Will Emerging China Change Things for Domestic Investing?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
purpleradish
Posts: 20
Joined: Sat Jul 23, 2016 2:59 pm

Will Emerging China Change Things for Domestic Investing?

Post by purpleradish »

The past 100 years the market has always gone up but the underlying theme here has been that America has been a superpower and always a leader in innovation.

Is it silly to think that things might change with China rising and becoming more dominant in innovation, power, and economics over the next 20-30 years?

China seems to be investing heavily in industries and education that will pay off down the line while America seems to be doing everything possible to stagnate its growth and future.

My underlying question is that with China looming can we safely continue to expect the domestic market to “always go up” over time.
raisinsaregrapes
Posts: 133
Joined: Thu Dec 21, 2017 4:24 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by raisinsaregrapes »

I think it was Warren Buffet that said "Never bet against America."
thx1138
Posts: 1129
Joined: Fri Jul 12, 2013 2:14 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by thx1138 »

Consider the UK that had its entire empire collapse just after being bombed into oblivion during WWII. That's about as big an economic change as one can possibly imagine for a country. Seems a lot more significant than a rising China...

And what were the effects of that on the UK equity returns? Well not much...

http://monevator.com/uk-historical-asset-class-returns/

In particular note the real equity return from 1899-2009 was 5.0%. The real equity return from 1959-2009 was 5.2%. Doesn't seem like the collapse of their entire world wide empire did much to reduce their long term equity returns, in fact they went up slightly.

As usual, ignore the noise and stay the course.
david1082b
Posts: 371
Joined: Fri Jun 09, 2017 12:35 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by david1082b »

You can just get global indexing and not worry about returns of individual nations so much.
China seems to be investing heavily in industries and education that will pay off down the line while America seems to be doing everything possible to stagnate its growth and future.
This seems close to banned topics imo:
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include: US or world economic, political, tax, health care and climate policies rules
Just fyi in case the thread gets locked.
User avatar
whodidntante
Posts: 9575
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: Will Emerging China Change Things for Domestic Investing?

Post by whodidntante »

raisinsaregrapes wrote: Wed Feb 21, 2018 8:12 pm I think it was Warren Buffet that said "Never bet against America."
Do you consider investing in China to be betting against America? I don't.
RRAAYY3
Posts: 926
Joined: Thu Jan 17, 2013 12:32 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by RRAAYY3 »

purpleradish wrote: Wed Feb 21, 2018 8:07 pm The past 100 years the market has always gone up but the underlying theme here has been that America has been a superpower and always a leader in innovation.

Is it silly to think that things might change with China rising and becoming more dominant in innovation, power, and economics over the next 20-30 years?

China seems to be investing heavily in industries and education that will pay off down the line while America seems to be doing everything possible to stagnate its growth and future.

My underlying question is that with China looming can we safely continue to expect the domestic market to “always go up” over time.
Why am I 50/50 US/INT’L? This ^
User avatar
FrugalInvestor
Posts: 5686
Joined: Fri Nov 07, 2008 12:20 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by FrugalInvestor »

It wasn't that long ago that the fear was of Japan taking over the world and specifically the U.S. economically. Personally I'll go with Jack and Warren and bet on the U.S.
Have a plan, stay the course and simplify, but most importantly....Ignore the Noise!
User avatar
unclescrooge
Posts: 5505
Joined: Thu Jun 07, 2012 7:00 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by unclescrooge »

purpleradish wrote: Wed Feb 21, 2018 8:07 pm The past 100 years the market has always gone up but the underlying theme here has been that America has been a superpower and always a leader in innovation.

Is it silly to think that things might change with China rising and becoming more dominant in innovation, power, and economics over the next 20-30 years?

China seems to be investing heavily in industries and education that will pay off down the line while America seems to be doing everything possible to stagnate its growth and future.

My underlying question is that with China looming can we safely continue to expect the domestic market to “always go up” over time.
Maybe, maybe not. All of this is irrelevant. At the end of the day, the only thing that matters is valuation.

At the end of 2015, the collapse in oil prices meant Russian government couldn't balance it's books, and it had invaded Crimea. Unemployment was high, and Russian stocks were selling at single-digit PEs. If you had igonored the noise and bought the country ETF, you would've made 50% return in 2016. Nearly a 100% return if you had bought Russian small caps.

The moral of the story is you shouldn't overthink this. Buy what's cheap, sell what's dear.
RRAAYY3
Posts: 926
Joined: Thu Jan 17, 2013 12:32 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by RRAAYY3 »

I don’t have much confidence in America maintaining its global prowess

I’ll just leave it at that
naha66
Posts: 198
Joined: Sun Jul 14, 2013 6:02 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by naha66 »

RRAAYY3 wrote: Wed Feb 21, 2018 9:15 pm I don’t have much confidence in America maintaining its global prowess

I’ll just leave it at that
How much time have you spent in Asia?
Woodlake
Posts: 47
Joined: Tue Mar 28, 2017 8:25 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by Woodlake »

buy CQQQ

go to china and see its dominance in technology yourself
there is no cash and credit cards in china anymore, tencent and alibaba dominates the payment market with their mobile app wechat and alipay

even when you go to a spa in china, you just have to bring your phone, no wallet, and all tips are done via wechat app

not to mention taxi, utility bills, phone bill, and anything you can think of, you can pay it via wechat/alipay

china is all about internet, all the internet companies you can think of in america, twitch, twitter, snapchat, instagram, netflix, china has the same thing except its 100 times bigger

the only thing china doesnt have is facebook, because the facebook equivalent (RENN, renren inc) is already dead in china, everyone use wechat/weibo now
jayk238
Posts: 715
Joined: Tue Jan 31, 2017 1:02 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by jayk238 »

This thread is inflammatory.
raisinsaregrapes
Posts: 133
Joined: Thu Dec 21, 2017 4:24 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by raisinsaregrapes »

whodidntante wrote: Wed Feb 21, 2018 8:42 pm
raisinsaregrapes wrote: Wed Feb 21, 2018 8:12 pm I think it was Warren Buffet that said "Never bet against America."
Do you consider investing in China to be betting against America? I don't.
I read the question as more of a fear of lack of growth in the domestic economy.
RRAAYY3
Posts: 926
Joined: Thu Jan 17, 2013 12:32 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by RRAAYY3 »

naha66 wrote: Wed Feb 21, 2018 9:22 pm
RRAAYY3 wrote: Wed Feb 21, 2018 9:15 pm I don’t have much confidence in America maintaining its global prowess

I’ll just leave it at that
How much time have you spent in Asia?
None ... but plenty in Europe. Good times.
traveler901
Posts: 65
Joined: Wed Aug 02, 2017 3:50 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by traveler901 »

Woodlake wrote: Wed Feb 21, 2018 9:53 pm buy CQQQ

go to china and see its dominance in technology yourself
there is no cash and credit cards in china anymore, tencent and alibaba dominates the payment market with their mobile app wechat and alipay

even when you go to a spa in china, you just have to bring your phone, no wallet, and all tips are done via wechat app

not to mention taxi, utility bills, phone bill, and anything you can think of, you can pay it via wechat/alipay

china is all about internet, all the internet companies you can think of in america, twitch, twitter, snapchat, instagram, netflix, china has the same thing except its 100 times bigger

the only thing china doesnt have is facebook, because the facebook equivalent (RENN, renren inc) is already dead in china, everyone use wechat/weibo now
It's almost like there is massive legal barriers to keep out competition :happy


And no, China does not have something like Netflix but 100 times bigger, or Twitter but 100 times bigger, or any tech company that is 100 times bigger.

Paying through a phone app sounds amazing and super convenient. However, when discussing China's economy and comparing the economies of US and China, it is quite literally very meaningless.
traveler901
Posts: 65
Joined: Wed Aug 02, 2017 3:50 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by traveler901 »

RRAAYY3 wrote: Wed Feb 21, 2018 9:15 pm I don’t have much confidence in America maintaining its global prowess

I’ll just leave it at that
It is of course possible that US loses quite a bit of it's global market cap share. I just don't see a single country that will come close to competing with the US anytime soon. In fact I think you could even make an argument that China's economy is nearing it's peak.

I say this as someone who heavily tilts towards EM and who does business in much of Asia, including China.
harvestbook
Posts: 795
Joined: Sat Mar 18, 2017 7:12 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by harvestbook »

raisinsaregrapes wrote: Wed Feb 21, 2018 8:12 pm I think it was Warren Buffet that said "Never bet against America."
True, but few of us get to live Warren Buffet's timeline. Interesting that he and Bogle both have heavily US-centric views that don't seem as common among the younger class of "investor types who get in the press." It's almost as if confirmation bias exists.

I'll keep a 10 percent EM allocation just in case they're wrong.
I'm not smart enough to know, and I can't afford to guess.
RRAAYY3
Posts: 926
Joined: Thu Jan 17, 2013 12:32 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by RRAAYY3 »

traveler901 wrote: Thu Feb 22, 2018 6:43 am
RRAAYY3 wrote: Wed Feb 21, 2018 9:15 pm I don’t have much confidence in America maintaining its global prowess

I’ll just leave it at that
It is of course possible that US loses quite a bit of it's global market cap share. I just don't see a single country that will come close to competing with the US anytime soon. In fact I think you could even make an argument that China's economy is nearing it's peak.

I say this as someone who heavily tilts towards EM and who does business in much of Asia, including China.
I don’t think it’ll be a single country either ... which is why I’m quite heavy Int’l Markets as a whole
aristotelian
Posts: 8584
Joined: Wed Jan 11, 2017 8:05 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by aristotelian »

Why would China's economic growth be bad for the US? US growth has been good for everyone else, generally speaking. Maybe we will start making cars and toys for the Chinese.
User avatar
Sandtrap
Posts: 12356
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona
Contact:

Re: Will Emerging China Change Things for Domestic Investing?

Post by Sandtrap »

All the more reason to consider the Vanguard Global Wellesley Fund, or similar funds.
Local economies are no longer "self contained". Each interdependent on the other.
The question itself is a bit skewed.
Actionably:
https://www.bogleheads.org/wiki/Behavioral_pitfalls
Wiki Bogleheads Wiki: Everything You Need to Know
Yooper16
Posts: 293
Joined: Mon Aug 21, 2017 7:44 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by Yooper16 »

Young (38) man we know, has been living and teaching in China for the last 12 years. Teaches at the science and economic university in Chengdu. He is not Chinese by birth. His worlds view is formed by being born, raised, educated in the Midwest and living almost 1/3 his life in China.

He has few doubts on the abilities of the Chinese to challenge and successfully compete against the US on any level.

It may be China, it may be some other country. For my remaining time horizon, the Chinese effect on my investing is more of a potential for gain. At this point though, I can still be successful by having a home biased investment outlook. Not so sure about the next generations time horizon.

History tells us time and time again, that empires do not last. I guess the last two would be the Soviet Union and Great Britain. Soviets got 60ish years, GB maybe 200 years. This will apply whether the empire is about land and its value of goods and serives being returned to the homeland or the value of goods and services produced by the homeland. Someone- someday will do it better.

To assume that this time it will be different, ie the US never loses its preeminence, would be poking a stick at history.
Dominic
Posts: 419
Joined: Sat Jul 02, 2016 11:36 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by Dominic »

It won't.

Diversification has always been, and will always be, our best method of minimizing risks and maximizing returns. This is true whether China continues its rapid growth, or it begins to stagnate.

Hold international index funds. Anywhere between 20% of equities and market cap weight. If you're feeling bold, overweight emerging markets. Without a crystal ball, that's the best advice anyone can offer.
Yooper16
Posts: 293
Joined: Mon Aug 21, 2017 7:44 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by Yooper16 »

Dominic wrote: Thu Feb 22, 2018 5:21 pm It won't.

Diversification has always been, and will always be, our best method of minimizing risks and maximizing returns. This is true whether China continues its rapid growth, or it begins to stagnate.

Hold international index funds. Anywhere between 20% of equities and market cap weight. If you're feeling bold, overweight emerging markets. Without a crystal ball, that's the best advice anyone can offer.
Would diversification away from home country investment bias, be conceding that emerging country XX has already changed things for domestic investing?
RRAAYY3
Posts: 926
Joined: Thu Jan 17, 2013 12:32 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by RRAAYY3 »

aristotelian wrote: Thu Feb 22, 2018 11:28 am Why would China's economic growth be bad for the US? US growth has been good for everyone else, generally speaking. Maybe we will start making cars and toys for the Chinese.
“Maybe we will start making cars and toys for the Chinese ... “

Please tell me you’re joking.
Dominic
Posts: 419
Joined: Sat Jul 02, 2016 11:36 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by Dominic »

Yooper16 wrote: Thu Feb 22, 2018 7:08 pm
Dominic wrote: Thu Feb 22, 2018 5:21 pm It won't.

Diversification has always been, and will always be, our best method of minimizing risks and maximizing returns. This is true whether China continues its rapid growth, or it begins to stagnate.

Hold international index funds. Anywhere between 20% of equities and market cap weight. If you're feeling bold, overweight emerging markets. Without a crystal ball, that's the best advice anyone can offer.
Would diversification away from home country investment bias, be conceding that emerging country XX has already changed things for domestic investing?
I don't think so. A pinch of home-country bias has always been ideal, considering that you're going to need to pay for things with your home currency, and foreign equities are generally not currency-hedged.

I'd say tilt international exposure to emerging away from developed, if anything. This is only because emerging markets are less correlated to US markets than developed markets are. It's not because I think the US will do poorly, necessarily.
naha66
Posts: 198
Joined: Sun Jul 14, 2013 6:02 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by naha66 »

Woodlake wrote: Wed Feb 21, 2018 9:53 pm buy CQQQ

go to china and see its dominance in technology yourself
there is no cash and credit cards in china anymore, tencent and alibaba dominates the payment market with their mobile app wechat and alipay

even when you go to a spa in china, you just have to bring your phone, no wallet, and all tips are done via wechat app

not to mention taxi, utility bills, phone bill, and anything you can think of, you can pay it via wechat/alipay

china is all about internet, all the internet companies you can think of in america, twitch, twitter, snapchat, instagram, netflix, china has the same thing except its 100 times bigger

the only thing china doesnt have is facebook, because the facebook equivalent (RENN, renren inc) is already dead in china, everyone use wechat/weibo now
If you think payment apps are technology you need a reality check, I can give a 1st hand view of their technology, the company I worked for set up manufacturing plants for some of our products and help in their build up of their power plants. In just a few years their own government plants were churning copies of our control components. They spend pennies on R&D, I'm sure they come up with some of their own designs, but only if they can't copy some one elses.
TheGreyingDuke
Posts: 1822
Joined: Fri Sep 02, 2011 10:34 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by TheGreyingDuke »

naha66 wrote: Fri Feb 23, 2018 9:50 pm If you think payment apps are technology you need a reality check, I can give a 1st hand view of their technology, the company I worked for set up manufacturing plants for some of our products and help in their build up of their power plants. In just a few years their own government plants were churning copies of our control components. They spend pennies on R&D, I'm sure they come up with some of their own designs, but only if they can't copy some one elses.
The stealing of trade business was also the engine that drove US early industrialization:

https://www.thoughtco.com/francis-cabot ... on-1991932
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells
Valuethinker
Posts: 41713
Joined: Fri May 11, 2007 11:07 am

Re: Will Emerging China Change Things for Domestic Investing?

Post by Valuethinker »

naha66 wrote: Fri Feb 23, 2018 9:50 pm
Woodlake wrote: Wed Feb 21, 2018 9:53 pm buy CQQQ

go to china and see its dominance in technology yourself
there is no cash and credit cards in china anymore, tencent and alibaba dominates the payment market with their mobile app wechat and alipay

even when you go to a spa in china, you just have to bring your phone, no wallet, and all tips are done via wechat app

not to mention taxi, utility bills, phone bill, and anything you can think of, you can pay it via wechat/alipay

china is all about internet, all the internet companies you can think of in america, twitch, twitter, snapchat, instagram, netflix, china has the same thing except its 100 times bigger

the only thing china doesnt have is facebook, because the facebook equivalent (RENN, renren inc) is already dead in china, everyone use wechat/weibo now
If you think payment apps are technology you need a reality check, I can give a 1st hand view of their technology, the company I worked for set up manufacturing plants for some of our products and help in their build up of their power plants. In just a few years their own government plants were churning copies of our control components. They spend pennies on R&D, I'm sure they come up with some of their own designs, but only if they can't copy some one elses.
If you wander around any highly ranked PhD programme in STEM in the world you find lots, even a majority, of candidates from China or India.

Perhaps even a majority.

Do not assume that they cannot do R and D.

A reflection on Chinese subway systems or airports Vs American (or British) would not make one feel smug. Even allowing for excessive capital investment.
naha66
Posts: 198
Joined: Sun Jul 14, 2013 6:02 pm

Re: Will Emerging China Change Things for Domestic Investing?

Post by naha66 »

Post Reply