Listen to the professor

Listen to the professor

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Listen to the professor
Princeton's Burton Malkiel says U.S. investors are underweight China
By Barbara Kollmeyer, MarketWatch
Last update: 6:21 p.m. EDT May 15, 2008

LOS ANGELES (MarketWatch) -- When it comes to China, history is bound
to repeat itself and investors should be ready.

"People don't realize that in 1820, China was not only the most
populated nation in the world, not only with the most land area, but
was the greatest economic power in the world," said Princeton
University Economics Prof. Burton Malkiel, who had a packed room of
****tfolio managers, analysts and certified financial planners hanging
on his every word Wednesday evening at a presentation for the CFA
Society of Los Angeles.

And in 20 years, China will once again claim that title, hence the
need for investors to make sure they've got the proper exposure, said
Malkiel, who wrote the recently published, "From Wall Street to the
Great Wall: How Investors Can Profit from China's Booming Economy."

Continued strong economic expansion will make this prediction a
reality, said Malkiel, who noted explosive growth in China the last 25
years, averaging 9% to 10% annually. In 2006 and 2007, growth exceeded
11%. "No nation in history has ever grown at this sustained rate," he
said.

Much of that growth owes to the culture of the people, a key reason
for his bullishness. "The hard-working Chinese energy makes New York
look like a sleepy town," he said.

Malkiel said investors who can only see as far as the 2008 Summer
Beijing Olympics should be looking ahead to even bigger events such as
the 2010 World's Fair, due to be hosted in Shanghai and expected to be
the most spectacular in history.

But he also points to several other factors that sup****t the growth
picture: development and urbanization of the country's Middle and
Western regions, a large and increasingly educated labor force,
continued infrastructure investments, the government's determination
not to repeat past mistakes and also its unwavering belief that China
will be a major power. "They know they were the greatest country in
the world," said Malkiel. "They'll do it again."

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