By Clay Fisher

We witnessed yet another article this week about the Chinese real estate market, citing Jim Chanos calling for China's property market to "stumble," but yet again providing very little in the way of facts to substantiate the call. Chanos should repent.

Contrary to what many might believe, the word repent wasn't first used for religious purposes, but for the military. It was a command to soldiers to turn 180 degrees from that which they are doing, as Mr. Chanos would be well served to do.

It appears that the most recent argument by the shorts is that China's property market will stumble because of excess "speculation." Here we'd like to help by brushing up on some investment terminology and thereby defining reasonable parameters for the discussion. We consider "speculation" to be high risk and short term in nature and to be done by those who either cannot hold for the long term or purchase with intent to "flip" in short order. Instead, we consider relatively less-risky, long-term purchases based on sound fundamentals generally to be referred to as "investments."

The best comparison today I can draw to the Chinese property market is the Warsaw property market six years ago. My wife is a Polish citizen. Even though I clearly became distracted by someone more important than real estate could ever be, at least part of why I initially went to Warsaw six years ago was to look into purchasing real estate. My not purchasing real estate in Warsaw then is unfortunate.

At the time, like in most of China's cities, property prices in Warsaw were hovering around $200 per square foot. But by all measures every forecast around called for the income of Warsaw residents to skyrocket, which is what they have since experienced. Then like today in China there was shouting about the amount of "excess speculation" by Europeans rushing, indeed falling over themselves, to purchase real estate in Poland.

On a recent visit to Warsaw I was reminded of my poor investment decision. Today I would need to pay nearly twice what I could have purchased real estate for then, even in light of the world's recent economic performance. And this was happening at the same time property prices (and indeed prices of just about everything) in the U.S. ... well we know what's happened. Almost all of my wife's friends who purchased real estate with mortgages are now relatively well off, even by U.S. standards, based on the increase in value of their real estate. The pace of their rise in wealth has been awesome.

Are the buyers of property in China doing so for short-term reasons and planning on flipping? The evidence so far is clear. They not only have the cash and rising incomes to be able to hold the property (so forced flipping seems less likely, especially considering their on-average, less-levered positions) but they are not selling. What the Chinese call secondary market transactions (or the sale of property that is not new) is a very small portion of transaction volume and is mostly done by natural sellers. Instead, wisely, they seem to be fairly intent to sit on empty property in some cases, and in most cases accepting lower short-term rent returns for the long-term likely outcome of dramatically higher property prices. Do the "investors" in precious metals get better returns? Mr. Chanos should simply repent and begin investing in Chinese real estate immediately. Even though the Chinese government is slowing the awesome rate of credit growth that ignited the country's economy, I doubt he will be able to buy property in major Chinese cities at $200 per square foot for very long.

Clay Fisher, an independent investor, comes from from a long line of investors. His grandfather, Philip Fisher, was a legendary growth-stock investor who pioneered the concept of growth-stock investing along with T. Rowe Price. His father, Ken Fisher, is a Forbes columnist, CEO of Fisher Investments and a member of the Forbes 400. Clay Fisher previously worked as a buy-side analyst for investment bank Robertson Stephens and later with Feshbach Brothers. He was executive vice president and co-founder of The Private Client Group, a division of Fisher Investments, which is now the majority of his family's business, where he spent most of his career.