Investing in Chinese Stocks: it’s the “Wild East” out there, and like the Wild West, the boldest and the bravest get the gold, everyone else, head back West

Finance in China can be a chaotic and volatile scene as far as stocks are concerned. Like any chaotic and volatile sector of the economy, aggressive investors see a river full of gold, and it should be a place to start panning.

Stansberry Research Analyst Steve Sjuggerud has issued a fair warning, however: investing in China is not for the faint of heart. As he writes in Stansberry Research periodical True Wealth China, “our model portfolio holdings are volatile. That’s just the nature of investing in China…if the downturn in our China-related stocks [in January 2018] kept you awake at night, you’re doing something wrong.”

What he means is investing in China is a high-risk, high-reward venture. After all, it reflects much of China’s economic situation in the last few decades- it went from an impoverished, war-torn nation to an economy almost as large as that of the U.S. Likewise, Sjuggerud himself has observed that in sharp contrast to Chinese Stocks’ weak overall performance in January, a significant number of Chinese stocks he himself has investigated have seen 100% returns just in the last year alone. Sjuggerud also cites another example: the Shanghai Stock Exchange Composite Index saw a five-fold increase in value between 2005 to 2007, only to lose 66% of it by 2008.

Stansberry Research has provided similar commentary on its studies on commodities. Much like the commodities industries, China’s finance sector experiences dramatic “booms” and “busts”. Sjuggerud concludes that investing in China is a tremendous opportunity, but if you are not brave enough to weather such chaotic storms, either sell off enough stock until you are comfortable with your commitment, or re-think your investment strategy with a more ambitious goal in mind. In an economy like China’s, such a mindset is a must (Gazetteday).

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