https://businesshala.com/stay-on-gu...na-expert-says-expect-to-be-blindsided-again/ My question is: WHY invest in China at all when you are to expect to be blindsided, again. I mean why invest in a place when you can expect to lose money for which there is no recourse?? The expected return is not even worth it anymore. Why would you put money in a place when you constantly have to watch out for something bad that can happen at any time that can cause you to lose all your money there are so many investments out there that you can earn a comfortable rate of return almost guaranteed or at least have some assurance that you can? This does not make any sense especially from a risk management point of view.
As an investor, you are basically the last person who is going to get paid in China. This makes sense to me. Investors risk their capital, others risk their time. If we ran like that here, perhaps we wouldn't have zombie companies/economy.
Yeah but in this case, the article is talking about fraud. Investors are not getting their money back because of fraud and misrepresentation not because of the reasons like economic downturn or the company losing the competitive edge and etc.; it's because of downright fraud. So why would it make sense to you? That you should expect to lose money because the companies lie about their financial health? It's like saying when you invest in companies you should expect to lose your investment because they are all Enron's.
Carson Block is a one trick pony. I followed him religiously for several years and he front ran his clients and there were long of large funds betting against his positions. I never make any money from his short list, perhaps I don't have big enough wallet and got squeezed out. So as Kyle Bass. I don't short second largest economy for the sake of dislike them. On the contrary, their economy is still dynamic, a billionaire today is not a billionaire in few years time. That is the main reason you won't see stocks P/E ratio in 300s, like that of TSLA. What goes up must come down.
China is a difficult place to invest thanks to the government. At times they are extremely supportive and goosing the markets higher... and other times crushingly negative.... not to mention that they are known to LIE about everything... even more than the US government. And then there is the "disclosure" issue. The SEC has threatened delisting Chinese companies who don't open their books to disclosure like American companies are required. China so far has continued to bristle at the notion of disclosure and has threatened to take the listing of their stocks to Hong Kong exchange. Not sure what that means to US investors in China shares... ?? Rookie investors and those without strong stomach for risk should likely avoid China altogether... IMV
When I trade or invest, the foremost consideration is probabilities for surprises which are either poitive or negative. I don't weigh these up using charts but through from fundamentals such as quality of management and where they operate from (country). China has a history of backstabbing Western business, they often encourage the West to set up shop, then suddenly pull the rug. In NZ for example, milk powder companies falsely thought they had a massive market in China, especially after the 2008 Chinese milk scandal which was a significant food safety incident in China. The scandal involved milk and infant formula along with other food materials and components being adulterated with melamine. The chemical was used to increase the nitrogen content of diluted milk, giving it the appearance of higher protein content in order to pass quality control testing. Of an estimated 294,000 victims, 50 babies died from kidney stones and other kidney damage and an estimated 54,000 were hospitalized. The Chinese have managed to basically wreck most NZ milk powder companies by taking large shareholdings in the business then destroying them from the inside, that is my strong impression.
This is what the CCP does with its own domestic companies so now it's extending the practice to foreign industries too but then again I don't think CCP considers Australia and New Zealand foreign anymore; they are practically the two additional provinces of China. LOL And also the fact that milk is an income inelastic industry does not really help. So what the NZ milk farmers and companies should've done is band together and form an OPEC-like oligopoly to restrict its output thus would've allowed it to be more able to control the price resulting in higher revenue for its members and be in a stronger position to resist takeover efforts and at the same time also being more environmentally friendly. The dairy industry is one of the industries that makes the largest carbon footprint in its greenhouse gas emission. So by restricting output, you also reduce greenhouse gas emissions at the same time. And it would've also likely prevented the CCP from being able to stockpile the milk when the price is low as a result of all of the individual dairy farmers and companies stampeding to provide China milk. When you are dealing with a large entity you need to band together to be a more formidable force otherwise you are going to be picked apart one by one if you remain as an individual party on your own. I am just surprised that the NZ government didn't do anything to interfere. Where was the NZ government in all this?
NZ kind of toady's up to China, always concerned about offending. Exports are crucial to NZ's survival, their population and internal market too small. Unfortunately when UK many years ago joined EU, their export of lamb and dairy dried up as UK was their major market, the swing of the pendulum may have just swing back though, little too early to tell now since Brexit.
Well it's hard for him and you to make money when there are long funds going long basically short squeezing him, doing like what the meme stock investors did to Melvin Capital and Lightspeed Capital. And you never know who's behind those funds doing all the short-squeezing. I mean it's China we are talking about. What he says does have merit but one just needs to be more careful when executing what he says as shorting is riskier to do and timing is everything.