Simple Answer – Anything That China is Buying!
Why? Because, world power is shifting from the West to the East. The value of the American dollar is taking a nose dive. The American economy is not yet recovering with the showing of both unemployment and corporate bankruptcy on the rise. And, the lift in the American stock market is on quick sand due to the huge dollar-printing dump of paper by the US government into the economy and American banking system.
This does not give me a lot of confidence.
But China does. The Chinese are savers – up to 35% of their income. The middle class is multiplying rapidly in China – and with the rise in their household incomes they are consumers of many products. And, most importantly, the dramatic economic expansion – with the enormous tide of the Chinese population – is driving an urgent need for everything from wheat to copper – and they are looking for these commodities all over the globe.
Deng Xiaoping spoke his famous capitalistic phrase – “to get rich is glorious” in 1978 – and they are doing it – never before in history has a country made such outstanding economic progress in one generation.
The American dollar will be replaced as the world reserve currency. China is the biggest creditor of the US. The US, with its huge deficits, is on its knees to the Chinese who sport reserves in their banking system and national reserves that should make us blush with envy. China is lightening up on ownership of US Treasuries, and has openly announced that it is moving its reserves to gold holdings.
Fundamental to making money is growth. When corporate profits go up, so do stock prices. When economies expand, so do stock markets.
ETFs are a good way to invest in this expansion in the Stock Market – and the symbol FXI (representing the Shanghai Index) is one way to participate in this opportunity. Also individual stocks that offer goods to China are another way to capitalize.
