US recession makes foreign stocks cheap
The effects of the credit crunch and US recession has spread across the world to affect virtually every country and surely every stock market. But there is still some good news, foreign stocks are cheap and their P/Es all at multiyear lows with economies that are far stronger than in the United States. This kind of situation makes foreign stocks a no brainer, they’re financially stronger, cheaper and have solvent governments to back up their products.
Sure US names are cheap but they aren’t as cheap as China. There is also a very big difference between a cheap US name and a cheap Chinese name. The US government is facing default while the Chinese government counts surpluses and fights its only inflation problem: that too much money is flowing in to buy Chinas goods.
The US dollar has yet to react to any of the fundamental inflation factors including TARP, the Fed’s interest rate target and the amount of cash spent by the Treasury to stabilize the banking industry. With the US dollar retaining much of its pre-credit crunch value it makes sense to start piling US dollars into foreign stocks both to retain the purchasing power of your currency and to invest in strong businesses that are not dependent on the United States.
To assume that all economies are so interconnected that one cannot live without the other is ridiculous. Its illogical to say that cash rich China could not survive if the US cut back on its consumption. They don’t need the US as much as the US needs them, China is one of the United States’ largest creditors and trade between the US and China keeps the US on the map.
The best way to play this recession isnt to buy US stocks, start buying foreign. Buy the companies in places that are cash rich and sell off the debtors. The US has $10 Trillion in debt while China has $3T in foreign assets and nearly no debts. Dump the debtors and sell the creditors and leverage the investment value of your dollar.
the Economic Recession has been pretty hard on us. some of my friends lost their job because of the massive job cuts. i just hope that our economy becomes better in the following years.
the Economic Recession made a lot of people jobless but at least there is some good progress on the economy this year. i just hope that the economy will continue to recover in the following months and years.
i am hoping that the global economy would recover from this economic recession. life has been very hard with these massive job cuts.
the economic recession made a lot of workers jobless. my best friend and me lost our jobs because of job cuts. i hope that our economy would recover soon
the Economic recession made a lot of jobless people in my own country. We could only hope that our economy becomes strong again
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