Just the other day the stock market rallied on news that the USA and China were close to an interim trade deal. And then the market slides back on news that there would be delays and problems. Thus, any of your investments that have anything to do with China are being held hostage. In the short term, political gamesmanship is the major factor but over the long term, there are very deep and permanent issues that each nation is fighting for in this matter. A year ago we posed the question, what happens to your investments if the trade war becomes permanent? In that article, we looked in some detail at the issues of global power, military dominance, and economic hegemony that China and the USA are fighting over under the guise of a trade war. The point is that the trade war will be with us for the rest of our lifetimes and longer. Thus, picking investments that have nothing to do with the trade war is a good idea, at least for part of your investment portfolio.
Investments That Have Nothing to Do with China
CNBC was thinking along the same lines when they suggest that you should own stocks that have nothing to do with China. Three suggestions that they offer include Sherwin-Williams, Waste Connections, and Zoetis.
These picks make up an odd trio of companies in waste management, home construction, and animal health, but the strategy connecting them is: “You can own all sorts of names that are not related to the China deal that are still growing earnings 10 percent.”
The common factor with these investment options is that they all do business within the USA, are not dependent on materials or products imported from China or sales in foreign markets.
And, these stocks have other attractive features. For example, Sherwin-Williams barely noticed when the financial crisis occurred and the market crashed. And, its stock price has gone up from the $50 range to the $550 range since that time! Waste Connections is another stock that barely flinched during the 2008 market crash and has gone up from being a $13 stock in those days to a $90 stock today. Zoetis has only been listed for six years but has gone up from $33 a share to $120 a share during that time. And, it does not jump up and down with every innuendo in the trade war.
Investments That Will Detach Themselves from China
In our article about investing during a protracted trade war we noted that that the ABC (anywhere but China) movement is taking hold. As this advances, we will see more and more companies that are not dependent on China for their supply chains including raw materials and for their markets. This will add to your list of investments that have nothing to do with China but do have access to international markets.