Great points. It's hard to imagine that this entire Chinese Microcap space will just fade away. Dave Gentry of RedChip had a good point when he said, "Faber stated that “many of these companies have questionable financials,” yet there are literally five or six out of a universe of approximately 350 that have gone public since 2003 in which there has been found any financial malfeasance. That is not even 2% of the universe of stocks to which they refer." This guilt by association bias has hurt the sector for most of 2010 and early on in 2011.
Here's an excerpt from Jason Zweig, one of the commentators for the revised edition of "The Intelligent Investor". It's fitting for this situation:
"And today's headlines are full of fearful facts and unresolved risks: "Investors don't like uncertainty," a market strategist is intoning right now on financial TV or in today's newspaper. But investors have never liked uncertainty-and yet is is the most fundamental and enduring condition of the investing world. It always has been, and it always will be. At heart, "uncertainty" and "investing" are synonyms. In the real world, no one has ever been given the ability to see that any particular time is the best time to buy stocks. Without a saving faith in the future, no one would ever invest at all. To be an investor, you must be a believer in a better tomorrow."
If you look at on the bright side of this industry, there are so many catalysts for its future growth. Value1008 had a good point about patience and how these stocks could go even lower. As hard as it is to believe, it's definitely possible. Think of it as an opportunity. In times like this, take the opportunity to strategically increase your position in these positions as they can offer you an even greater value and margin of safety.
