(Financial) Predictions About China: Misleading Marketing Gimmicks vs. Meaningful Metrics


One of the main drawbacks associated with being an economist is represented by the fact that most individuals believe they know exactly what you do for a living (perhaps even that they could do it better, but that is an entirely different discussion) and when you ask them what that is, they present an extremely distorted perspective on what an economist actually does as well as should do.

In more than a few cases, observers who aren’t exactly economics-savvy end up simply believing that the “job” of an economist is to predict the future. As such, many of the questions I am personally asked end up invariably involving the word “when” and here are just a few examples:

WHEN will the next financial crisis start?

WHEN will China become the #1 economic superpower?

WHEN will the let’s say US stock market reach its peak?

WHEN, after the subsequent collapse, should I buy?

… the list could go on and on.

The ChinaFund.com team firmly believes that, right off the bat, it is vital to make it clear that an economist is not a clairvoyant and furthermore, those who claim to be just that are nothing more than liars or even downright scammers, who give the public what it WANTS so as to score popularity/marketing points, even if they know it’s not what the market NEEDS.

Time and time again, reckless economists choose the easy route by making bold predictions which essentially act as click/visibility bait and use the exposure they gain to attract unsuspecting clients. If those predictions pan out due to sheer luck, they are all of a sudden heroes in the eyes of their clients as well as potential clients. If not, no problem, they know the general public doesn’t tend to excel in the long-term memory department. As such, they simply lay low for a while and then approach the market with a new prediction as if nothing happened. Rinse and repeat.

We want to make it crystal-clear that the ChinaFund.com team is not here to make predictions. Instead, we are here to help our clients meaningfully “get” China from an economic perspective so that they can make their own decisions. At the end of the day, it is a dangerous misconception that to be good as an investor, you have to accurately predict the future. Nothing could be further from the truth. All it takes is:

  1. The ability and willingness to conduct thorough research/due diligence, something the ChinaFund.com team is here to help with
  2. The courage to assess probabilities (again, eliminate the word “certainties” from your vocabulary) and take action when an opportunity with a risk:reward ratio that is asymmetrically in your favor emerges
  3. The wisdom to understand that as asymmetrically in your favor as that risk:reward ratio may seem, it is still possible (even if not probable based on our models or your in-house models) for the market to turn against you
  4. The patience to play the long-term game and understand that if you apply and fine-tune a robust model over an extended period of time, you will most likely be far more generously rewarded than those who invest using more or less esoteric short-term models and give up the moment hiccups appear

Investing 101 and common sense 101 are interchangeable, whether we are referring to individuals who want to gain exposure to Chinese assets or investors who are interested in other asset classes. The more you let’s say stick around, the more obvious the cyclical nature of the entire game becomes. Fly-by-night pundits who try to gain exposure through sensationalistic predictions come and go, gullible investors who believe all it takes to be successful is following the right guru come and go as well (the so-called churn rate can be downright depressing, unfortunately) and the list could go on and on.

However, the proverbial Lindy effect ends up working in favor of those who embrace a longer-term perspective which revolves around sustainability rather than proverbially chasing a quick and/or easy buck. In other words, the previously mentioned economic common sense inevitably ends up representing a common denominator you cannot help but identify when studying market participants who stood the test of time.

ChinaFund.com “brands” itself as just that: a team of experts that passes the test of time, an entity with a hands-on experience in China of over 12 years and an equally impressive multi-jurisdiction track record. You won’t find our names associated with flamboyant predictions, just as you won’t find an artificial sense of urgency associated with our articles. We are not here to shock, we are not here to do whatever it takes to obtain attention.

Instead, we simply put the most objective analysis we can on the table each and every day, being honest with clients with respect to what we can as well as cannot do. Should you be interested in what we have to offer, visit our website’s Consulting section or if you already have a few questions that you would like to ask us in mind, you can send us a message through ChinaFund.com’s Contact section. Alternatively, if you prefer a more adrenaline-rich experience and believe quick-fix solutions are the key to sustainable success, feel free to work with one of our many more eccentric competitors first and once those strategies fail and the entities in question evaporate, we will be right here.