Predictions of China's growth by the Christmas tree

I have often found that some of the best information comes from the least expected places. For example I recently was at a Christmas party for a top NYC law firm. One of the people I met was a trader who specializes in Southeast Asia.

This trader believes that Japan, China, and Australia will all be exceptional areas of growth throughout the next 5 years. China is his personal favorite. I paraphrase…

“China has the sheer manpower that will help it outperform. In many ways it is similar to Japan of the 1950’s.”

It is hard to argue that point. Especially since the $5 billion 9.9% stake in Morgan Stanley was made December 19th. This positioning and the $29 billion Chinese buyers spent buying outside companies signal a long-term plan by China to integrate with the world markets in a more direct manner.

There is no question that the manpower resources available to Chinese corporations are a unique resource few nations can match. Add the previously stated investments and time, and you get growth and stocks that can surge longer and stronger than even in the last Chinese bull market.

But there are serious negatives. The Chinese stock market is hardly as transparent as many might wish. The latest bull has very recently reversed into a solid bear market. That transition occurring in an amazingly rapid month. And of course the communist nature of the Chinese Government adds political issues; some of which are known, some unknown, and 1 thing is assured – volatility.

There is no lack of investors that agree with the abovementioned trader I met. In fact I agree with reservations. While I am perhaps more cautious than Warren Buffett, China is a market that demands attention. The only question is the one most vital to all investors.

When is the right time to get in and out?