I wouldn’t call myself a crisis investor.
I prefer the safe-and-steady route.
Still, now and then, my inner speculative demons get so loud, it’s hard for me to ignore them.
This time, they’re telling me about a depressed and hated market no sensible investor would touch at this point…
It’s a crisis investor’s dream.
A Word Of Caution
Before I continue, though, I must warn you about the dangers of investing in this manner.
Sure, by buying something that’s falling in price, you have a unique opportunity to grab an undervalued asset.
However, there’s also a high probability that you’re going to catch a falling knife… and the asset will depreciate further.
On top of that, it could take years before the price finally recovers and you start seeing the returns you were hoping for.
So, as always, you need to understand the risk you’re taking.
What If You’re Right And They’re Wrong?
Now, let’s talk more about the opportunity…
My father, one of the best investors I know, always said to me, “Son, as long as you move in the opposite direction as everyone else, you will succeed.”
Lately, the financial world has been staunchly moving in one direction—away from China.
We are in the midst of a full-blown trade war… with some saying it could turn into an actual shooting war…
The economic data coming out of China is the worst in 17 years…
The trade negotiations with the United States have all but fallen apart…
Protesters have completely paralyzed Hong Kong, the center of Chinese trade with the world…
Besides Iran and Venezuela, China might be the worst market for investors right now… at least according to the mainstream narrative.
But, as another great businessman famously said, “Be fearful when others are greedy, and greedy when others are fearful.”
And my greedy speculative demons are telling me that China is the trade to make right now.
The Big Picture Never Lies
Let’s look at the facts.
If we ignore the current negative sentiment and look at the big picture, we see a completely different China… a China that continues its rise to economic superpower…
It’s a leading country in fintech…
Number two in the world in autonomous driving, education technology, virtual reality, and wearables…
Number three in artificial intelligence and machine learning…
And, 34% of the world’s unicorns (startups with a valuation of over $1 billion) come from China. Furthermore, if you look at the share of global unicorn value, China represents a whopping 43%.
So, now we come to the big question…
Why is a country with such positive outlook trading so low?
Hang Seng and Shanghai Composite, China’s leading stock indexes are trading 25% and 50% below their all-time highs.
It doesn’t make sense. Clearly, Mr. Market is behaving irrationally again.
I believe that this is just a short-term anomaly, making China the perfect crisis trade.
If you’re looking for ways to invest, the fastest way is through an ETF.
iShares China Large-Cap (FXI) and iShares MSCI China (MCHI) are two of the largest ones. Alternatively, if you’re looking for exposure to other emerging markets, I suggest you also consider iShares MSCI Emerging Markets (EEM).