A year ago today, the SCI closed at 5,843.11 points. Now that it’s around 1,830, we’re looking for ways to derive some non-monetary value from its ungraceful plummet. With that in mind, the Capitalist Roader Fund presents “Going down in history with the SCI.”
Today, we’ve passed the British North America Act that led to the formation of Canada (1,867), left behind the Sepoy Mutiny (1,857) and witnessed Queen Victoria’s accession to the British throne (1,837).
As we argue in a commentary in our upcoming November issue, the reason it is falling so low is obscured by government policy that maintains a lack of transparency under the veneer of a free market. Should we be paying attention to the fundamentals of the companies we’re investing in, or does it make more sense to determine our investment direction by divining the government’s mood?
There’s not a lot of reason to put faith in the government’s desire or ability to step in. In a conversation I had recently with Fraser Howie, a noted A-share watcher and author of a book on the Chinese markets, he made a very relevant point.
“You think, well, we’ve fallen from 6,100 down to 1,800 … and you think, ‘At what point were they going to support it?'”
In any case, we haven’t done anything this week, although Warren Buffett’s suggestion to buy while bad news rules has had us thinking. It’s certainly a time of pessimism for owners of Anhui Conch Cement (600585.SH), now down more than 70% from June 3, when we bought in.
Even Industrial and Commercial Bank of China (601398.SH), which we used to count on for keeping us more-or-less afloat, is losing its luster. It’s down more than 27% as of this writing. Overall, the SCI is down more than 46% since June 3 (though the markets haven’t yet closed today), and the CRF is down 49.6%.