Yes, authoritarian regimes can make quicker decisions. The problem is that they make many more bad decisions. And one of the main reasons they make poor decisions is that they are usually divorced from the public so don't know what is really going on in the country. Their power blinds them to reality.
Mao Tse Tung's famous Kill All Sparrow campaign is a clear and dramatic example of that. He heard that sparrow were eating some of the grain crop so he ordered all sparrows to be killed. People got paid to kill the birds. Teenage girls were taught how to kill them with guns. Other girls would bang pots and pans so the sparrows couldn't sleep and die from exhaustion. And the campaign worked! A huge success! Sparrows were essentially wiped out.
Mao had promised that everybody would get 12% more food! What a genius he was!
Oh, one small problem.
The sparrows had been eating the locusts so the locusts were never a problem. Every farmer knew that. So the locust population expanded rapidly and ended up eating the whole crop.
Literally tens of millions of people starved as a result of Mao's insane idea that any farmer could have told him would never work. But why would any farmer tell him? They would simply be killed so they all kept quiet.
You see, there is an old saying that power corrupts and absolute power corrupts absolutely. We are seeing that in China today.
The longer Xi stays in power, the more powerful the effect will be.
He has smacked around anybody in the private sector that could challenge him, particularly tech billionaires. Do you think anybody wants to make a lot of money in China anymore.
So how do we make money from this?
I'm going to repeat myself and say sell China. It is on a slow slide down. I have outlined other reasons in other essays so I won't repeat them here.
We can do things like short FXI. That is an obvious play. We can also short specific stocks traded in the US.
We can also do more creative things like short WYNN since it is really a Macau company now. Or how about shorting Apple or Starbucks. All their growth is coming from China so a weaker China will impact their income. That is a riskier play but will make money sometimes.
Or how about buying US Steel. As China exports less steel, US Steel will pick up the slack.
Or shorting copper or copper stocks. Declining demand from China will hurt copper stocks.
As you can see, there are many creative ways to play the decline of China.
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