You are right in principle, but the mechanisms described only apply to (largely) free markets.
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@randomdude @Roman_moed TRUST YOURSELF 😘
When you see such absurd discounts as in China, you will always find reasons why you shouldn't invest there.
Do you think a country like China can escape market forces?
Their cost of capital is exploding! High youth unemployment, consumption has collapsed, deflationary tendencies can be seen. The real estate crisis is not over yet. The banks don't look healthy either. In regulatory terms, the last 3 years have been a disaster, everyone is unsettled.
This is all publicly available information.
Sentiment is so gloomy that long-term investors are considering swapping their EM ETFs for EM ex-China. Institutional investors are debating whether property rights are still sufficiently protected for foreign investors and whether the country is still investable at all.
What else is to come? Expropriation fears are already the superlative from an investor's point of view, there's no way to top that. It reeks of the end of the world!
Of course you have to watch your position size.
BUT
The potential for surprises on the upside is far greater than on the downside.
The position is only 1% of my ETF share, if they fall further I will gladly buy more.
When you see such absurd discounts as in China, you will always find reasons why you shouldn't invest there.
Do you think a country like China can escape market forces?
Their cost of capital is exploding! High youth unemployment, consumption has collapsed, deflationary tendencies can be seen. The real estate crisis is not over yet. The banks don't look healthy either. In regulatory terms, the last 3 years have been a disaster, everyone is unsettled.
This is all publicly available information.
Sentiment is so gloomy that long-term investors are considering swapping their EM ETFs for EM ex-China. Institutional investors are debating whether property rights are still sufficiently protected for foreign investors and whether the country is still investable at all.
What else is to come? Expropriation fears are already the superlative from an investor's point of view, there's no way to top that. It reeks of the end of the world!
Of course you have to watch your position size.
BUT
The potential for surprises on the upside is far greater than on the downside.
The position is only 1% of my ETF share, if they fall further I will gladly buy more.
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10Mes
@PowerWordChill I don't think the time is right yet. I want to get into a halfway intact uptrend. 5%+ says nothing yet. Once it has gone up by 10-15%, I'll be there
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@Roman_moed It looks like we have different strategies.
That was my last purchase at this level.
From now on, I'm only buying at a lower price... should it go down again and with my luck it will. 😅
That was my last purchase at this level.
From now on, I'm only buying at a lower price... should it go down again and with my luck it will. 😅
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10Mes
@PowerWordChill 1% share? It sounds like you've gone all in, but at one percent there's not really anything to trust, is there?
And on the actual topic: the political risks are definitely real, which is why you have the discount. But everyone will have a different opinion on the size of the discount. Then some will get out and others, like you, will get back in.
And on the actual topic: the political risks are definitely real, which is why you have the discount. But everyone will have a different opinion on the size of the discount. Then some will get out and others, like you, will get back in.
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•@Moep First of all, 1% is a four-digit amount if you have a six-digit portfolio, secondly, I continue to buy in the event of weakness and thirdly, $ICHN is only the speculative part. In total, my other ETFs add up to 6% (including Taiwan)
My China share can therefore rise to 10-11% at the peak. 😜
And no, the issue is NOT whether the political risks are real. Nobody disputes that. For you as an investor, the question is:
Will things be better or worse in the future than what has been priced in.
If everyone sees their property rights at risk, but this does not materialize, there is plenty of room for upside. 🚀
My China share can therefore rise to 10-11% at the peak. 😜
And no, the issue is NOT whether the political risks are real. Nobody disputes that. For you as an investor, the question is:
Will things be better or worse in the future than what has been priced in.
If everyone sees their property rights at risk, but this does not materialize, there is plenty of room for upside. 🚀
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@PowerWordChill China as a plausible bet - no one will disagree with you. But I took your original argument as a purely economic one. And that can only be applied to China with very great restrictions.
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