China Stock Market Crashing?
Just finished reading a post at Diligence China entitled ‘So Your Market is Crashing…’ Etiquette Guide for a Down Market, and while sympathy is good and all, it’s a mistake to make people feel like they are victims of a falling market. They are victims of their own stupidity, and this is really what they should learn, and quickly. You can help to spread the message.
Now is a good time to buy?
There are plenty of people who then go on to convince themselves that the market has fallen, so now is a good time to buy. If you rub in the stupidity of their earlier losses and how overvalued the China market remains, you might just save your friend from further losses.
The truth, really, is that the market in China has hit a minor speed-bump. While based on fundamental factors it has a lot farther to fall (and sometime in the next several years it will fall a lot- although the timing is still hazy), it hasn’t fallen much yet. How about some perspective? An article from Bloomberg today states that Chinese stocks, on average, are overvalued 67% in comparison to Singapore stocks. However, from my recent trip to Singapore, it is pretty apparent that Singapore is suffering from a bubble of its own in many ways. You do the math.
With Your Chinese Friends, Rub in the Losses to Save them from more Stupid Trades
So should you rub it in? I think so. A more rational world is better for everyone except a small handful that make out like bandits at the top. As of now, the two people I talk to the most about the Chinese stock market have made money and sold at the right times. But they remain convinced that they can continue to ride the ups and downs of the market correctly, based on a logic I neither understand nor accept.
Don’t make enemies in China
But be careful how you warn others. Only tell people they are making idiotic decisions in private, never do it in front of someone else. That’s just common courtesy. Another note: Don’t tell people who are not your friends, otherwise your enemies will expand in number. And who wants to give advice to strangers in China anyway? (hint: it’s not the China way)
Yes, well, maybe you have a point. It might be crueller to be kind — and vice versa. Either way, we’ll have plenty of opportunities to your theory in the weeks & months to come. This thing looks like it wants to fall hard when it gets around to it.
Congrats on the redesign. Looks great. I look forward to reading regularly.
Andrew,
Thanks for the compliment! Appreciate it very much. I definitely agree with you when it comes to people you don’t know, that’s just mean.