U.S. investors have typically shown a penchant for putting their wealth in stocks.
For the Chinese, it’s real estate… and art. Ungodly-expensive art, as I’ll tell you more about in our upcoming issue of Boom & Bust.
So relatively speaking, the Chinese stock market just doesn’t have the same appeal the U.S. markets enjoy. As you’ll see in the chart below, New York and Shanghai are really a tale of two (very different) cities.
In late 2007, U.S. and Chinese stocks peaked at the same time.
In early 2009, these stock markets bottomed together.
And for a while, heading into 2010, both U.S. and Chinese markets moved higher in a surging, V-shaped recovery.
But that’s where the correlation ended. Since the beginning of 2011, U.S. stocks, as measured by the popular S&P 500 ETF (NYSE: SPY), have gained about 35%.
Over the same time, Chinese stocks are down 13%.
That’s a whopper of a performance gap!
For everything China has going for it in the economic-growth department, investors have clearly shunned Chinese stock investments. U.S. stocks, especially in these “new normal” times, seem far more stable.
Watch for this trend to continue as investors enjoy the safety, and superior returnrns, of U.S. markets relative to China’s volatile, underperforming stocks.