 Good day, fellow investors. As discussed in the last stock market news on Friday, today we're going to discuss the risk and reward and why you should consider having portfolio exposure to China. Ray Dalio recently made a nice 30-minute video about his thoughts of investing in China, why he thinks a portfolio should be exposed to China. I'm going to summarize his views, I agree, pretty much with his views on China, and I want to give you a short, quick few pointers on why you should really consider China and perhaps even something else. Now, diversify across these emerging markets that are getting stronger and stronger in the world. So this is a very very interesting chart. Over the last 2,000 years, here you see the share of world GDP, the world powers over the last 2,000 years. The red share is China. So the first part of the chart is 1800 years, so from Anodomini, and it has always been China and India have been the strongest economic powers over the past 2,000 years. No question about that. And then we had colonization, wars, military force issues in those countries. They lost their economic power, but now over the last 30 years, China is emerging again to the place where it belongs. It belongs to be the strongest economic power in the world and over the next years it will surpass the United States as the largest global economy. There is nothing we can do about it. So it's not like I'm cheering here for someone to lose or to win. This is reality. And one should think about adjusting his portfolio to reality. So it's very simple. Ray Dalio says that the growth of an economy is based on technology, output, trade, military, financial and reserve, financials and reserve currency. So China was really behind in technology 30, 50 years ago. Now it's one of the leaders in technology. The output is constantly growing. It's trading all across of the world. The military power is getting stronger and stronger. And the finances are starting to question the power of the dollar with its currency. Just to show you how strong China is getting and how empires rise and crash in the 1600s, the Golden Era of the Dutch 50% of world trade was done by a small country like the Netherlands because they had a technological advantage in building those boats. They used wind to cut trees which allowed them to build three, four boats while the English built only one. Later that changed when the English got better technology. And then again, if we look at the world map, look at China, 1.4 billion people. India 1.3 billion people. And look at the influences China has around. We have South Korea 50 million people. Vietnam just below China 96 million people. Indonesia 266 million people. Philippines 100 million people. And all those influences Asia is about 4.5 billion people that China has an influence on. On the other side, we have the United States with 326 million, Mexico 130 million and Europe with or aging demographic of around 800 million. But still, China has the influence over emerging markets. And this is one reason why you might consider China as an investment. Plus, if we look at global plug-in electric car sales. So let's discuss technology a little bit. China's electric car market is growing much faster than electric vehicle sales in Europe, United States, Japan and the rest of the world combine. China doesn't have the heritage of all businesses keeping their stand and doing whatever it takes to prevent development. China is just roaring and going forward. So electric car sales in China are really growing. We are surpassing 1.2 million electric cars sold over year. And it is expected that it will continue as the government is building infrastructure and pushing electric cars to lower environmental emissions. Now, when it comes to investing in China, should we do it now? Or should we wait for the economy to stabilize for the rule of law to stabilize for things to get well there and for China to look like developed marketing? This comment I found under Ray Dalio's article on LinkedIn, Dominic Irniger said, I agree with growing importance of China in the capital markets. Whether this translates in attractive returns for investors is not so clear to me. Attractive returns are generated if capital can flow to the most productive use. To make this happen, economy needs to have good legal framework, good corporate governance and the possibility of entrepreneurs to make the decisions without political inference. Many of these conditions are not met in China today. And then Ray Dalio replies, if one waits for everything to be developed, one will be too late for those investment returns. And that's something we have to really think. The SAP 500 is in the perfect environment now, but is up 30 times over the last 45 years. It might be too late to invest now. And we must invest in places where things are not yet developed, but will probably be on valuations. If we look at China, the ETF, just to use it here as comparison price to earnings ratio of 11 SAP 500 price to earnings ratio of 21. So half the valuation double the long term investing returns, especially when you add the expected growth of the Chinese economy that will probably not be seven like it was in the past or 9%, but even a good 4% on the current base is a great, great thing. Just to mention, you have then other Asian countries, Russia 5%, as I mentioned earlier. Now on the risk of investing in China, many CEO China risky, risky, risky, don't put your money there. But if you look at the global perspective, we discussed in the news, the US is very risky deficits, a huge debt pile, issues with trade wars, political uncertainty, Europe, it's a mess. It's extremely risky. We have populism. We have you the United States are one country, Europe is 44 countries. So there is no stability. The UK is going out. They are stimulating, stimulating, stimulating. But if something cracks, it will first be Europe and that will contage that will spread around, especially the United States and also China. So we have to see who will win there. If you look at other parts of the world, Japan, very old country, demographics are bad, economic growth is bad, and valuations are high in Europe and high in the United States. So from a risk reward perspective, there are different risks across the world. But you never know which one will materialize. And that's why you should consider investing in China from a risk reward perspective. The upside in China is very strong. The risk is there in various forms. But I would argue that the risk in China is perhaps even lower than is definitely lower than the risk of investing in Europe. And perhaps at the same level as the risk of investing in the US, the upside is larger in China. So it's a better risk reward investment to think about investing in China rather than the US and definitely Europe. So if you are from Europe, diversify across the globe, you're already long European, the European system with your home, with your job, with pension funds, so diversify, diversify, diversify. Then another important thing is let's look at the stock market capitalization. The Chinese stock market capitalization is about $6 billion something. If we compare it to the world, the Chinese economy will soon be the largest economy in the world. But the stock market is just one tenth of the global market capitalization. The United States economy is half the global market capitalization. And if we add China to that, it is China is one fifth of the United States market capitalization. If China becomes the leading economic power, which it's likely it will become, these things that market capitalization might be very different. So we have five X upside for China to reach the market capitalization of the United States. It's unlikely that the United States will have a bigger market share in global market shares market capitalization than 50%. 50% is already crazy for what's going on. So the risk reward also from this perspective is skewed towards China. This is my view. Of course, then there are the next step is will I invest in an ETF? I don't know much about ETFs. I know about individual stocks. How do you balance those risks? How do you find exposure to China? It can be true commodities, which is also exposure to India that we didn't mention here, but it's another country in Asia of 1.1 billion something people growing at 8%, but better to invest something at 1% dividend and no growth in Europe, then to invest in India with 10% growth. So commodities, food, technology, Chinese direct investments, Alibaba, you have direct stocks. That's something we will discuss further during this channel. We've discussed it really in depth when I analyze the whole and analyze the whole sector in September of last year, there will be updates earnings updates, new investment analysis. So please subscribe to this channel. If you want to check everything that I do, there is my stock market research platform. You have the link in the description below of the video. And you can see there what am I doing with my money? See whether you fancy that whether this fits your investment risk reward and global investing, let's say strategy, not so much going there where everybody is going also on YouTube. The channels are mostly skewed towards US tech stocks, but also looking at other places other parts in the world to find better risk reward opportunities to buy there where there is five x potential if what's going on in the US replicates, for example, to China to Brazil to Russia to other countries that are not yet uncovered by the investing media and mainstream because not familiar. And we as humans are wired in a way that we don't like what's not familiar. But when it comes to investing, you have to be objective, not subjective. And you have to look at the risk reward. And you have to learn about the unfamiliar to find the best risk reward investments. Thank you for watching. Looking forward to your comments. Are you invested in China? Please let me know in the comments. And I'll see you in the next video.