If you?ve been following the dynamics of global trade lately, the statistics suggest that China is leading the world as an exporter (seller) of goods and that the US is the world's largest consumer (importer). This isn't really new news, yet, if the direction of global capital flows represents a good indicator of economic growth opportunities, wouldn't this lead you to believe that investing in China makes a lot of sense?
During this past month, I corresponded with my good friend and client, John. John emailed me out of the blue with: ?we need to invest in China?any ideas?? For a number of reasons, John's question startled me. Yet, he had put forth an excellent question that, in my opinion, could not be answered easily through a couple of brief e-mails.
To set the stage, John is a very busy medical professional who barely has time for social activities and much less time to study finance. Yet, I thought his observation about China was very astute. He also inquired about investing in alternative fuels?
In my response to John, I complimented him on exhibiting good instincts in seeking to uncover an investment opportunity. At the same time, however, I expressed that it is also very important to consider how and when you take advantage of opportunities that will determine whether you win or lose.
With global capital flowing into ? or through ? China, I certainly do believe that there is an investment opportunity to consider. However, how exactly, does one take advantage of it? Will opportunities come from currency ? in the form of an appreciating Renminbi (the Chinese ?People's Currency?)? Will it come from an empowered business environment? Or, will it come from an exploitation of their relatively inexpensive labor?
As readers of our newsletter well know, wealth management is the ultimate goal of all that we do at Hoffman, White and Kaelber. Yes, we also promote our services; yet, you will find that we always seek to present thought provoking topics that are relevant to our wide audience.
This is the first of a series of articles that will explore the ?China Machine? as an investment opportunity and how you might want to consider exploiting it. Following that, if you think a highly diversified and conservatively managed portfolio returning 15.22% for the 12 months ended April 30, 2006, is desirable, please be sure to look over our investment performance regularly posted on our web site www.hwkfs.com. It will be well worth the investment.