Grantham Says U.S. âBlue Chipsâ Are Cheapest Stocks (Update1) Share | Email | Print | A A A By Sree Vidya Bhaktavatsalam July 27 (Bloomberg) -- Jeremy Grantham, chief investment strategist of Grantham Mayo Van Otterloo & Co., said ... Chinaâs economy could âcome unhinged,â hurting emerging-markets stocks.... ... Edward Chancellor, a member of GMOâs asset-allocation team, âstrongly suspects that the Chinese economy is dangerously unbalanced and very likely to come unhinged in the next few quarters, surprising the pants off investors,â Grantham wrote. Read more: http://www.bloomberg.com/apps/news?pid=20603037&sid=ajElWAbjxwHw
I think the question for a good investor should be "can you risc not beeing invested in China" rather then "can you risc beeing invested". Of course there will be rough times cause +8% anually can not be made for infinity and there will be more political issues with all the different cultures they have to keep under control. My portfolio has more chinese stocks than US-stocks and up to now I have been doing quite well. But my favorite is Brasil and also Vietnam regarding the emerging markets. So much more money to be made there in comparison to USA. And regarding the current rally, thats what I told you... We are seeing a rally in stocks (hard assets) because the underlying currencies are falling all together.
What's happening in China, according to those who've been there recently, like Pesek, is that a lot of the money the banks are loaning out under the Chinese Government's orders is being put to work in the Chinese equity markets by retail investors. In other words, the stimulus measures are being diverted to speculation rather than consumption.
I don't know. All I can say is that chinese love consuming, they are adicted to that. At least I can say that for cities. Countryside is different, they still live there like in the stone age. But this is what makes this so interesting. There is so much potential. And I would assume that >95% of chinese people still don't own stocks, only a small fraction of well educated and "rich" people in the cities take part in this speculation. I am visiting china due to business reasons 2-3 times a year. And finally: I don't care what drives up a market. As long as its going up and I am invested, I even appreciate such stimulus measures and manipulation. Every time the market goes up the bears cry foul and manipulation. Only the down-train is the "right" direction for them, following the natural way of gravity. The stock markets have been manipulated since they have been created. You can accept that and make money with the moves or you can choose to fight it.
The Chinese save 50% of their wages. Urban or rural, it makes no difference. The urban professional class can consume nicer and more expensive things while still retaining the strong Chinese ethos to save half their income. This is the Chinese Government's dilemna, and has been all along, if they're ever going to get their domestic consumers to replace the demand that formerly came from the now entrenched American and European consumers, who are saving more money than they have in 50 years, as the recession deepens.
China, the US, all of this is going to end very badly. But there's big money to be made until it does, and experience suggests this stuff goes on a lot longer than it should. If that is the case, we could see months, even years until this stuff comes to fruition. Why miss out on that stupidity?