Thursday, September 14, 2017
Popularity and investment
ANBOUND
Popularity is a necessity for any investment in China; if a company or an industry is bolstered up by the market, massive capital will flood into the doorsteps of the company. Vice versa, if the company or industry is lacking of supports, regardless of its profitability, it would experience difficulty in the financing. For the market, the core of asset allocation will slide on the "popularity" when the asset values are largely built upon its popularity than profitability. Yet the problem is that the logic of investment strategy based on popularity only works when there is capital oversupply. Once that condition changes, the consequence will be the fall such popular companies.