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Reasons to Open a Chinese Bank Account

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Re: Reasons to Open a Chinese Bank Account

#91

Post by garply »

brianobush wrote: post #86
poutine wrote: post #81

Earlier quoted context omitted.

Well run? You've obviously never been to China.

Why would you need to visit China to have an opinion that could be arrived at by looking at financials - a common practice in measuring success. Just look at a portfolio of large Chinese companies - they are doing well, thus I would also hypothesize that they are well-run companies.

The numerical data to which you have access is not necessarily accurate. Corruption, bribery, fabricated numerical data are par for the course here.

He was talking about China as a country and as an economy. If you come and visit, it is immediately obvious that there are problems.

Re: Reasons to Open a Chinese Bank Account

#92

Post by geekinthecorner »

brianobush wrote: post #86
poutine wrote: post #81

Earlier quoted context omitted.

Well run? You've obviously never been to China.

Why would you need to visit China to have an opinion that could be arrived at by looking at financials - a common practice in measuring success. Just look at a portfolio of large Chinese companies - they are doing well, thus I would also hypothesize that they are well-run companies.

Slave labor is cheap, of course they do well.

Re: Reasons to Open a Chinese Bank Account

#93

Post by rtghnthyjnm »

gaius wrote: post #82
rtghnthyjnm wrote: post #77

Earlier quoted context omitted.

You can if every thing they want to buy is made in your country. The US can't half the value of the dollar to boost exports because everything in Walmart that is made in China will double in price. China can because everything it's people want to buy in GreatWall-Mart is already made in china. As long as the government steps in to subsidize imported fuel the people wouldn't notice as long as they didn't travel - and…

Fuel is needed for all sorts of industrial activity too, including farming.

But I suspect less so in china than the US. I doubt that a major part of the Chinese diet is exotic fruit flown half way around the world out of season.

China does have oil reserves and could always 'spread democracy' to some 3rd world country if it needed more.

Re: Reasons to Open a Chinese Bank Account

#94

Post by borism »

yummyfajitas wrote: post #90
borism wrote: post #88

Earlier quoted context omitted.

China, not the Fed, has ultimate control over their monetary policy. sure, but since 1994 they haven't really exercised that ultimate control: http://en.wikipedia.org/wiki/File:1_RMB_to_US_dollar.svg and despite all promises to the contrary last year, they are still not exercising it to any substantial extent: http://www.google.com/finance?q=NYSE:CYB

If the Chinese keep up their peg, holding RMB is equivalent to holding dollars. If they fail to maintain the peg, the RMB will most likely rise. Most US consumers are already exposed to the downside of this risk - they have expenses which will rise if the RMB goes up (e.g., all the goods they purchase which are made in China). Holding RMB is a hedge against this.

Tell me more about it :)

I myself have a Long Straddle on CYB since some time last year, betting that it moves in either direction.

Let's just say hoping to make guaranteed profit cause chinese promised it isn't such a great strategy :)

They have 1 week more to move though, just in time for Paramount Leader's visit to D.C.

Re: Reasons to Open a Chinese Bank Account

#95

Post by jhamburger »

grandalf wrote: post #68
nkurz wrote: post #63

Earlier quoted context omitted.

Over time, odds are this stock will do poorly compared to if he'd had a more diversified portfolio. How are you calculating these odds? I'd naively assume that the average performance would be the same but the volatility would be much higher. Dollar cost average into it and you reduce this somewhat. I've never really understood the magic of diversity either, unless it's just to insulate against risk of ruin.

Just look at the top stocks 30 years ago and see which ones are still in business today, and of those which have beaten the market average. No stock will outperform the market over the long term. Nor will any mutual fund! For medium time horizons it's not impossible but exceedingly unlikely. For short time horizons it's still not remotely easy for firms to accomplish, and many do not.

> No stock will outperform the market over the long term.

So all stocks are below average...Sort of a reverse Lake Wobegon effect?

Re: Reasons to Open a Chinese Bank Account

#96

Post by nkurz »

grandalf wrote: post #68
nkurz wrote: post #63

Earlier quoted context omitted.

Over time, odds are this stock will do poorly compared to if he'd had a more diversified portfolio. How are you calculating these odds? I'd naively assume that the average performance would be the same but the volatility would be much higher. Dollar cost average into it and you reduce this somewhat. I've never really understood the magic of diversity either, unless it's just to insulate against risk of ruin.

Just look at the top stocks 30 years ago and see which ones are still in business today, and of those which have beaten the market average. No stock will outperform the market over the long term. Nor will any mutual fund! For medium time horizons it's not impossible but exceedingly unlikely. For short time horizons it's still not remotely easy for firms to accomplish, and many do not.

This is a disappointing answer. Yes, most firms don't manage to beat the market average. The apparent answer would be that about half of them do, probably slightly fewer due to occasional runaway successes.

What you seem to be saying is that there is a complex system guaranteed to beat the expected return of buying and holding a single stock. I don't see how this can be true, although it's certainly possible that the lower volatility is preferable enough to offset the slightly greater costs.

Do you really believe that it is 'exceedingly unlikely' that a firm would exceed the market average for a 15 year period? I haven't done research into this, so I'm happy to learn. Instinctively, it would be a pretty frequent occurrence.

Are you saying that more than 95%[1] of the individual underlying stocks held by a major index fund will underperform the market over a 15 year period? If yes, how can this be? If not, what are you saying? Are you a betting man?

[1] "Extremely Unlikely" is typically defined as a less than 5% chance. Here's an example: http://www.ipcc.ch/publications_and_data/ar4/wg1/en/ch1s1-6....

Re: Reasons to Open a Chinese Bank Account

#98

Post by grandalf »

jhamburger wrote: post #95
grandalf wrote: post #68

Earlier quoted context omitted.

Just look at the top stocks 30 years ago and see which ones are still in business today, and of those which have beaten the market average. No stock will outperform the market over the long term. Nor will any mutual fund! For medium time horizons it's not impossible but exceedingly unlikely. For short time horizons it's still not remotely easy for firms to accomplish, and many do not.

> No stock will outperform the market over the long term. So all stocks are below average...Sort of a reverse Lake Wobegon effect?

I suppose it's possible for a company to exist indefinitely, but how many companies that existed 1000 years ago exist today?

Re: Reasons to Open a Chinese Bank Account

#99

Post by grandalf »

nkurz wrote: post #96
grandalf wrote: post #68

Earlier quoted context omitted.

Just look at the top stocks 30 years ago and see which ones are still in business today, and of those which have beaten the market average. No stock will outperform the market over the long term. Nor will any mutual fund! For medium time horizons it's not impossible but exceedingly unlikely. For short time horizons it's still not remotely easy for firms to accomplish, and many do not.

This is a disappointing answer. Yes, most firms don't manage to beat the market average. The apparent answer would be that about half of them do, probably slightly fewer due to occasional runaway successes. What you seem to be saying is that there is a complex system guaranteed to beat the expected return of buying and holding a single stock. I don't see how this can be true, although it's certainly possible that the…

I realize that my comment was a bit imprecise.

Surely some firms will do better than average, it's just that humans are notoriously bad at anticipating which firms those will be, hence the superior performance of index funds compared to managed mutual funds over the long term.

Re: Reasons to Open a Chinese Bank Account

#100

Post by joe_the_user »

emptyhanded wrote: post #2

Good rundown in article. We were discussing this last night in the freenode #startups IRC channel ;) The rumor is that the $20K per year investment cap is limited only to individuals and not institutional investors and funds. Furthermore, if there is massive demand, it is expected that those caps will be raised. What is unclear is how your yuan can be used to make investments in China itself?

Why would the Chinese lift the cap for institutional investors? They would be the ones that would try to use the Yuan at some point. With a 20K cap, it's more like a novelty than a real investment.

It seems unlikely the Chinese have a need for many dollars flowing to them. I mean, look how many they have - unless something truly weird is going on...

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