Categories
Investing Shanghai Composite

Bottom fishing time?

Reading Time: 2 minutes

Yesterday was another brutal day in the Wall Street, or the Bay Street (Toronto), or SSE (Shanghai Securities Exchange). According to the number, the Dow is now officially in bear territory. General Motor (NYSE:GM), a Dow component and an American icon, hit 53 years low. It closed at $11.43. So, should we go bottom fishing?

I am not a market timer, nor do I like to predict the market trend. But I noticed another interesting article from my friend Wang Jianshuo’s blog: Stock Market Big Drop. Note Jianshuo is not into stock market, a rare type in Shanghai. In other words, when people like Jianshuo started to pay attention to the market, things are either really good or bad (noteworthy). So, the 1 million dollar question: should we go bottom fishing? My answer is be careful, because if we don’t we will catch some falling knives instead 🙁

Some ideas for bottom fishing

Buffett’s low PE stocks (source: GuruFocus): the stock holding of Buffett. The assumption here is Buffett holds good stocks. When we bottom fishing, make sure we got quality names. A related idea is Berkshire Hathaway itself , I just noticed NYSE:BRK.B is about $4,000 a piece.

China A share is more tricky, due to many reasons. But I think those listed both in Hongkong and Shanghai are worth to take a look. Traditionally A share has 30% premium over H share. One would think that’s unthinkable but it’s a reality. Now the A H price gap is closing fast. I use this table (author: oror) to compare the price. The assumption here is H share is priced rationally. This is a reasonable assumption because Hongkong stock exchange is open to the whole world (efficient market).

PS, I won’t try to catch the RIM now. I am hope it drop more (at PE of 40) before pull my trigger. I would not look into any US financial except WFC (buffett holding).

Leave a Reply

Your email address will not be published. Required fields are marked *