China Goes Parabolic . . .

See for yourself.


I believe China is headed for a 1929-style wipeout, which will be bad news in the short term for them, but good news in the long term as they implement a range of market and economic controls that mirror those imposed in the US depression era.

China now has the financial clout of a world power, but the market infrastructure of an emerging country. This is great for them on the upside (the above chart) as it accelerates the boom, but is going to make the bust equally ugly.

And unlike Japan in the 1980s, I don't believe China has a stable, coordinated-enough banking system to prop its equities up indefinitely.

We're likely to see some great opportunities in China over the next 5-7 years--I mean the exact same companies now, but at PEs of 3-5.

Keep your powder dry.