Investing in China
I am a big believer in investing in China, in fact a small cap Chinese company is my largest holding at the moment.
Investing in China is not about chasing stocks at a price to earnings multiple of 40 or investing part of my hard earned money in a company that is not ever profitable, not for me at least. Investing in China to me is about looking for a solid company that is bound to do great things.
I heard a quote while watching a financial show a few years ago and it has stuck with me: “Europe was the financial hub of the 19th century, America was the financial superpower of the 20th century and China will be the financial superpower of the 21st century.”
China has over one billion people, far more than the United States, Canada, and Mexico combined. Their government is starting to embrace capitalism more and more and they have a huge surplus. This means they have more than enough money to spend on building infrastructure, roads, bridges… Things that will facilitate commerce and spur the economy towards growth.
The company I am invested in is trading at a 10 price to earnings ratio, has a proven track record, and a great balance sheet. They are also growing, not at an exponential pace, but at a steady, consistent pace.
Do not look for Chinese companies to give you a 50% return in a year, that is unrealistic. Invest in solid Chinese companies for the long term, 10, 20+ years and reap the benefits of their growth and their budding success story.
These days at least 25% of your portfolio should be in companies that do most of their business outside of the United States and a large chunk of that percentage should be in profitable, proven Chinese companies.