Where were you before 2008 pu-erh crash?

[auhckw]

Beginning in 2008, much of the Pu'er industry suffered a tremendous drop in prices. Consequently, many have lost their fortunes and some have even decided to stop selling, growing, or distributing Pu'er as a result of the financial loss plaguing many of those in the industry. Investment-grade Pu'er has witnessed declines in price as well, although not as drastically as those varieties which are more common.

http://en.wikipedia.org/wiki/Pu-erh_tea

Anyone venture into Pu-erh before the bubble burst before 2008?

How expensive is expensive then? Did you purchased any overpriced pu-erh then?

I heard the price now has been adjusted to its supposed price. Any example of the price then and the price now?

[TomVerlain]

Since I started drinking pu'erh just before it took off, I was not an expert, and did not buy the higher end, more valuble teas. So, I can't comment on how the market was. I still do not really purchase high end tea, so it is hard to tell where we are now.

I do know that it seemed quality dipped and there were far more vendors out there. I think taht might have been the biggest impact of the bubble, everyone wanted to be buying and selling (for big money) pu'erh. Since there was not enough quality tea to go around, sub par tea came into the market.

I guess the pandora effect of high pu'erh prices might mean there will always be a market for fakes, and all that subpar tea will need to be sold off as vintage in the coming years.

[dobermanlover]

The Pu-erh crash was in 2007... May 2007.

The NY times article is poorly written and inaccurate on many counts. It was written in 2009 more than a year and a half after the crash.

I remember because there was a panic as the speculiators lost their fortunes. I heard of 2 people here in Kunming who committed suicide. One these speculators had his tea values go from about 20 million RMB to about 4 million in just a few days.

One of the best examples of "bubble tea" was the 2007 Nan Qiao Iron Cake whose factory price was about 700 RMB per case, but speculators drove the price up on this to about 5000 RMB. About a month after the crash this tea was selling for about 600 RMB per case, about 1/10th the price it had been traded at just a few weeks before.

A case of Menghai 7542 701 (84 cakes) was being sold above 20,000 RMB per case... but went down to about 4000-4500 RMB per case after the crash.

2006 Xiaguan Te Ji tuo skyrocketed to 400 RMB per kilogram... and then back down (post-crash) to about 60 RMB per kilogram.

I bought alot of teas after the crash... I knew prices going up 500-1000% was not normal and stayed away from speculation. Even with a small mark-up I would have had to sell that 2007 Menghai 7542 at more than 250 RMB per cake!!!! That's a tough sell!

- Scott

YSLLC

[IPT]

I've been drinking Puer for a very long time and was definately into it before the crash. In most places on mainland China, it was considered a "farmer's" tea and people didn't really go for it. It wasn't until it got trendy that you could find it everywhere. I used to go to Yunnan or Guangzhou to get mine because there wasn't much of a selection in Guilin. Puer was pretty cheap at that point. Actually, I still go to Guangzhou or Yunna to get mine. When it became trendy, I stopped buying. I knew it would crash eventually. There's no way the market could sustain itself like that. The plus side to the crash is that I was able to get a lot of nice Puer very cheap when stores were going out of business. Sad for the business owners, but good for me I guess.

[nickE]

Wow, thanks for sharing Scott and IPT. It's interesting to hear about it from people who live in the area.

[Sententia]

The Federal Reserve’s decision to expand its quantitative easing by purchasing more Treasuries is a dangerous one, says Keith McCullough, CEO of research firm Hedgeye.

“That could lead the country to the brink of collapse,” he wrote in a Fortune magazine column.

“It’s a point from which it’s almost impossible to return,” McCullough wrote.

Government debt will reach 62 percent of GDP by Sept. 30, the Congressional Budget Office predicts.

“On July 2nd, we cut both our third quarter 2010 and full year 2011 GDP estimates for the U.S. to 1.7 percent,” McCullough says.

• Every NYSE crash since 1985 has been preceded by a Hindenburg Omen.
• Based on historical stats, the probability of a panic sellout is 41%, while the probability of a major stock market crash is 24%.
• Out of the previous 25 confirmed signals, only 8% (two) have failed to predict at least a mild decline in equities markets.
• The probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen is 77%, and usually takes place within the next 40 days.

http://www.businessweek.com/news/2010-0 ... lysis.html

As a result, the Hindenburg Omen is indeed the most feared indicator for Wall Street bulls. However, when the infamous omen starts showing itself two times in two days, that’s when things can get really scary.
--

I'm just curious.. if the US economy does experience some form of hyperinflation, or if the market continues to slide and get worse.. will this inevitably affect the tea market again ? We never really recovered from the 2008 financial crisis, with real unemployment numbers somewhere near 22% .. would it be wise to wait a few months to see how this all plays out before investing in bulk tea ? I myself, am just a consumer so I was inconspicuously seeing what the options for the future of the market may be. The overall economy though sortof looks bleak.

[AdamMY]

Sententia, as interesting as that article is, I am unsure if you actually know what the 2008 Puerh crash was, and the preceeding puerh bubble.

I'll give you a hint it has little to nothing to do with the US stock market, and its crash around the same time.

It basically involved investors primarily in China seeing puerh as a great potential investment, so they went about buying up all the puerh they could find to hold on to and trade like commodities, this created the puerh bubble, where all sorts of factories kept increasing production to meet demand, and prices soared on all the teas.

I personally do not know what started the crash, but finally people realized that puerh should not have been priced where it was and the bottom fell out of the tong, I mean market, causing prices dropped drastically.

[Sententia]

Adam,

Yes I understand this. But also economically, the over-all situation it seems is getting worse. You don't think this will transcend onto the tea-market again? Or do you think it's irrelevant that we may be heading into a serious downturn as a whole soon, but not with the tea market?

Here's another instance of trouble "Social Security will pay out more this year than it gets in payroll taxes, marking the first time since the program will be in the red since it was overhauled in 1983, according to the annual authoritative report released Thursday by the program’s actuary."

http://www.washingtontimes.com/news/201 ... time-ever/

Debt as a whole, and the continuing printing of the dollar has and continues to create inflation.. I'm just wondering if future inflation and the overall situation will affect consumers and future costumers in buying tea. I myself have already cut back at the grocery store, but tea is something I really wouldn't want to cut back on.

Would pu still be a great investment even with these troubled signs, or do you think tea would still be safe from bottoming out. Overall their will always be investors and a market for tea, though things just seem rocky for consumers ahead.

[debunix]

Can't imagine tea is ever a truly 'safe' investment, regardless of the economy, because of fads in tea-drinking as well.