Latest / Money Grows on Trees / #250 - Why My Investing Portfolio Is Angled Toward China

Transcript

#250 - Why My Investing Portfolio Is Angled Toward China · Money Grows on Trees

• 0:00
  China's the second biggest economy in the world. It manufactures so much stuff and
• 0:03
  it takes a lot of the world's resources and iron ore and oil and so forth, but it's a
• 0:06
  burgeoning, building, big economy. It wasn't until Charlie Munger
• 0:09
  started to invest more seriously in China, and both he and Warren Buffett, by
• 0:12
  the way, 50x their money on BYD. I've been to China many times, and
• 0:16
  I've been to a lot of the major cities there more than once, and I've seen
• 0:19
  this growth in China in the last 20 years, and a
• 0:22
  lot of people are just not aware because they're not looking there. I'm Lloyd James Ross, seven-figure
• 0:26
  investor and entrepreneur, and I've helped thousands of business owners and
• 0:30
  professionals turn financial stress into success. If
• 0:33
  you're stuck in old money habits, overwhelmed by investing, or unsure where
• 0:36
  to start, this is for you. I'll give you the mindset and
• 0:40
  strategies to take control, grow your wealth, and achieve financial
• 0:43
  freedom. It's time to make your money work for you. All
• 0:47
  right, why are my personal portfolios angled towards China? In this
• 0:50
  episode, I'm going to talk to you about what I believe is interesting in terms of investing
• 0:53
  in China, but this is not advice. Please don't go out and run in and do anything yourself. I'm
• 0:57
  just going to share some wisdom with you that I think is what makes China interesting
• 1:01
  in terms of buying assets in China. Of course, I'm not going to divulge anything,
• 1:04
  because I wouldn't want to influence you in that area. But I would like to share this
• 1:07
  with you, because it's kind of interesting. And you may find it interesting as well, because it's
• 1:10
  very misunderstood, the Chinese economy. And I want to just share some insights
• 1:14
  with you as to why I think it's fascinating, and why we've definitely
• 1:17
  angled some of our portfolio to that. Yes,
• 1:21
  it's a fair chunk of the portfolio. Actually, it's not a small amount. So very
• 1:24
  very bullish on China and If you follow me on the X
• 1:27
  platform, I talk about this a lot on the X platform So if you're on X
• 1:31
  come and follow me on there I think it's at Lloyd James Ross Like I pose a lot
• 1:34
  on X and a lot of people don't know that and so you can
• 1:38
  hang out with me there It's where I divulge a lot of stuff on
• 1:41
  there as well in a bit more detail. It's kind of fun. So China's
• 1:45
  the second biggest economy in the world and it's fast. It's growing so
• 1:48
  they say and people just don't trust any numbers that come out of China. But
• 1:51
  it's growing at about four to four and a half percent in GDP a year, which
• 1:55
  by all accounts for a country that size, that's a
• 1:58
  good growth. That's a very strong growth rate. And of course, everybody knows now
• 2:02
  from the Western media that China's gone through a challenging economic
• 2:06
  experience since COVID. Its GDP has fallen quite
• 2:10
  drastically. It used to be around 9% to 11%, which is massive. And
• 2:14
  it's fallen all the way down to 4%. And China's property market
• 2:18
  was the cause of a lot of that because it was a massive property bubble. And
• 2:21
  since then, in the last four to five years, it's come right back since COVID. And
• 2:25
  they're going through a bit of a renewal in the property growth there
• 2:29
  at the moment. So it's helping restoke country. But it's
• 2:32
  a massive manufacturer. China is responsible for
• 2:35
  manufacturing most of the world's goods. It has dialed that right
• 2:39
  in. The US is obviously in a trade war at the minute with them or in
• 2:42
  trade negotiations to figure out how they're going to get China to be more of
• 2:45
  a consumer-led economy rather than
• 2:48
  a manufacturer-led economy. But it's a huge It's a huge manufacturer. It manufactures so
• 2:52
  much stuff and it takes a lot of the world's resources and iron ore and oil and
• 2:55
  so forth. But it's a burgeoning, building, big economy. 1.4 billion
• 3:00
  people live there and it's got a massive, massive
• 3:04
  growing middle class. And of course, some of the biggest companies in the
• 3:07
  world are emerging out of there, which is super interesting. And
• 3:11
  of course, it's in this position where, almost like the USA was
• 3:15
  in 2011, it's gone through a big bust in its economy and
• 3:19
  in its property market, and it's starting to recover. So right now, interest rates in
• 3:22
  China are about 3%. And they're stoking and inflating the
• 3:26
  economy. They're putting their pumping
• 3:29
  stimulus into the economy to get it going again. So
• 3:33
  it's at this position where it could really find some legs in
• 3:36
  the next 10 and 20 years and 30 years. And it seems to me like
• 3:39
  China will become the world's permanent superpower. If you look at a lot of
• 3:42
  cities in China, they're far more advanced than any other cities
• 3:46
  on the planet. There's a lot of self-driving things happening already. There's brand
• 3:49
  new infrastructure. They're building the biggest infrastructure projects in the
• 3:52
  world. They recently just built the biggest dam in the world. They're building bridges
• 3:56
  that make the Golden Gate Bridge look like a poor cousin. They're
• 3:59
  really going after it. There are cities in China that
• 4:03
  hold and harbor more people than the entire country of Australia. These
• 4:07
  are very advanced cities. In fact, it was recently put out
• 4:11
  on multiple apps. A lot of people in the States were realizing that people in China live better
• 4:14
  than they do. They're starting to realize that. They're actually starting to see China's not
• 4:17
  like a third world country with huts and no internet. It's actually a very advanced
• 4:21
  civilization. I'd even go far as saying it's now pretty
• 4:24
  much almost the most advanced civilization. It's crazy. And
• 4:28
  people have, I mean, I've been to China, I've done business in China. I've been to China many
• 4:31
  times. I went there for the first time in 2006. That's almost 20 years
• 4:34
  ago. And I've done business in China a number of times. And
• 4:38
  I've been to a lot of the major cities there more than once. And I've
• 4:41
  seen this growth in China in the last 20 years. And
• 4:45
  yeah, it's just incredible what's happened there. And a lot of people are
• 4:48
  just not aware because they're not looking there. It wasn't until Charlie
• 4:52
  Munger started to invest more seriously in China and both he and Warren Buffett
• 4:55
  by the way 50x their money on BYD, which is if you
• 4:59
  don't know what BYD is it's the car manufacturer there That's absolutely belting Tesla
• 5:02
  at the moment. It's the preeminent car manufacturer in the world and it's Chinese
• 5:05
  led It's very difficult to compete with the Chinese
• 5:09
  because they just work and work when I went there I was like, this
• 5:12
  is incredible. All these guys do is eat and do business and That's
• 5:17
  it. There's hustle, hustle. Everyone's doing business. And there's people
• 5:21
  upon people. It's just incredible. And so the scale of what they're doing
• 5:24
  there is massive. So they've got this massive scale, scaled market.
• 5:28
  And to put that in perspective, it's like three times the size of
• 5:31
  the United States. in terms of its consumer power and everything. So
• 5:35
  what is interesting to me about China as a place to invest is, I
• 5:39
  really do think it will become the world's superpower. I really do think the
• 5:42
  renminbi, which is the digital RMB, could be the thing that replaces the
• 5:45
  US dollar. You can clearly see that it's actually starting to become
• 5:49
  the world's superpower. And I actually like the way they do things there. And here's
• 5:52
  what I mean. Back in the 50s, back when Mao
• 5:56
  used to run China before the revolution there, It
• 5:59
  was very communist, so it was a lot more
• 6:02
  like North Korea. You
• 6:06
  know, it was very, very, like there was hunger. There was 7,800 million people died
• 6:10
  of hunger. It was terrible things. And it was very much communist. Now,
• 6:13
  what happened was Deng Xiaoping brought in
• 6:17
  and shifted things in the economy after Mao, and he actually applied
• 6:21
  capitalism to it. He said, I don't care if the cat's black or white as long as
• 6:24
  it catches mice. Meaning, I don't care what we adopt as long as it works. So they started
• 6:27
  to adopt all these capitalist rules in
• 6:31
  the economy, and it started to grow. So from the 90s, early 2000s to now,
• 6:34
  it's grown massively. Massively, it's become the world's second biggest country. It's crazy. What's
• 6:38
  happened. So what's over there now? Is this you got advanced civilizations?
• 6:42
  You've got the economy pumping stimulus into the economy to grow it you world's
• 6:45
  biggest manufacturer You got the biggest growing middle class. You got the most advanced effectively.
• 6:49
  You've got most of the smartest people in the world. They're working
• 6:53
  now and Incredible purchasing power. So
• 6:56
  you've got companies over there. There's a lot of big investors like David Tepper and
• 7:00
  Michael Burry and I mean, Li Lu, who
• 7:04
  was Charlie Munger's protege, and
• 7:07
  even Charlie and Warren have invested in there before. You know,
• 7:12
  Warren's had big investments in China and Japan and other places, but I
• 7:16
  think Charlie Munger really liked China, and he found that there were better deals
• 7:19
  there than in the United States. And he used to have this saying, he said, you know, the first rule
• 7:23
  of fishing is to go where the fish are. So for me, I was
• 7:26
  like, well, that started to help me explore into China. And what I realized was
• 7:29
  there was great businesses and great companies there, That are
• 7:33
  just incredibly powerful companies that have the ability to scale
• 7:37
  beyond even some of the companies in America Because of the population there and
• 7:40
  they're protected from a lot of competition because how the Chinese market works and
• 7:44
  of course They have a lot going for them. So they've got a
• 7:47
  lot of cash. They got great returns They've got huge customer
• 7:51
  base and they're in the beginnings of their growth cycle. So there's a very,
• 7:54
  very effective, what seem to be super effective companies
• 7:58
  there. And you can buy them for like prices are three times as cheap as
• 8:02
  the ones in America, and equally as powerful. And so just
• 8:05
  quickly, if you're ready to take control of your finances, but feel stuck on
• 8:08
  where to start, I have a solution. My book, Money Bias Happiness,
• 8:13
  simplifies investing and wealth building with practical steps to help
• 8:16
  you achieve financial peace. Get your copy via the
• 8:19
  link in the show notes and let's get your money working for you. Now back
• 8:22
  to the episode. I think it's the future growth engine
• 8:26
  of the world. And in fact, if you look at Australia's economy, a
• 8:29
  lot of the success we've had, I would say almost all of our success, is
• 8:32
  from the growth in China. And so people turn their nose up at China, but
• 8:35
  the reality is you wouldn't have the wage you have in Australia or the opportunities you have here if
• 8:39
  China didn't exist, because we're pumping so many resources to China's economy
• 8:43
  that we've actually become wealthy in ourselves, because we're like the resource bowl
• 8:47
  for China. And it doesn't, it wouldn't surprise me
• 8:51
  if China was manhandling the current leadership here to kind of like
• 8:55
  build a strategic position against us
• 8:58
  over time because they just want our resources. I mean, Tucker Carlson did a really
• 9:01
  good interview not too long ago on this very topic. You may be able to
• 9:05
  find it on YouTube, but he talked about China's really wanting
• 9:08
  to get hold of Australia. And recently there was some battleships out the front of Australia in the Pacific
• 9:11
  Ocean, just near New Zealand. You
• 9:15
  could see them off the coast of Australia. And it
• 9:18
  was interesting, because I'm like, oh, I wonder if China wants to come and grab us. Because whilst
• 9:23
  they can't force project, they've been building up a presence in
• 9:26
  the Pacific. And their Navy's now the biggest in the world. People don't know this. Their
• 9:29
  Navy's now the biggest in the world. Their drone
• 9:34
  technology is far superior to any others. And Peter,
• 9:39
  what's his last name? Hagsworth? The Secretary
• 9:43
  of Defense in America, they've actually created theoretical
• 9:46
  battles with China and the US losers. So
• 9:50
  there's this real strength to the Chinese economy
• 9:54
  that people don't realize. And I really feel like I'd prefer to
• 9:57
  be aligned in some, not all of our portfolio, but a lot of our portfolio aligned
• 10:01
  with that, because I really believe in the growth of that country. How
• 10:04
  do you compete with people that don't stop working? How do you compete with
• 10:07
  their ability to manufacture at scale? How do you compete with
• 10:10
  the fact that the country's leader does care about the people? How
• 10:14
  do you compete with that? Like it's incredible. Um, Xi Jinping
• 10:18
  who's the president now? I mean you look at how he operates there He doesn't
• 10:21
  let companies get in the way of actually providing for the people He's a real people
• 10:24
  put people guy and and I think he's a marvelous leader And so
• 10:28
  I think you got to not let the communist thing get in the way and
• 10:31
  for some reason the mainstream media's painted China as this enemy that
• 10:35
  I think in the last 50 to 100 years China's not invaded any country
• 10:38
  and They haven't started any wars. They're very peaceful. They're
• 10:42
  very wily, though. You've got to be careful of them. They're hard to do business with, as
• 10:46
  the US is finding out with their trade negotiations. And they do own a lot
• 10:49
  of the world's precious minerals. They do. And
• 10:53
  so they've got a very powerful negotiating position. And I saw that happen with
• 10:56
  the United States in the trade wars. They didn't take a backward step, because
• 11:00
  the reality is they hold the cards. So when it comes to
• 11:03
  investing in certain areas, obviously you can't just willy-nilly invest in
• 11:06
  there. You have to do your own research. You have to understand what you're doing. But following
• 11:10
  people like David Tepper and Li Li and these big investors, they are seeing a
• 11:13
  lot more bang for their buck in companies in China than
• 11:17
  in other parts of the world. So it doesn't mean that it's going to be great forever, but
• 11:21
  it seems to be more affordable and getting more company for your dollars than
• 11:24
  it does in places like the United States or Australia, where the markets are
• 11:28
  very overvalued. It's just more interesting. It
• 11:31
  seems to me that's where the fish are. So you've got to go fish where the fish are. Now,
• 11:35
  it begs the question whether China can come out of this slump that it's in. A
• 11:38
  lot of people are betting against it. But I would say the way
• 11:41
  they can produce incredible goods and the way that the country is being operated and
• 11:45
  managed, I think they'll come good. And so, I've got one foot in each
• 11:48
  camp. We've got assets in Australia, we've got assets in
• 11:51
  America and we've got assets in China. It just gives me
• 11:55
  confidence if I want to grow wealth to be in
• 11:59
  the next up and coming economy. And with just
• 12:02
  so much happening over there, if you haven't visited, I'd
• 12:06
  encourage you to go visit and check it out. And I think the
• 12:09
  best is yet to come when it comes to China. And yeah, the world is
• 12:13
  changing. And you've got to change with it. So it's just a hedge against Western markets.
• 12:17
  It's a different valuation model, different companies. And
• 12:20
  if you kind of know what you're doing there, then there's a chance where you can
• 12:23
  grow your wealth beyond the market of the US market currently. And I think it's interesting
• 12:28
  to look at. But of course, don't put all your eggs in one basket. And
• 12:32
  just make sure you know what you're doing, all right? But this is why. Because I see all these. More
• 12:37
  subjective things I see that are happening there. I just feel like the country's
• 12:40
  run better And that that counts for a lot long term for people
• 12:44
  that want to invest and they're buying a lot of gold They're they're doing a lot of they're
• 12:47
  doing a lot of world trade Very interesting stuff. So hope that gives
• 12:50
  you some level of insight as to what's actually happening in china. It's worthwhile looking
• 12:53
  at it um, and you know, I think a lot of people are
• 12:57
  biased towards non-china because they get caught up in this communism rubbish that gets shared
• 13:00
  in the mainstream media, but Jump on X, follow me on there, and you'll see a
• 13:04
  lot of people are doing some work in China. I really do think that people like
• 13:07
  Warren Buffett and Charlie Munger invested in there because of that reason, and it's
• 13:11
  worthwhile having a look at. All right, so hope that makes sense. Share this
• 13:14
  episode with a friend if you've got value from it, and good luck
• 13:17
  if you're in China, and I'll see what happens. Well, the proof will be in the pudding, and
• 13:20
  time will tell what happens in the next 10 and 20 and 30 years, but I think, yeah,
• 13:24
  China will emerge as the preeminent superpower of the world, and
• 13:27
  be nice to get some of that growth along the journey. All right, so see you in the next episode of
• 13:30
  the Money Grows on Tree Podcast. Thanks for listening to Money Grows on Trees. If
• 13:34
  you enjoyed the episode, leave a five-star review on Apple Podcasts and
• 13:37
  Spotify and subscribe to us on YouTube so you never
• 13:40
  miss an episode. And if you're serious about building wealth, make sure to
• 13:44
  check out the links in the show notes and follow me on all social media
• 13:47
  platforms at LloydJamesRoss for more. See