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The Pitfalls of Investing in China

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To the Editor:
Given that the political winds can change at any minute and the Communist Party can essentially dictate to a company how it needs to manage its business (Alibaba Group Holding is an example, among many others), there is little reason to invest in Chinese companies (“How to Invest in China Now,” Cover Story, Jan. 27). I see some sense in investing in companies that do business there, like LVMH Moët Hennessy Louis Vuitton, but unless you like taking a lot of risk, I would stay away.

Ashok Arora, On Barrons.com

To the Editor:
After reading the article about the world’s second-largest economy, it looks like the resurgence is continuing and things are starting to recover.

The Chinese government is looking to get its country self-reliant by building up technology and becoming a strong rival to the U.S. It may be the right time to invest in these Chinese companies—though with caution because you’re dealing with a Communist country that could change policy at any time.

Martin Blumberg, Melville N.Y.

To the Editor:
Someone said that capitalists would sell the rope with which Marxists would hang them. By repeatedly promoting investing in China, we are, in effect, buying that rope. Yet the size of the Chinese market both in purchasing power and workforce is a powerful incentive that capitalists are no more capable of ignoring than a fly attracted to honey. One possible solution to the downside of investing in China is to impose a Chinese tax surcharge of 10% on profits made from these investments. All proceeds would go directly to our military budget. Short of banning all investment in China, this policy would lessen the counterproductive political consequences. This may result in some disincentive to invest in China, but that’s the point.

Peter Dodge,St. Augustine, Fla.

Rewarding Savers

To the Editor:
My preference would be for the Federal Reserve to get to 5% and stay there (“How High Will Interest Rates Go? This Coming Week’s Fed Meeting Is Key,” The Economy, Jan. 27). Billions of dollars of corporate (mostly junk) bonds will need to be refinanced in the coming years. We need, as a society, to reward hard-working, frugal savers. A 5% federal-funds rate will guarantee that savers get a decent return on a bank certificate of deposit; 5% is close enough to the 100-year average interest rate. The federal debt will be restrained from growing, in that debt service will start to crowd out food stamps and military spending.

I don’t see the wisdom of rapidly increasing rates and rapidly reducing them. A stable 5% cost of funds seems reasonable to me. If we can’t function as a country with a 5% cost of funds, then maybe we need to rethink who we are.

Ray Noack,On Barrons.com

ESG Fund Returns

To the Editor:
Investors in environmental, social, and governance, or ESG funds, are free to believe whatever they want about the difference, if any, that their investments will make toward the objectives they are seeking to achieve (“Here Are the Best-Performing ESG Funds,” Jan. 27). However, one belief they should not hold is that their investments are generating competitive returns. Of the 32 funds listed in Barron’s 2022 ESG Fund Scoreboard for all four periods, in only the three-year period did 41% of the funds beat the SPDR S&P 500 ETF Trust. For the other three periods, fewer than 35% of the funds beat the exchange-traded fund. This dismal result is in part explained by the fact that 25 of the 32 funds have total expense ratios of 0.7% or higher.

Finally, only three of the 32 funds were in the top 10 for all four periods. Good luck guessing which ones will be in the top 10 in future periods. The governors of the 19 states that banned ESG funds and managers for state pension plans have astutely recognized that ESG is nothing more than a marketing scam designed to enrich the fund managers at the expense of the investors.

Robert Davidow,Palm Beach, Fla.

Spotlight on Deere

To the Editor:
I concur with everything the panelists said about Deere (“Deere, Dollar Tree, and 21 More Investment Ideas From Barron’s Roundtable Pros,” Jan. 27). Many investors still think of Deere as a mere industrial cyclical, but that viewpoint is no longer valid.

Roy Friedman, On Barrons.com

Playing With Dynamite

To the Editor:
Obviously, the hardest-hit sector last year experienced the greatest bear-market technical bounce (“The Stock Market Has Flipped the Script. What’s Behind the Reversal,” Up & Down Wall Street, Jan. 27).

Therefore, we should probably stay away from those companies in the near term and rotate back to the utilities and healthcare sectors. Tesla is extremely overbought, with a seven-day relative-strength index above 90, and a 14-day RSI above 73.

This isn’t the year 2021. Chasing short-term bullish stocks is playing with dynamite.

Benjamin Lee, On Barrons.com

Animal Spirits Abound

To the Editor:
The best thing that Fed Chairman Jerome Powell can do is hike interest rates by another 50 basis points or another heartbreaking 75 basis points and cause a selloff (“The Unstoppable Stock Market Is About to Meet the Immovable Fed,” The Trader, Jan. 27). Bitcoin is already up nearly 40% since the start of the year. Animal spirits, including those of crazy Bitcoin speculators, are back with vengeance.

Mark Yu, On Barrons.com

Send letters to: mail@barrons.com. To be considered for publication, correspondence must bear the writer’s name, address, and phone number. Letters are subject to editing.

Credit: marketwatch.com

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