A) 28x money, for the communist party members, who were the only people allowed and only people who could afford to buy into the SEE in 1991. since 1993, the SSE has greatly underperformed virtually every other major benchmark.
B) you can’t say the SSE is better because of its 24 year track record when its 22 year track record sucks. you are basically inferring that the SSE is awesome because of strong performance in a 2 year period. thus cherrypicking.
This would be like saying Groupon is an amazing stock because of its amazing track record between 2008-2011 because it started with a value of $0 and ended with a value of $15B and a couple of guys got rich. infinite returns!!! and oh forget about the crappy performance between 2011 and 2015 that was experienced by millions of people. its still awesome.
Do you not have a Bloomberg, or even a Yahoo Charts connection? Perhaps you would like to share your calculations with the class? I would like to see your funky math please.
in order to not misrepresent returns, the only period that should be included is the period in which foreign investors could invest in the SSE, which results in too short a period to make any conclusions. i’m unsure when institutional foreign investors were able to invest in the SSE but i think it wasn’t too long ago.
if you use past data, it comes with a massive chunk of salt, and that data should be highly scrutinized. since the period of 1991-1993 saw a retarded gain for only a select few investors as the market was basically private at that time, clearly that period’s return is not representative of what foreign investors could ever expect so it should be excluded.
I already posted reproducible returns, correct down to the decimal. You make up some random numbers, get called out on it, accuse others of making up numbers, get called out again, then back down. Are you like 12? How do you work in the investment industry??
simply choose returns from 1993-2015. 1600-3700 in 22 years. crap. even if you chose 1995-2015, crap returns.
i’m not sure why you’re so adamant to prove that the SSE has good past returns. it did not. who cares? maybe its returns will be good in the future. probably not in the near term but at the right starting valuation, of course investors should expect decent returns. if china can engineer a careful transition to democratic rule and a far more advanced market economy, i would expect china to be near the top in terms of stock market performance. but as to whether foreign investors could’ve done well in China’s stock markets relative to other markets since the mid- to late-90s when institutions started having access to the SSE, the answer is no, they would’ve underperformed meaningfully and with extreme volatility. just because you’re invested in the market you don’t have to fudge performance and valuations to make a case for investment.
thing is though. every investor is different. some cant afford to buy and hold, they have liquidity requirements. also most investors buy and sell at the worst times. institional managemnt is bad already, retail is even worse. thats y diversification is key especially when they have low or the rare negative correlations. plus some have fidicuiary duties, and when a market has a terrible reputation, they arent even allowed to invest there.
and again if you look at small cap value returns, its even greater. about 35X in same time period. their standard deviation is ~same. which is why i juss dump everything there. haha cuz i dont have a lot of wealth but i got a lot of income over time. but for ppl with a lot of wealth and dependent on stock income. it dont make sense cuz the downside risk is too huge.
The whole argument is flawed. If I can’t buy it, it doesn’t matter what the returns were.
However, going forward… my money’s on China. It’s obvious they’re the next big thing and if this whole Chinese equity bubble popping thing grows legs, im going long, really really long.
I’ve never run the data on China but one thing I do know is if you look back at the Russell 2000 Value from 1980, it has compounded at cumulative returns of about 6,850% from 1980 - 6/2015. On a risk-adjusted basis, I don’t know what you could own at scale (hundreds of millions of AUM) that’s legal that would do better than that over long periods of time. Even if China or some other emerging market were somewhat higher (which I doubt, someone run it and prove me wrong), I’d still much rather be invested in the US for risk control.
R2K goes back to 1972 but I don’t have the data. Probably the 70s sucked for US equities in general though.
I worked for someone who achieved a 140,000% (not a typo) return over about 20 years using an R2K Value strategy. It was off a small initial asset base, but still, that’s ridiculous. Long R2K Value, short everything else (conceptually).
It doesn’t matter what time period you take, using any reasonable time period CN blows away US equity returns. And yes studying history is relevant, regardless of investability, because now it is investable and you should be looking at it and studying past returns. That it is now investible is one reason why it will be exploding with capital inflows over the next decades. Here are returns, yet again, China absolutely destroys everyone. And this is historic, going forward US vs CN isn’t even a contest. Anyone with a brain knows base case = CN winner.
Since nobody can use a calculator I’ll do the embarrassing thing of showing you…
Shanghai price return from inception (July 15 1991 to July 15 2015)
Name, Open, Close, Change
Shanghai Comp : 133.14, 3805.70, 2758%
S&P500 : 380.28, 2107.40, 454%
Nasdaq Comp : 493.64, 5098.94, 933%
Russell 2000 : 170.04, 1264.52, 644%
Looks like you guys have a lot of explaining / rationalizing to do.
Anyone with an internet connection can verify prices here.
Posted numbers were calculated from starting and ending values for the longest date range comparison possible, they are reproducible. You can not do division, ending/beginning, and use exponents to calc TVM?
LOL @ “reknowned website”, let’s see the math kid.
Good, you are an embarassment to the profession. Gain some objectivity, stop posting random biased junk, back up your posts with reproduciable math. Tips for the future kiddo!
The market dynamics of the Shanghai are drastically different now that it’s ‘open’ to international investors. Could easy argue that the market went from way undervalued to overvalued within 12-months since opening up the market to foreign capital.
Not saying it’s not a good buy at some point soon but it’s not as easy as saying the cumulative equity returns from XYZ period (before foreign captial) are Y so future returns should be some scale of Y. It’ll be a different flavor of returns for sure, i’ll bet on that.
EDIT: To add, I think the Shanghai will outperform other benchmarks just not as the same scale as before
Looks good to me. You get the best rule of law, the most upside, and the least downside of any equity strategy in the world. I’ll take two.
The interesting thing about this which I know intuitively but have not run the data for is the dispersion underlying that number is large. Probably even “mediocre” R2K value did well. If you could find the gems in the pile though you would have done much better with even lower risk. Easier said than done, but it’s there.
You guys aren’t even capable of understanding simple price returns, you think you will be able to understand/reproduce if I include dividends? You think the result will be different with dividends? If you do, we come back to the fact that most of you can’t do basic math.
Dividends are currently around 2% for both US & CN. Find a common source, that has 24yr data for both CN/US (like a bloomberg terminal), post numbers. If you can not do so, shut up.
Cherry picking to support biases. Not apples to apples, for all we know China small cap is like 18,000% return, their investors prefer small cap (see ChiNext 77X valuation vs ChinaA50 12X).
