Thursday, November 15, 2012

Chinese Stock Market Crash

When people start quiting their job to be a full-time stock trader and valuations look unreal there is going to be a big fall. Those are just a couple of the things that happen in an overvalued bull market. All excessive bull's led by speculation come to a severe fall. The bubble in China is getting out of control and will crash sooner than later. How soon? One can't know for sure. I found the average PE of 8 of the top 10 stocks in the (FXI), the index that tracks the Chinese market. The average was about 50. That would be ridiculous in itself but factor in the variable that a lot of the numbers reported by many of these companies isn't totally clear. What impact will the crash have on the world markets and furthermore the world economy? I'd say dump your FXI very very soon, maybe today. It is best to sell when the valuation is to high.

EDIT: Just two days after this post the Xinhua Index began crashing and was down 77% by March 2008. stock pursuit

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