Invest Like a T-Rex in China's AlphaShares China's Technology Index
The Dow Jones Industrial Average (DJIA) and the Standard and Poor's 500 (S&P500) are doing really well. Both market indices are trading at historic highs. And the question you should ask yourself right now is, should you still be investing in the U.S. equity markets or should you be taking money off the table? Should you a take a contrarian view and sell short, since everyone else seems to be still buying or should you just look elsewhere? I say look elsewhere.
The above decision also depends on whether you expect continued growth in the U.S. economy, albeit slow growth. Of course, there are other economies that are doing well also, such as the Chinese economy. I believe that the Chinese economy, although saddled with some serious structural issues, can provide a great place to receive spectacular returns on investment. Without getting into all the macro and micro economic niceties of trying to explain why and how and because this blog is not the venue for such a serious economic discussion, I will try to sum up as quickly as possible a few points of interest that bolsters the argument for investing in that country.
Before the U.S. recession, the Chinese economy, tethered to the U.S. economy, grew and enjoyed rapid, awesome growth. After the U.S. recession, China's regime came away with hard lessons learned, of which, one of them was that they could no longer rely on the U. S. economy to drive their export heavy, capital intensive economy. "As the U.S. economy has been slowly recovering, China has been trying to shift its economy from a capital-intensive and highly polluting industrial base to a consumer spending and service industry."1
China's regime has sought to achieve this goal by tackling their serious problem of overproduction and overcapacity in many of its industries. "The changes are just part of the central government's economic reforms, many of which could be more difficult than controlling capacity. Beijing's agenda includes restructuring inefficient state-owned firms, revamping China's agricultural land system and remaking the tax system. Those changes also pit the central government against local officials and their allies in industry."2
One such industry in China is the steel industry. The central government has called for many steel mills throughout the country to shut down. This has not been so easy though, for many steel mills are located in cities that are responsible for their own well-being and economy. Government officials in those cities in attempting to comply with the wishes of the regime are faced with the issue of protecting jobs and businesses in those cities, even if it means keeping these same factories open and operating in the red.
However, the economy is still growing there. "China's gross domestic product for the second quarter of this year rose 7.5 percent from a year earlier, up from 7.4 percent growth in the first quarter."3 "While here in the U.S. Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 2.9 percent in the first quarter of 2014 according to the "third" estimate released by the Bureau of Economic Analysis."4
The keyword again is growth. 7.5 percent is still awesomely great! One fund that I believe will continue to do well in an economy that is still growing is the Guggenheim China Technology ETF (Ticker: CQQQ). It has a 4 star rating by Morningstar. It's year-to-date return is 5.0 percent. I'ts 1 year return is 38.8 percent and its 3 year return is 10.6 percent. Awesome returns on investment. The Fund, using a low-cost “passive” or “indexing” investment approach, seeks to replicate, before fees and expenses, the performance of the AlphaShares China Technology Index. The fund shares, through American Deposit Receipts (ADRs), Global Depository Receipts (GDRs) and International Depository Receipts (IDRs), represents some of the top-traded companies located in China, Hong Kong or Macau.
The index itself has done well and this fund may be a good place to diversify your portfolio holdings in case of an American market pullback, in addition to benefitting from the low cost fees and the adverse consequence of trying to predict and time the markets, this fund is a great place to park some dough. If you would like to know more about this fund, call me (Rick) at 1-866-801-3359 or visit our website and fill out the secure form on the Wealth Products page with a description of your request in the comments section of the form.
References:
1 Lingling Wei, Bob Davis, "In China Beijing fights Losing Battle to Reign in Factory Production: Some Chinese Localities Stymie Efforts to Curb Industrial Overcapacity and Pollution", The Online Wall Street Journal, July 15, 2014, July 17, 2014. http://online.wsj.com/articles/in-china-beijing-fights-losing-battle-to-rein-in-factory-production-1405477804?mod=WSJ_hp_EditorsPicks
2 Lingling Wei, Bob Davis, 2.
3.Lingling Wei, Bob Davis, 3
4 Lisa Mataloni, "Gross Domestic Product: First Quarter 2014 (Third Estimate)", Bureau of Economic Analysis U.S. Department of Commerce, June 25, 2014, July 17, 2014. http://bea.gov/newsreleases/national/gdp/2014/pdf/gdp1q14_3rd.pdf
Brought to you by: ThrushyMedia
**We are not paid to promote, or sell any of the Guggenheim family of funds. Our recommendations are based solely on our own research. If you are interested in any of our recommendations, please call us first or your own financial advisor before you invest. Some investments are not suitable for some investors and involve a certain amount of risk.
The Dow Jones Industrial Average (DJIA) and the Standard and Poor's 500 (S&P500) are doing really well. Both market indices are trading at historic highs. And the question you should ask yourself right now is, should you still be investing in the U.S. equity markets or should you be taking money off the table? Should you a take a contrarian view and sell short, since everyone else seems to be still buying or should you just look elsewhere? I say look elsewhere.
The above decision also depends on whether you expect continued growth in the U.S. economy, albeit slow growth. Of course, there are other economies that are doing well also, such as the Chinese economy. I believe that the Chinese economy, although saddled with some serious structural issues, can provide a great place to receive spectacular returns on investment. Without getting into all the macro and micro economic niceties of trying to explain why and how and because this blog is not the venue for such a serious economic discussion, I will try to sum up as quickly as possible a few points of interest that bolsters the argument for investing in that country.
Before the U.S. recession, the Chinese economy, tethered to the U.S. economy, grew and enjoyed rapid, awesome growth. After the U.S. recession, China's regime came away with hard lessons learned, of which, one of them was that they could no longer rely on the U. S. economy to drive their export heavy, capital intensive economy. "As the U.S. economy has been slowly recovering, China has been trying to shift its economy from a capital-intensive and highly polluting industrial base to a consumer spending and service industry."1
China's regime has sought to achieve this goal by tackling their serious problem of overproduction and overcapacity in many of its industries. "The changes are just part of the central government's economic reforms, many of which could be more difficult than controlling capacity. Beijing's agenda includes restructuring inefficient state-owned firms, revamping China's agricultural land system and remaking the tax system. Those changes also pit the central government against local officials and their allies in industry."2
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| Rolls of Steel Sheets |
One such industry in China is the steel industry. The central government has called for many steel mills throughout the country to shut down. This has not been so easy though, for many steel mills are located in cities that are responsible for their own well-being and economy. Government officials in those cities in attempting to comply with the wishes of the regime are faced with the issue of protecting jobs and businesses in those cities, even if it means keeping these same factories open and operating in the red.
However, the economy is still growing there. "China's gross domestic product for the second quarter of this year rose 7.5 percent from a year earlier, up from 7.4 percent growth in the first quarter."3 "While here in the U.S. Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 2.9 percent in the first quarter of 2014 according to the "third" estimate released by the Bureau of Economic Analysis."4
The keyword again is growth. 7.5 percent is still awesomely great! One fund that I believe will continue to do well in an economy that is still growing is the Guggenheim China Technology ETF (Ticker: CQQQ). It has a 4 star rating by Morningstar. It's year-to-date return is 5.0 percent. I'ts 1 year return is 38.8 percent and its 3 year return is 10.6 percent. Awesome returns on investment. The Fund, using a low-cost “passive” or “indexing” investment approach, seeks to replicate, before fees and expenses, the performance of the AlphaShares China Technology Index. The fund shares, through American Deposit Receipts (ADRs), Global Depository Receipts (GDRs) and International Depository Receipts (IDRs), represents some of the top-traded companies located in China, Hong Kong or Macau.
The index itself has done well and this fund may be a good place to diversify your portfolio holdings in case of an American market pullback, in addition to benefitting from the low cost fees and the adverse consequence of trying to predict and time the markets, this fund is a great place to park some dough. If you would like to know more about this fund, call me (Rick) at 1-866-801-3359 or visit our website and fill out the secure form on the Wealth Products page with a description of your request in the comments section of the form.
References:
1 Lingling Wei, Bob Davis, "In China Beijing fights Losing Battle to Reign in Factory Production: Some Chinese Localities Stymie Efforts to Curb Industrial Overcapacity and Pollution", The Online Wall Street Journal, July 15, 2014, July 17, 2014. http://online.wsj.com/articles/in-china-beijing-fights-losing-battle-to-rein-in-factory-production-1405477804?mod=WSJ_hp_EditorsPicks
2 Lingling Wei, Bob Davis, 2.
3.Lingling Wei, Bob Davis, 3
4 Lisa Mataloni, "Gross Domestic Product: First Quarter 2014 (Third Estimate)", Bureau of Economic Analysis U.S. Department of Commerce, June 25, 2014, July 17, 2014. http://bea.gov/newsreleases/national/gdp/2014/pdf/gdp1q14_3rd.pdf
Brought to you by: ThrushyMedia
**We are not paid to promote, or sell any of the Guggenheim family of funds. Our recommendations are based solely on our own research. If you are interested in any of our recommendations, please call us first or your own financial advisor before you invest. Some investments are not suitable for some investors and involve a certain amount of risk.
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