Several months ago, November 10, 2006 to be exact, I wrote an essay on how I use Stock Viewer. In that essay, I said, I examine the top 20 stocks ranked by VST-Vector and "I look at the graph of each and every one of the top 20 stocks every night." China Mobile caught my eye two weeks ago, August 17, 2007. Then, a few days later, an old friend, China Life, appeared along with LDK Solar. Hmm, the market was rebounding and these guys were exploding. It was time to get serious about Chinese stocks.
Not only did I want to cherry-pick the top rated Chinese stocks, but I thought it would be a good idea to gather all the Chinese stocks that VectorVest covered in a WatchList. I called it, "Ka-Ching China" and put it in the Special WatchLists Group. Frankly, I was amazed that I was able to put 121 stocks in this WatchList. If there are any Chinese stocks that I missed or that you would like to see us add, please email
amyo@vectorvest.com.The emergence of China as one of the most powerful economic forces in the world is one of the great stories of our life time. FT.com published an article today called "Big in China." It said that "the total universe of mainland stocks, including those listed in Hong Kong, now stands at some $5,000bn, eclipsing the Japanese market." It goes on to say that in terms of market capitalization, the Industrial & Commercial Bank of China, ICBC, is the world's largest bank, while China Mobile, China Life and Air China take the top slots in telecom, insurance and aviation, respectively. Given China's size, I wonder how many other Chinese goliaths are in the making.
So what can we do with the Ka-Ching WatchList? Well, of course, it could be used as a reference list, but that's not going to make a lot of money for you. The best way to use the Ka-Ching China WatchList is as a filter in a search or strategy. For example, I opened the WatchList, set the drop-down calendar to 08/22/06, and ran a Quick Test to 08/30/07 on the top 20 stocks ranked by VST. These stocks gained 57.11% with 17 winners and three losers. That's not bad, but will these stocks continue to sizzle? Yes, as long the economy continues to grow at its blistering pace. The Chinese economy grew at 11.5% over the first half of 2007 and 11.9% in the second quarter. So keep an eye on Ka-Ching China.
P.S. For your convenience, the Ka-Ching China Watchlist has been installed in the Special Watchlist folder. Enjoy!
WHO'S IN CHARGE.
The biggest question on Wall Street is whether Dr. Ben Bernanke will lower the Fed Funds rate soon. As noted in last week's essay, Wall Street has been clamoring for such a move, and those who are making the most noise are the same people that made the most money on low interest rates.
In a surprise move aimed to do something before Congress returned to work next week, President Bush offered a modest plan to help subprime home owners. As expected, Dr. Ben Bernanke did not promise a rate cut in his speech this morning, but he didn't say he wasn't going to lower the Fed Funds rate either. Put together, the speeches showed investors that Bush and Bernanke hadn't forgotten them and were enough to spark a buying spree on Wall Street today.
All this notwithstanding, it is my impression that all the jawboning for a cut in the Fed Funds rate is not going to influence Dr. Bernanke that much. He's not running for office and the economy isn't showing sufficient damage for him to act yet. There are things that may cause him to make a rate cut. First, 90-day T-Notes are yielding only 3.99% compared to the 5.25% Fed Funds rate. Traditionally, yields on 90-day T-Notes have led the way for Fed Funds rates. Secondly, he will cut interest rates severely if he senses danger to the banking system.
Even so, something tells me that Dr. Bernanke may be stubborn come September 18th, the date of the next Federal Open Market Committee, FOMC, meeting. He's got something to prove. And that's to let everyone know Who's in Charge.
