Ricard

19 Chinese Stocks That Are Relatively Cheap

You need to look at the annual reports. American websites are notorious for botching up the financials when they're listed in foreign currencies.


On Oct 11 11:27 PM Herewego wrote:

> I looked up several of the 19 Chinese stocks that you say are cheap
> based upon P/E ratios in Yahoo Finance, Google and MarketWatch and
> none of them had anywhere close to the P/E numbers that you claim.
> Where do you get your information?

Aluminum's Future: A Mixed Bag

I would think that anyone long aluminum should no longer be looking at AA...ACH is the up-and-comer. China has given numerous hints that this company is tied to its political fortunes. That means that if you are long China, then ACH would be an obvious bet.

Caterpillar, Aluminum Corp. Offer Perspective on Technical vs. Fundamental Investing

Glad you agree about the point on 'trend investing' - that was the main spotlight I tried to shine in my email as well.

On CAT, I wish I could join you in your exuberance. I actually noticed the stock the day before the most recent earnings announcement, so while I was researching it, I saw it promptly go from $32 to $48 in about two weeks. One personal mantra I go by is to 'never chase', so instead I just look at it and sigh.

You're also more than likely correct in that Oct-Mar was the 'new normal, perhaps at a slight discount. In my 10+ years of investing, this 'new normal' was essentially a clearance sale on pristine and quality companies.

To everyone else reading this article, I must apologize for the title - it's quite a mouthful - it was originally something along the lines of 'Technical vs Fundamental Investing - A Perspective going into the Winter'. SA did some tinkering with it, although I personally thought my original title was more to the point.

Most CAT and ACH investors are probably looking at this article expecting some actual analysis, and instead *yawn*.

The Importance of China's Foreign Exchange Holdings

Very interesting. This article aptly describes the results of sound economic policy on politics.

To answer the question about unwinding US debt, I believe the author is saying that they are swapping long-term treasuries for short term paper whenever they can, and also selling agency debt. It's also evident from his graph that these purchases have reversed in the recent past.


On Jul 30 10:02 AM Living4Dividends wrote:

> Firat - How can China be ramping up its purchases of US Debt while
> at the same time looking to get out of US Debt? Can you resolve
> the contradiction? What is your conclusion ?

Why Investors Should Avoid State-Owned Companies

Good points, thanks again.

On Mar 19 10:08 AM William Gamble wrote:

Why Investors Should Avoid State-Owned Companies

Mr. Gamble,

Don't get me wrong - I think you're making an outstanding point. However, I've become rather jaded by the insistence upon a differentiation between nationalized companies and un-nationalized. To me, and in some of my experiences, government control has afforded stability in times of crisis, and IMHO, large discounts to market caps due to the pervasive fear of profit maximization being relegated to #2 priority.

Especially in China's case, they've actually put their money where their mouth is - I owned SNP several years back, and was elated that the government subsidized the price of petrochemicals due to runaway crude oil prices. It was not a small subsidy - it amounted to several billion yuan, or dollars, I forget which.

Your point is 'pure', in that the theory makes natural sense, and seems to be most supportive of the capitalist model. However, I've found that in practice, the theory gets muddied, as does the corresponding profit potential. One can take a good look at Korea's corporate sector, and see that there are many, many more factors at hand than simply profit maximization when it comes to privatization. At one point after their IMF crisis, their stock market was nearly majority owned by foreigners. I'm sure many nations are not envious of that fate.


On Mar 18 09:39 PM William Gamble wrote:

> Ricard
>
> Sorry for the long winded reply. To simplify
>
> Stalin, Lincoln, Mao, Rove and Obama all share one thing in common,
> They all wanted political power. Shareholders want something else.
> They want money. The Chinese government wanted CNOOC to buy Unocal
> to satisfy what it considered a political necessity, access to oil.
> (The Japanese had the same issue in 1940). The US Congress had to
> satisfy the political necessity of the negative image of an American
> company being purchased by a nominally communist country. Neither
> government cared that much for the investors in either CNOOC or Unocal.
> My point is that if you have a better chance of making money if you
> avoid political incentives of state owned companies and go for the
> profit of the private companies.

Why Investors Should Avoid State-Owned Companies

One thing I'd like to clarify, and which I struggled to differentiate above, is the difference between private ownership in a publicly traded company, and public ownership. Companies on the S&P 500, while publicly traded, are privately owned by shareholders, and not the government. AIG, on the other hand, is publicly owned by the government, and publicly traded.

In case this was slightly confusing in my prior comment.

Why Investors Should Avoid State-Owned Companies

This is a well-written and sober reminder to those that invest in government owned corporations.

However, I will play devil's advocate. Currently in the US, we are seeing who is ultimately the owner with responsibility in any sector deemed vital to national interests. Right now, those sectors happen to be the auto industry because of its massive presence in manufacturing, and finance, because of its pervasiveness in the entire economy. The owners are you and me. It is hard to distinguish between private and public ownership, when public corporations owned by private individuals are deemed as providing a vital public good.

Also, the case between Unocal and CNOOC comes to mind. I admit, this is a weaker example, given that CNOOC is a government-owned entity. However, CNOOC tried to purchase privately owned assets in the South China Sea. This is hardly the Gulf of Mexico. These assets were deemed by Congress as vital to national interests, and so the ultimate owners with responsibility (you and me through our elected government) exercised our rights and denied the asset purchase. However, Unocal is a private corporation...or is it? Why did the government get involved in this transaction?

After seeing the CNOOC purhcase fall apart, I looked at the US auto industry and saw a crisis forming, and surmised that this sector, although seemingly privately owned, is in fact a public entity, owned by you and me through Uncle Sam. This is true of any industry deemed vital to US interests. Sure enough, I was proven right this year.

So, the only difference I can see between state-run corporations and publicly listed corporations in the US is the degree of overt government control. In one hand, it is clear that electricity in France and Korea, aluminum in China, and oil and gas in Russia are deemed vital to national interests and are too important to be subject to the whims of the market. In the US, this has been true for decades in key sectors, but we have been able to conceal this fact by allowing the private sector to gamble with the fate of America until the failure is too great for words. Hence, our current predicament with nationalization.

I see little difference in government-run entities, and corporations deemed as providing a vital public good. Or, do you really think the military-industrial complex is ultimately a private good, and won't be nationalized if in jeopardy? I think not.

How Low Can Mining Stocks Go?

Very much appreciate your analysis. Along with all of the geniuses and idiots out there, I have also been taken for a ride in this market. Good to hear a conservative, reasoned approach to investing in what in all appearances looks like a winning sector in the not-too-far-away future.

Ten High Yielding China Stocks

I do believe the PE of ACH is incorrect...3.06 is earnings per share, and PE is around 7. Still very attractive...