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Old 07-09-2015, 06:55 AM   #21
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OK, let me get this straight. The Chinese market has doubled in the last year while ours has pretty much gone sideways. So their run up had little correlation with our market. However, now that its going down, OUR market should now follow Why should there be correlation on the down side but not the up side??

The Chinese were buying into THEIR market, not ours. So they will lose THEIR money not ours. I don't see why it should concern us in a big way.
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Old 07-09-2015, 07:20 AM   #22
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I'll bet the phones are awfully quiet in those San Francisco, Irvine and Cupertino real estate offices now. If you didn't get your money out of the country yet, you are too late.
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Old 07-09-2015, 07:40 AM   #23
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I know us Westerner have done more than our fair share of stupid things both as individual, exchanges, and as government. But every time I read another story about China's market just seems more and more crazy, its like somebody gave them a Book 23 stupid things not to do when running a stock market and they got confused and decide to do all of them at once.
Thomas Friedman and many others (incl some inthe US government) have gushed about the wonders and efficiency of the Chinese government, observing that the US government could do so much more if it could act with the same speed and centralized efficiency. Yep, that's how they get really expensive trains that nobody rides to places nobody wants to go. The Chinese government thought they could centrally manage an equities market, bend it to suit their needs if they rig it right.

I still do not understand why Vanguard thinks adding Chinese A Shares to their indexes is a great idea--it is not.
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Old 07-09-2015, 07:49 AM   #24
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... I still do not understand why Vanguard thinks adding Chinese A Shares to their indexes is a great idea--it is not.
But isn't the idea of indexing that one must hold all stocks in proportion to their market caps or prices, and not use any other metrics?

What's an A share? I understand there are several classes of Chinese stocks with different restrictions. Does not sound like a free market to me, so I lose interest quickly.
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Old 07-09-2015, 08:00 AM   #25
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But isn't the idea of indexing that one must hold all stocks in proportion to their market caps or prices, and not use any other metrics?

What's an A share? I understand there are several classes of Chinese stocks with different restrictions. Does not sound like a free market to me, so I lose interest quickly.
Exactly. Indexing works only in a free market--where investors can make decisions about where to put their money, or to take it out and move it elsewhere to seek better value. The Chinese A Shares are not that.
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Old 07-09-2015, 08:45 AM   #26
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I know us Westerner have done more than our fair share of stupid things both as individual, exchanges, and as government. But every time I read another story about China's market just seems more and more crazy, its like somebody gave them a Book 23 stupid things not to do when running a stock market and they got confused and decide to do all of them at once.
Big shareholders banned from leaving for six months. That's nuts.

That's like if you are a high roller in a casino but forced to gamble for a certain amount of time.
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Old 07-09-2015, 08:50 AM   #27
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How about banning selling stocks at a loss?

A shareholder can only sell his stock once the price rises above what he paid for it. That way you cannot lose, and have to win by definition.
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Old 07-09-2015, 09:42 AM   #28
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Here is China's biggest problem. Too many single young men without enough young women to tame them, bear there children and give them a good reason not to drink and fight.

China's Growing Problem Of Too Many Single Men - Forbes

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In a culture like China’s, where the mainstream societal expectation continues to put heavy emphasis on progeny, family network strength and family unit establishment as a benefit to status-building, for these one in four adult Chinese males, being single adds extra dimensions of undesirability. Deep personal anger and frustrations must inevitably be a byproduct of these societal pressures. If these single men will be found predominantly in a single demographic–namely rural, poor and uneducated men–what we might see is the emergence of a distinct subgroup of people, or a new class segregation. An entire class of potentially angry, frustrated, relatively poor and uneducated single men can mean serious threats to societal stability,
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Old 07-09-2015, 09:56 AM   #29
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Here is China's biggest problem. Too many single young men without enough young women to tame them, bear there children and give them a good reason not to drink and fight.
Per Wikipedia, in the 15-64 age range, the US has more males than China as do 25 other countries including Greenland and UAE countries.

China only ranks #1 in the under 15 age range.

https://en.wikipedia.org/wiki/List_o...s_by_sex_ratio
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Old 07-09-2015, 10:06 AM   #30
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Per Wikipedia, in the 15-64 age range, the US has more males than China as do 25 other countries including Greenland and UAE countries.

China only ranks #1 in the under 15 age range.

https://en.wikipedia.org/wiki/List_o...s_by_sex_ratio
Thanks. Those are interesting numbers.
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Old 07-09-2015, 02:33 PM   #31
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I took an opportunity of the huge bounce in the Chinese market today to dump all my emerging market index funds. So I am thankful for the Chinese unique version of capitalism today.

I'd still like to invest in emerging markets, but I just don't want any of money in Chinese market at these levels with these crazy rules. Anybody know a good way of getting the rest of the world without China. I know that Russia market is also rigged and India has problems, but at least Russian stocks are relatively cheap.
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Old 07-09-2015, 03:08 PM   #32
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... Anybody know a good way of getting the rest of the world without China...
One can get country specific ETFs. However, countries with a small equity market may not get covered with an ETF. Plus this takes more work.

How about keeping the broad EM ETF or world ETF, then subtract out China with an inverse ETF?
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Old 07-09-2015, 03:27 PM   #33
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Thomas Friedman and many others (incl some in the US government) have gushed about the wonders and efficiency of the Chinese government, observing that the US government could do so much more if it could act with the same speed and centralized efficiency...
Some of these pols believe that they are better at deciding what is good for the rest of the people. They are closet elitist at the same time that they beat the drum about democracy.
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Old 07-09-2015, 04:08 PM   #34
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Two good reasons to stay away from the Chinese markets:
1) "Lack of transparency"--so stockholders can't know how the books are being cooked, and
2) It is a big casino. It appears to me that the Chinese in China, Hong Cong and Singapore love to gamble and are buying stocks on the 'Bigger Fool' theory--wanting to sell them to the next guy for a capital gain.

There may be some Chinese stocks in my mutual funds, but I would never intentionally invest a penny in China.
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Old 07-09-2015, 04:11 PM   #35
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An entire class of potentially angry, frustrated, relatively poor and uneducated single men can mean serious threats to societal stability....
It seems obvious, no? This seems to be the case in several countries, including places in the US.
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Old 07-09-2015, 04:16 PM   #36
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Thomas Friedman and many others (incl some inthe US government) have gushed about the wonders and efficiency of the Chinese government, observing that the US government could do so much more if it could act with the same speed and centralized efficiency. Yep, that's how they get really expensive trains that nobody rides to places nobody wants to go. The Chinese government thought they could centrally manage an equities market, bend it to suit their needs if they rig it right.

I still do not understand why Vanguard thinks adding Chinese A Shares to their indexes is a great idea--it is not.
Actually I find there is much to admire in the speed and efficiency on how the Chinese build infrastructure. At least when the Chinese build high speeds trains to nowhere most of the money is spent on low and middle skill construction workers and its done over a short period of time.

In the US most of the money seems to get spent on "high" skilled lawyers and consultants develop plans writing EIS etc. The project drag out over decades and cost go through the roof. The Chinese system of jailing obstructionist lawyers does wonders on reducing the NIMBY attitude that is rampant in the US. #sorrynotsorry

However, there is really nothing that I can see worth emulate in the Chinese form of capitalism when it comes to financial affairs. Yes Vanguard is silly to pretend that Chinese shares are like American company shares. They are not as recent events show.
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Old 07-09-2015, 05:23 PM   #37
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I don't think it's that different.

In the late 90s Americans were running around like the fundamental rules of economic didn't apply. Then during the housing boom people ran around saying prices never go down.

China is doing the same thing.

I live in Hong Kong and am shocked at how many people here and from the mainland think "housing never goes down" and I reply... Yup... That's what we thought in the US in 2007.

Of course the "huge losses" are big news but year over year they are still reasonable gains... The problem was there were unreasonable gains that are now being reverted... They will be over corrected and then go back up too high.

Looks like a functioning human market to me .

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Old 07-09-2015, 07:08 PM   #38
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That may be, clifp, but our stuff doesn't fall down as often as theirs does.

I have noticed in both the US and Canada that immigrants believe they can't lose money in real estate. Yeah, you can. Usually at the same time they lose their job. I do know that immigrants own a LOT of rental properties and motels.

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Old 07-09-2015, 08:33 PM   #39
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Actually I find there is much to admire in the speed and efficiency on how the Chinese build infrastructure. At least when the Chinese build high speeds trains to nowhere most of the money is spent on low and middle skill construction workers and its done over a short period of time.

In the US most of the money seems to get spent on "high" skilled lawyers and consultants develop plans writing EIS etc. The project drag out over decades and cost go through the roof. The Chinese system of jailing obstructionist lawyers does wonders on reducing the NIMBY attitude that is rampant in the US. #sorrynotsorry

However, there is really nothing that I can see worth emulate in the Chinese form of capitalism when it comes to financial affairs. Yes Vanguard is silly to pretend that Chinese shares are like American company shares. They are not as recent events show.

Well put Clifp.

Having lived in china for the past 8 years, and in the field of finance, I know less about the inner workings of the Chinese financial markets today than the day I set foot on the Middle Kingdom soil.

Lack of financial Transparency, excessive speculation, and arbitrary and overnight government regulation are not ingredients for successful capital markets.

That said, I know many who made a boatload on the upswing this time and are still ahead despite the "crash" of the last 2 weeks. A year ago (and for much of the prior 5 years ) the market was at 2000... It recently flew to 5200 and now back to 3800 or so. Still nearly double from a year ago.

Not bad at all for an emerging market ...

The reason the USA catches a cold when china gets the flu is simply that the market is dominated by individual investors- consumers of stuff - who will not be able to afford the latest Mercedes Audi or Porsche with wealth decreasing in equities ( and a slow decline in real estate has not helped consumer confidence either).

There are those who say this was a government sponsored bull market. Great if you got in early ! Ride the bull. Tame the bear.

Most USA reporters and media are totally naive to china and her markers and the way business happens and to make even the vaguest comparison to the USA market is plain ignorant.

Back to the first point on infrastructure - I envy the Chinese infrastructure. USA infrastructure, bridges, roads absolutely suck. Decrepit and broken at best. And we have no high speed rail what so ever. The high speed trains are awesome. Used them between Beijing Shanghai Guangzhou hangzhou, Xian, Dalian and Cheng du all the time. They are much better than air travel and efficient as can be. We have that joke called Amtrak. Embarrassing ...

Ok. Enough for me . Let's see what the real china experts have to say.
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Old 07-09-2015, 09:34 PM   #40
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Back to the first point on infrastructure - I envy the Chinese infrastructure. USA infrastructure, bridges, roads absolutely suck. Decrepit and broken at best. And we have no high speed rail what so ever. The high speed trains are awesome. Used them between Beijing Shanghai Guangzhou hangzhou, Xian, Dalian and Cheng du all the time. They are much better than air travel and efficient as can be. We have that joke called Amtrak. Embarrassing ...
Wow! I knew that our mass transportation system trails that of other countries, but some of that is because Americans love their car too much to give it up. For long range travel, they like to fly more than taking the train, even if it is available.

But our highways and roads suck? I do not see that out here in the West. I have done a lot of RV'ing, and do not have too many complaints. I have not been to China to compare but would be very surprised if their electric grid and water supply are better than ours.
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