Shanghai Stocks Party Like It's 1929

Here is some essential background reading on the Chinese stock boom:

http://www.marketwatch.com/story/china-stocks-may-be-in-serious-bubble-2015-03-26

Key information:

"China has entered a new stock frenzy, like something out of America in the Roaring 20s or the dottiest days of the dot-com bubble, with trading volumes continuing to push to new record highs."

"The lure of flush times on the Shanghai market is sweeping in unlikely investors by the hundreds of thousands. This week, both the China Securities Daily and the Beijing Morning Post had dueling reports about recent college graduates and, yes, teenagers buying shares.
Typically these young investors speculate with money given to them by their parents, according to a Great Wall Securities broker quoted in the Beijing Morning Post story.
Yet another report, this time by the Beijing News newspaper, relates that at the Beijing trading halls of China Securities Co., “even the cleaning lady” has opened an account to play the market."


http://www.washingtonpost.com/blogs/wonkblog/wp/2015/03/05/is-chinas-1929-moment-coming/
Article title: "Is China’s 1929 moment coming?"
Key information:

"And now that's happening to stocks. It's still nowhere near its 2007 highs—in fact, it's barely halfway there—but the Shanghai index has nonetheless been on a tear the last six months, up 50 percent in that time. Why? Well, it's not earnings. Those are down. No, it's the debt. Investors have become so exuberant, perhaps irrationally so, that they aren't just throwing their own money into the stock market, but borrowed money, too. Margin accounts, which let people do this, more than doubled in 2014. And to give you an idea how important this has become to the market, stocks tanked 7.7 percent in a single day after the government announced it wouldn't let the three biggest brokerages open any new margin accounts for the next three months. It sure looks like China is replacing its housing bubble that just popped with a new stock bubble."