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Buy with open arms?

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Been reading lots of stuff about a super bubble developing in China. Not sure what's going to happen but some pretty big hedge funds (ie Dick Chanos') are betting on the bubble bursting soon. The communist govt there have to keep growth above 8% just to stay in power. They are only managing that by building property, including empty cities (see Ordos). Lots of developers might not be able to repay their loans for empty skyscrapers. When the GFC hit, China's exports dropped massively as did their heavy rail traffic. They lied about continued growth, then lent lots of money to make empty buildings. Sustainable? Hmm.

If the China bubble pops, the world's stock markets will drop. It will harshly affect Australia by a plunge in commodity prices as occurred during the GFC. The 25-year super boom in mining royalties may not occur. Also, remember that the reason most of the Western world didn't experience a second great depression is because it borrowed so much money. The original problem of too much debt has only been pushed down the road.

I think piling your entire capital into mining shares would be very risky indeed.

Oh yeah, the best thing I read about it all recently was this quote:

"40% of the world's population has a great plan to get rich by selling stuff to 14% of the world's population..."
 
takeprofits said:
WOW. All this optimism makes me feel that It's time to be fearful!
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I've tried to remain with not less than 70% cash for over 20 years now. This is, in itself, a form of risk reduction when investing in the high risk mining and oil sector. [I suppose it also depends on earnings, pensions received etc., and a persons debts, as to what further risk they should take on]
 
takeprofits said:
WOW. All this optimism makes me feel that It's time to be fearful!
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A good contrarian indicator. BUT.......

Data shows that it is only recently that retail investors are starting to flow back into the market.

Probably not enough to squeeze yet and they are probably what is slowly dribbling this market higher.

That being said, coming into reporting season, we could see fireworks at some point. Anything is possible.

As for Chinese bubble, would a raising Yuan and hence, movement of foreign capital into China providing additional capital flow, enable medium term sustainability of the bull? Need to do more research on the Chinese scenario. That being said, China is not in vogue at the moment, so it's impact won't be as severe as it would have been a year ago. Though, of course, commodies/commodity currencies would cop the brunt of it. Many funds though, seem to be moving into the Asian region more and more, which will insulate any potential 'crash'.
 
greebly24 said:
Also, remember that the reason most of the Western world didn't experience a second great depression is because it borrowed so much money. The original problem of too much debt has only been pushed down the road.
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This seems to be being very conveniently ignored by all the spruikers who assure us a real recovery is well and truly under way.
 
MRC & Co said:
A good contrarian indicator. BUT.......

Data shows that it is only recently that retail investors are starting to flow back into the market.
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Yet another indicator for me to start reducing my exposure.

The smart money bought shares March 2009 and earlier. Now the dumb money are buying overvalued shares trying to get in on the action.

Think I'll hold some cash and wait for the next crash!
 

Care to clarify which part of china is the super bubble? Eco? Property? Stocks? All of the above?

Also, that 14% has a GDP per capita 7 times of the 40% so it doesn't look too bad from a wealth flow point of view.
 
Chinese banks are built on sand, if you apply proper accounting to these banks they'd be technically insolvent mostly because of the portfolios being consisted of state run enterprises so they just do constant roll overs.

The growth is real though people, the indicators such as electricity use and other energy consumption is consistent with the numbers. What people should watch out for is the property prices... I think it was in the papers, the chinese buying up property here and trying to insulate from the bubble in china. I even asked a few academics (economics wise) and they both said they were pretty positive that china is a bubble waiting to burst, one of them even put a timeline on it, 12-18 months.

Remains to see.. the ball is in with the chinese.. we'll see if they can manoeuvre through this maze; containing a bubble whilst sustaining growth.
 
sageintraining said:
Chinese banks are built on sand, if you apply proper accounting to these banks they'd be technically insolvent mostly because of the portfolios being consisted of state run enterprises so they just do constant roll overs.
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Looking forward to you providing the financial reports of these banks so you can show us exactly where they are invested.
 
Markets continue bullish and we still have to see a concerted uplift in the small mining sector, 'though there are signs now, to signal the end of what may be the final push. Always interesting when the likes of the Chinese property crash are signaled by Gurus in number. A big boost in uranium minnows should see an end to the mining rally, when it comes???

ASX 200 over 5,000, again of course, and 'buy with open arms' still looks right???
 

What are you buying today on the 'pullback'?
 
greebly24 said:
....The original problem of too much debt has only been pushed down the road...
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Yeah, a concern indeed.

Oh my, this bucket has a hole in it and it's losing water...

Just keep filling it up with water, forget about the hole
 
Trembling Hand said:
Where is the rage? I don't like this amusing behaviour.
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Ha ha! The only rage I know is on the ABC Friday & Satdee nights

Maybe I'm not me at all?

Buy silver that would make me LOL

And then there's this, I could hardly believe my eyes -

April 13 (Bloomberg) Super trader Trembling Hand has stunned his followers with a raging buy recommendation for the little traded commodity Silver. According to well connected insiders, the high flying trader, who once nearly bankrupted the Bank Of England, has almost cornered the market with Comex longs. He was heard to comment recently "My complete dominance of the Silver market will maka the Hunt brothers attempt look like a Bert & Erny audition for American Idol"

(The things you do on a slow day )
 
sageintraining said:
.. we'll see if they can manoeuvre through this maze; containing a bubble whilst sustaining growth.
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lol, like the West has done for the good part of a century? It's called liquidity, and China has built lots of it! I'm sure there will be sharp scares, but it will keep on keeping on as long as these Commies keep acting like capitalists and economic growth continues to be so valued by the free spirits of those of the fat religeous B man.
 
Uncle Festivus said:
What are you buying today on the 'pullback'?
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'pullback', what pullback? I'm continuing to buy stock up to my 30% limit rule (70% remaining in cash and bonds), now at about 83%.
I don't see, IMHO, any big declines in stocks (excluding the takeover candidates) this year.
Buy with open arms??? - but stay 65% to 75% in cash or short term bonds to reduce risk.
Buying one stock today but wont say which as it trades infrequently.

A strong currency is good with China and others buying into the Aussie sector. [could be a too strong Aussie and too strong Yuan - either way it shouldn't matter.] Not good news for those looking for European tourists and others in weak currency zones - Australia Zoo prices in British Pounds are up 40% in a year, tough, should keep certain foreigners out of Australia and some may be flying back as their pensions aren't worth much now - depends how you feel I suppose.
 

'Buying with open arms' but limit to 30% to reduce risk? 70% cash and bonds is not unbridled optimism in the market is it?
 
Uncle Festivus said:
'Buying with open arms' but limit to 30% to reduce risk? 70% cash and bonds is not unbridled optimism in the market is it?
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It all depends what the 30% cash is, not that it could be proved so there's no point saying. I remember some of the posts after the dotcom crash where some borrowed money to buy shares. Plenty made $50,000 a week during the run up to nasdaq 5,000. Shares are risky, only invest if you can afford the money - Yes! We all know that bit but forget as the great bull arrives.
 
The point is, now that you have reached your 'limit' (was that even before the thread was started?) you are not 'buying with open arms' - thread redundant????
 
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