What the experts say
Growth stocks defy odds; Riding China’s boom; A lesson in savings
Growth stocks defy oddsIn these times of economic uncertainty, you’d think that investors would flock to defensive stocks, said Paul Lim in The New York Times. But “money managers are betting on what has often been a riskier segment of the market: growth stocks.” Since July, growth stocks in the Russell 1000 index are up 2 percent, while “defensive-minded value stocks” are down more than 7 percent. Growth stocks make sense now for a few reasons. If the Federal Reserve keeps cutting rates later this year, as it’s expected to, growth stocks should benefit. Many growth stocks also have been laggards recently, giving them “less room to fall” if the market heads south soon, according to Ernest Ankrim, Russell’s chief investment strategist.
Riding China’s boomIt’s been a groundbreaking year for investing in China, said Kirk Shinkle in U.S. News & World Report. PetroChina became the first $1 trillion company, and the Shanghai stock index soared. It’s “a bubble, to be sure, but one with some amazing long-term potential.” Consider the demographics: “China is home to 1.3 billion people who provided its economy a low-cost workforce that is quickly becoming an army of consumers.” The downsides? Eventually, workers will demand higher wages, and its banking system will need reform. “China also needs to curb the worst offenses that have accompanied its rise, including environmental damage and a blind eye turned to infringement on patent and intellectual-property rights.” Looking for a piece of the action? Consider travel giant Ctrip.com and digital advertising “powerhouse” Focus Media—both listed on American exchanges. Considering the country’s “amazing long-term potential,” some risks are worth taking. A lesson in savingsIt’s never too soon to start teaching kids about managing money, said Jayne O’Donnell in USA Today. Kids can usually grasp the concept of saving starting in grade school, says Conrad Ciccotello, head of Georgia State’s Graduate Personal Financial Planning Programs. “You have some money come in; some money is spent in the present; and then there is some money left over to spend later,” he says. Set a good example and keep your explanations as simple as possible, he adds. Don’t force kids to save every last penny or, conversely, buy them anything they want. “The idea is to avoid the financial equivalent of bingeing while dieting.” As children become more adept at managing money, take the lesson to the next level, and create checking accounts and debit cards held in both your names. The goal is to make sure kids know how to act responsibly before they start getting bombarded with credit card offers.