WEB Notes: I would much rather have my money in real-estate which has some real value, than a piece of paper called a stock or bond.
Only a handful of countries have a higher savings rate than the Chinese do. For a still relatively poor emerging country with GDP per capita about a fifth of that in the U.S., the Chinese get an A+ in this area.
But if diversification and asset allocation are the key to preserving wealth, then the Chinese get an F!
The reason: 75% of their wealth is in real estate. They’ve overinvested in one illiquid and bubbly asset that they wrongly believe can only go higher. Relative to income, China has seven of the 10 most expensive cities in the world.