wilslm

Yes, but not *just* China.

Suppose food prices rise further, and there is rebellion in the countryside. The party sends troops to crush the rebellion, but it is widespread. Then students in the cities push for more representation, then there is extreme instability in China. Do you really want ALL your eggs in that basket?

And how much transparency do you really get with China? Do you really know what you're buying? Do you really trust official statistics on growth rates, etc.? Do you trust companies not to manipulate their balance sheets with abandon?

The only reason to be exposed *only* to China is if you are forced to be only in China, either because of legal requirements, or because you are a fund that has China-only as your investment policy (which will usually be so you can get to manage the "China portion" of someone else's diversified portfolio). Even wealthy Chinese want to diversify beyond China to the extent that they can.


And the dollar is unlikely to become "worthless." It will lose purchasing power over time, unless things change markedly, but it would take an awful lot to make it truly "worthless."



Edited 1 time(s). Last edit at Saturday, July 9, 2011 at 07:23PM by bchadwick.