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  • Is the China Craze a Tech Bubble 2.0? [View article]
    John,

    More to the point of my article, the 44.1% 3-mont return of CAF being much greater than the 3-month return of FXI, further amplifies my concern about a bubble patter forming around China based on ROC (rate of change) as an indicator of likely reversals. It's just too much too fast -- a rate of change that is not sustainable.

    Without even compounding that rate is over 170% growth per year. I don't think that the fundamental value of China under the most optimistic of assumptions can increase at that rate for long.

    In one year $1 invested would grow to $2.70 and after the second year would be about $3.90 by the end of the second year (nearly quadruple in the original investment in 4 years). Could happen, but not likely and probabilities are what drive my decisions. I think the probability of a reduction in the rate of change is extremely high and the probability of a significant reversal of some of the recent gains is high.
    Jan 10 10:59 am |Rating: 0 0
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