China, we are told, is buying up property throughout Latin America, businesses throughout the world, and buying influence as it divests itself of purchased American debt. Now, they say that China is buying USA REITS (as well as their own). Sounds like the USA for much of the last century or more. But, what is an investor to do? How do someone else’s investments affect yours? Will this be a repeat of the Japanese foray into US real estate before their economy went stagnate for more than a decade?
When the investor reads the news he or she is always on the lookout for information that will provide an advantage in buying, holding, or selling investments. However, much of what is written attempts to provoke fear or greed or both. In a lot of “big picture” articles the author attempts to elicit a gut response from the reader that will keep him or her glued to the page and coming back for more.
The current articles that basically say that China is buying up lots of property and US assets sound very familiar as they mimic the articles at the end of the 1980’s when Japanese investors bought Rockefeller Center, Colombia Pictures, and the Pebble Beach Golf Course.
This is not to predict that the Chinese economy will go the way of the Japanese economy with a decade of stagnation but everyone has their problems, including China.
The point, when reading articles about other investors is not to be greedy or fearful but to look, dispassionately, for information and clues about what you can buy or sell to improve your own investment portfolio. If buying REIT’s is such a good deal that the Chinese are putting their money into them then maybe you should do a little research and invest too. If the Chinese have too much cash and are looking outside of their country for investments then maybe they know something that the West doesn’t know. If things are so great in China why buy assets in the West?
Regarding REIT’s they were introduced in China a couple of years ago and are popular so if REIT’s work at home (China) why not invest in REIT’s in the USA too?
The US has problems with it huge federal deficit. US monetary policy is often captive to dealing with the huge federal deficit and may lose flexibility therefore.
What to keep in mind when reading investment pieces about Chinese investments, monetary policy, federal deficits, and the like is that your are looking for information useful to you in your role as an investor. Getting worked up over politics is your right and mine in a democracy but getting worked up over politics, the investments of others, has little to do with finding and managing good investments for yourself. That includes Chinese investment in REIT’s in the USA or US investments in Chinese REIT’s for that matter.
Where the growth will be is where you want to invest. Where the stability will be is where you want to invest. If US monetary policy and the federal deficit have made it so bad for the USA investor, look offshore. However, if prospects and prices are so bad here then why are offshore investors buying REIT’s here instead of REIT’s there?
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