sidney

China's Huge Property Bubble

I've been following this story as well for a few months at least and I thank you for your contributions to the historically significant bubble forming. However, what I would like to see is a list of executable actions that can be taken by a US based investor who wants to bet against this bubble. This list should enforce risk management techniques ala the hedge fund manager Paulson's bet against the US housing bubble using by only putting part of the portfolio down at a time leaving room to be wrong longer...(bubbles have a tendency to outlast shorts...). While there may be no CDO market to short like Paulson did, what other means might be available to the average investor to invest in such a bubble bursting theme. What ADR's might have out of the money put options that could be bet on a little at a time that would offer a huge pay out if the theme turns out correct. This theme suggests that a "black swan" type strategy is appropriate. It is not enough to lay out the theme... we need to offer a plan... We should be able to look at the domino effect that played out in the US and European bubbles bursting to further strengthen the plan. It seems the crisis rippled through industries slowly in US and Europe. Plenty of time to act as long as you plan out the different stages in the ripples. Look to the early Roubini work prior to the bubble crashing for his ~20 steps and apply them to China. How many still fit... can you lay out a case that China would see the same ripples and lay out the black swan bet across the calender...

Is a Hard Landing in Store for China's Economy?

Another question might be to what extent the market sentiment has already priced in a hard landing. I might suggest that the negative sentiment already reached an extreme that factored in a worst case hard landing...