August 4, 2015

Chinese Farmer loses his savings in stock market

This e-mail is making the rounds today:

    "Watch this truly amazing video on CNBC this morning showing how out-of-control the China stock bubble became and how early it may be into the crash. Chinese farmer puts $164k savings into China stock market, following the Gov'ts lead last year. The broker gives him ONE MILLION DOLLARS in margin credit; a Third World farmer levered (some) 6x in high-risk stocks. He bet it all on one China mining company, (but) the market fell ... and now he OWES the broker (for a) margin call."

This story is likely not the exception in China from this market crash.

All day long on financial TV, people say "but the China market is still up 15% this year. That's great." This ignorant assumption means somebody had to buy the broad index on Jan. 1 and hold until today. Few do that. Most buy on the way up and double-down at the top.

The small percentage of people who did make a fortune in the Chinese stock bubble over the past 18 months have been driving up house prices on the U.S. West Coast. They often don't care about anything but winning a bidding war, and they probably don't even know the meaning of the term "comparable-sale price."

After watching this video, one can easily believe that this is just the beginning of the Chinese crash.