China’s Luck is About to Run Out
15 'Bargain' Stocks About to Go Bust
According to the Chinese zodiac, 2011 will be the “Year of the Rabbit,” which is considered to be a lucky sign. But I think China’s luck is about to run out, and I’m not the only one who sees the writing on the wall.
A surprise interest rate hike from China’s central bank over the weekend sent U.S. stocks lower, but this was really just window-dressing. Chinese banks have unspeakably conflicted relationships with their big borrowers, and small increases in interest rates will not slow down underlying speculative fever. Chinese land developers and industrialists are now engaged in financial musical chairs — they will keep borrowing to grow until they absolutely, positively cannot borrow any more, assuming someone else will get left standing without a chair. Well, the U.S. financial crisis began when Bear Stearns found itself without a chair.
So despite what you hear from the China bulls out there — and there are plenty of them — 2011 will not be the “Year of China” for investors … unless they plan on shorting China stocks and ETFs, that is. Here are five reasons traders should bet against China in 2011:
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