There has been A LOT of talk about slowed growth in China over these past few weeks. And it’s a bit scary. After all, what happens in China will affect us all, as they have essentially been one of the few bright spots in the global economy, and have been the engine that pulled the global economy out of the Great Recession of 2008.
I have a friend currently in China, and I asked him what he was seeing on the ground there. It seems that people are remaining relatively optimistic and that there isn’t a discernible difference in people’s behavior when observed from the streets. So on the surface, everything appears to be normal.
However, he says that if you dive deeper and actually start talking to Chinese citizens, you’ll see that they have many of the same concerns that we have in America.
The difference is that most investors in the stock market in China are not institutional investors. On average they aren’t highly sophisticated and are more prone to making mistakes than their institutional counterparts. Unfortunately they are also the hardest hit in times of economic downturn.