Shanghai: Nowhere Comes Close...

New York, Paris, London, and... Shanghai?

Shanghai? You bet. In ten years, Shanghai may even be at the top of the list of the world’s most impressive cities. Before you call me crazy, let me explain a bit...

I’ve spent the last dozen years or so traveling the world, looking for great investments.

From Iceland to Ecuador... from Patagonia to Brunei... I’ve been there. It’s reached the point where it’s hard to impress me... as I’ve seen a lot of booms and busts around the world. But Shanghai right now... oh my...

My first trip to Shanghai was over a decade ago. I was thoroughly unimpressed. Thankfully, it was the right way to be, as Chinese stocks (as measured by the MSCI China Index) are lower today than they were back then. On that trip, I felt Shanghai’s best days appeared to be behind it.

A decade ago, one of my meetings in Shanghai was just across the river from The Bund, in the former swamplands called Pudong.

The meeting was run by government officials, who obviously didn’t know anything about business, or financing, or anything. But somehow, they were in charge of the largest stock on the Shanghai Stock Exchange.

The government guys showed me a scaled-down model of the government’s plans for Pudong in the coming years. It was made out of fancy Legos. (That was all this company had – Legos – and it was worth a billion dollars!)

This scale model of Pudong and Shanghai was ridiculously ambitious. It would easily cost tens of billions of dollars to accomplish what they wanted. Yet the unbelievable phrases kept coming...

“Someday, Pudong’s airport will be the world’s largest airport... This bullet train will take people from the airport to the city at 300 miles an hour...The stock exchange building will be the world’s tallest building... this will be the world’s highest hotel... This park will be better than Manhattan’s Central Park... We’ll then have the world’s largest shipyard... and the world’s largest ferris wheel...”

It was like these guys were just guessing what foreigners might want to hear, and then telling it to us. The lines of B.S. just kept piling up.

The costs of the project would be extraordinary. And yet the people of China, as a whole, are poor. Where was the money going to come from? Without a doubt, this was going to be the biggest government boondoggle of all time...

No rational person would have believed this stuff could happen. Yet... it’s all happened. It’s all true. It’s all here (Well, a few of them are still under construction, but I believe they’ll soon be here.)

When I look out my hotel room window, all I see are high rises. And I can see a long way. Apparently, 300 of the Forbes 500 companies are here in Pudong now (100 more are on the other side of the river. So they obviously get it too.)

Amazingly, none of these 300 large companies were in Pudong a decade ago... there was nowhere for them to be.

It’s extraordinary. Unbelievable. And it’s not just Pudong. It’s all of Shanghai...

I bought a book called “A Changing Shanghai.” It’s a simple book done by a father and son. The father took pictures all around Shanghai in 1990. The son took pictures all around Shanghai in 2004, standing in the exact same place his father stood 14 years before.

The images all tell the same story... Much of Shanghai in 1990 was dirt roads, bicycles, and rusty, ramshackle huts. Today, the dirt roads have given way to superhighways... the ramshackle huts have given way to the most modern high rises I’ve ever seen.

In my opinion, too much history has been razed in that time. They say half of the pre-1949 buildings have been demolished, and most of the demolition has taken place in the last two decades. Cold-looking ultra-modern buildings have replaced Shanghai’s heritage.

I now believe Shanghai will be like New York or London within the next 10 years – a major city for finance, business, and life.

There’s simply too much to tell you about in a single article. In upcoming issues of DailyWealth, and in upcoming issues of my investment advisories, I’ll share my specific thoughts on what’s going on here, and how to safely invest in it.

Please look out for them. I hope I can convey how extraordinary things are... and point out the best opportunities as I see them.

Good investing,

Steve