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China shows what happens to stocks in a true bear market, writes Doug Kass, as near-relentless...

China shows what happens to stocks in a true bear market, writes Doug Kass, as near-relentless selling since early this year has stocks trading at 7.8X forward earnings, and with a 3.9% dividend yield. "If China is the growth driver of the (world economy)," asks Kass, "doesn't this highlight how cheap stocks can get when growth is called into question?"
Comments (7)
  • TruffelPig
    , contributor
    Comments (4059) | Send Message
     
    Maybe this all has something to do with the collapse of real estate there and continuous "margin calls". I wouldn't blame it all on growth as the bear market started before the growth caved in.
    5 Sep 2012, 03:52 PM Reply Like
  • into dark shadows
    , contributor
    Comments (322) | Send Message
     
    Yeah,
    I seem to remember Apple at 85 bucks not to long ago!
    With an I-PHONE juicing 70 % of profits what do you think happens if people just take a break from the "ALWAYS" have to have the next model?
    Look out below for the NASDQ, Apple is 20 % of NASDQ market!
    5 Sep 2012, 04:00 PM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (5779) | Send Message
     
    or just that nobody trusts China stocks. Domestic small caps face the same issues. Got a whole portfolio of stocks with PEs below 7.8x forward earnings. If you don't have a huge dividend, you stock price is compressed.
    5 Sep 2012, 04:02 PM Reply Like
  • GaltMachine
    , contributor
    Comments (1135) | Send Message
     
    The Chinese had an inverted yield curve last year and that's generally a pretty reliable warning signal for a bout of substantial economic weakness.

     

    In the old days, pre-meltdown, the Shanghai was considered a bellwether for the S&P. Here's hoping it isn't!
    5 Sep 2012, 04:07 PM Reply Like
  • Pinocchio1
    , contributor
    Comments (206) | Send Message
     
    Got burnt once on Chinese stocks. bought 10 "recommended" (must buy) stocks and lost 50% in 3 months.
    Checked recently - got out in time.
    Once is enough
    5 Sep 2012, 04:16 PM Reply Like
  • Venerability
    , contributor
    Comments (3048) | Send Message
     
    Doug Kass is usually pretty bright, but the easy answer is "No." In fact, a resounding "No."

     

    The Chinese stock market is very immature, as are supporting numbers of participants, on both the institutional and retail side.

     

    How can you compare that to mature markets? It's totally apples and oranges, IMO.

     

    The correct comparison for Chinese markets would be with other young markets in emerging economies or the other BRICs.

     

    (The fact that we keep having these BOO! comments from all the big hedgie names says a lot, though. As I said last night, if 100 percent of the so-called Smart Money is on one side of a trade, it simply isn't being very Smart.)
    5 Sep 2012, 04:49 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4059) | Send Message
     
    Nice comment :).
    6 Sep 2012, 10:46 AM Reply Like
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