Seems like a good time to make this post published in Jul 2021 free. It is surprisingly still pretty relevant.

I was genuinely surprised by the amount of YouTubers, especially the Americans, who said how great an opportunity BABA was. I could not fathom why they were using American style valuations to judge.

Especially these morons.

It’s unbelievable the amount of bad advice I see being given freely, and the amount of people who follow blindly. But to each his own I guess.

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Wow, so glad I got out of Chinese stocks a while ago. Back here, I said that the game had changed, and it seemed like things could get much worse. I was totally out of that market by Dec 2020.

Even so, I am still surprised by how much the Chinese government is willing to smash foreign investors. With little warning and a wave of their hand, they single-handedly destroyed an entire industry. Many of the Chinese education stocks are down 70% or so.

With such a drop, do Chinese stocks represent a good opportunity? Would I invest?

My answer is the same as before. Personally I wouldn’t. The government has shown a great disdain for investors, and investors’ rights will always take a back seat to domestic politics. Chinese education stocks could well go to zero.

And it could be a long time before the Chinese government decides to stop waving the stick. The fight is about control and data. Building a regulatory framework can take years. In the meantime, companies will not dare to grow and innovate.

If I were to invest, I would do so through a broad-based ETF, like the Tracker Fund of Hong Kong. Single stocks, especially those linked to Tech, are just too risky.

Small-cap stock ETFs may be a good bet. The Chinese government is trying to stop monopolies from being entrenched, and small competitors to the tech giants may stand a chance now. I’m staying out of it personally, but brave investors can try.

I also want to say don’t invest based on the size of the supposed market. So many people have been tricked by the simple idea that China is big so that equals profit. Countless investors have been burned by that notion. It takes a lot more than size for a good investment.

Instead, focus on investing based on the product. While China’s domestic market is huge, their champions such as Alibaba, Baidu and Didi wouldn’t stand a chance against their American counterparts. The only reason they have risen so far is the Chinese government’s protectionism, and they cannot compete outside of their domestic markets. And I think they will just fall further behind.

Stay in markets that treat their investors right.

Take care everyone!

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