From Whitney Tilson. He promised to stop sending too many emails, but he is out-raged about his father being scammed by a Chinese website over an un-named product. Tilson in his own words below:
Yet another case study that reinforces my belief that if you do business or invest in China or with Chinese companies, there’s an alarmingly high likelihood that you will get scammed: my dad ordered a $1,000 electronic item from www.topchinatrade.com, wired the money – and now, two months later, after repeated attempts to contact them…nothing. The web site looks professional (check it out), they were highly responsive regarding questions before he placed the order, etc. It makes me sick…
You’d think the Chinese government would crack down on fraudsters, but instead it attacks those who seek to uncover it – no doubt largely because princelings (children of powerful senior leaders) are directly complicit in (and profiting enormously from) the fraud…
Of course there are many legitimate, honest people and businesses in China, but I’m convinced that the fraud is so pervasive that, as an outsider who can’t tell who/what is legit, you’re likely to get scammed.
In my view, China falls into the same risk category as Russia and Zimbabwe – completely uninvestable.
Speaking of things that make me sick that I’ve been pounding the table on for a long time, kudos to Scott Paterson and Jenny Strasburg for their work uncovering the increasingly disturbing realities of high-speed trading. It’s blindingly obvious that it’s impossible to make high, steady profits trading every day, regardless of what the market is doing, without some sort of huge edge – and, as I’ve long suspected, it’s now becoming clear that this edge appears to involve conspiring with the major exchanges who, for a (very high) price, are willing to screw all of their other customers (it’s a zero-sum game of course). If so, it’s exactly like the mutual fund late trading scandal – and I hope the consequences are just as severe.
