down to lower ranking employees. For example, factory canteen worker receives an "envelopes" in scheme where he claims he received 10 bags of rice when only 8 bags are delivered.
3. There is almost no "law" since laws are written to support the communist party or corrupt local communist bosses. Judges are appointed by the local communist boss and few if any understand law. Many judges got job thru "guanxi" or connection and of course bribes.
4. The Chinese banks in are BIG TROUBLE. E&Y got in heaps of trouble for discussing hidden bad and noncollectable debts. Local communist cadres dictate banks to lend to their pet projects and of course friends who bribe them not to mention COMPLETE lack of transparency.
5. No one except pea size brains trusts the communist government's statistics which are MANIPULATED.
6. Many of the listed companies numbers are COOKED. Auditors and their management can be bribed and extorted. It's beyond me how anyone would trust Chinese companies' financials unless audited by Big 4. And even Big 4s audited numbers are suspect since most Chinese companies carry multiple books including one for taxation and another with slush funds and hidden losses.
7. Latest Chinese share and commodity appreciation have lot to do with communists pumping money to the economy by directing the banks to lend. This kind of stimulus cannot go on.
Now is good time to buy FXP when all the investment gurus in unison are recommending Chinese stocks and even "taxi drivers" and clueless herd investors believe China with 1/3 US GDP will save the world.
The first golden rule in the investment world is that the winners are ALWAYS the minority, and the losers are always the absolutely majority. It's basic mathematics. You can have one Warren Buffet, or maybe two, tops. You can not have a million Warren Buffets. But losers will always be counted in the millions.
So if you think you can make money by listening and worshiping the most famous economist and listen to everything they say, think again. These people have the biggest audience. So you are part of the biggest audience so each one of you in the biggest audience who listen to Andy Xie can make money, and only a very few who disrespect this world famous economist will lose money? Think again. It does not work that way.
I heard the story that upon a time, two Nobel Economy Prize winners who win by their theory of optimal investment strategy decides to use the prize money to practice their own theory. They end up losing every penny of their money quickly.
Always think for yourself. Do not worship any one, especially do not worship any one with big titles and big fame. They are probably right on 55% of the stuff and wrong on 45%. Where they got it wrong is what's going to cost you money, where they got right does not help you to make money either because there are already too many followers.
I admire Jim Rogers but I always do my own homework to pick him out. I do not listen to everything he says. I criticized many times his pitch on agriculture commodities and I explained, contract to Jim Roger's opinion, why agriculture commodity could NEVER be the best performing commodity class, but rather it should always be near the bottom.
Read why even Jim Rogers could be wrong:
seekingalpha.com/user/...
seekingalpha.com/autho...
Once again, think for yourself. Don't be afraid to pick out the opinions of any "expoerts".
First, why are we worried about a China or commodities bubble, which may be a 2 or 3 on a 1-to-10 bubble scale, when we have the biggest bubble I ever seen in my 30 years in the investment industry - the Treasury market which is a 10 and the US stock market which isn't far behind at an 8??
Second - please ignore the comments from doubleshortetf who is a well-known flag-waving China-hater on Seeking Alpha. Take all of his comments and substitute United States where you see China and you will have a better picture of what is going on in the global investing scene.
China has the money to deal with all of the above.
Thanks to the Japanese carry trade, every economy in the world saw huge capital inflows as everybody borrowed free money from Tokyo and invested nearly everywhere else.
Now, we're Japan. Tokyo is New York.
At best, the US will muddle through the next 20 years like Japan.
My guess is A LOT of dollars will end up in China.
And, I'll stand by Mark Anthony any day.
On Nov 02 02:44 AM China Interest wrote:
> Mark the report from Pivot Capital includes as its sources IMF and
> Chinese National Bureau of Statistics. The authors can be found by
> looking at the creditionals of the company partners. The partners
> in the company are well respected and well educated in finance. What
> are your creditionals?
Sounds like you should have signed your post with
"Mark Anthony Dad"
GreatWhite
On Nov 01 11:54 PM Albertarocks wrote:
> On Nov 01 09:42 PM China Interest wrote:
On Nov 02 01:25 PM Mark Anthony wrote:
> For those of you who worship Andy Xie:
>
> The first golden rule in the investment world is that the winners
> are ALWAYS the minority, and the losers are always the absolutely
> majority. It's basic mathematics. You can have one Warren Buffet,
> or maybe two, tops. You can not have a million Warren Buffets. But
> losers will always be counted in the millions.
>
> So if you think you can make money by listening and worshiping the
> most famous economist and listen to everything they say, think again.
> These people have the biggest audience. So you are part of the biggest
> audience so each one of you in the biggest audience who listen to
> Andy Xie can make money, and only a very few who disrespect this
> world famous economist will lose money? Think again. It does not
> work that way.
>
> I heard the story that upon a time, two Nobel Economy Prize winners
> who win by their theory of optimal investment strategy decides to
> use the prize money to practice their own theory. They end up losing
> every penny of their money quickly.
>
> Always think for yourself. Do not worship any one, especially do
> not worship any one with big titles and big fame. They are probably
> right on 55% of the stuff and wrong on 45%. Where they got it wrong
> is what's going to cost you money, where they got right does not
> help you to make money either because there are already too many
> followers.
>
> I admire Jim Rogers but I always do my own homework to pick him out.
> I do not listen to everything he says. I criticized many times his
> pitch on agriculture commodities and I explained, contract to Jim
> Roger's opinion, why agriculture commodity could NEVER be the best
> performing commodity class, but rather it should always be near the
> bottom.
>
> Read why even Jim Rogers could be wrong:
> seekingalpha.com/user/...
> seekingalpha.com/autho...
>
> Once again, think for yourself. Don't be afraid to pick out the opinions
> of any "expoerts".
> capacity of only 1.5B square meters per annum. But they are working
> overtime to produce more than 2B square meters per year. Still far
> below 8.4B square meters per year needed just to provide for the
> 300M new urban population a year.
That's not 8.4B square meters per year, that's 8.4B for ever. Do some simple math: 8.4 billion / 28 square meters per person = 0.3 billion, or about 1/4 of the Chinese population. Mr Xie is saying that is enough to bring China's urbanization from 50% to 75%.
But that 2B square meter building capacity *is* per-year. Now you see Mr Xie's point.
On Nov 02 12:11 PM doubleshortetf wrote:
> Can China with 1/3 US GDP will save the world?
>
> I've been to China over 30 times since 1998 while working for 3 multinationals.
> It's amusing to see "experts" who has not been to China or spent
> few days in the big Chinese cities recommending Chinese stocks...
> Wonder if they ever spent weeks at a time in gritty factory towns
> or poor interior areas...
>
> And Xie is right - Chinese market is indeed a ponzi scheme and gambling
> den where the "house" is CCP (Chinese Communist Party).
>
> Some sober FACTS:
>
> 1. China is a communist country ruled by 1 party with iron grip.
> CCP party bosses appoint the national/regional/local politicians
> and many private company managements since many private companies
> are ex-SOE (state owned enterprises).
>
> 2. Corruption in China is prevalent, rampant and one of the worst
> even down to lower ranking employees. For example, factory canteen
> worker receives an "envelopes" in scheme where he claims he received
> 10 bags of rice when only 8 bags are delivered.
>
> 3. There is almost no "law" since laws are written to support the
> communist party or corrupt local communist bosses. Judges are appointed
> by the local communist boss and few if any understand law. Many judges
> got job thru "guanxi" or connection and of course bribes.
>
> 4. The Chinese banks in are BIG TROUBLE. E&Y got in heaps of
> trouble for discussing hidden bad and noncollectable debts. Local
> communist cadres dictate banks to lend to their pet projects and
> of course friends who bribe them not to mention COMPLETE lack of
> transparency.
>
> 5. No one except pea size brains trusts the communist government's
> statistics which are MANIPULATED.
>
> 6. Many of the listed companies numbers are COOKED. Auditors and
> their management can be bribed and extorted. It's beyond me how anyone
> would trust Chinese companies' financials unless audited by Big 4.
> And even Big 4s audited numbers are suspect since most Chinese companies
> carry multiple books including one for taxation and another with
> slush funds and hidden losses.
>
> 7. Latest Chinese share and commodity appreciation have lot to do
> with communists pumping money to the economy by directing the banks
> to lend. This kind of stimulus cannot go on.
>
> Now is good time to buy FXP when all the investment gurus in unison
> are recommending Chinese stocks and even "taxi drivers" and clueless
> herd investors believe China with 1/3 US GDP will save the world.
Yup the yen carry tarde has been going on for 2 decades. Lots of people made money in it. It may be a bubble but there is a bigger bubble which is the yen itself. Japanese government may go bankrupt, so who knows the yan carry tarders may ultimately WIN.
Same thing is going on in US dollar carry trade.
On Nov 02 06:50 PM yellowhoard wrote:
> The US and the rest of the world all benefited from the collapse
> of the Japanese bubble 20 years ago.
>
> Thanks to the Japanese carry trade, every economy in the world saw
> huge capital inflows as everybody borrowed free money from Tokyo
> and invested nearly everywhere else.
>
> Now, we're Japan. Tokyo is New York.
>
> At best, the US will muddle through the next 20 years like Japan.
>
>
> My guess is A LOT of dollars will end up in China.
>
> And, I'll stand by Mark Anthony any day.