China Booming Now But Later? Bust

I think China is a great long term investment but the market has gotten ahead of itself. I've seen enough booms followed by busts over my life time to sense potential instability. The boom/bust cycle was repeated many times in America during its industrialization. So it is not surprising to see the same mistakes repeated elsewhere.

International funds that were primarily invested in emerging markets in 2006 performed amazingly well. Many of these funds had substantial investments in China. I would recommend selling emerging markets mutual funds and etfs in 2007. Instead, invest in international funds primarily focused in developed countires with a small exposure to emerging markets. This will minimize your risk of substantial losses but still earn you a decent return if China doesn't experience a correction in 2007.

Here is an article from Bloomberg on China's financial markets.
http://www.bloomberg.com/apps/news?pid=20601089&sid=aV4Hj3nDTAjE&refer=china

Libby Mihalka
The Financial Pragmatist