China's stock market has soared in the past year and a half:
Even if you look at the market from 2000 and average in those down years through 2005, it's still grown tremendously.
Nouriel Roubini argues forcefully that Chinese stocks are overvalued, with the PE around 50. What to think?
1. China has great growth prospects over the long haul.
2. The Chinese economy will stumble some time. I'm not forecasting when, but there's no doubt that at some point they'll have either a significant slowdown in growth or a real recession. Heck, it's hard for U.S. policymakers to avoid a recession, and we pretty much know what we're doing. China is running on near-total ignorance of economics.
3. China's strong economic growth trend does not imply a stronger-than-average stock market. When everyone knows China is growing at 10% real, then you have pay for stock at a price that incorporates what everyone else knows.
Should should a stock investor do about China? Include Chinese exposure to your portfolio. It's good diversification. If you want to overweight China, look for companies selling internally rather than externally. That is, commodities sold on the global market (steel, aluminum, cement) are fiercely competitive. However, there are still market imperfections in consumer products and services, so look there for investment picks.
But don't get carried away with the momentum play. It may work early in the cycle, but momentum investors always get burned when the market changes.
Chinese stocks are overvalued right now, and I would expect to see a major pullback. Just a question of time. That said, if your investment horizon is long term, buy on the dips.
I can see a 10-15% correction in Chinese stocks coming soon. The chart looks like so many dot coms back in 1999.
Posted by: Chris on Stock Market Investing | December 01, 2007 at 02:06 PM
www.speculatingStocks.com
Investors are looking for a solid way to take advantage of a possible up spike in the NASDAQ exchange and the stock market as a whole. We are stepping away from our usual discussion of penny stocks and focusing on two Exchange Traded Funds (ETFs).
Posted by: Penny Stocks | December 03, 2008 at 11:57 PM
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Posted by: Louis | March 01, 2009 at 06:36 AM
I think that most penny stocks are scams. When trading penny stocks, it's important to realize that most are worthless. It doesn't mean you cannot make money.
You have to go into them realizing they are not investments and you have to sell when you realize the profit you want, because if you don't, you will be left with nothing.
I normally visit this
Penny Stocks Site: http://www.surefirepennystocks.com to research. It's a decent resource.
I know that in penny stocks, they move with good news, chatter online, and when price and volume breakout occurs, you hop in. When the momoentum slows down - GET OUT! Take your profits and limit your losses, that's the way to make money with them
Posted by: Louis | March 01, 2009 at 06:37 AM
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Posted by: Penny Stocks | June 12, 2009 at 03:36 AM