http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy How to Short the Chinese Economy After decades of impressive economic growth China’s economy is not only slowing down but may be in danger of collapse. The question one might ask is how to short the Chinese economy. Profit Confidential addresses the issue of a possible China economic collapse. The billionaire short seller, Jim Chanos, has often worried that China’s economic collapse is right around the corner. Last year’s stock market crash proved he may have a point, but how would we know when the economic collapse is here? He says China’s problems are eerily similar to what went wrong in the United States a few years ago: reckless banking activity helped create the conditions for a crash. “If we learned anything…during our crisis, it was you shouldn’t finance hard-to-value long-term esoteric real estate-related derivatives or securities with overnight money, which is what a lot of the investment banks ended up doing by ’07/’08,” he said. “They couldn’t move a bunch of the gunk on their balance sheet and increasingly they were financing themselves in the repo market.” Chinese banks apparently are holding $300 of debt for every $1 of equity. When this financial house of cards collapses it won’t be pretty. From an investment point of view how can we short the Chinese economy? What Is a Short? According to Investopedia short selling means you borrow money to sell stock with the expectation that you can buy the shares back at a lower price.

1. How to Short the Chinese Economy
By www.ProfitableInvestingTips.com

2. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
After decades of impressive
economic growth China’s
economy is not only slowing down
but may be in danger of collapse.

3. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
The question one might ask is how
to short the Chinese economy.

4. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
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Before We Continue…

5. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Profit Confidential addresses the
issue of a possible China
economic collapse.

6. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
The billionaire short seller, Jim
Chanos, has often worried that
China’s economic collapse is right
around the corner.

7. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Last year’s stock market crash
proved he may have a point, but
how would we know when the
economic collapse is here?

8. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
He says China’s problems are
eerily similar to what went wrong
in the United States a few years
ago:

9. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
reckless banking activity helped
create the conditions for a crash.

10. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
“If we learned anything…during
our crisis, it was you shouldn’t
finance hard-to-value long-term
esoteric real estate-related
derivatives or securities with
overnight money, which is what a
lot of the investment banks ended
up doing by ’07/’08,” he said.

11. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
“They couldn’t move a bunch of
the gunk on their balance sheet
and increasingly they were
financing themselves in the repo
market.”

12. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Chinese banks apparently are
holding $300 of debt for every $1
of equity.

13. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
When this financial house of cards
collapses it won’t be pretty.

14. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
From an investment point of view
how can we short the Chinese
economy?

15. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
What Is a Short?

16. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
According to Investopedia short
selling means you borrow money
to sell stock with the expectation
that you can buy the shares back
at a lower price.

17. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
When you short sell a stock, your
broker will lend it to you.

18. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
The stock will come from the
brokerage’s own inventory, from
another one of the firm’s
customers, or from another
brokerage firm.

19. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
The shares are sold and the
proceeds are credited to your
account.

20. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Sooner or later, you must “close”
the short by buying back the same
number of shares (called
covering) and returning them to
your broker.

21. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
If the price drops, you can buy
back the stock at the lower price
and make a profit on the
difference.

22. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
If the price of the stock rises, you
have to buy it back at the higher
price, and you lose money.

23. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
There are Chinese stocks listed as
ADRs on American exchanges
and Chinese stocks trading on the
Hong Kong stock exchange.

24. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Any of these that seem overpriced
might be choices to short as a
proxy for the Chinese economy.

25. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Other Proxies for the
Chinese Economy

26. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Nearby economies are perhaps
being hit worse than China by its
slowdown.

27. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Bloomberg says the deceleration
of China’s economy hits nearby
economies hardest.

28. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Those nearest to China are
among the hardest hit as growth in
the world’s second-largest
economy grinds to the slowest
pace in a quarter century.

29. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
Hong Kong, Macau, and Taiwan
all saw their economies shrink in
the first quarter, while Mongolia’s
commodities-fueled boom has
faltered. And the bad news doesn’t
stop there.

30. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
How to short the Chinese
economy most effectively may well
be to select a Taiwanese computer
chip manufacturer, a Macao
Casino operator or a Hong Kong
bank.

31. http://profitableinvestingtips.com/stock-investing/how-to-short-the-chinese-economy
As always do your own homework
before investing or before you
short the Chinese economy.