Alphameister

Three Myths About Business in China

Excellent article. Some people seem to think that ingenuity is unique to the American DNA. Creativity will be found wherever men are free. The Chinese economy has the rough spots to be found in any economy new to the free market, but it also has a population willing to work hard and to innovate in search of the rewards that capitalism can bring. It's exciting to be able to invest into such an economy.

China: Beware Bubble 2.0

The acceleration of money in China has surely been accompanied by a slowing of money velocity, just as it has in the US and other nations, leaving them the same challenge of easing back as money velocity gradually accelerates. In a world fighting deflation at every turn, I don't see inflation becoming a serious problem anytime soon.

BIDU has had a nice run, but at 64 times earnings still trades below the norm of the past five years and at a multiple arguably low relative to projected growth. I considered buying it earlier this year but found too many alternatives in the China markets trading at low single-digit multiples of earnings expected to rise at rates many times the earnings multiples (amazing GARP stocks).

Both BIDU and the Chinese markets generally look like they could endure a correction on the order of 5% to 10% without disrupting their long-term bullish patterns (though the charts currently suggest nothing nearly that serious).

Just because a stock or a market is up 100% in less than a year does not ipso facto imply a "bubble." That judgment necessitates a fundamental evaluation of both the starting and current price levels, which nobody among today's SA China bashers seems inclined to do.

If you want to look at what a bubble looks like just prior to bursting, check out some of my current Chinese holdings: ORS (less than 3 times earnings), CSR and CPHI (5 times), TPI and TSTC (8 P/E), XSEL and SUTR (6 P/E), HOGS (9 P/E). These multiples are all based on trailing 12-month earnings; using 2010 estimates, the multiples are lower. I also own a couple of stocks sporting "glamor" double-digit P/E's, though the multiples for ABAT and APWR both drop under 9 based on 2010 estimates. If I were more willing to hold OTCBB stocks, I could lower my average P/E considerably.

It's not too late to hop on the Chinese investment train (though I became hedged this week for the short term based primarily on the heavy rate of insider selling in recent weeks). It would be a shame to miss completely the investment opportunity of a lifetime!

Investor's Business Daily-100 China Edition?

Ditto the above comments by mouth and GARP.

China Remains a Compelling Buy via PowerShares Golden Dragon ETF

I share some of the misgivings about China mentioned above. I do not believe that central planning succeeds in the long run. But I suspect that a soundly based economy such as China is a lot less vulnerable to the evils of central planning than is a US economy that will increasingly be directed by Obama, Pelosi, Reid and their ilk. I'm quite certain that Chinese central planners are pursuing real growth and real wealth, both for the benefits conveyed to their citizens and for the increased international influence made possible through a large and thriving economy. What would they gain by creating an illusion of success that would all collapse at some point? Seems to me it is precisely this desire for real progress that has and will continue to lead China to increase their commitment to clean energy, to improve their record on human rights, etc. I am holding a wide range of Chinese ADRs providing real products and services to a growing customer base and valued at 4 to 12 times rapidly growing earnings. All part of a giant fraud? I doubt it. I agree with Glen Bradford that China skeptics are missing the opportunity of THIS generation.

Top 10 Chinese Internet Stocks: Comparing P/E Ratios

Anonemouse: There are many types of risk associated with an individual stock: economic, market, industry, debt leverage, etc. I believe the author's point is that investors are typically more willing to accept a high p/e when they see low risk of the stock disappointing with its earnings due to industry factors, debt risk, etc.

Why It's a Good Time to Consider Chinese Stocks

Most of the stocks in your list (several of which I own) have had big runs recently and I'd be reluctant to chase them here. For some that have not and which appear to offer superior value, check out APWR, CMED, CPBY, CPSL, SORL, and SUTR. Big believer that Chinese stocks are embarked on a new bull market.