Investing: Shanghai Fever

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Still, at today's prices, Lee isn't buying. Nor am I. For those who have missed the joyride so far, it's hard not to be worried that the headiest gains have already been made. The most vocal doomsayer is Morgan Stanley economist Andy Xie, who has warned repeatedly--to the misfortune of those who have heeded him as prices doubled in just two years--about an ominous oversupply of apartments and the government's efforts to stifle speculation. Nonetheless, as Faber says, "you may overpay on a short-term basis, but real estate in China makes sense in the long term." Of course, the same was true of New York. If we had held on to that dud apartment for a few more years, it would now be worth about three times what we paid. In retrospect, buying it wasn't nearly as dumb as selling it.•