Xinhua China 25 Index - FXI
I've been following the China iShares, FXI, for a long time now and I noticed that Maoxian posted about it nearing its all-time high. This reminded me of the time when the talk was that FXI might be overextended or possibly reaching the top. At the time, it sure looked that way. I even posted on my old site saying that the trend might be over but the more I thought about it, the more I wondered if my initial call was wrong.
Something didn't seem right to me so I built a classification model to analyze FXI's trend. I was surprised when the model remained long throughout the selloff. You can see the charts I posted on January 31, 2007 and April 6, 2007 on my old site. I even reiterated FXI's UP trend in one of my first blog entries here. As of today (in 2007), the trend remains UP.
FXI Update in 2019
Back in 2007, I thought I had a great trend-following system. I was feeling pretty smug about the direction that my AI trend models were giving me (because it was up). Little did I know that I was just lucky. The markets were trending upwards and I was riding their coattails. So it's fitting to revisit my FXI calls from 2007 and see where are they now.
In 2007, I made at least two posts about FXI. I posted this chart and noted that the trend remains still up. FXI was trading around $115 per share. A little bit later in 2007, FXI split 3:1, so the price got cut by a third. For today's argument, assume the split happened at $115 (it was a bit higher than that).
Today FXI is trading at $39.93, which is just over $1 higher than if FXI split at $115. So it did a whole hell of nothing over 12 years. If you look at the chart, it's been nothing but a roller coaster. Up, then down, then up, etc.
Sure you could've picked up some FXI at the bottom of 2009 but who knew it would recover? Sure you could've picked it up when it touched $30 a share a few times over the years but maybe it would've gone lower.
FXI in July 2020
Just updating this with a new chart.
Not much to see here but it's just hanging around the $40 mark.
FXI in November 2023
Revisiting this bad boy in 2023 reveals that after the stock splits and all the market noise, FXI hasn't gone anywhere since it started. Yes, it had some highs but it's making lower lows again. I have to ask, is the whole China story just a big hype?
Here's a chart of FXI since inception:
Here's a chart of FXI from the last 6 months (May to November 2023):
What moral of FXI?
After posting this in 2007 and revisiting it from time to time I'm beginning to think that FXI might be a long-term stinker, just a lot of noise over time where you get lucky if you happen to buy low and sell high.
The moral here is that stock quality does matter, sometimes it's best to just buy a few individual stocks and manage them instead of buying an ETF in an emerging market. I have nothing against the emerging market, about 30% of my retirement money is in the emerging market, but what you buy is sometimes more important than when you buy.
Thomas Ott
Yet, hindsight is always 20/20. When I first bought FXI back in 2007 (and sold it later), I thought that it was going to keep appreciating over the long term. I would've dollar cost average this dawg and probably would've eeked out a gain over time but that might've been more hassle than what it's worth. The reality is that sometimes you pick stinkers.
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