RE: China stocks- It's no news that most China stocks have shown relative weakness vs. U.S. stocks.
As far back as we can remember, stocks showing poor relative strength in bull markets do not buck the trend and start going up in a correction of the broad market.
We stated last night that we think a correction has started in the U.S. market.
It would therefore be unusual for China stocks to do well in the period coming up. We expect most will go down with the U.S. market corection we believe has begun.
We adressed with ChartReader the "Therefore" question last evening.
"are you going to do anything?
Our answer is no.
We will stick with the ones we own and remain of the belief that they represent some excellent values, and with patience, the stocks will be accorded higher valuations. Enough so to make it worth sticking to our plan.
Individual names might [might-maybe?] do OK. Earnings are on tap over the next few weeks for many China Small Caps. It remains to be seen how the market will react to those earnigs even if they are stellar.
Just too many of them selling for 5 X earnings [20% earnings yield] with a future that looks bright for us to bail now.
BORN-We checked it out some quite a while ago. Not smitten with the name, but we're not informed enough to give an opinion.
The chart, like many of it's peers, is nothing to take home to mom, or even Newly.
Fabian
There are some valid reasons to say no to selling now...
1. We could be wrong about this being the start of a correction in the broad market. Not likely but possible
2. Even if it's a correction in the broad market, it's possible the better China stocks will resist going down. Not likely but possible.
When a GFRE reports earnings, it's possible the market reaction will be-even a gap up. Possible, not probable.
Getting out means a lot of get in questions arise. What and when.
Yet..
A counter argument can be made.
Even if bullish on them long term and thinking they are a good value-long term going higher.
Why not sell all of them [which includes some admitted dogs we're not totally sold on] and then wait. Just wait until they individually start showing decent relative strength. Maybe a gap up on news...some sign that an uptrend may have begun and then concentrate the proceeds from selling all of them on 3-5 names that come up on the emerging strong list.
We probably won't do it but it's a valid alternative to consider.
For now we'll stick to the long term plan but other options are always open.
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