Chart: Spot the correlation
No doubt you have read numerous articles about the dramatic run up in valuation on the Shanghai Composite index. Overnight stocks fell dramatically - down some 6.5%. I personally don't know much about investing in China - so I don't try to do it. However, I have worked with margin lending and most recently in 2007/08. When margin lending is introduced to new investors. On the upside it generates quite a bit of excitement as eyeballs google and the expanded position sizes on offer. On the downside - well things get out of control as accounts freeze and selling becomes uncontrolled and indiscriminate.
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