The Mother of all Bubbles

Article Submitted by: H Greenleaf
Stocks - Options - Mutual Funds


Tags: Buffett, Fxi, Ptr, Brk.

It is very hard to separate yourself from most Chinese Stocks these days. It is so easy to double your money fast. The etf, FXI, and PetroChina (PTR) just keep going up and up. Most investors know all this, and many have put a lot of money to work in FXI, PTR and many others. It is hard not to. And, the TV gurus tell us that the Chinese government will control things such that its market doesn’t come crashing down, at least until after the Olympics – August 2008. But, if you believe that, I have a bridge in Brooklyn for you at a real cheap price.

 

Submitted: Oct 12, 2007    Views: 1267    Comments: 7    Likes: 45   


It is very hard to separate yourself from most Chinese Stocks these days.  It is so easy to double your money fast.  The etf, FXI, and PetroChina (PTR) just keep going up and up.   Most investors know all this, and many have put a lot of money to work in FXI, PTR and many others.  It is hard not to.  And, the TV gurus tell us that the Chinese government will control things such that its market doesn’t come crashing down, at least until after the Olympics – August 2008.  But, if you believe that, I have a bridge in Brooklyn for you at a real cheap price.

 

Even China will have a hard time keeping this from crashing on its own schedule.  It may be able to control its people, but market dynamics are global and far too unpredictable.  It will crash and it will do so on its own schedule.  The parallels with the internet bubble of the 1990s are stark.  That bubble had its own momentum too.

 

The problem with all bubbles is that it is hard, as an investor, to exercise discipline.  I don’t know anyone investing in China now who doesn’t worry a lot about things turning south fast.  But it is just too seductive to stay in and reap daily gains.  One investor knows better and we should follow his lead.  Warren Buffett’s Berkshire Hathaway just unloaded most or all of its very large position in PetroChina.  Buffett’s timing is always excellent.  The smart among us will follow him and get out of the Chinese market. 

 

When it comes down, it will be the mother of all bubbles.

 

 




Related Articles:



45

Email this story Email to someone | Print Story Print Content | Add to reading list

Comments Received:

Francis
(Unregistered)

Grandpapa Warren is still keeping around 3.x% of PTR because anymore shares further sharesold he will not need to report. He sold his stocks due to the pressure given from the government on the Sudan issue.







Posted: Oct 12, 2007

ChinaBull
(Unregistered)

There are tons of dollars floating around China and few places to put them. This is creating enormous demand for the relatively few stocks that trade. As long as China is growing like gangbusters and more dollars are flowing into the country, they have to go somewhere. Chinese stocks are the recipients. There is no reason this should end now.

Posted: Oct 12, 2007

AronLiv
AronLiv

You would have doubled your money on PTR if you bought on the day in July when it was announced that Buffett was starting to sell. It is amazing, but you are right that it is a bubble.

Posted: Oct 13, 2007

JRodgers

I called for the bubble to burst two months ago here:

http://www.bestcashcow.com/economics_and_currencies/article/jrodgers/you-will-lose-your-shirt-pants-and-underwear-with-emerging-markets-here

I don't know if they can hold on to this through the Olympics, but it is playing with fire to think so. One thing that is clear is that the longer it spirals higher, the worse the fall will be.

Posted: Oct 13, 2007

JRubinstein
JRubinstein

Agree that Olympics are a red herring. It won't be long now.

Posted: Oct 15, 2007

chi
(Unregistered)

FXI will be an avalanche. But you can profit going down just as well as you did going up. ;) Olympics??? Financial Markets????? Is anyone really buying that crap?

Posted: Oct 15, 2007

tim clinton

@chi - Or you can get burned like everyone else who has said at the slightest selling that this is the beginning of the avalanche. One lesson about avalanches, steer clear of them - don't think that you are a better skiier than everyone else.

Posted: Oct 19, 2007



Add Your Comments:

Your Name:

Spam protection control:


© Copyright 2008 H Greenleaf All rights reserved. H Greenleaf has granted BestCashCow.com, LLC non-exclusive rights to display this work on Bestcashcow.com.

Financial products of all nature bear inherent risks and this website is not a financial advisory service; it is a forum for users to share and to compare notes and observations on financial publications. The website provides, free of charge, the technical and logistical apparatus and the medium for users to share and to publish financial information and to comment on publications. As such, the website’s operator can not and does not take responsibility for information, observations or opinions of any sort or nature provided by third parties with whom it is not affiliated who use the website to publish, to comment or as a means of solicitation. Users are specifically warned against following any advice related to specific instruments, including, but not limited to, equity securities, that may be provided by other users directly on this site or on web pages to which other users have provided links on this site. BestCashCow.com can not and does not check or verify the qualifications and credentials of users who publish or comment on this site or on linked pages. Users should seek personalized advice from qualified professionals regarding all personal financial issues and evaluate the risks and applicability to their own circumstances of each financial product discussed regardless of who the publisher is or purports to be. Should you, through your use of this site, identify an individual or organization purporting to offer personalized advice, you bear all responsibility to ensure that the individual or organization has the qualifications that they may represent on the website, and that their advice is appropriate for your circumstances. On certain webpages, BestCashCow.com provides information related to rates on US-based savings accounts, CDs, short-term government bonds, and other US cash equivalent securities, also free of charge to internet users for their independent use. The accuracy of this information is not guaranteed, and the information, like all other information on this website, should not be construed to provide investment advice, nor to endorse a financial product of any sort.

© 2007 BestCashCow.com, LLC. All Rights Reserved. Terms under which this service is provided to you. Privacy Policy.