How China’s Economy Passed the United States

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.
[interlocking Chinese and American flag puzzle pieces]

China Puts the Smackdown on the United States

In the United States, we used to be able to chant, “We’re No. 1; we’re No. 1.” Well, we can’t do that anymore — at least when it comes to the size of our economy.

According to the International Monetary Fund, when you measure national economic output in “real” terms of goods and services, this year China will produce $17.6 trillion vs. the United States, which will produce $17.4 trillion.

While this total output figure doesn’t tell the whole story, it does suggest that at least by this important metric, we aren’t No. 1 anymore. That distinction belongs to our neighbors in the Far East.

For investors, China’s smackdown of the United States here is something that should be embraced, especially because size does matter when it comes to investing in international markets.

Take a look at the two-year chart here of the Shanghai Composite Index ($SSEC). As you can see, Chinese stocks trended lower from early 2013 through mid 2014. Since then, however, there has been a huge rebound in Chinese stocks.

SSEC_120514

This big rebound has taken place due to various factors, including Chinese stock market reforms, an interest rate cut by the People’s Bank of China and a stabilization of economic growth.

I suspect that this trend will continue in 2015, as investors look to ride momentum in international sectors and also as stocks here at home rise to overbought levels. Then there’s the issue of the increasingly strong U.S. dollar, which could actually have a negative effect on U.S.-based equities.

Exclusive  Four Best Ways to Invest in China Include a Mutual Fund and Several Growth Stocks

In my Successful ETF Investing advisory service, we’ve been on board the China train for some time, and my subscribers currently are profiting from several funds pegged to the fate of the new global economic No. 1.

If you’d like to find out more about how you can make money investing in China, check out my Successful ETF Investing newsletter right now.

Cambrian Wisdom

If it was up to me
I would’ve figured you out
Way before the year clocked out…

–Coheed and Cambria, “The Suffering”

This time of year, we tend to start looking back and trying to figure out what we did well, and what we did wrong, during the previous 11-plus months. This can be a valuable undertaking, but just make sure you remain objective when doing so. Doing so will allow you to learn how to repeat the success and to learn from your mistakes.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Weekly ETF Report readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week about the benefits offered by investing in ETFs. I also invite you to comment in the space provided below.

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Gross Output, a broader measure of U.S. economic activity published by the Bureau of Economic Analysis, advanced to nearly $30.9 trillion in the second quarter of 2014, a 4.8% jump in real terms (annualized).

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