China, Puerto Rico, BOREF July 9, 2015July 9, 2015 CHINA / CISG The Chinese stock market has dropped 30% in a month — but before you go out running for bargains, note that it is still 80% higher than it was last summer. The bubble may have further to deflate. Here’s a quick clip from yesterday with the tale. One Chinese stock that may not have been overvalued, as argued here before, and whose sudden sharp drop may be a case of a perfectly good baby having been thrown out with the bathwater, is CISG. I bought more yesterday at $5.76. I’m told it has $8 or $9 of cash per share, so in effect, at $5.76 [update: $6.83], you’re getting its profitable automobile insurance business for free. Indeed, you’re being paid handsomely to take it. Just as you were a year and a half ago, if you bought shares at $5.40 when first suggested, before they doubled. (“This would be an obvious time to sell half and, with house money, see what happens with the rest,” I suggested a few weeks ago, with the stock at $11. In case you did sell half, it might make sense now to buy them back.) Note that someone just paid $11.80 a share for $37 million worth, which gives me further comfort there may be value for us here at $6 or $7 a share. CHINA /FIREWORKS It’s not just in their infratsructure that China is leap-frogging. Get a load of this two-minute 2013 New Year’s Eve fireworks display from a town in Hunan province. (Thanks, Glenn.) Of course, the Chinese invented fireworks. [OOPS. Mike Martin: “I believe the Hunan fireworks video is fake: notice that YouTube describes it as ‘FWSim’ which is software for simulating fireworks displays on your computer.”] PUERTO RICO Mentioned here and here, this may be a cliffhanger. If you were smart enough not to buy the zero coupon bonds at $92 each, when I did, you may now be able to get them for more like $65. Only with money you can truly afford to lose. BOREF Some lucky — or unlucky — bastard bought a few shares Tuesday at $6.70. That values the whole company at less than half what Demi Moore is asking for her apartment. One day, we’ll all look back and laugh. Either at how I actually could have believed any of this (like Isaac Newton buying shares in the South Sea Bubble?) . . . or else “all the way to the bank.” No Isaac Newton, my strong assumption, nonetheless, is that the stock dropped not — likie an apple from a tree — because anything has come unhinged, but because a shareholder got bored and sold.