What’s the latest worry facing investors while they await the quadrennial anguish of selecting a president? Right now, it appears to be China.
It’s the world’s second-largest economy, and it’s run by communists. It’s a major player in the global free market system, despite denying basic freedoms to its own citizens. And now some serious cracks are showing. China’s economy grew 5.2% last year, but that growth rate is slowing dramatically – brought on by a deepening real estate crisis and plunging consumer confidence. Its national population decline is accelerating.
Why should you care, especially if you don’t have money invested in China? Because there’s a good chance you actually do. Most of the largest U.S. companies – those that dominate the S&P 500 – do a lot of business in China. They make products there, sell goods and services there, and now China’s problems are hurting their bottom lines. For better or worse, if you own stocks, you have a vested interest in how this plays out.
For investors who need something to stress over at the expense of what really matters – their long-term financial goals – the latest news from China should be a sufficient distraction. If not, Super Tuesday is only six weeks away.
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Words to the Wise
“A mind once stretched by a new idea never regains its original dimensions.”
– Oliver Wendell Holmes
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