China Stocks UNINVESTABLE Or BIGGEST OPPORTUNITY of the decade?

Purchasing China now sound like the last thing one might perhaps think of. Nevertheless, now might be the best bargain you see for a long time. Here are the essential elements to help you understand the threat and benefit of buying China.

0:00 UnInvestable
1:48 Sound vs. Reality
5:59 Herd Behaviour
7:08 Valuation
8:20 Headlines vs. Info
10:02 Drivers
11:53 Reward
13:31 THREAT
15:53 YT Portfolio

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UNINVESTABLE Or BIGGEST OPPORTUNITY of the decade?

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37 Comments

    1. @miguel zapata
      Scenario 1:
      $1 earnings
      5x multiple = $5
      15x multiple = $15

      Scenario 2:
      $1 earnings
      5x multiple =$5
      Earnings drops to $0.33 and share price remains constant
      15x multiple = $5

      Earnings declines, share price remains constant, but earnings multiple increases. The person commenting is showing why using historical earnings multiples has exceptions and is not to be relied on with as much emphasis as is shown in the video

  1. Never, ever use P/E ratios as a guide. The E is far too volatile and is the easiest number to manipulate. E could fall by 50% and suddenly things aint so cheap and then it could fall another 50%. Then earnings for a market can go negative and then what??? Always use slow moving metrics such as yield or P/BV.

  2. Precisely because there is a risk to go to zero, shouldn’t we distance ourselves on all aspects not just stocks from China? It will then become a vicious cycle, as we distance ourselves from China, the risk to go to zero is higher.

  3. Thanks for the great video and for sharing the Asian Times article Sven! Plus nobody maybe noticed that Yi Huiman, the current chief of the CSRC who actually made the accounting deal with the PCAOB, was confirmed in the Central Committee and there’s rumors that he may become be the next chief of the PBoC! It doesn’t look like a decision going in the direction of “closing the capital markets” to me… Keep up this kind of good content man! 👍

    1. yes, only the US is closing things to try to delay growth and protect itself and its interests.

  4. I have been a long term china watcher and would say that rhe 10-20-70 distribution is on the optimistic side. I would build in a margin of safety by using 20-40-40 as the probabilities.

    1. most of them are much smarten than me, they make much more money than me :-)))

  5. I see the book on the back ground “where the money is”. I read this book and its pretty interesting read. I think the author touched quite interesting accounting trick.
    Normal companies have capex and its depreciated over the years to allow companies to report positive earnings, while software companies dont really have capex and instead everything goes to R&D and SG*A, but accounting rules require them to deduct all their investments at once, so that why all these companies have negative or minimal PE ratio.

    I am just thinking as well that we had 10 years of QE and all stock market in general had a nice run, so either the autor is genius, either FED just pumped everything up by doing QE

  6. Don’t get the appeal investing in China no matter how “cheap” it looks. Anything can happen over there, especially with their government.

  7. Eye opening charts, data and commentary: 4:52 – translation 👍. 14:43 – understandable projections. 15:20 – You have to think always, am I ready if it happens (sluggish or worse returns). Huge value in this. Great work and insight. Thanks again!

  8. Small comment Sven on chinese Indexes, they are not as representative of Chinese economy because of less developped market-based public stock exchanges. That means, we ought to be careful when positioning/picking proxies.

  9. I totally agree with your analysis. My broker called me as I have 20% of my funds in Chinese stocks. He thought I should get out. I gave him the same analysis as you just did.
    How about a Similar summary about meta? 😂 I know you do not like it …. However it’s a question of possible risk and reward as we know 👍

  10. Great content, really appreciated! I’m maintaining almost the same percentage of my investments in China, by buying some more shares when prices go down, like in the last week. Hope the strategy works for good future returns 🙂

  11. The issue is that people just come out of the wood work who were bullish on China 3 years ago acting like they knew the whole time now that China is showing weakness, like they weren’t calling for the displacement of the US 3 years ago. China will still be a significant power in its area, like an overhyped tech stock people are realising China has problems once the hype has died down.

  12. The GDP breakdown and estimated size chart should be updated in light of recent developments. It is without question that zero-covid has taken a significant toll on the Chinese economy. The third quarter GDP figures were also deliberately delayed.

    1. @Value Investing with Sven Carlin, Ph.D. Maybe, but the long term trends basically follow the stated policies of the leader, so you go from Deng, to Jiang, to Hu, to Xi. GDP growth has slowed, population growth has slowed, real estate market has collapse. One can say short term noise, but in China, the man at the top matters. We cannot assume it has no effect. Now we don’t know what an unrestrained Xi will actually do, but uncertainly is not noise. Noise eventually regresses to zero net effect, where the uncertainty can become a significant effect in one direction.

  13. With your comment on how asset managers think you reminded me of a quote by John Maynard Keynes: “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally”. It was exactly the same 100 years ago.

  14. Great analysis Sven. Got a small allocation to china myself, I DCA into it every month as i add to my portfolio. On the topic of emerging markets, what is your opinion on Brasil? And Petrobras to be specific.

  15. Hi Sven, I agree with you concerning our stocks will be the less of our problems in case of a real conflicts with China, hoping this will never happen. However, I am worry about long term tension between US and China that can pressure on Chinese Stocks (like actually) and very bad sentiment, regardless positive fondamentals…this is my biggest worry…Thanks again for your content

  16. Great analysis Sven. Check these other ETFs as ideas for your YT portfolio: EMQQ (50% China), FMQQ (No China) and INQQ (India Focus).

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