thanks... not sure about the 'super bright', but I am planning to keep my long position in XIN and increase it in the future. In the end it is all about risk/reward. The question is, based on all the availaible information(positive about fundamentals and negative about China sistemic fraud risks), am I willing to risk USD 1 in this company to possibly make 10 or 20 USD in a few years' time? In my opinion the possible reward far outweights the risk at the moment, so the answer is yes.
Looking at the possible reward from $1 to $20 is the wrong way of looking at the problem, if I may. But first, let me say I am long 24k shares down from 37k when all this Gurnee stuff started, which I consider serious.
Best would be to consider the odds for that risk/reward you mentioned. Since it is unknown whether this company is a fraud or not, the odds are 50/50. Which means "total uncertainty". In other words, the odds do not favor the bet and the potential 2000% return may never materialize. Same odds for a total loss.
Briefly, we are all gambling here.
My simple thesis for this "investment" has been that I want to have at least 1 speculative chinese stock in my portfolio in case China does not land hard or in case the government intervenes in a way that causes speculative real estate stocks to run up by attracting hot money. And XIN is probably the best of the lot. Without ever forgetting that the basis for purchasing this stock is fragile.
So after we have done all our financial analyses, according to your probabilities (which to me are quite pessimistic, but I will take them for the sake of reasoning) we have 50% chsnce to loose 1 USD and 50% chance to make USD 20. Call it a bet if you wish, but that is a pretty good bet. Imagine you could spread these bets with the same probabilities over many stocks and you would be rich. Unfortunately there are not many stocks as XIN around.