American Consequences - June 2018

Hundreds of billions of dollars will flow into these stocks over the next five years... which means our opportunity is huge, even if U.S. stocks eventually enter a bear market. Let’s look at the last time U.S. stocks had a “Melt Down”... You can stop worrying about a trade war killing your China investments.

MSCI USA INDEX

and what happened to Chinese A-shares during that crash... U.S. stocks peaked in March 2000. After the peak, the Nasdaq Composite Index lost 70% of its value by September 2001. This chart shows what happened to Chinese A-shares during the final inning of the last great “Melt Up”... and the subsequent bust. Take a look at the below chart:

feel it. Technology stocks in particular could take a beating. Simply put, U.S. companies need China more than Chinese companies need the U.S. That means U.S. stocks are more vulnerable to a trade war than Chinese stocks. This isn’t the mainstream view, of course. I know folks who’ve followed my advice on China are worried about this. But the numbers are clear.

SHANGHAI VS. NASDAQ: COMPOSITE INDEX

You can stop worrying about a trade war killing your China investments. I believe the overblown rhetoric has set up a buying opportunity. And if a trade war does set in, Chinese stocks are less vulnerable than you probably think. In fact, Chinese stocks can help your portfolio weather a severe bear market in the U.S ...

American Consequences 97

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