The New York Times describes a China real estate boom that appears to have reached bubble-icious stage or at least something approaching that. In the same fashion in which previously sensible writers, editors and publications gave the Internet stock lunacy respect simply because prices kept on rising, the title of this article gives the Chinese lunacy respect. The article is titled Market Defies Fear of Real Estate Bubble in China. It's hard even to cite one quote. The entire article describes an unreal state, even ignoring memories from the 1980s and before when China was a poor agrarian society.
Please read the article. The text is fine; the title is just one more example of how the mainstream media (MSM) enables the formation and especially perpetuation of obvious overvalued situations. The title is clearly factually incorrect. The "market" is defying nothing. In a bubble or near-bubble, the rise in prices is the defining characteristic. A better title that would alert the reader to the writer's point would have been, for instance, "Evidence of Real Estate Bubble in China". Pick your title; the exact words don't matter. By using the language the Times did, though, it leads one to think of "playing" along in a (pseudo)-contrarian fashion.
Also please remember that the greatest growth story of the 19th century was the buildout of the U. S. and Canada. Routinely, foreigninvestors in the U. S. lost their shirts as financial collapses occurred despite the long-term growth curve. In China's instance, this is not comparable to the growth of the gigantic virgin territory of North America north of Mexico. It is an old, tired land that has grown with command and control procedures, inadequate concern for the environment, and dubious manufacturing controls. We do not hear about the large number of violent protests. The government is a kleptocracy, so far as I can tell. Income distribution is said to be more unequal than here.
If you want to invest in the China growth story in all its China-centric and global manifestations, first please ask yourself whether you are ready to be a long-term holder if the current boom collapses as so many others have over the centuries.
I for one prefer stories I understand and can actually evaluate firsthand, such as by walking into a Dollar Tree (one day I might just do that), Ross Stores or Marshalls; by dealing with Chubb; or by checking out an Apple store or learning how to actually use my IMac.
After protecting one's downside (backside?), the secret to successful investing is no secret. For those of us with no access to material nonpublic information, going with a reasonably valued asset that appears to have the right combination of improving fundamentals and that is rising in the estimation of the market is a strategy that continues to work. Finding those assets, whether they be markets such as gold or the stock market writ large, or whether they are individual stocks or specific opportunities such as an undervalued bond, takes work. If you don't enjoy doing so or have no talent for that sort of avocation, fuggedaboutit. Just avoid probably overvalued, over-hyped situations such as the China story and you will probably be fine and can spend your spare time doing this you like and/or are truly good at.
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