The Hong Kong China index was in the vice like grip of panic selling yesterday.
It closed 7.2% down, the biggest drop since November 2008.
The index is now down 28% in one month and a whopping 45% in one year.
Contrast this with the Sensex which despite recent volatility is still up 12% over a 1-year period.
Now, here's some data that will really shake you to the core.
Since its inception in December 1992, the MSCI China index has returned just 1.5% per annum in USD terms.
If you include fees, taxes etc., the returns could come to almost zero.
Yes, that's correct.
The stock market of the fastest growing economy, an economic miracle of the current century, has given almost zero returns over a period as long as 30 years.
Here's the chart for a quick overview.
Is this crisis an opportunity by the way?
Charlie Munger definitely likes to think so.
He made his love for the Chinese economy and its dominant stocks loud and clear at the recently held AGM of Daily Journal Corporation, a firm where he is the Chairman.
Here's what he is believed to have said.
There's an important investing lesson here. The future is always going to be unclear. So, do your homework, ensure that the underlying stocks is of good quality and buy it with an enough margin of safety.
It doesn't matter what others think. If the stock ticks both the quantitative as well as qualitative boxes, go ahead and take the plunge without worrying about the popular opinion out there.
For Munger, his Chinese investments of BYD and Alibaba ticked these boxes and he is also confident of the Chinese economy doing well going forward. This is all that matters to him.
By the way, I shared this update on my Telegram channel earlier today.
If you're interested in ideas that can potentially accelerate your profits, don't get left behind. Join my telegram channel...
You'll get access to the best ideas on how to spot accelerated profit opportunities in this market.
Happy Investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...
Rahul Shah co-head of research at Equitymaster is the editor of (Research Analyst), Editor, Microcap Millionaires, Exponential Profits, Double Income, Midcap Value Alert and Momentum Profits. Rahul has over 20 years of experience in financial markets as an analyst and editor. Rahul first joined Equitymaster as a Research Analyst, fresh out of university in 2003 but left shortly after to pursue his dream job with a Swiss investment bank. However, he quickly became disillusioned working for the 'financial establishment'. He learned first-hand the greedy stereotype of an investment banker is true and became uncomfortable working for a company that put profit above everything else. In 2006, Rahul re-joined Equitymas ter to serve honest, hardworking Indians like his father, who want to take control of their financial future - and not leave it in the hands of greedy money managers. Following the investment principles of Benjamin Graham (the bestselling author of The Intelligent Investor) and Warren Buffet (considered the world's greatest living investor), Rahul has recommended some of the biggest winners in Equitymaster's history.
Equitymaster requests your view! Post a comment on "An Investing Lesson from China's Stock Market Meltdown". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!