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Strategies & Market Trends : Fundamental Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: gcrispin who wrote (1286)	10/14/2010 4:56:50 AM
From: bruwin	Respond to of 4720

”The Chinese micro-caps have been on fire. It's fascinating that they were being thrown out with the bath water only a couple of months ago.” Yes indeed, it is fascinating and no doubt ironic. Once again you have to wonder on what basis folk made those decisions, as it’s not likely that the business performances or fundamentals of those companies could have changed that much in only a few months ! No doubt the same will occur with GFRE which has been testing its resistance on numerous occasions. The more it tests it, the more dramatic will be the up move when it eventually comes. Although I’m not a fervent disciple of TA, I have noticed that the general price downtrend of GFRE, since mid-April this year, has not been supported by the trend of GFRE’s RSI. I believe that’s a sign that the direction of the share price could very well follow the trend of the RSI and therefore move up. More importantly, IMO, the current Quality of GFRE’s fundamentals should eventually be reflected in its price trend. With regard to China and its position in the “Industrial World”, I came across the following extract in Bloomberg .... ”SCRUTINY of China’s foreign exchange policies will be intensified, analysts said yesterday, after a new report showed the Asian giant’s forex reserves — the world’s largest — surged to a record 2,65-trillion at the end of last month. The report adds fuel to complaints that the country’s curbs on gains in the yuan are undermining the global recovery. Currency holdings rose about 194bn in the third quarter, Tuesday’s statement from the People’s Bank of China showed. September exports were the second-highest on record at 145bn, a separate customs bureau report showed yesterday.” The way I see it (from my ‘layman’s perspective’) the USA needs to face up to the fact that it will continue to suffer as long as it continues to get its products made in China, just because it’s cheaper there, at the expense of its own industries and work force. In so doing there’s less industrial activity in the USA which means less jobs, which means less taxes from companies and individuals, which means less money available to the government to pay out unemployment and other benefits, which means the government needs to print more money, which means the government needs to issue more bonds to borrow more money (mainly from China), which increases the country’s debt, which reduces the value of the dollar, which, ironically, harms China’s forex reserves because it’s mostly in dollars, etc.. etc.. etc... For one thing, IMO, labour rates in the USA probably need to become more realistic to make their products more competitive. At the same time the West needs to take note of the way many Chinese workers are being exploited in terms of their wages, working hours and conditions. Maybe western industrial countries need to get together and impose some form of tariff barriers on China to at least get them to improve matters for their own citizens. It shouldn’t always be ONLY about the Bottom Line. There are also other important, collective, human considerations as well. The very low, relative wages being paid in China no doubt benefit the end cost of their products, so it’s not surprising that USA businesses are getting stuff made in China and importing it from China and selling it back home. Anyway, that’s just the way I see it. I’m no economist, so maybe I’ve got it all wrong.