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Two Safe Ways to Profit From the "Alibaba Shockwave Effect"

In the mid-1990s, I was fortunate to meet and start working with an Upstate New York money manager named Anthony M. Gallea.

The relationship began when I attended and wrote stories about some of the investment seminars he periodically held for prospective and existing clients. He then became a “source” for some of the investment stories I periodically wrote for Gannett Newspapers. And we ultimately collaborated on a pretty successful book about “Contrarian Investing” that was published by Prentice Hall.

Along the way, Tony shared some pretty important snippets of investing wisdom…

  • Featured Story

    The Hottest Investment Market on Earth

    China has been dominating the headlines in recent days... And not in a good way. Since late last week, worries about slowing growth, financial-system shenanigans, and the potential for an "Asian Contagion" type spillover have whacked global stocks - and have left folks wondering if the Chinese Miracle is over. But China's kind of like a still-young tech venture: There are going to be reversals, it's going to be volatile, and it's normal to expect this kind of whipsaw market action. And let me tell you something else: While it's true that Beijing has some big problems to solve, investors who just write China off are going to miss out on one of the biggest profit opportunities in global technology. Even as the broader economy there slows (meaning it's still growing - just at a slower rate than before), there's a tech-focused slice of that country's market that continues to advance at a scorching pace. In fact, if you look at the numbers, I bet you'll agree with my assessment that we're looking at the hottest investable market on earth. Today I'm going to tell you all about this market... and I'm going to show you exactly how to play this for maximum gain. Full Story
    Full Story
  • China

  • The Golden Yuan Is Coming – Here's How to Play It The U.S. dollar has been the world's de facto reserve currency for almost 90 years. But this financial dominance may be nearing its end. In recent years, China's been floating the idea the yuan should take on the dollar's role as the world's reserve currency. In fact, the Chinese have already negotiated numerous bilateral trade deals that completely bypass it. And they've even called for efforts to "de-Americanize" the global economy. Whatever happens, China's economic rise foreshadows increased influence. It's a trend that not only has serious implications, but also great profit opportunities, if you know what to expect... Read More...
  • China Calls for a "De-Americanized World" 10152013KFG2

    Yesterday (Monday), Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on FOX Business' "Varney & Co."to respond to China's newly released blast on U.S. foreign policy.

    The statement was released in Chinese state-run media yesterday. It calls for a "de-Americanized world," and that's not all.

    To continue reading, please click here...
  • Keith Fitz-Gerald Sheds Different Light on China’s Economic Growth Forecasts Keith-Fitz Gerald china economic growth

    We've heard reports of a slowdown in the Chinese juggernaut. Forecasts have shown that China's economy will grow by "only" 7.5% in the second quarter of 2013.

    Europe is already in a recession, and America's own economic growth is wheezing along at less than 1% this quarter.

    Is the media hype about China's economic growth slowdown overblown, or will it have real fallout for the United States and Europe?

    Money MorningChief Investment Strategist Keith-Fitzgerald speaks with FOXBusiness' "Varney & Co."about what these figures really mean for the global economy. Watch the following video for the answer.

    To watch the video, please click here...

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  • Why Jim Chanos is Wrong About China's "Ghost Cities" city-building

    China's "ghost cities" present the West with the shocking images of vast urban areas that sit nearly empty.

    In a striking report, shown recently on CBS News' "60 Minutes,"there are rows of high-rise apartment buildings, tracts full of suburban American-sized detached homes and  imposing government edifices in China's western  desert that are empty and utterly devoid of any signs of life.

    Their existence has raised more than a few red flags among investors.

    To continue reading, please click here...

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  • Invest in the Chinese Yuan Before It Takes Over the Financial World Currency yuan The yuan will replace the U.S. dollar as the world’s dominant reserve currency. That’s why now’s a good time to invest in the yuan. Read more... Read More...
  • Why China Is Tunneling a Mind-Boggling 800 Miles in 2 Years China plans to add 800 miles to its subway system over the next two years. By all measures, this is a massive infrastructure buildout. Here's what it means for those 1.3 billion citizens and for investors in China, too. Read More...
  • These Mining Companies Will Profit from China's Good News China announced industrial production data for October today (Friday), showing industrial value-added up 9.6% year-on-year, up from 9.2% in September and 8.9% in August.

    This is great news for mining companies.

    "Data out today provides convincing evidence that the modest macro recovery we've been anticipating is well underway," wrote Shanghai-based Andy Rothman, China Macro Strategist for CLSA Asia-Pacific Markets. "Industrial value-added, power generation, retail sales and new home sales all improved in October, while inflation remains so low that it is not a policy factor."

    Infrastructure investment in October was up 24.9% year-on-year, continuing the rebound begun in September.

    Rothman explained, "...this infrastructure rebound is the result of the government fixing approval and financing bottlenecks for projects originally scheduled to be built this year, not due to a stimulus."

    Looking at prices, industrial input prices fell by 1.7% year-on-year in October, an improvement from the 4.1% decline seen in September.

    "We are starting to see a bit of a bump up in both input and output prices, which is consistent with our view that the growth rate of industrial inventory levels has slowed and a modest macro recovery is underway," Rothman concluded.

    This has led some economists to believe that this increase in industrial production in China will be positive for commodity prices, including Li-Gang Liu and Hao Zhou who work for Australian bank ANZ.

    If this is the case, it'll benefit the global "mega miners" that have seen their share prices tumble since the slowdown in China began back in 2011.

    Mining Companies That Benefit from China Demand

    BHP Billiton (NYSE: BHP), based in Australia, is the world's largest mining company and sells iron ore, base metals, potash, aluminum, metallurgical coal, thermal coal, manganese and oil products to China.

    BHP is China's third-largest supplier of iron ore where growing stockpiles in China due to sluggish production had undermined pricing.

    But this is starting to change.

    To continue reading, please click here... Read More...
  • Will President Obama Be Able to Stand Up To China? While U.S. Presidential headlines dominate the airwaves this week, there is another "election" under way thousands of miles from our own shores that may be even more important when it comes to your money.

    The 18th National Party Congress is now underway in Beijing. Attendees are girding for a week of symbolic posturing and speeches, the culmination of which will be a new set of Chinese leaders and a new Chinese President for the next 10 years.

    While this is a complicated process when things are running smoothly, this particular Congress is really critical. China is a mess. Recent economic challenges and corruption on a scale that has boggled even the most jaded of insiders are at the top of the "fix it" list.

    Outgoing Chinese President Hu Jintao's replacement and China's presumptive new leader looks to be a man named Xi Jinping.

    At 59 years old, he's a power player with close ties to the People's Liberation Army (PLA).

    While he's not a military man per se, as the son of a revolutionary general he currently holds several significant offices that give him wide-ranging and very significant exposure to both the State and Communist Party.

    What's significant about this is that there are three parallel strands in Chinese government structure: the Communist Party, State, and Military.

    The Party and State are deeply intertwined, but the military is less so, except at the top levels of leadership. Consequently, China's new leader is intimately familiar with the Chinese military and also the likely new head of China's Central Military Commission.

    I'm not so sure we've ever seen this exact combination before and I think it's going to challenge President Barack Obama in ways that he hasn't thought through yet.

    To continue reading, please click here...

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  • China's Pyramid of Power China celebrated another achievement last week, as Mo Yan became the first Chinese citizen to win a Nobel Prize for literature.

    The selection of Mo was praised by a Chinese nationalist tabloid as a sign that mainstream China could "no longer be refused by the West for long."

    Mo grew up in Shandong province in northeastern China, and during the Cultural Revolution, he left school to work in the fields, finishing his education in the army, according to The Guardian. The author draws upon his rural upbringing in his novels, mixing historical perspective with mythical elements.

    His real name is Guan Moye, but he chose "Mo Yan" as a pen name meaning "don't speak," to reflect the culture in which he grew up.

    The new Nobel laureate is of the same generation as the new leaders set to take over the Politburo Standing Committee next month after the convening of the 18th National Congress of the Communist Party of China.

    This group of men (and one female contender) are "old enough to remember the suffering of the Cultural Revolution, but also young enough to fully experience how China has grown through Deng [Xiaoping]'s opening of the economy to market forces," says CLSA China Strategy research.

    They've seen vast political reforms take place, transforming China "from a country ruled by the contradictory personal whims of Mao to one ruled through institutions and rules," says William H. Overholt in The Washington Quarterly.

    During these decades, "freedoms blossomed, affecting everything from clothing to haircuts to job or marital choices to social and political speech," says Overholt.

    As a result of these policies, they've been able to witness China's incredible growth, with GDP averaging 10 percent per year and more than 500 million people moving out of poverty over the past 30 years.

    To continue reading, please click here... Read More...
  • Q&A With Keith: The Real Answers in China Are Never That Simple As you might imagine, I get a lot of questions about China - it's topical and it's very important to our future.

    Most are really just reincarnations of concerns voiced since 1970 when China first began to open up. In that sense, they're really nothing new.

    So rather than tackling the same old "they'll never succeed because they're not democratic" or "ghost cities" arguments that seem to incessantly make the rounds, let's frame them in terms of what's in the news lately and dig into the subtleties that escape most Westerners.

    And, let's start with one of the questions I get the most.

    Q - Is China going to have a "hard" or "soft" landing?

    A - This one stumps me. Where have the people asking this question been? China's had a soft landing for the last four years. They are already there - the economy is slowing, debt is rising, and the urban migration may be closer to an end than people think.

    The fact is that nobody can define what a Chinese soft or hard landing actually is because Western metrics don't apply. It's just a catch phrase that gets bandied about in the media.

    That's why I believe this question is really a matter of perspective. For example, there is no question China faces huge challenges, but those challenges are no different than many we've faced here in our own past.

    During the last century we experienced two world wars, multiple recessions, a depression, and a presidential assassination -- and still the Dow rose more than 20,000%.

    China will, too. The genie is not going back in the bottle.

    As I recall, many people in England thought that America was a pretty silly venture at one time. And don't forget that the world thought Japan was good for nothing more than cheap tin toys following WWII.

    Looking at China through Western lenses is a mistake.

    Q - The Chinese copy everything. Companies can't make money there, especially lately.

    A - That's simply not true. Domestic Chinese companies have made plenty of money. So have foreign companies like McDonalds, ABB, Coke, and even GM, which have been fabulously successful there because they've taken the time to localize their products.

    Not many people know this, but the ultimate sign of executive status is a jet black Buick minivan in Beijing at the moment. How's that for a contradiction?!

    To continue reading, please click here...

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  • Winning the Race for Resources The world watched in awe as American swimmer Michael Phelps became the most decorated Olympian of all time.

    I've read he's been training in the pool for an average of 6 hours a day, 6 days per week, which equates to about 30,000 hours since age 13 and about 10,000 calories burned during a training day. It's inspiring to see the incredible results of his tremendous sacrifice and commitment.

    Investing in global markets requires the same sort of stamina, especially at times like this week, when the month's reading on the manufacturing industry was not encouraging. The J.P. Morgan Global Manufacturing PMI of 48.4 for July was the lowest since June 2009.

    However, I believe there are encouraging pockets of strength to energize and inspire investors.

    For example, we're coming up on the anniversary of the first stimulus move that kicked off the global easing cycle.

    On August 31, 2011, Brazil unexpectedly cut rates by 50 basis points, and since then, ISI says 228 stimulative monetary and fiscal policy moves have been initiated across several countries, including the Philippines, China, France, and Colombia.

    In June and July alone, there were nearly 70 moves-the most since the world began this massive easing.

    Generally, by the time central banks make a fiscal or monetary easing move, economic deterioration has already occurred.

    Even with these moves, it still takes several months for the stimulative measures to take effect and work their way through.

    China Makes Its Move

    But while the world wades in the shallow end of the pool waiting for the economy to warm up, Asia has taken a deep dive into the energy space as they've recently announced acquisitions of Canadian resources companies.

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  • Where the Chinese are Putting Their Money American investors have been in love with the China story and Chinese stocks for more than a decade.

    And, there's a lot to like if you know what you're doing and where to look.

    But there's an even greater opportunity when you look in the places no one else is looking...except for the Chinese.

    China faces a labor crisis. It's not what you think.

    They have lots of workers. Some are very skilled, others highly educated. But the ones working in the factories by the millions possess little but what they can do with their hands.

    Their wages are not enough to buy the very purses they sew or bicycles they assemble. That is changing, slowly. The change is becoming painful for Chinese factories.

    You see, China does not have factories that have huge margins for profit.

    The country has succeeded by being the lowest-cost producer in the world, selling its wares at razor-thin margins to quash any competition.

    The resulting success has made China a global powerhouse...but it has also resulted in an unintended consequence: inflation.

    China is one of the few emerging countries that I have been to where the government offers few subsidies. Take gasoline, for example. It costs over US$5 per gallon for gas today in China.

    That's more than the U.S., and it's a lot more than India, which subsidizes fuel.

    The price for everything is going up for the local population, so now they're demanding higher wages.

    And they're getting higher wages, which means even lower profits for factories already stressed by a global economic contraction that has end customers unwilling to pay more.

    There is a fix. And that fix is going to make you money. It's where the Chinese are putting their money -- lots of it.

    To continue reading, please click here... Read More...
  • Forget About the Trade Deficit, Now is The Time to Invest in China You may have heard that China just posted the biggest trade deficit figures in over a decade .

    Naturally, this caused the usual suspects who have been waiting - some would say hoping - for a Chinese crash to jump up and down with excitement.

    But not so fast guys... one set of figures doesn't tell the entire story.

    The truth is the $31.5 billion trade deficit is actually a sign that things inside China are growing and that imports are becoming a more viable part of China's future than ever before.

    It's exactly as I've been telling Money Morning readers for several years now.

    Up some 39.6% year-over-year, the numbers are far ahead of expectations and a good deal higher than the 15.3% contraction China experienced in January.

    True, exports climbed at only 15.3% versus the 18.4% expected rate, but that's still plenty positive at a time when the so-called developed world is on track for overall growth of 1.3% according to The Conference Board.

    Get used to it.

    As China's wealth rises and its internal consumption strengthens, imports are going to decouple from exports and deficits like these will be the norm.

    If anything, these numbers reinforce the notion that investors should be actively looking to China and be accumulating Chinese investments.

    What Smart Investors Recognize about China

    What's changed?

    For starters, how China processes its imports. It used to be that the majority of stuff we sold them was fashioned into exportable goods that came boomeranging back to our shores as finished products.

    In other words, we sold China handles and steel and they sold us shovels.

    Maybe I'm exaggerating, but not by much. Today, more of China's imports now go straight to domestic consumption than we've ever seen before.

    What's happening is not magic. There is no rocket science. No hocus pocus.

    To continue reading, please click here... Read More...
  • The Real China Story: It's What Premier Wen Didn't Say That Matters According to Premier Wen Jiabao on Monday, China is only going to grow at 7.5% this year.

    But this isn't the bombshell most Western analysts think it is-even though the markets sold off on the day and may continue their temper tantrum later this week.

    It's actually what Premier Wen didn't say that really matters. As is so often the case in China, it's what goes on behind the scene that is far more interesting - and actionable.

    In that sense, Premier Wen's comments aren't really news at all, but rather recognition of the symbolic priorities attached to Chinese growth.

    As I have talked about at length in the past, China needs to do three things this year: 1) keep growth in line, 2) promote monetary stability and 3) be flexible with regard to inflation.

    What makes Wen's 7.5% GDP figure significant is that in dropping it by half a percent, Premier Wen is not saying, but, in fact, telegraphing two things:

    • China's domestic growth priorities have now trumped growth through exports and manufacturing in terms of relative importance; and,
    • The Communist Party expects to shift spending to lower brow projects like ordinary train lines, rural roads, education and technical infrastructure.
    Having spent more than 20 years doing business in Asia, I've learned that Chinese leaders almost never say anything in public they haven't already baked into the cake.

    This stands in stark contrast to our own politicians who frequently write checks with their mouths that they can't possibly cash.

    Understanding the China Story

    No. China's leaders are acutely aware of "face" and the risks of losing it. So it's what hasn't been said that's actually far more important here.

    The real message is that China expects to maintain growth above 6%, the internal Party Elite's real target, and continue to develop employment opportunities that will keep its 1.3 billion people fed, clothed and housed - so they don't revolt.

    Never mind Iran's "Red Line." This is the one that matters.

    Understand the importance of 6% and you will understand China in a way that Washington doesn't.

    Exports, imports, the yuan, the ghost cities, and hard landings...

    None of these things hold a candle to what Beijing considers its most important issue--ensuring China's own survival.

    To continue reading, please click here...

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  • A New Robotic Horde Means Big Business for iRobot (Nasdaq: IRBT) Don't let the recent sell-off in iRobot Corp. (Nasdaq: IRBT) shares get you down about robotics.

    The truth is, this small-cap robotics leader just reported record results for 2011.

    Shares of iRobot only fell when the company warned that tight defense budgets could curb sales of "warbots" until the second half of the year.

    iRobot investors who are concerned that the drubbing is a reason to worry about the future of this industry are making a very big mistake.

    Here's why.

    An Asian electronics firm alone will field nearly 1 million new robots in less than five years. And in a moment I'll give you the details behind this robotic horde....

    But first I want to make sure you know why I'm so bullish about this emerging high-tech field.

    After all, in the Era of Radical Change, robots and other smart machines will transform the world in ways we still don't fully understand.

    A Robotic Leap Forward

    I realize that robots have been around for at least 30 years in factories. I actually saw some of the earliest versions in use at a General Motors Co. (NYSE: GM) plant in the early 1980s.

    But today, the robotics industry continues to register one advance after another...

    You see, we've reached critical mass in key areas. Today we have better software, chips, programming, and artificial intelligence.

    All these high-tech advancements add up to a new generation of robots that can perform highly complex jobs.

    Now, even low-cost Chinese workers who steal jobs from Americans face pressure from this new generation of "workerbots."

    Just ask the workers at Foxconn International Holdings Ltd., a firm based in Taiwan that makes products for big computer firms.

    To continue reading, please click here...
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