Should you invest in China's stock market? Know this one thing first.
Despite incredible economic growth, it is not necessarily an investor's paradise.
Weijian Shan: 10 years ago I would say that the Chinese economy didn't really matter to American consumers and to American market. But as you saw, when Apple made this announcement, then their stock dropped 10%. The broad market came down about 3%. There used to be a saying in 1980s that when America coughs, the rest of the world catches cold. And today it seems to me that when China sneezes, that the rest of the world at least coughs. So it's relevant and it's important, and therefore it's important to understand it.
I think understanding its most recent history, as I explained in my book, Out of the Gobi, will be useful. You wouldn't want to get into a market without knowing anything about it. What is the most deceiving thing about China is that growth doesn't necessarily translate into profitability. If you look at the Chinese stock market, which started around 1992-- so by now we're talking about 27 years, right? And in that 27 years, China's economy has grown-- can you guess by how much? It has grown by 30 times in nominal terms. 30 times in 27 years. If you had invested in China's stock market from very beginning, 1992, and you have held your investment for all this years, never got out, during which the economy has grown by 30 times, how much money do you think you would have made as an investor? You will have lost money, right?
People would ask why that is the case. Now there is not a strong correlation between the stock market and economic performance at any given moment. However, over a long period of time, let's say 20 years, in every country there is positive correlation between economic growth and stock market performance. And China is a single exception.
You know, I've heard some investors telling me-- we're in the investment business. We are in private equity business, so we have many investors who trust us with their money to invest in Asia, particularly in China. They say well, China now is second largest economy in the world, America is the largest, and I allocate 40% of my capital to America, I should allocate at least 30% to China just by the sheer size of the economy. And I would tell them a story about how China has grown the past 20 some years and how the stock market would actually give them a negative return. And then you look into the question-- why that is the case? It has to do with China's economic growth model driven so much by investments. And therefore, yes, earnings have been growing in aggregate in China. But the capital base with which you produce the earnings has been growing even faster, because China has invested so much and therefore ROE, or return on capital, may be falling.
If you don't understand it, if you invest just in economic growth, you will understand that there is a bad economy with a lot of overcapacity, and there is a good economy which is actually growing, then you're bound to make mistakes.
- China's stock market is just 27 years old. It's economy has grown 30x over that time.
- Imagine if you had invested early and gotten in on the ground floor.
- Actually, you would have lost money. Here's how that's possible.
Dominique Crenn, the only female chef in America with three Michelin stars, joins Big Think Live this Thursday at 1pm ET.
Scientists have found evidence of hot springs near sites where ancient hominids settled, long before the control of fire.
Finances can be a stressor, regardless of tax bracket. Here are tips for making better money decisions.
- Whether you have a lot of money or a lot of debt, it matters how you handle your personal finances. A crucial step when it comes to saving is to reassess your relationship with money and to learn to adopt a broader, more logical point of view.
- In this video, social innovator and activist Vicki Robin, psychologist Daniel Kahneman, Harvard Business School professor Michael Norton, and author Bruce Feiler offer advice on achieving financial independence, learning to control your emotions, spending smarter, and teaching children about money.
- It all starts with education and understanding. The more you know about how money works, the better you will be at avoiding mistakes and the easier it will be to take control of your financial circumstances.
Welcome to the world's newest motorsport: manned multicopter races that exceed speeds of 100 mph.
- Airspeeder is a company that aims to put on high-speed races featuring electric flying vehicles.
- The so-called Speeders are able to fly at speeds of up to 120 mph.
- The motorsport aims to help advance the electric vertical take-off and landing (eVTOL) sector, which could usher in the age of air taxis.
Credit: Airspeeder<p>To prevent crashes, Airspeeder is working with the companies Acronis and Teknov8 to develop "high-speed collision avoidance" systems for its Speeders.</p><p style="margin-left: 20px;">"As they compete, Speeders will utilise cutting-edge LiDAR and Machine Vision technology to ensure close but safe racing, with defined and digitally governed no-fly areas surrounding spectators and officials," Airspeeder wrote in a <a href="https://airspeeder.com/news/2020/9/7/airspeeder-worlds-first-flying-electric-car-racing-series-partners-with-cyber-protection-leader-acronis-34g4k" target="_blank">blog post</a>.</p>
Credit: Airspeeder<p>Beyond motorsports, Airspeeder hopes to help advance the electric vertical take-off and landing (eVTOL) sector. This sector is where companies like <a href="https://www.ainonline.com/aviation-news/business-aviation/2020-01-07/hyundai-and-uber-announce-evtol-air-taxi-partnership" target="_blank">Uber, Hyundai</a>, and Airbus are working to develop air taxis, which could someday take the ridesharing industry into the skies. By 2040, the autonomous urban aircraft industry could be worth $1.5 trillion, according to a <a href="https://www.morganstanley.com/ideas/autonomous-aircraft" target="_blank">2019 report</a> from Morgan Stanley.</p><p>Still, many technical and regulatory hurdles remain. Matt Pearson, Airspeeder's founder and CEO, thinks the futuristic motorsport will help to not only speed up that process, but also pave the way for self-driving cars.</p>
Astronomers spot an object heading into Earth orbit.
Minimoons<p>Scientists have confirmed just two prior minimoons. One was <a href="https://en.wikipedia.org/wiki/2006_RH120" target="_blank">2006 RH120</a>, which orbited us from September 2006 to June 2007. The other was <a href="https://en.wikipedia.org/wiki/2020_CD3" target="_blank">2020 CD3</a>, which got stuck in the 2015–2016 timeframe, and is believed to gotten away in May 2020.</p><p>2020 SO, the new kid on the block, is expected to arrive in October 2020 and pop out of orbit in May 2021.</p><div id="37962" class="rm-shortcode" data-rm-shortcode-id="f4c0fc8a2cba6536ea4cd960ebed3e6e"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1307729521869611008" data-partner="rebelmouse"><div style="margin:1em 0">Asteroid 2020 SO may get captured by Earth from Oct 2020 - May 2021. Current nominal trajectory shows shows capture… https://t.co/F5utxRvN6Z</div> — Tony Dunn (@Tony Dunn)<a href="https://twitter.com/tony873004/statuses/1307729521869611008">1600621989.0</a></blockquote></div>
Identifying 2020 SO<p>The first clue 2020 SO isn't your ordinary asteroid is its exceptionally low velocity. It's traveling much more slowly that a typical asteroid — their <a href="https://www.lpi.usra.edu/exploration/training/illustrations/craterMechanics/" target="_blank">average rate of travel</a> <a href="https://www.lpi.usra.edu/exploration/training/illustrations/craterMechanics/" target="_blank" rel="noopener noreferrer"></a>is 18 kilometers (58,000 feet) per second. Even <a href="https://en.wikipedia.org/wiki/Moon_rock" target="_blank">moon rocks</a> sent careening into Earth orbit by impacts on the lunar surface outpace pokey 2020 SO.</p><p>For another thing, 2020 SO has an orbital path very similar to Earth's, lasting about one Earth year. It's also just slightly less circular than our own orbit, from which it's barely tilted off-axis.</p><p>So, what is it? <a href="https://cneos.jpl.nasa.gov/ca/" target="_blank">NASA estimates</a> that the object has dimensions very reminiscent of a discarded Centaur rocket stage from the <a href="https://en.wikipedia.org/wiki/Surveyor_2" target="_blank" rel="noopener noreferrer">Surveyor 2 mission</a> that landed an unmanned craft on the moon. Back in the day, rocket stages were jettisoned as craft were aimed toward their desired position. This stuff, if released high enough, remains in space. It appears that this Centaur rocket, launched in September 1966, is now making its way back homeward, at least for a little bit.</p><p>When 2020 SO arrives at its closest point in December, the rocket is expected to be about 50,000 kilometers from Earth. Its next closest approach is much further: 220,000 kilometers, in February 2010.</p><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDQzMDk3NC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyODg1MTQ1MX0.HGknDwqp0GmeuczKY_AS7vrPG7KMFUc_XO95tNoI2xo/img.jpg?width=980" id="e5cda" class="rm-shortcode" data-rm-shortcode-id="85eb1f790d8c3ee5b261f7ba13eaa5e1" data-rm-shortcode-name="rebelmouse-image" alt="Centaur rocket stage" />
Centaur rocket stage