Conquer The Wallstreet !!!: Why I’m selectively bullish

From Money Morning of iStockAnalyst
November 04, 2008 2:24 PM

There clearly are countries - such as the United States and much of the European Union - that are going to collapse into recession, even if only unofficially. But this doesn’t necessarily have to evolve into a global recession - a position that most of the traditional Wall Street establishment disagrees with, by the way.

Let’s take a look at several of Wall Street’s current misconceptions - and see why I’m selectively bullish:

The Red Dragon (China) is ready to hibernate:

Wall Street is worried that a U.S.-induced recession will slay the Red Dragon.
There’s no way. If a country can fall into a recession when its economy (as measured by gross domestic product, or GDP) is advancing at a 9.6% clip - at a time when its U.S. counterpart will be lucky to eke out a 1.0% growth rate - well, I’ll eat my hat. The Armani Army, in its infinite wisdom, is worried about a recession in China even though its $1.9 trillion in foreign reserves are more than 32.10% of GDP and external debt is a miniscule 7.6% of GDP (external debt is defined as the amount of debt that China owes external creditors, including consumers, central governments and commercial institutions, according to the CIA Fact Book). By contrast, the U.S. reserves are 4.84% of GDP, while external debt is 84%. The United Kingdom and Switzerland are in even worse shape, with external debt of 382.2% and 279.1%, respectively.

China won’t be able to survive a drop-off in exports to the
United States:

Then there’s the myth of China’s export economy. The last time China took a header and export business dropped by 35%, its GDP dropped by less than 1%. I’m betting it will be an even smaller bump this time around, especially since China’s middle class now is increasingly responsible for internal growth - independent of what China exports to the rest of the world.

The Asian economies are an economic train wreck just waiting to
happen:

This was true a decade ago, when the United States and Western Europe held all the cash. But no longer. Today, nations such as Singapore, Thailand and Malaysia are running trade surpluses. So is Canada. That suggests that the currencies of these countries are significantly undervalued at a time when their economies are increasingly tied to that of China.

The U.S. economy remains the financial center of the
world:

Today, an estimated 78% of global economic activity takes place outside U.S. borders, which means that even in a recession, an increasing amount of capital circulates beyond the U.S. shores. Indeed, the U.S. stock market now represents less than 30% of total world market capitalization, down from roughly 45% as recently as 2004. Don’t be surprised to see the United States continue to decline in economic relevance. One day, the lion’s share of the financial trades will take place beyond U.S. borders.

Because it’s a developed market, the United States remains the
world’s safest and most promising place to profit:

In the 1980s, the United States accounted for one-third of the global economy; by 2030, that ratio will be cut in half. The reality is that U.S. investors who want to be
successful in the years to come will have to learn all they can about markets whose names they can’t yet pronounce.

For some insight into which countries have the biggest reserves as a percentage of GDP, take a close look at the accompanying chart:

ETFs/Stocks :

+1.49 (5.91%)

-9.26 (-10.36%)

Total Credit Market Debt as Percent of GDP

Sources :

How To Be “Selectively Bullish” - Even In The Face Of Financial Crisis

Please Note!

This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

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