With so much uncertainty about the U.S. markets today, it’s perhaps easy to get tempted by markets abroad. But what’s the reality of investing in China?
While China seems like a “hot” place to put your money, the first thing we have to do here is take a reality check.
As Bert Whitehead points out, China represents a high level of investment risk once we get past the hype.
The country suffers from high levels of inflation (up to 20% to 25% in urban areas) and social unrest is a growing worry.
Most importantly, though, China does not have the infrastructure and market discipline of developed countries like the U.S.
It’s possible for the government to nationalize any company it wishes at any time and there is no guarantee that the stocks you’ve bought will be safe.
So best to stick with Warren Buffet’s advice: don’t lose money by chasing high yields.
It often turns out to be fool’s gold in the long run.