I’ve been saying this forever, and I’ll keep saying it until my dying breath: I’m anti-communism, so I’m no fan of the Chinese Communist Party… Especially when it comes to its meddling in financial markets…
I have strong capitalistic opinions about global markets, and we discussed this very topic on this week’s episode of Crush the Open — be sure to tune in at 9 a.m. EDT every Monday!
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We were leaning bull over the weekend after a big day for the market Friday. I’m watching futures pop while eating all the kids’ Halloween candy six days before trick or treat… The S&P 500 was up 1%, the Nasdaq was up 1.5%…
Then the Chinese stock market opens and tanks everything after Xi Jinping tightened his grip on power over the weekend, paving the way for an unprecedented third term as president.
Meanwhile, people often ask me if they should buy Chinese stocks. But that’s insane to me…
Crush the Open: Why I Think It’s Stupid to Buy China Stocks
Why the heck would I want to buy Chinese stocks when they have a leader who says he’s more communist than previous leaders, and is hurting publicly traded Chinese companies?
They want control over everything.
China had been opening up its economy and market for most of this millenia, but now Xi seems hellbent on reversing course..
And their stocks are paying the price. Take a look at Alibaba Group Holding Ltd – ADR (NYSE: BABA)… It’s back to its 2016 prices in the low $60s, and ready to crash into the $50s… Since reaching a high just north of $300 a share in October 2020, it was trading just south of $63 a share near Monday’s close, a near-80% fall…
And the iShares FTSE China Large-Cap ETF (NYSEArca: FXI) plunged through its COVID-19 low of $33.10, now trading just under $22, levels not seen since the Great Recession…
So when someone asks me if they should invest in China long term, I’m just like… why?!
There are much better American companies that have gotten smashed and are super cheap, in my opinion. I think you can get similar upside potential with less risk in the U.S.
To me, the answer is clear… So I’m removing the buy button on these commie stocks.
In fact, we discussed a couple of trade ideas in Intel Corp. (Nasdaq: INTC) and Google parent Alphabet Inc. Class A (Nasdaq: GOOGL). The GOOGL trade involves risking $3 a contract to potentially make $10 — and that’s the kind of risk-reward we love to see! I also like the chart pattern for this stock.
So check out Crush the Open up top and we’ll dive in — and have some fun doing it.
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P.S. Ready for the Coming Catastrophe?
The writing is on the wall…
Humanity is on the brink of a modern-day, 21st-century energy catastrophe…
And I believe this crisis is only going to escalate as we head into the cold winter months.
So I’m going to fill you in on everything.
And most importantly, how you could set yourself up to capitalize on the “Energy Supercycle” at hand.