China Trading Stocks

[kindama]

Re: Underperformers

A year ago just about every China small cap was a fraud or it was cheap. Since then many of the stocks have rallied and some have even become expensive, especially compared to weak YTD performance of Hong Kong listings. I think investors need to adjust their approach.

In recent months I have been balancing long holdings in oversold and undervalued names with short positions in overbought and overvalued names. Even in an up market, picking shorts has been pretty easy.

When these stocks were unloved, one could hold the "bag" with some faith that the sellers had no clue what they were doing. Now the "weeee names" have plenty of clueless buyers who will dump on the first bad news or fading momentum.