Chna Rally to Be Expected
If China's stock market continues to rally this week - and beyond - don't be surprised. Not only has the Chinese government pulled out all the stops, but now, apparently, certain "famous" investors - for example, a certain Jon Carnes - have joined the effort to bolster Chinese stocks:
Now, I don't know this guy Carnes. So maybe my story doesn't capture what he's up to. But I've known other like him who - if they could - would proceed as described in a heartbeat. On the other hand, maybe you buy Carnes' "expert analysis." If so, you'll likely agree with this:
On the other hand, his referring to those who "missed out" and calling the bounce a huge buying opportunity does go beyond the pale if he's manipulating these folks to enrich himself. But that's what skilled traders, speculators, and manipulators do. Caveat emptor!
The stock market’s surge to a seven-year high in June caught most Chinese investors by surprise, and they’re determined not to miss the next buying opportunity. In a country where household wealth surged to an estimated $21 trillion last year, less than 10 percent of the population is invested in equities.One can't help but wonder whether Mr. Carnes, a stock speculator, might not be playing with the lives and fortunes of ordinary Chinese in order to line his own pockets. According to this article on Bloomberg, the man has notoriously shorted Chinese stocks in the past. So what's made him do a 180? We suspect he's no fool and knows that after a violent drop, a strong bounce back typically follows. If the man has shorted before, he must know the snap back will create long (buying) opportunities - for a spell. A true trader, with access to the media, he can simply put out his story - as an "expert" - and hope that enough suckers drink the kool-aid and jump back into China's stock market. If he's positioned himself ahead of the surge, he'll likely clean up on the long side, having already cleaned up on the short side. At which point, the rug will be pulled out from under those suckers, as men like Carnes take their long profits and switch to the short side.
“A lot of people missed out on the bull market,” Carnes said by phone from his office in Vancouver. “This violent correction is a huge buying opportunity for them.”
Now, I don't know this guy Carnes. So maybe my story doesn't capture what he's up to. But I've known other like him who - if they could - would proceed as described in a heartbeat. On the other hand, maybe you buy Carnes' "expert analysis." If so, you'll likely agree with this:
“There’s tons and tons of money in China, and that money has to go someplace,” Carnes said. “I don’t think giant bull markets like this end that quickly.”If you buy this, you'll likely disagree with our last post on China. You'll ignore the signs that China's intensifying credit crisis will drive - more accurately is already driving - their economy into the dumpster. Then again, when we read Carnes' last comment, we realize he might simply be saying that the end of the bull may be a few more months in coming. After all, if it's not unheard of for a plunge to be followed by a bounce, then this slick dude may simply be describing that bounce, knowing all along that the next leg down lies just beyond the horizon. And maybe the guy is skilled enough to play these short-term trends and clean up.
On the other hand, his referring to those who "missed out" and calling the bounce a huge buying opportunity does go beyond the pale if he's manipulating these folks to enrich himself. But that's what skilled traders, speculators, and manipulators do. Caveat emptor!
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