Fortune’s Economic Analysts: Five high risk investments

Within a decade, investors have experienced the fiasco in technology stocks, the collapse of the real estate market and the financial crisis. Therefore, someone could expect that the investors should have the knowledge to avoid the excessive enthusiasm, which leads to unpredictable results.
But it seems that this is not the case. The investors, amid excessive expectations or fears, seem to turn massively towards specific high earnings assets. The economic analysts of “Fortune” identify the five most dangerous investments of today.

The first lies in the Chinese market. Thanks to the impressive growth, the consumption and construction activity in the country constantly rises. At the very same time however, rapidly rises the lending of Chinese households, as well as the real estate prices. The rapid credit growth and the increased prices of the real estate market is something that concerns deeply the analysts and Beijing. It is well noted that the Chinese shares recorded profits of 300% over the last 15 years.

The second bubble is located in the U.S. sovereign debt. In a period of increased uncertainty about the prospects for global economic recovery, investors seeking safety in U.S. Treasuries, which have seen their prices strengthened 14% this year but their performance to fall to historically low levels despite the fact that U.S. has issued a $3.3 trillion debt in the last two years. Many believe that as the U.S. deficit is increasing at unprecedented levels, bond prices may soon suffer a major value loss.

The third high risk investment is the gold market. The price of the precious metal increased by 150% within five years while it continued to record successive profits during last year. The price decreased in July but this was just temporary as the gold price rising again.
Fortune’s analysts also consider the investment on the energy stocks and mining industries – especially the ones of the natural gas companies – as high risk because the equity prices are engaged in a relentless rally in the last two years.

The last high risk investment by the analysts is the cotton; its value has nearly doubled last year to 80 cents a pound. Economists estimate that it is not possible to maintain the price at these levels; therefore they expect a drop below 50 cents within 2010.