Investors who consider themselves to be conservative will sometimes keep a relatively small amount of money aside for riskier assets to “juice” overall returns. This riskier pool may be 5% or less of a total portfolio and can be targeted toward smaller companies with higher growth rates and potentially higher returns.
What could be more enticing than investing in a Chinese natural resources company that is listed on the Nasdaq global exchange? China is a fast growing economy, a growing middle class and a major manufacturing center which uses natural resources.
A Yahoo Finance article and video reviews one particular pitfall of investing in a company whose “home” is in a country that has less stringent financial oversight of publicly listed firms. As on a “wet vac”, money machines that entice investors with the promise of higher returns have two ports, one for suction and one for blowing.