It’s been one of the strongest moves of 2017…
Yet practically no one in the U.S. was in the trade. Few had the guts to get into the trade at the beginning of the year.
If that was you, I have good news. We’re seeing a rare setup… one that means a certain sector on the other side of the world could absolutely soar.
History says gains of 45% are possible over the next year. And today, I’ll share the simple way to make the trade.
Here are the details…
Chinese property stocks were one of the hottest sectors in the entire world this year… until late September.
They had soared nearly 60%. Then the bottom fell out…
The sector fell 5% in a day. It was down as much as 8% within a week. But that big fall set up a rare opportunity…
One-day falls of 5%-plus have happened less than 1% of the time going back to 2001. And the recent occurrence was the first in two years.
History says a one-day fall of 5%-plus in Chinese property stocks tends to happen before big gains. And that means we could see a 45% rally over the next year alone.
You see, we looked at the AlphaShares China Real Estate Index – which focuses on real estate in China, Hong Kong, and Macau – going back to its beginning in 2001. Similar one-day falls have led to massive outperformance over the next year. Take a look…
Chinese property stocks have returned 14.7% a year since late December 2001. That’s more than double the S&P 500’s 7.2% annual return over that same period.
But that’s not even the impressive part. Buying after similar one-day falls led to 45% returns over the next year. That’s amazing!
One-day falls of 5% or more happened 23 times since 2001. With the exception of 2008 – when everything went down – Chinese property stocks were higher one year later in every instance but one.
The simplest way to invest in this sector is through the Guggenheim China Real Estate Fund (TAO). TAO tracks the AlphaShares China Real Estate Index that I mentioned earlier.
TAO soared this year before crashing in late September. Take a look…
The drop looked scary. But history says a 5% one-day fall isn’t a sign of a major correction… And therefore, we don’t need to panic.
In fact, history may already be repeating itself. As you can see, the fund has almost completely recovered since its September fall – in only two weeks.
The last time we saw a 5%-plus one-day decline in TAO was August 2015. The fund rallied 27% over the next year.
The message is simple: The recent struggle in Chinese property stocks could be short-lived… And a massive rally could follow. (Of course, always trade them with a trailing stop loss to protect your downside risk in case I’m wrong.)
Shares of TAO are the simplest way to take advantage of the opportunity. They’re up big in 2017. But history says more gains are likely still to come.
Good investing,
Steve
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Source: Daily Wealth