Why is the long term view so hard for pundits to understand? Maybe because they need a story today, not one that may take years or decades to play out.
So much as been documented about China’s empty cities.
Rational market investors may conclude that they’ve artificially experienced economic expansion. They have several cities that are often referred to as ghost towns.
A list can be found here.
Wall Street by in large ignores these types of obscure and inconsequential, inconvenient facts. After all, you can’t have a “China” mutual fund or ETF or Equity Analyst focused on Chinese companies, while at the same time publish a report showing nobody’s home.
Equally rational investors may conclude that leadership in China is far more forward thinking then given credit for. They may be showing the world their 40 year plan. In fact, they may believe that it’s only a matter of time before both the European and US financial system will experience the reset most believe is behind us.
These long term thinkers may believe that some day, the Yuan may be the worlds reserve currency. Maybe there will be no need for a reserve currency. It’s entirely possible that China will become the next world super power both economically and militarily. After all, in the history of civilization, has there ever been any super power that hasn’t imploded, was over thrown, or simply not feared or respected any longer. Until today, yes. By enlarge the United States has held that role since the emergence from WWII. Yes, it’s arguable on all fronts.
Maybe the world is changing. Maybe nobody knows what the world may look like in 40 or 50 years. The Chinese are preparing for what they envision.
What are we doing?
Why do I bring this up and how does it relate to the markets, swing trading, technical analysis and all the rest?
While it may not be profitable today to look at the very long term view of a country’s chart, but sometimes for no other reason than it’s interesting to know stuff. China’s long term picture does tell a story. The Shanghai index can make a double bottom low and spend the next several decades climbing to record highs. That would only come with an economic boom to the likes we haven’t seen from China….yet.
So, it’s very possible that upon the next major global market correction, China and other Asian nations such as India, Korea and more emerge as the next global financial capital and economic powerhouse.
While it’s hard for those living in a country and a point in time where most have never seen otherwise in the United States, it just seems reasonable to understand what’s possible. If for nothing else to eliminate the element of surprise.
So in my spare time, I’ll begin compiling a list of Chinese stocks on the Shanghai index that we may be trading in the decades to come.
I like to be prepared.
For an interesting account if what’s going on over there, check out the video below.