China Envy Doesn't Pay
03/29/2010 12:01 am EST
A quick message for the people who are predicting that China is going to rule the economic world, reducing the United States (and the rest of the world, including Japan) to lap-dog status:
Oh, shut up!
I'm not saying you're wrong. I'm just saying that I don't know what's going to happen and you don't, either.
I was around when Japan, Inc. was on a tear. I heard the gnashing of teeth when [Sony bought Columbia Pictures and when Japanese investors] bought Rockefeller Center. I saw the cartoons about them buying the White House and carving a Japanese face on Mount Rushmore. I read the warnings that we'd all better teach our children Japanese, because they were our next overlords.
It was a load then, and it's a load now.
Simply taking the current direction of things and drawing a straight line toward the logical conclusion "if this goes on" is a stupid way to make economic predictions.
China may indeed be the Next Big Dog of the economic world. But there's nothing inevitable about it. And I'd love to lock a few of the Chinese triumphalists in a room with a few of those who think that China will inevitably melt down into chaos and depression and see who walks out the door at the end.
For now, I will keep my eye on the intermediate-term health of the entire universe of emerging market stocks. That's a fact-based phenomenon I can use. When the market is healthy, put money into it. When it's weak, take money out.
And for the people with big predictions about what might happen in China, Russia, Brazil or anywhere else? How about a MUTE button?
In honor of the Oscars (of which I watched every minute and loved it all), I'm going to point you in the direction of a cinema-related stock.
CineMark (NYSE: CNK) is a movie theater operator with 424 theaters and nearly 5,000 screens in the US and Latin America, which makes it the world's second-largest motion picture exhibitor (Regal Entertainment (NYSE: RGC) is number one.)
Revenue growth has been steady, advancing even during the Great Recession. CNK has been outperforming the broad market since the stock's correction ended in August 2009. The steady price appreciation, together with the generous dividend and good outlook for theatrical movie distribution makes CineMark a good choice for the aggressive growth portion of your stock portfolio.
My interest in CineMark comes from the company's Latin American exposure, which accounted for more than 20% of 2008 revenues. Brazil is a giant market that keeps moving in the right direction, and the rest of Central and South America have enormous potential, but they need their biggest trading partner to healthy up. Once the US economy gets its mojo back, the region will begin to spawn stock winners again. [Shares closed at $18.20 in New York Friday—Editor.]