Bloomberg's William Pesek Jr. wrote an interesting article today about Buffett's investment in PetroChina.
I wasn't aware that he had taken such a large stake in this Chinese company. It surprised me because of Buffett's constant reminder
to stay within one's "circle of competence" when investing, and the fact that he generally eschews foreign markets.
I recently read a report called "The Myth of 2.3 Billion Consumers" which was put out by Deutsche Bank earlier this year. They
write about the prospects for consumer products companies in China and India in coming years, and they're not terribly bullish, their conclusion
is actually very cautionary.
I skimmed the sections on India and concentrated on what they had to say about China, a place I know more about. (If you're interested in reading it (all 190 pages), just drop me a line and I'll send it over.)
"What we found was [a] market replete with risks and obstacles to profitability: overestimated market size, a looming banking crisis,
dramatic excess capacity, poor physical and distribution infrastructure, weak legal institutions, rampant counterfeiting, and considerable
Despite those very legitimate concerns, I still like to say Buy China, Hold America, and Short Europe. Why? Buy China because the country
is full of dynamic go-getters; Hold America because the Bush administration is
pursuing the foolish, wildly expensive, and potentially disastrous neoconservative dream of a New American Century; and Short Old Europe
because it is statist and sclerotic.
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