Friday File: Buy What You Like, Not What You’re Sold

A little ranting on "private" companies and IPOs, plus check-ins on gold, marijuana, eSports and more... including a couple little add-on buys

By Travis Johnson, Stock Gumshoe, September 27, 2019

President Trump and his team have reportedly been talking about ways to “delist China” from US stock markets or otherwise put up some barriers to prevent US investors from putting money into China, which put a scare into pretty much all the US-traded Chinese stocks and ETFs… I have no idea if that’s going to go anywhere, or if it was just leaked to try to light a fire under the Chinese negotiators, but we’ll see. Trump hasn’t mentioned it in CAPITAL LETTERS on Twitter yet, and that means it’s not real… right?

I did not sell anything as a result, of course, though I don’t have very much direct China exposure at the moment anyway… given the challenge that an autocratic move (like delisting all Chinese companies form US markets) would face in our courts, I have to imagine it wouldn’t go anywhere — but this kind of sentiment shift can be a freight train when it really gets going, so you never know. That’s part of the reason I sold some of my Apple shares a little while ago, and why I’d be a little concerned about Starbucks — US brands who are counting on continuing strength in China could face a surprising amount of backlash in favor of domestic Chinese brands if this really becomes a situation where the flags of patriotism are wagged by both sides. Image is important — if it becomes “unpatriotic” to be seen walking around Beijing with an iPhone or a pair of Nikes or a Starbucks cup, don’t be surprised if Xiaomi (XIACY) and Li Ning (2331.HK) and Luckin (LK) start to do a lot better, at least for a little while. There’s no need to overreact to that possible worry, Starbucks has been building its brand in China for more than 20 years, for example, so they know their market well, and these things are never just binary events… but the risk level for China-dependent US brands is clearly rising.

It appears to me that the market is now so driven on a day-to-day basis by shifting sentiment about the Chinese trade war that everything on Wall Street seems is seen through that prism… if impeachment moves forward, will Trump get even more aggressive with China to appear strong? Will the Chinese react by selling Treasuries or further punishing Hong Kong? Good golly, I have no idea… ...

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