Your Questions About How To Invest In China

Carol asks…

What do you think of the same global investors in China energy shutting down energy sources in the US?

CO2 and water vapor coming out of coal burning power plants has been propagandized as a threat against global warming by retards like Al Gore, yet these people are heavily invested in energy in China, which by the way carries their pollution back to the US through the jet stream.

John answers:

China will own us in a few years.

Helen asks…

What can China do to improve energy consumption to decrease pollution — especially in terms of coal?

I’m trying to do an economic analysis of the role of energy consumption in China‘s ever-increasing pollution problem. If anyone could provide answers either quantitative or qualitative in nature it would be much appreciated. The sooner the better!

John answers:

Not toally sure. They could invest in alternate energy. However, I’m not sure they will. I don’t think they would… I think that American criticism/other critics of their policies is not working and has only inflamed them. However, my idea to fix this is by working with the Chinese cooperatively on trying to make some pollution agreements/agreements on how much emissions everyone should have. Its difficult but I prefer dialogue rather than criticism. Also, if they pass that, (sign the agreement and start working on it) then both countries should work on getting more alternate energy. Partnerships and cooperation could occur..and that would help However I think my ideas could be very idealist and may not occur.

Paul asks…

What is the best way to invest my money?

I’m 22 and don’t know much of anything about investing. I’ve looked into Bonds and I’ve heard way to many horror stories involving mutual funds to even consider it. I have 12,000 to invest and I am looking for a medium gain over a period of 5 – 10 years. Im not interested in high risk as I have a family to take care of and looking to make a career change in the next 2 years. Also if anyone could recommend a good financial planner for me to talk to that would be a big help.
I already have 5,000 in a CD and Im in the military and have a retirement account set up with them, I’m just looking for other options.

John answers:

I”m going to agree with some of what has been said and disagree with some of it.
In the interest of full disclosure, I”m about to recomend some things I’m currently doing. I’m also going to recomend some I’m not doing but would like to. I’m not a representitive of any one, and I work for my self. I began investing at 17, I retired at 45.

CD’s will be the first topic. Why any one would ever get into one of those is beyond my ability to understand. You can get a couple of points better return in 30 year TBills. FDIC insurance is nothing to boast about. The american tax payer stands behind the TBill. The CD will cost you if you ever need to get out in a hurry. The Tbill will cost you a commission from your broker and your check will be in the mail box in about 10 days. The whole process takes one phone call. Most CD’s are either just behind inflation (your losing buying power) or just keeping up (your not making any gains while the bank is using your money) and your buying power is stagnant and if you owe taxes on it, you just lost.

Mutual funds. I can undersand your dislike of these. Let me add to your horror stories. The following experiment has been conducted over and over with the same result, reguardless of who conducts the experiment. The results of every mutual fund is tallied, and then an average is obtained. Remember this is an average of every pro manager, both the good and the bad. Remember these people are pro’s, complete with lots of collage degrees. The wall street Journal is then tacked to a wall. 3 darts are thown at the wall. What ever stock is hit, is bought. At the end of a year, (any year you do it) the darts have out perfomed the average pro with all that education. In fact the darts (7 out of 10 times) will out perform the S&P 500. If your willing to do a little homework, you can become quite expert in 2 or 3 stocks. Even if you suck at picking stocks Im sure you can find 3 darts. I have about as much use for mutual funds as a ticker for the price of rice in china.

In as much as you are a novice get some books and educate your self. Investing is not a part of highschool gaduation requirments. Too bad cause its the most profitable thing you will ever lean to do. I guess thats why they don’t teach it. In the mean time take every thing you hear on this forum with a grain of salt. That would include me too. Do your own homework.

That would include getting a pro to help you till you can get enough education to do it your self. It has been suggested that you see edward jones. I agree. Even though I do a lot of my own work I also have an account at edward jones. Having a full time pro in my pocket, is an asset and I use him often.

At your age it would be in your best interest to open a ROTH. Look in the phone book and call an edward jones office near you. They have been in business a long time and have recieved high ratings for service over and over. They have been in business from the very early days of wall street. They tend to take a conservative approach. This is a good starting place for you. Further more a roth has some great advantages. You will have a limit of $4K that you can put in per year, if your married you get to put down a little more. I don’t remember the exact figures as I’m not married so it does not apply to me so I don’t delve to deep into that. Your broker will know. Put as much as you can into that roth. Later in life when you get ready to retire and all you kids are grown and gone (translate no more deductions) you will have an income off of your roth. It will all be federaly tax free. (INSERT EVIL LAUGHTER HERE) In as much as you have time on your side (another valuable asset for you at age 22) use it and let that roth grow. With 12,000 you can max out your contribution 3 years in a row. Back in the day when IRA’s first became available one of the selling points was that if a young man put 2000 (the limit at that time) into an IRA that was averaging 12% per year from age 20 to 25 then he continued to get the return but never added another dime, how much would he have at 65? Then for comparison another individual did not start contributing to his IRA till he was 25 but added to it at that rate till he was 65, who would have the most money. The correct answer is the one who put in from 20 to 25 then quit. The other fellow would never catch up. YOu have time on your side young man, use it or lose it.

You impress me with your abilities so far. To be that age and have that much saved up instead of spending like a fool. If only I could get my son to save more and spend less…..ahhh the dreams of a father. Well at least your on your way. If you continue to use these same frugal habits, you will do well. AFter all its not how much you make but how much you keep. I have seen people with 6 figure incomes who were broke at the end of each month and had nothing in savings at all. They really were just one paycheck away from a cardboard box under and overpass. I guess being smart enough to make a six figure income does not make you wise enough to know what to do with it.

I started married to a woman who was a shop-a-holic. She ran me 10’s of thousands in to debt. I divorced her and paid off all the debt. 4 years after the divorce, I retired. I’ll be turning 47 next month. I thank God for the mentor who taught me to trade. Otherwise, I’d be broke, poor, and still driving a fork lift.

You have 12,000 reasons to learn to invest. I know its a long way off now but one day you will have a very special reason to invest, Its called grand children. I look forward to spoiling mine. (insert evil laughter here) That will take some money and its fun to start them with a little investment account of their own. I have discovered that as my children see a small nest egg grow as they grow up, by the time they are teenagers they have a little more interest in learning to manage it them selves.

If you don’t learn, then you will see inflation eat your money. If you don’t learn and you try to do it in blind ignorance you will see people like me owning your money. (sorry no evil laughter here just a hard cold fact of life).

I personaly have 2 stocks that I work in…thats it, just two. Every one tells me I need to diversify. I don’t need to have a dollar in everything. I just need one thing as long as its the right thing. So many mutual funds do so poorly because they are spread all over everywhere. Because I ‘m more focused, I have made far more money. When your starting off small, focus like a laser beam. When you get big THEN start to spread out.

I have only 2 stocks that I work in. The first is
PVX you can look it up and study it for your self. When I bought the stock a few years ago the price was so low that for the money I put in the dividend equals about 18% return. Now the price is up so it would only equal about 10% return. They pay dividends every month. Thats my bread and butter money. Cha-ching Cha-ching every month…sort of like a paycheck every month weather I get out of bed or not (insert evil laughter here)

The second one is
FRO They pay a dividend quartarly and right now it equals about 15% rate of return. This is my work horse for growth Its like getting a raise 4 times a year. Further more I write a lot of covered calls on this one so my rate of growth is further excellerated. No edward jones does not do options but like I said they are only one account.

I think what I’m trying to say is the best place to invest in, is your own brain. Study and learn. And let edward jones know they owe me some sort of royalty for shamlessly promoting them please. (standard evil laughter again)

You may also wish to start a subscription to investorflix. Let them know they also owe me some sort of fee for promoting them. It works a lot like netfilx but every CD and DVD is only about investing. Its 20 bucks a month. Hit the librairy. Read everything wade cook wrote, take it with a grain of salt, stay away from the margin stuff he rants about. Never pay for anything he has for sale. He makes more money selling wade cook than he does investing sometimes. Just get all you can from the library. Then hit a good book store. Robert Kiyosaki also has some good stuff for the beginer to learn. Don’t go head over heals for his realestate stuff. Again with the grain of salt. Who ever you chose for a broker can also recomend some reading. Learn what a balance sheet is and how to read one. There is a book called your money or your life but I can’t remember the authers name. Something spanish sounding. Its a great place to start with things like your own day to day spening and that will free up more of your income for keeping and less junk that will land in the sanatary land fill. You will learn to see your money for what it is and what it can do for you and how to use it to get what you want out of life. YOur money or your life is a great book and it will help you get started. Its the first book I recomend you read. It got me out of debt in record time, It got me where I am today…so start there.

If every one I have just promoted paid me a fee for doing so I could retire all over again. Oh well. Good luck to you. Now go make your own luck. (insert your own evil laughter here)

William asks…

Why does China copy so many things off other counties? How will this affect China in the long run?

Does this make China lose their ability to innovate? Why don’t we do anything about it?

John answers:

Government desicions are based on the country’s current status.

China is still a vastly underdeveloped country.

There may be a lot of big cities, some rich Chinese and a huge total number of wealth, but 70% of Chinese are still farmers that earn little more than feeding themselves.

So what the Chinese government would do? Protect foreign interest and have Windows sold in China at a price that’s equal to a whole month’s income of a Chinese farming family and lock them behind? Or pretend to be blind to piracy so these poor people can have access to more advanced western technology?

It’s the same in other areas.

Actually China has some really strong big companies who are innovative and competent.

I’ll give you an example.
55% of the world’s 3G services has to do with technologies and services from a private Chinese company called Huawei that was started by a low-profile Chinese worker repairing street lamps in the 90s. The company also makes phones for some of the world’s famous phone brands like Samsung and Nokia, they just stay behind the scene and don’t use their own brand yet since Made in China is not so trusted in the high tech areas.

But the vast majority of Chinese business are small factories run by lowly educated people who left the farmlands for a better future. They have little fund and can risk little, so it’s lot easier and more practical for them to just copy stuff from others and the Chinese government would give them this opportunity and make room for the possibility that one day these little underdeveloped companies would develope into something like Huawei.

China will start protecting copy rights and stop copying once the majority of Chinese business have reached a level where they can afford to invest in their own innovation. They’ll get there, it’s just not now.

Betty asks…

How does China do it? Produce goods at such low rate, exporting to so many countries? How long sustain this?

How can China and its people continue to produce so many goods that so many countries are importing due to such low costs? I would think it is because the workers are paid so little. How long will the chinese workers continue this? Are there any human rights being violated as workers? Or am I just amazed and confused? If the process og a country and people going to evolve to where civil rights will be an issue?

Any facts, historical perspective, or educated opinions are greatly appreciated!

John answers:

I think a good deal of it is that people are paid lower wages in China. But, you have to remember, goods (and food) are also much cheaper in China (and many other Asian countries). Also, not everyone has expensive “luxuries” like cars (and maybe TVs, even) and computers.

As more money comes into China, though, people are going to demand higher wages so they can buy the luxuries that they see the rich and middle class getting even now. And, I don’t think the factories will have too much of a problem with that, as long as they are still making some money and able to re-invest in the company. Since China has a communist ideology as well as a strong Confucianist background, I don’t think you’ll see *quite* the excessive rampage that you might see in a Western country.

Eventually, things will balance out, and their goods will cost as much as any Western countries’ goods. However, they will have a large market (of Chinese), so I don’t think it’s really going to hurt them so much. It’ll be interesting to see how things are 20 years from now.

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