January 15, 2008 – stlplace

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Last Updated on January 16, 2008 by stlplace

What a day. I mean the stock market. Monday IBM gave us some good news. Today neither Citi nor Apple (and New Oriental if I may add) sent out re-assuring news, and the market (both Dow and Nasdaq) tanked…

These days I started to read the Buffett shareholder letters date back to year 1978.

I also found this talk “human mis-judgement” given by Charlie Munger, vice chairman of Berkshire Hathaway, to be enlightening. Two things I immediately connected with:

1) Association: He mentioned Coke is associating its product with Olympics etc. I think McDonald is another genius doing this. It gives all kinds of toys to the kids. So as Buffett’s own Geico Car insurance, did you see all these “stupid” ads on TV?

Geico = a cool car insurance company.

2) Frog is not as alert to a slow cooker compared to being put into hot water. I know I have similar problem. Take my loss on Longtop as an example, I did not sell when it dropped a little every day. Today I decided to sell some eventually because it dropped more (under $17 the IPO price).

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(source: creighton.edu)

China ADR crashed

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Last Updated on January 17, 2008 by stlplace

(Update) Halter US China Index closed down 7.89% and FXI down 7.55%. China Mobile (CHL), a major component of both index, is down 7.79% today.

FXI (FTSE Xinhua 25) dropped 7.23% as of now 11:27 AM US CST.

Halter US China Index (web site), which is more broad based Chinese ADRs traded in the US (although PetroChina, China Mobile has a bigger weight), dropped 7%.

And last but not least, trader818 China ADR index, dropped 8.4%.

Sounds a lot like the Feb 28, 2007, except the bear comes early this year. Although the general US market also dropped a lot, this Chinese drop seems a bit excessive. I unloaded some LFT today (yes I decided to take the bite, rather than hanging there dead). I think going forward small cap Chinese ADRs, especially newly listed IPOs, will perform wose than the large cap ones. Just like the “2-8” and “8-2” phenomena in China domestic market, when things are uncertain, stay with the big guys 🙂