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Editor's note: This week, we've been sharing Steve Sjuggerud's research on China in DailyWealth. Steve Sjuggerud first visited China in the early 1990s. The changes since then have been astounding. He says he wouldn't believe it if he hadn't seen it with his own eyes. Check it out for yourself below...
Friday, May 15, 2015
I wouldn't have believed it was humanly possible if I hadn't seen the growth in China with my own eyes...
I first visited Shanghai about 20 years ago. I almost laughed out loud when a Chinese official in a small, musty office told me his plans to develop a massive new financial district in sleepy Pudong, located just across the water.
This official worked for the Shanghai Lujiazui Finance and Trade Zone Development Company. He showed me a 30-foot-by-15-foot table – a 3-D master plan full of skyscrapers... maybe more than 100 of them.
As I listened to him talk, I knew his proposal wasn't possible – for anyone. He was planning what seemed to be the greatest construction project in the history of mankind. How could a bunch of inexperienced bureaucrats make that happen... and in such a short time frame?
I could hardly hold in my laughter as he explained this preposterous plan with a straight face... But China had the last laugh.
The Chinese official in the musty office was right. His plan for Shanghai came true – and then some.
Words can't even describe the transformation. Fortunately, I found an excellent "before and after" picture online of what this guy was talking about. It is unbelievable... but it really happened.
As you look at the picture below, use the "Big Ben"-style clock (circled) as your frame of reference. It doesn't change from past to present. (You can view the original photographs here.)
China's growth has been crazy. And I wouldn't rule out that its economy could overtake – even double – the U.S. economy by 2050.
This doesn't mean I'm a China "bull" – thinking everything China does is right. I'm also not a China "bear" – thinking everything China does is wrong. I am simply an investor looking for a way to make money.
And in all my years in the markets, I have learned one thing about China...
Sometimes, investors love China... They think it's the next big thing, so they pour money into it. And sometimes investors hate China... They think it's all a big fraud that will never amount to anything, so they take their money out of it.
I think the truth lies somewhere in between, leaving us room to make real money. Here's how:
If you're simply bold enough to buy when people think China will never amount to anything and sell when people believe China is about to take over the world, you can make a lot of money in Chinese stocks.
From 2005 to 2007, for example, investors fell in love with China. Stocks soared by hundreds of percent. Then, during the 2008 financial crisis, nobody wanted anything to do with China. Stocks lost two-thirds of their value. But they recovered again in 2009 with a triple-digit gain.
Over the last few months, investors have fallen back in love with China. And that gives us an incredible opportunity. I believe now is the time to put money to work in China.
That's the biggest theme, right now, in my True Wealth newsletter. And I suggest you make China a large holding in your portfolio as well.
You'll find the rest of Steve's essays about China from over the last week here:
First Time in 33 Years: A New World Reserve Currency Is Coming
Dramatic changes are coming to the world's monetary system this October...
What to Expect From This Upcoming Once-in-a-Lifetime Financial Event
A new currency will likely get "reserve currency" status this October... Here's how we know this event will likely take place then.
These Places Are Better Than America
I am embarrassed to admit it... but America has been beaten... Even worse, we'll never catch up...
The Shocking View From Inside a Chinese Factory
China is way more advanced than you think... Americans don't know this, and they are underinvested.
THIS BUSINESS ISN'T EXCITING... BUT THE RETURNS ARE
Today's chart is another reminder that "selling the basics" is no thrill ride... but it works.
Longtime readers know we're fans of simple businesses. Contrary to popular belief, you don't need to invest in complicated businesses to make money. Companies that "sell the basics" are often great long-term investments. Take Snap-on Inc. (SNA), for instance...
Snap-on is one of the nation's leading manufacturers of high-end tools. This includes hand tools, power tools, shop tools, diagnostic tools, and tool storage. It's the kind of "boring" business that would make most folks' eyes glaze over if you talk about it at a cocktail party.
But as you can see in the chart below, Snap-on's stock returns have been anything but boring. Over the past three years, shares are up more than 160%... and just yesterday reached a new all-time high. It's the latest proof that selling the basics isn't exciting... it just works.