Thursday, May 6, 2010


I have to confess with some other China OTC players that even the most undervalued stocks become cheaper every day. If you look today at prices you think that World War III has begun. Investors are worried that Greece's debt problems could spread to even China. Let me laugh....

How some markets are reacting is irrational. Irrational behaviour can indeed persist for long periods of time.

You would say that investing in Chinese OTC companies with low fundamental valuations is a hedge against most other asset classes and overvalued stocks but in this markets the market is right.

Despite what is happening today and the days to come the growth we see in Chinese undervalued stocks will support the EPS in the coming years and in the long run reward those who continue to own.

That said, in times of turmoil, you have to be willing to buy stocks that haven gotten crushed even when it means that the chance excists of being crushed more.

Of course we are still in the glowing halo of recovery and a lot of the recovery is priced in to the general market. But is that also the same for our Chinese OTC stocks. I disagree with the quote from a famous OTC trader: Bet the trend and take money off the table in the expectation that you will be able to pay less and get more in the future.

As a contrarian value investor I am standing firm and look to add to my positions. Well, that’s my game.

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