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#1
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First remember that I believe an edge comes from having information that no one else has or that others aren't paying attention to. All the other information out there is on average reflected in the stock price.
The piece of information that I think not too many peole have thought about is that during the Olympics the fact that China will be hosting the 2008 games will be given a lot of publicity. As of now most people don't know that. So given closed end funds like China Fund (CHN) or Greater China Fund GCF are fairly priced without this snippet, it seems you would have a small edge buying now and perhaps selling after the Olympics. (It also might be better to hold indefinitely or until their Olympics) |
#3
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David:
How do you know these funds are fairly priced? PE ratio of the underlying Companies? Also, 2 or 3 weeks ago there was a very good article on China business in the New York Times Magazine Section. |
#4
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Brief primer on closed end funds:
You can check discount (percentage assets exceed share price) at cefa.com. The discount exists because these funds charge expenses amoiunt other reasons (see economic texts). CHN seems to be selling at a 10% permium while JFC and GCH are selling at discounts. It is possible that CHN sells at a premium due to it's comparatively low expense ratio. http://www.cefa.com/scripts/fundstat.asp?id=CHN http://www.cefa.com/scripts/fundstat.asp?id=GCH http://www.cefa.com/scripts/fundstat.asp?id=JFC It is also usefull to see how funds with similar objectives track each other. 2yr Comparison of china funds shows CHN lagging. http://finance.yahoo.com/q/bc?t=2y&s...fc%2Cgch+DPCAX Finally I suggest you read SEC filings at www.sec.gov. Before you invest in a closed end fund you should confirm that it is superior to an ETF or mutual fund. Remember that a CE is a different animal from ETFs or mutual funds. In general I find that cefa+yahoo charts+sec is the starting point for US investors investigating CE funds. I forgot to add you also need to check out chineese ADRs www.adrbny.com. Sometimes owning individual shares is better than a fund. As to your china idea in general I posted a jim rogers story on the subject that may be interested. Finally, My crazy investment idea: Israel fund ISL. Buy now before the jews do [img]/images/graemlins/wink.gif[/img] |
#5
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It is a big assumption to say that at current levels Chinese stocks are fairly valued. I believe there is a fairly high level of speculative frenzy going on now and China is hot. As you say, on average known information is priced in but the strict version of Efficient Market Theory has been pretty well debunked.
Also, even if your play is +EV, you have to weigh that there might be higher +EV plays available. |
#6
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I am Overseas-Chinese young man and have strong business links in East Asia.
Olympic games unlikely to have much effect either (why is such major international event not known to public?), might boost tourism for a month. PLC's way too much corruption and dumb bureaucrats, to reduce this effect go for the family type, main owner dominant companies. Otherwise imagine these Chinese managers taking whatever product they want from the company for friends and families, signing off expensive restaurant, hotel and hooker party bills as business expense. I'm not kidding, it's a common practice. My uncles used to boast to me how much company cash they can abuse. If you want to make a Chinese play, go for Hong Kong PLC, much better run and more transparent, and many invest in China. HK companies compound foreign profits tax-free (How do I know? [img]/images/graemlins/cool.gif[/img]) If you insist on mainland investments, go for real estate in fast developing areas, the Chinese and Japanese loves to trade houses when they get cash. In fact most of the economies growth are coming from that sector. Or wait until my little HK corp goes public. |
#7
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You guys are all missing the point. The fundamentals are irrelevant here in capturing the perceived edge.
99% of the world has this same mental block. |
#8
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You guys are all missing the point. The fundamentals are irrelevant here in capturing the perceived edge.
99% of the world has this same mental block. |
#9
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David,
It seems fairly difficult to find free information on the China Fund (CHN) and I couldn't find any on the Greater China Fund (GCF). I did find some information on the China Fund, but not enough to even consider buying it. What information do you have that ties this funds profitability to the Olympics? The fund has went from approximately 47 dollars a share to 27 dollars recently. I can't find the information that gives me the reasons why it is declining in value. Furthermore, just a few years ago it was at 10 dollars a share? Seems pretty risky, unless you know something I don't. Good Luck Mark |
#10
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I was talking merely about the publicity.
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