Millions of investors around the world are watching China's stock markets with bated breath, given that the Shanghai and Shenzhen bourses have lost more than $3 trillion in market capitalization between them over the past three weeks – a real money amount that's greater than Brazil's annual output or Spain's entire stock market, according to Bloomberg.
Bluntly speaking, they're hoping the "bubble" won't pop.
Well, you and I both know that "hope" is not a viable investment strategy. In reality, a Chinese market correction is exactly what's needed and what every savvy investor knows has to happen, even if they don't "want" to see it.
Once you understand why, you won't want to miss out on what happens next.
Here's what most investors are missing and how to get a piece of the Red Dragon.
Extraordinary Volatility… and Uncommon Profit Potential
Legions of "experts" are falling all over themselves recently to pronounce China's imminent collapse. Never mind that most of them have never set foot in country, but it's hard not to pay attention.
More than 40% of Chinese stocks were halted last Wednesday, meaning trading was suspended for more than 1,200 of 2,808 listed issues, according to Cninfo.com.
Comparisons between what's happening there now and what happened here in 1929 just before the Great Depression raged across the Internet, even though Chinese markets seem to be gaining at least some semblance of stability.
… The Parallels with 1929 Are Uncanny – The Daily Telegraph
… Has China's Bubble Popped? – Forbes
… Forget about Greece, China Is Cause to Freak Out – MarketWatch
Things are so bad that even Chinese regulators are reporting that this is the largest wave of trading halts in the history of that country's equity markets. Given that China's bureaucrats are notorious for publishing only sunshine accounts of what's happening there, that's a serious development.
Yet, it's not the end of the financial universe. In fact, China's markets have a long history of growth and contraction.
From 1990 to 1992 they rose 629% and fell off 71% before a brilliant U-turn and another run up of 97% into early 1993. Then they took off on a brilliant run that saw the Shanghai index peak eight years later in June 2001 after it'd tacked on additional gains of 156% – staggering growth considering the gains it was already building off of.
The next run up will be, too.
About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.