The Chinese people should look for an income investment

This has been a wild week for stock markets around the world. One question I have -- would the U.S. stock market have reacted so badly to a Chinese plunge 10 years ago? Even 5 years ago?

This article on the Chinese stock market plunge this week explains that the fall was due to the Chinese government proposing interest rates hikes and taxes on capital gains.

These conditions in China do not directly affect the U.S. stock market or those of other countries, yet it seems that "investors" -- really, traders; true investors do not sell for such reasons -- are itchy and ready to sell and "take profits" as the media so often says. (Though I've had traders complain that more often they cutting losses than taking profits.)

I'd even say that since capital can now flow around the world so quickly, the imposition of such measures in China would be an advantage to other stock markets. That's because people who take their money out of Chinese stocks will want to invest it somewhere else, increasing cash flows to all nonChinese stock markets.

I'm not sure how much freedom the Chinese people have to put their money into nonChinese stocks. Quite possibly they're not allowed to. So the fear of paying capital gains taxes made them take profits before being required to pay taxes on them.

I wonder how many Chinese stocks are an income investment? I suspect that the vast majority of Chinese people are caught up in the illusion of capital gains. I don't know how many Chinese stocks pay dividends, but my advice to the Chinese is to focus on them. That's the best way to avoid paying capital gains taxes.


income investment
income investment