The market this week seemed to assure us that our investment decisions aren’t entirely without basis. After selling our single biggest holding two weeks ago – based on the radical theory that a market rally divorced from economic reality wouldn’t last forever – the Shanghai Composite Index (SCI) has gone and done what we expected it to do: fall.
A lot of that falling was thanks to similarly dismal market performance elsewhere in the world. But this being the Shanghai Stock Exchange, a good deal of the drop was due to good old-fashioned rumor and hearsay. In other words: No lessons have been learned, and the market will remain sensitive to the whims of retail investors next week (and the week after, ad infinitum). The drop this week actually had little to do with the problems we highlighted when selling two weeks ago, despite what we’d like to think about our predictive powers.
Still, it was nice to hear that Anhui Conch Cement (600585.SH) was the single worst-performing stock on the SSE on Thursday without having to worry about our portfolio.
No matter. On to the numbers: While the SCI dropped 7.9% over the week, our one and only holding, Industrial and Commercial Bank of China (601398.SH) fell 2.61%. The fund is down 33.25% since June 3, 2008, while the SCI is down 39.3%.