A few things that are occurring now are very similar to Japan in the late 1980s. Now China has 4 of the world top 10 largest banks, which is similar to Japan in the 1980s when it has 4-5 of the world top 10 companies. China GDP is about 8% of the world GDP. USA economy represent 25% of the world GDP and yet it did not dominate the top 5 of the world largest banks.
If I did not recall wrongly, Japan was buying many real estate and businesses in the US in the 1980s. They bought so many things that Americans are worried the Japanese will buy half the real estate in USA. Now, China is buying things all over the world. News reported that China customers are so rich that they walked in the showflat in Sentosa and open up a few luggages full of money to purchase these expensive waterfront houses.
It turned out that the Japanese overstretched themselves and slipped into a deep recession that lasted for 10 years. I wondered if history will repeat itself again. Will China economy take a nosedive? No countries has been spared a recession. I guess China will go into one as well. We just have to be patient and observe.
Thursday, July 22, 2010
Demise of penny stocks?
I read with interest on an article on the lack of interest in penny stocks by investors. A stockbroker interviewed swore that he will never touch penny stocks again as he has been burnt till all his fingernails are gone. He even vowed that he will tell his children never to buy penny stocks. I laughed at his funny remarks and remained optimistic about penny stocks.
Currently, I hold 2 penny stocks called Lee metal and AEI. Both have good track record and the management has done well for shareholders even in this 2008 credit crisis. For Lee metal, the company has been paying dividend for the past 5 years and the last dividend payout has even increased in this crisis. This speaks volume about the strength of the management. The lack of interest in penny stocks may be a good thing for us, as we can accumulate at reasonable prices. I am confident the management of these two companies is above mediocre and will continue to do well as proven in the recent crisis.
Currently, I hold 2 penny stocks called Lee metal and AEI. Both have good track record and the management has done well for shareholders even in this 2008 credit crisis. For Lee metal, the company has been paying dividend for the past 5 years and the last dividend payout has even increased in this crisis. This speaks volume about the strength of the management. The lack of interest in penny stocks may be a good thing for us, as we can accumulate at reasonable prices. I am confident the management of these two companies is above mediocre and will continue to do well as proven in the recent crisis.
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