With exceptions such as AC Flyer and others, most of us believe that investing in US stocks at this point in history is unlikely to bring profits. I suppose also that most of us, certainly including me, think that investment in China is dangerous, but we are somehow attracted. The reasons for the attraction boil down to the extraordinary performance of the Chinese economy in the last decade or so and the well known Chinese work (and study) ethic. The reason for a certain amount of fear is the also well known corruption that absolute power always brings, wherever in the world that we see it. Limiting my Chinese shares to 10% of the total value of my shares allows me to sleep nights. My admired investment seer, Jay Chen, also has a similar limit. Life is short; we should spend the nights sleeping, not worrying.
I am listing here the Yahoo symbols for the Chinese stocks I own. What I am hoping is that others will comment favorably and preferably unfavorably so that we all can have a useful discussion. They are: CEO,PTR,YZC,01777.HK,0598.HK,0696.HK,2328.HK,2868.HK.
There is a web site "Hongkong Exchanges and Clearing Limited". Through that site you can fetch the annual reports of all those eight companies. I forget whether or not all have them have English translations. At least, many do.
I only own a little of 2868.HK. The history of real estate development companies isn't good. Most wind up in the garbage heap; they seem not to be able to resist overextending themselves to "own the world." Real estate rental companies are different. I think most of them are actually a satisfactory albeit not thrilling investment. I'm not sure whether Beijing Capital Land will wind up as mainly a development company or not.
You might ask why not just follow Jay Chen? For one thing he darts in and out too rapidly for me to follow him, as I'm busy with my day job. Secondly he is so brilliant that I think sooner or later his talents will be bought out. Every one has their price. Then we won't have his advice and we won't have learned how to operate on our own.
A tremendously valuable generalization by him is that we should avoid the manufacturing companies. Also I think we should, arbitrarily, sell companies whose P/E has reached 40 no matter what magic business they are in. That way we can participate in the boom and maybe avoid some of the bust. Buffett's principle, to own companies that are semi-monopolies, that have a "moat" that the competition can't easily cross, also still applies. In the above I think the coal company YZC and the real estate company don't qualify by Buffett's criterion but I am a nut on energy and real estate so please allow me some insanity.
This post may not be the required catalyst, but I do think it would be well to discuss specific Chinese companies. |
