|Enthusiasm for Chinese investments is diminishing due to slower growth rates; less government stimulus in both fiscal and monetary policy; a real estate market that’s topping out; and a much lower tolerance among investors for speculative securities — all the
makings of an attractive new buying opportunity.Of course, we’re not there yet. Expectations for China continue to be reduced and there is a general view that domestic Chinese equities have further to fall. But, like I say, buying low and selling high takes time and patience. A lot of U.S.-listed Chinese stocks are worth watching right now. The iShares FTSE/Xinhua China 25 Index (NYSEArca/FXI) is also worth keeping an eye on.Another favorite group of mine remains precious metals. But for gold and silver especially, it isn’t a case of buying low. Gold and silver have already gone up substantially, so for new investors, it’s a case of buying high and trying to sell higher. That’s speculation for you, but, in this case, I think it’s worth the risk.
As I’ve written before, I like junior and intermediate miners, because they have increased odds of maximizing returns to investors. Intermediates especially are attractive, because they are ripe for takeovers. The mining industry is awash in cash due to previous commodity price strength and decent production growth. The big players have a lot of investing power and they have the institutional backing to do deals.
If there was one sector of the equity market that I favor, it’s the mining business. Not for a long-term, income-generating solution, but for unabashed speculation. And, while I generally favor the buy-low/sell-high investment strategy, I think the chance for incremental returns makes a lot of mining stocks worthwhile bets.