Trade War for China, Profits for You

By Matthew Milner, on Wednesday, March 21, 2018

President Trump is pissed off about our country’s trade deficit.

He wants there to be consequences for other country’s anti-competitive practices and intellectual property violations.

So, a few weeks ago, he threw down the gauntlet and announced tariffs on imported steel and aluminum.

His actions appear to target our largest trade partner: China.

For example, over the past twenty years or so, China’s steel production has grown enormously, from about 15% of the world’s supply, to roughly 50%.

If you don’t invest in commodities like steel — or in the companies that sell them — perhaps you believe this trade war doesn’t affect you.

But as you’ll learn today, even if you invest solely in technology companies and start-ups, this will affect you plenty

Today we’ll show you how…

Then we’ll show you how you might profit from it.

This Could Affect Everyone, Including You

A trade war affects many types of companies — for example:

U.S. companies that sell into China…

Chinese companies that sell into the U.S…

Even companies that aren’t American or Chinese, but have Chinese operations.

Let’s take a look at some of these entities from our perspective as investors…

Then we can figure out which ones are safe from the storm, and which ones might get hit the hardest. 

Some Are Safe, Other Are High-Risk

Many of China’s largest tech companies are safe from worries about tariffs.

I’m talking about companies like Alibaba (NYSE: BABA), Tencent (HKG: 0700), and Baidu (NASDAQ: BIDU).

They’re safe because they rely mainly on the Chinese market for their business.

But if a Chinese company has significant exposure to the U.S. market, it could take a big hit…

Here I’m talking about companies such as Hisense Electric Co (SHA: 600060), and of course Foxconn (TPE: 2354), the electronics manufacturing company that helps produce Apple’s iPhone.

Closer to home, let’s see how some popular U.S. based tech companies will fare...

A number of U.S. companies enjoy significant sales into China. This list includes Intel (NASDAQ: INTC), Apple (NASDAQ: AAPL), and chipmakers like NVIDIA (NASDAQ: NVDA) and AMD (NASDAQ: AMD).

If this trade war escalates, these companies would be at risk — and would therefore make risky investments.

On the other hand, a number of the U.S.’s most successful tech firms would be relatively safe from a trade war…

You see, in sectors where local Chinese equivalents have achieved enormous traction — for example, in e-commerce and social networking — U.S. companies haven’t made much progress, and thus, they don’t have much exposure to trade.

These companies include Google (NYSE: GOOG), Amazon (NASDAQ: AMZN), and Facebook (NASDAQ: FB).

Is Facebook Worth $5 Trillion?

If we thought we could make big profits — i.e., at least 10x our money — by investing in big tech companies like Google or Facebook, we’d love to invest in them.

These are great brands with exciting growth stories, and they’re well insulated from an ugly trade war with China.

Unfortunately, since these companies are already so big, our upside as investors is minimal. For example, for you to make 10x your money on Facebook, it would have to increase its market cap to $5 trillion.

I like Facebook as much as the next guy, but I don’t think it’s going to be worth $5 trillion anytime soon.

So here’s what I’d recommend investing in instead…

Safe from Trade Wars and there’s Big Upside

If you’re seeking to avoid investing in entities that could get pulled into the cross-hairs of an international trade war, you’d be smart to avoid companies that sell commodities or even physical products…

And smart to avoid companies that derive a meaningful amount of their revenues from China.

Instead, you should invest in Internet software and tech companies.

You just need to look for companies that can still deliver big profits — like start-ups!

Hundreds of start-ups are raising capital from investors like you right now. Here’s a small sample of them:

CircleOf — CircleOf is a mobile platform focused on healthcare. It enables caregivers to create a network of support for loved ones.

Dante Labs — Dante offers genetic testing kits. Using its proprietary technology, it provides insights into hereditary diseases, health conditions, and genetic traits.

Pedal — Pedal is a mobile app for fitness enthusiasts. It enables customers to search for local gyms and then purchase last-minute spots in fitness classes.

Of course, investing in start-ups comes with its own set of risks, so you need to know what you’re doing in this market…

But if you’re reading Crowdability, you’re already in good hands.

In the meantime, if you have any questions or opinions on the U.S. trade war with China, we’d love to hear from you.

Just click here and share your thoughts with us — we review every one of the comments we receive!

Happy Investing

Best Regards,
Matthew Milner

Founder
Crowdability.com

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