Why a “Blindside” by China Means a Great Buying Opportunity

Theres not a day goes by that I dont see some variation on the theme that China
is going to crash, or that somehow that nation will blindside us and that its
markets might fall 60%. This is like saying in March 2009 that the U.S. markets
were in for a hard landing after they had already fallen over 50%. Folks who
acted on this argument and bailed not only sold out at the worst possible
moment, they then added agony to injury by sitting on the sidelines as the
markets soared 95.68% higher over the next two years. People forget that the
U.S. stock market as measured by the Dow Jones Industrial Average using weekly
data fell more than 89% from 1929 to 1932, more than 52% from 1937 to 1942 and
more recently experienced a decline of more than 53% from 2008 to 2009 and that
doesnt even account for four 40+% declines beginning in 1901, 1906, 1916 and
1973. Each was a great buying opportunity, and following those meltdowns, U.S.
markets rose more than 371% from 1929 to 1932, more than 222% from 1949 to 1956,
more than 128% from 1937 to 1942, and more than 95.68% in just over the two
years starting in March 2009 one of the fastest melt-ups in market history.
People forget that world markets dropped 40% to 80% in 1987. And as legendary
investor Jim Rogers noted earlier this month, that was not the end of the
secular bull market in stocks, either. People forget that our nation endured two
world wars, a depression, multiple recessions, presidential assassinations, the
near-complete failure of our food belt, plus the deadliest terrorist attacks the
world has ever seen just to name a few. And guess what? The U.S. has still been
the best place to invest for the last 100 years. So what if China backs off or
slows down? The Asian currency markets blew up in 1997. Mexicos market passed
out during the great tequila crisis of 1994. And Argentina failed to the tune of
a 76.9% crash starting in 1997, only to give way to a 1,724.56% rally from 2001
to 2011. Lets seegold rose by over 600% in the 1970s, then fell by 50%, which
terrified investors at the time. It subsequently rose by more than 850%
something else Rogers noted in recent interviews, as have I. China is
undoubtedly going to have several hard landings in our lifetime. Despite the
fact that China is thousands of years old, modern China is a mere 40 years old
if you consider its birth to be the nations opening following the historic
Nixon-Kissinger visit in 1972. And todays China has 1.3 billion people all of
whom want to live the way you do. The country is growing by an average of 9% a
year or more and has done so every year for the last 41 years straight.
Meanwhile, Washington has just poured an estimated $7.7 trillion into our
economy and the best we can do is 2.5%. The EU is on track for 0.2% growth in
2012 after trillions in euro backing there. Make no mistake: Chinas government
is well aware that it has a problem. Unlike our own government and those in the
EU, Beijing raised bank-reserve requirements repeatedly before loosening them a
bit last month. It hiked interest rates six times in the last two years. Beijing
is deliberately tapping on the brakes . Chinas government actually wants
segments of its economy to fail so they can reboot parts of the system,
including the real estate market, which is a prime example of this .