Replies to post #53275 on China Growth Stocks

[joenatural]

I'd say there's certainly enough claims of fraud, but is there anything definite and concrete or are there just many claims of fraud without undeniable proof ? Personally, when the short attacks started, I was waiting for proof of fraud to come at some point and not just agenda driven speculation. I for sure thought it was coming, but I'm still waiting. I just think these short-sellers were simply trying to take advantage of a declining market, knowing they truly didn't have anything concrete to offer and spun their hit pieces as best they could. Bottom line is that earnings will continue to be monsterous and within another quarter, I think all these claims of fraud will fall on deaf ears. In another 6 months, I think we'll look back and have a good laugh and there will be talk of "would, coulda, shoulda" with regards to picking up shares of stocks that rebounded big time with short covering a great assistant. No doubt that we have to continue to be able to adapt to changing situations, but even if the overall market takes a dump, I feel differently now than a couple of weeks ago. I'm starting to take that step off the bench and into the game. I mean seriously, do naked shorts end up printing 20 million fake CCME shares or do they finally concede and admit defeat before ending up homeless ? I really think they missed their window due to September's rally that fooled many, including me .........

"There's certainly enough evidence of fraud in many places"

[Rames]

Agreed, however I believe that most of us here will agree that the vast majority of Chinese small caps are not fraudulent. Right now it's actually pretty easy:

1. Use your own criteria to buy into 10 undervalued Chinese stocks where you see potential of at least 50% price appreciation
2. Spread the risk evenly
3. Assumed 1 in 10 is a fraud (that would be an unbelievably high number) you will have nine huge winners

I do firmly believe that in the end it is always value that drives demand for a stock, just takes a bit of time in an environment of doubt. With good DD you can probably reduce the assumed 5% fraud risk significantly.

I just really don't see a better value investing sector in the market. Everything else looks overextended or betting on future growth for exploration stage companies (precious metals, gold, lithium, rare earths). And for the general U.S. or European markets I just don't see a huge rally ahead. However, there is a good chance that Chinese domestic markets will start their own rally within the next few months.

Additionally, what people tend to forget now... the current dollar weakness puts enormous pressure on the Chinese government to allow the Yuan to appreciate faster. The Yuan has dramatically lost in value against the Euro and commodity currencies as the CDN$ and AUS$. That is good for U.S.-listed Chinese stocks and very bad for Chinese stocks listed in Canada or Europe.

[viking86]

Can you name for me a few places where there is "evidence of fraud" besides discrepancies b/w SAIC and SEC numbers?