Bear Market? Please. Go To China If You Want To See a Bear Market

As we Americans whimper about the horrific 10%-15%-ish declines in our stock market, it’s worth remembering how bad bear markets can really get. To get a sense of that, we can go back to the depths of 1932, 1974, or 2002–or we can just pop across the Pacific for a quick look at how things are going in Shanghai, where the market is down 45% in six months.

The New York Times’s David Barboza did the latter today. Here’s what he found:

THEN (October 2007):

Millions of small investors…were crowding into brokerage houses, spending the entire day there playing cards, trading stocks, eating noodles and cheering on the markets with other day traders and retirees…

Chinese share prices had climbed over 500 per cent in the span of two years, setting off a nationwide stock buying frenzy.When experts periodically warned about the possibility of a bubble, prices would dip temporarily then soar even higher, breaking records and inciting another mad dash to snap up equities.

“The market was going wild,” says Mr. Guan, 49, who a few years ago closed his real estate company to invest in stocks full time. “Everybody was talking about how much they had earned, how much more they would invest, and which stocks had jumped 20 times, or even 30 times.”…

Shopkeepers, real estate brokers, even maids and watermelon hawkers are said to have become day traders.

A new version of the national anthem made its way around the country last year, beginning, “Arise! Ye who haven’t opened an account! Pour your gold and silver into the hot market!”

The anthem went on: “The Chinese nation faces its craziest time. The passionate roar of our peoples will be heard!


“These days my family quarrels a lot,” says Zhang Liying, 55, a retired hotel waitress who with her husband invested all their savings in the stock market. “My husband asked me to sell; I wanted to hold for a while. Now my husband condemns me as so stupid that we lost our family’s savings.”

Si Dansu is even more distraught, but she blames the government.

“I devoted my whole life to the country. I went to the countryside after graduation, and worked as an engineer in a Shanghai factory until retirement. I invested almost all my savings and retirement fund in the market 10 years ago. But now I’m totally penniless. All my stocks went down.”…

The rest of Asia? Clobbered, too.

India: -31%
Japan: -31%
Vietnam: -53%

Here’s to the joy of a 15% decline.

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