Categories

Investing

Tools

  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts


    Gold Slammed To Fresh 10-Week Lows Below Key Technical Level
    Futures Creep Toward All-Time Highs Again
    Flash Boys Has Been Dethroned At The Top Of The Amazon Bestseller List By This Book
    Banker Death ‘Epidemic’ Spreads To China
    Apple’s Total Cash Holdings Decline For The First Time Since Before Lehman
    Where Facebook’s User Growth And Revenue Generation Is
    Nasdaq Winning Streak Snaps As Yield Curve Hits Fresh 5-Year Lows
    Futures Gain On Tech Results, Apple Soars In Premarket
    Three Employees At Marubeni’s Grain Unit In China Detained
    Pernod Looks For More Bolt-on Deals After U.S. Buy
    Nokia Says India Plant Unlikely To Be Part Of Microsoft Deal
    Juicy Apple Buoys Shares, Euro Volatility Sinks
    Tokyo Court Orders Bankruptcy Trustee To Begin Mt. Gox Liquidation
    Buffett: Moving Oil By Rail Safely Major Industry Concern
    Facebook First-quarter Revenue Grows 72 Percent On Rising Mobile Ads


    You Could Make Fivefold Gains In Chinese Stocks, Starting Now

    When the Chinese government wants its stock market to go up, it goes up — a lot. It’s happened several times in history.

    It happened from 1996 to 1997 and again in 2005. (Heck, Chinese stocks soared fivefold in just two years starting in 2005, the last time the Chinese government wanted the stock market to go up.)

    Today, the Chinese government wants the stock market to go up again.

    Even better, Chinese stocks are incredibly cheap, and the uptrend has begun. In short, we have the perfect conditions for a triple-digit profit, courtesy of the Chinese government. Let me explain.

    I first visited China in 1996. When I realized what was happening with the Chinese government, I recommended the largest blue-chip Chinese stock I could find to my readers.

    You see, to push stocks higher, the government tried floating a variety of rumors. The government rumor that sparked the biggest rise was that China was going to allow local Chinese investors to buy shares of foreigner-only stocks.

    Chinese stocks soared. My readers pocketed close to a triple-digit gain in a very short period of time.

    But eventually, China’s government worried that its rumors pushed up stocks too much. So it floated the opposite rumor. The company we’d pocketed nearly a double on eventually lost more than 80 percent of its value.

    This has happened multiple times. The most recent time was in 2005, just before Chinese stocks soared fivefold. And it’s happening again, today.

    Last month, China’s top securities regulator announced it would increase by tenfold the amount of money qualified foreign institutional investors are allowed to invest in Chinese stocks.

    We have seen this play out before. China gets behind its stock market, and the market soars. It’s already happening, as I write. And because Chinese stocks are so cheap, I believe we have an easy shot at triple-digit gains.

    The Shanghai Composite Index now trades for the cheapest price-to-earnings (P/E) and price-to-book (P/B) ratios we’ve ever seen. In fact, Chinese stocks are even cheaper today than they were in 2005, right before the market soared fivefold in two years. Take a look.

    This index of blue-chip Chinese companies traded for more than 40 times earnings in 2007. And over the past 15 years, its average P/E ratio has been over 30. Today, this index trades for less than 10 times earnings.

    Our starting point is basically the cheapest point in the history of the Shanghai Composite Index (based on the P/E and P/B ratios). 

    Chinese stocks have bottomed, and we now have our uptrend in place. Even better, the Chinese government is doing everything it can to push the stock market higher.

    If the 2005 to 2007 bull market is any indication, our upside potential is hundreds of percent.

    You may want to consider the Market Vectors China Fund (PEK). It’s a one-click way to trade the Shanghai Composite Index. Check it out.

    Good investing,

    Steve Sjuggerud

    This article was originally published on Feb. 14 at DailyWealth.com.

    Dr. Steve Sjuggerud is the founder and editor of one of the largest financial newsletters in the world, True Wealth. Since inception in 2001, True Wealth readers have made money every year with safe, contrarian investment ideas. Steve did his Ph.D. dissertation on international currencies, he's traveled to dozens of countries looking at investment ideas, and he's run mutual funds, hedge funds, and investment research departments. Steve's investment philosophy is simple: "You buy something of extraordinary value at a time when nobody else wants it. And you sell it at a time when people are willing to pay any price to get it." It's harder than it sounds, but Steve continues to be able to do just that for his readers. Click here to learn more.

    | All posts from Dr. Steve Sjuggerud

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    Apple Expands Buybacks By $30 Billion, OKs 7-for-1 Stock Split
    Qualcomm Faces China Bribery Allegations From U.S. Regulator
    5 Stories To Watch Before The Stock Market Opens Today
    The Dow Jones Industrial Average Is A Big Lie
    How High-Frequency Traders Use Dark Pools To Cheat Investors
    Key Differences Between Investing In Gold Mutual Funds And Gold ETFs
    As Soda Sales Slide, Coca-Cola’s Strategy Baffles Investors
    Why Apple Has Stopped Growing
    Activist Investor Bill Ackman Says This Book Explains His Firm’s Biggest Deal Ever
    Algos Getting Concerned Low Volume Levitation May Not Work Today
    Chinese Banks And 100,000 ‘Outlets’ Selling Gold!
    Ex-Morgan Stanley Chief Economist Admits ‘Fed Is Distorting Markets’
    Futures Flat After Six Straight Days Of Gains
    Global Share Rally Peters Out, Euro Lifted By PMI Boost
    Primark Targets U.S. With First Store Openings
    Goldman Loses Four Asia Prime Brokerage Execs To Rivals
    U.S. Justices Show Little Support For Aereo TV In Copyright Fight
    AT&T Ups Revenue Growth Forecast On New Pricing Model
    Comcast Seems To Be Having Its Cake And Eating It
    McDonalds Misses Revenue, Earnings Estimates: Blames Weather
    Goodbye Biotech ‘Growth Bubble’; Hello Pharma ‘M&A Bubble’
    Ukraine Currency Collapses Nearly 70 Percent Against Gold In 4 Months
    The Earnings Season: “House Of Cards”
    Why Putin Is Smiling At The Bond Market’s Blockade Of Russia
    ‘The New GM’ Seeks Court Protection Against Ignition Lawsuits
    Novartis Reshapes Business Via Deals With GSK And Lilly
    Comcast’s Profit Rises; Company Adds Video Subscribers
    Futures Flat, But Netflix Jumps In Premarket
    M&A Talk Lifts European Shares, Euro Dips To Two-week Low
    Next Batch Of Companies Hope To Raise $3.6 Billion Through China IPOs
    Read more from Investing...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sources


    close[X]

    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.