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Will China Experience a Prolonged Period of Slower Growth?

China's greatest asset to growth was its cheap manufacturing base that drew investment and interest in low cost alternatives. Globalization is stripping China of this advantage as other nations find their own competitive ground. China will need to adjust its economic strategy to help it find sustainable growth that doesn't rely heavily on foreign capital accumulation. Changing their investment policies and encouraging long-term solutions will be more helpful than short-term strategies in the next phase of China's economic life. China has been known as a great place to produce products because of a business friendly government, lower labor costs, and less environmental restrictions. This cheaper cost alternatives encouraged foreign companies to outsource simple manufacturing of parts to Chinese companies. This create a net influx of foreign dollars that fuel growth over the past couple of decades. The country's production capacity was based on its ability to partne

3Q Economy Picks Up Speed-Offering New Economic Investment Opportunities

Gross Domestic Product (GDP) in the third quarter (3Q) of 2014 grew to an abundant  3.9%. It is always nice to see the economy grow, unemployment decline, housing recover, and consumer spending rise. What is the icing on the cake is the increased business investment that can tell us a lot about how big money is viewing the economy and its prospects. The reemergence of the American economy offers some new opportunities that were not possible in the past. The global economy may be slowing, China and Europe are propping up their systems, but the U.S. has for a short time been clear from such programs. The slowing world economy should have investors worried but it hasn't. The sour international market may just provide investors a silver lining in the U.S. The U.S. is not isolated from the global economy and certainly will have some challenges. However, as manufacturing parity improves and infrastructure strengthens the U.S. is in a better position to help investors take their capit

Does Data and Our Personalities Impact How We Invest?

Data is used to understand the environment and make investment decisions about new products and services that directly impact the stock market. Recently, the Institute of Supply Management made an accidental miscalculation on the May Purchasing Manufacturers' Index by published 53.2 and then revising that estimate to 56 after the error was discovered ( Strumpf, 2014 ). Due to the importance of that economic indicator stocks bounced downward and then leaped upwards 26 points after the revision.  The change made sense with investors who saw a tough winter and potential spring rebound.  Stocks can be finicky on new data. The information provided from credible sources, often released from large institutions, are given more weight than smaller publishers. This doesn’t change the fact that they are still a single reference point that when taken in isolation can lead to inaccurate perception. A single switch of a number, miscalculation, or ignored measurement can change the r

U.S. Stocks Rise-Analyst Argues "Buy American Stocks"

The Dow ended at an all time high bumping up 32.37 points (.2%) to 16,583.34 points. The Dow was not the only one to rise. The S&P 500 rose 0.15 percent to 1,878.48 while the Nasdaq Composite rose 0.5 percent to 4,071.869. A royal flush for the day indicating an improving economy.  Geopolitical risks still exist for Ukraine, Syria, and other areas of the world. Some Americans feel it may be best to invest in the U.S. to limit those exposures. Some of these exposures will continue on for more than a year and others are likely to be resolved soon. Investors often fear the unknown and make decisions based upon these inherent risks.  Some investment analysts are arguing it is best to invest in U.S. stocks. Emerging markets appear to have stagnated in growth while the U.S. appears to be moving forward into positive growth territory. None of the analysts discussed the emerging market hubs within the U.S. that are becoming ripe for focused investment and development. 

Saving or Spending for Economic Growth?

Neoclassical growth theory states that higher saving rates can increase long-term wealth while Keynesian economics indicates that higher saving rates can lower consumption. Yun-Kwong Kwok in his paper creates a bridge between the two theories by studying the links of the Solow diagram (neoclassical) and IS-LM curves (Keynesian).   These two concepts are often covered separately in college because they do not easily mesh into a single framework.   People are left wondering if we should save or spend? The first concept to understand is that the neoclassical model is a long-term model while the Keynesian model is more short-term.   One focuses on a longer-term trend while another focuses more on immediate needs. This is one reason why decision-makers who are looking for immediate results often use the Keynesian model.  In the long-run Solow model, the total output Y of an economy is produced by capital K and labor L: Y=F(K,L).   Capital accumulates through net investment. Out

The Perpetual Sustainable Economic System

Sustainable economic development is a process of investment, value creation, and reinvestment to expand the economic engine.   Those economic engines that are able to provide a consistent and solid return on investment are able to draw in new resources and investments that keep the circle of influence growing. The system becomes a perpetual changing machine that develops new innovations and efficiencies that translate into market impact.  To formalize this concept let us consider an example of an investor that contributes $100 into a business venture in hopes of earning higher revenue than what their local bank can offer. The success of a higher return on investment is based within the ability to raise the value of that money through new products and services that are sold on the international market for a profit.  The ability to raise value is based in labor skill, the cost of obtaining resources, the technology available to increase the productive aspects of the system,