4 ms·

Serious question - how can a non sophisticated investor bet against the chinese economy?

by aresant 17y ago

api 17y ago
"The ability of markets to defy gravity exceeds your ability to short them."
- cynicalkane 17y ago
  So buy puts. =)
  - CamperBob 17y ago
    How does that help? Puts expire.
    - cynicalkane 17y ago
      Limited downside risk? You have to understand that when you bet on price movements, you're taking a risk. Options let you do that without risking more money than you want to. They don't solve the problem of having to guess market movements, but nothing will. They solve the problem of shorting being risky to your portfolio's health.
weezer 17y ago
One way is shorting exchange traded funds invested in Chinese companies like GXC. Another way would be to short companies dependent on China's economics growth, or companies highly valued for their Chinese branches like YUM (owns KFC, etc..). Jim Chanos in a Businessweek (http://www.businessweek.com/magazine/content/10_16/b4174010646611.htm?campaign_id=rss_topEmailedStories http://www.businessweek.com/magazine/content/10_16/b41740106...) interview recommends the following: "There are ways to play Chinese companies outside of China. Either they trade in Hong Kong or New York. Probably more important from an investment point of view, this has implications for the people selling stuff to China—cement, glass, copper, steel. "
soldarnal 17y ago
Probably the least sophisticated way is to buy shares in an inverse ETF. There are a couple bear market ETFs that target Chinese indexes (FXP and CZI). (I'm not endorsing anything here; please understand whatever you invest in before doing so.)
- DenisM 17y ago
  Don't buy any inverse ETFs until you understand the "inverse ETF decay" problem well. Serious stuff.
  - 3pt14159 17y ago
    This really cannot be said enough. I thought I had figured out a way to arbitrage the oil market sometime last year. Luckily I decided to "make the trades on paper" and see how it turned out before actually putting down ten grand. The devil is in the details, of course, and after watching what happened and fully reading the prospectus of the inverse oil ETF I realized what happened. Always READ THE PROSPECTUS if you are going to be using ETFs or anything else exotic. Again: READ. THE. PROSPECTUS.

Serious question - how can a non sophisticated investor bet against the chinese economy?

by aresant 17y ago

Serious question - how can a non sophisticated investor bet against the chinese economy?

api 17y ago

"The ability of markets to defy gravity exceeds your ability to short them."

cynicalkane 17y ago
So buy puts. =)
- CamperBob 17y ago
  How does that help? Puts expire.
  - cynicalkane 17y ago
    Limited downside risk? You have to understand that when you bet on price movements, you're taking a risk. Options let you do that without risking more money than you want to. They don't solve the problem of having to guess market movements, but nothing will. They solve the problem of shorting being risky to your portfolio's health.

weezer 17y ago

One way is shorting exchange traded funds invested in Chinese companies like GXC. Another way would be to short companies dependent on China's economics growth, or companies highly valued for their Chinese branches like YUM (owns KFC, etc..). Jim Chanos in a Businessweek (http://www.businessweek.com/magazine/content/10_16/b4174010646611.htm?campaign_id=rss_topEmailedStories http://www.businessweek.com/magazine/content/10_16/b41740106...) interview recommends the following: "There are ways to play Chinese companies outside of China. Either they trade in Hong Kong or New York. Probably more important from an investment point of view, this has implications for the people selling stuff to China—cement, glass, copper, steel. "

soldarnal 17y ago

Probably the least sophisticated way is to buy shares in an inverse ETF. There are a couple bear market ETFs that target Chinese indexes (FXP and CZI). (I'm not endorsing anything here; please understand whatever you invest in before doing so.)

DenisM 17y ago
Don't buy any inverse ETFs until you understand the "inverse ETF decay" problem well. Serious stuff.
- 3pt14159 17y ago
  This really cannot be said enough. I thought I had figured out a way to arbitrage the oil market sometime last year. Luckily I decided to "make the trades on paper" and see how it turned out before actually putting down ten grand. The devil is in the details, of course, and after watching what happened and fully reading the prospectus of the inverse oil ETF I realized what happened. Always READ THE PROSPECTUS if you are going to be using ETFs or anything else exotic. Again: READ. THE. PROSPECTUS.