Have Chinese companies become the next BIG SHORT! June 6, 2011Posted by advocacybz in Uncategorized.
The Sky is falling Brigade has certainly done a job on Chinese US listed and now Toronto Listed companies. The research rags that make a living creating short campaigns have single handedly destroyed several China based concerns. As an investor it doesn’t really matter whether there is any truth in the research and accusations as either way the results are same. Panic leads to selling and selling leads to millions of dollars in short campaigns. Much like yelling FIRE in a crowded auditorium, the results are imbedded in a form of psychological warfare. Panic is uncomfortable in the investor behavior dynamic. It is an undeniable trigger and the short campaigns play on this fear and obtain very predicatable results. So investors will not only flee from the stock being targeted they will ultimately decide to flee from the entire universe of stocks. If Chinese based US listed companies can simply be accused of malfeasance in any format with the the intentions of shorting the stocks why would any prudent investor take the additional underlying risk? It follows that perception is always the main ingredient and certainly the perception now is that Chinese companies are tainted. Sadly this hits an entire universe of global investment opportunity. Sure the storm should weather, but how long will the dark clouds be in the sky? That’s the big money question.