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Don't invest in China right now, you will lose your shirt
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So short china? That market is moving, its either going to keep going way way up or its going to go down, i dont think anybody is predicting anything but that.
Why not go long w/ a tight stop/loss, then short the market when it crashes?
The fundamentals for the country are strong, and the PE ratio's aren't that out of whack with what they should be considering the phenomenal growth that country is going to have.
Even if there are some more one day crashes (like happened recently...though it rebounded strong), the market should go nowhere but up in the next 5, 10, 20+ years.
Care to rebut any of that? Feel free to use more than 5 words this time.
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Ok, You asked for it...
Chinese stock bubble
I read in the above article that Chinese stocks are trading at 40x earnings. I realize the Chinese economy is growing faster than the US, but an average PE of 40 is ridiculous.
If most people are willing to accept a 10% ROI annually, the PE ratio for a no-growth stock should be about 10. The Chinese economy has averaged a growth rate of 9.4% over the last 25 years. Because of this, it has become the 4th largest economy in the world. It will become harder each year to maintain this pattern of growth. And even if it can sustain 9.4% for another 25 years, that still doesn't really justify todays PE ratio in the Chinese market.
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Sooooo???
Why does any of that matter if he is looking to take advantage of short term opportunities in that market?
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Are you aware that this is the first mention of short term anything in this thread?
Also, let's say he is talking about short term. Sounds like you'll concede that an overvaluation (which we'll say a high PE is a proxy for) is a material concern long term. The long term is just a series of short terms, so who's to say it doesn't matter? If it's going to matter in x years what makes you confident it won't matter tomorrow or yesterday?