Over the last few weeks a slew of articles detailed how wonderfully the Chinese stock market was performing and how the Chinese people from all walks of life were shifting their hard earned savings to speculate in the stock market. Today, Shanghai composite plunged 5.43%.
So much for that Santa Claus rally everyone was expecting. Yet, the main question remains. Is this the beginning of a larger sell-off or a simple correction? Here is one theory.
THE QUOTE: Hu Guopeng, an analyst at Founder Securities in Beijing, said the plunge in China’s stock markets was a “technical correction” linked to the uncertainty about credit availability created by the change in collateral requirements. It “does not mean the end of the market boom,” Hu said.
Perhaps. Yet, it is always a “technical correction” until it slowly turns into a 10%…..20%…..30%….etc….bear market correction. The bottom line is this. Investors should not guess or speculate on whether or not this is a technical correction. They should have a clear understanding that most worldwide markets are in a massive speculative bubble driven by imbeciles in power. A massive bubble that will eventually correct. If you would be interested in learning when, please Click Here.
