I'm always willing to hear out the contrarian view to one of my positions. I've been bullish on China, but there is evidence that their banking sector is as susceptible to bubbles and systemic risks as the U.S. system:
Human nature is a constant across cultures. Our species is genetically wired to feel an endorphin rush when we experience something that makes us feel more able to reproduce, or increases our "inclusive fitness" as biologists would say.
Is the Chinese economy headed for a bubbly burst? Maybe. It doesn't change my opinion that China is still a healthy place to hold a portion of my portfolio for the long term. Once the U.S. equity bubble is fully deflated (it has further to fall!), it will get a long allocation too.
Nota bene: Anthony J. Alfidi is long FXI with covered calls at the time this comment was published.
China risks frittering away its stimulus spending on speculation in stocks and real estate, reports said Monday, citing economists who say surging bank loans risk inflating risky asset bubbles.
(snip)
While recent gains in shares and property prices are a welcome respite for investors, putting funds meant for stimulus projects into speculative investments could undermine the government's effort to boost growth and reduce the economy's heavy reliance on exports.
Human nature is a constant across cultures. Our species is genetically wired to feel an endorphin rush when we experience something that makes us feel more able to reproduce, or increases our "inclusive fitness" as biologists would say.
Is the Chinese economy headed for a bubbly burst? Maybe. It doesn't change my opinion that China is still a healthy place to hold a portion of my portfolio for the long term. Once the U.S. equity bubble is fully deflated (it has further to fall!), it will get a long allocation too.
Nota bene: Anthony J. Alfidi is long FXI with covered calls at the time this comment was published.
