Travel Back in Time to 2009… and Buy Tech

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In the aftermath of the Global Financial Crisis (GFC) in 2009, I was obsessed with the risk of a “double-dip” recession.

The outlook was bleak. The banks all seemed to be failing, stocks had crashed, housing was belly-up, and the Fed was printing money like mad.

So instead of gobbling up cheap tech shares, I was primarily focused on hoarding my (meager) stash of precious metals and preparing for an armageddon which never came.

The gold and silver investments worked out fine, and I’m extremely bullish on gold and silver going forward.

But let’s be honest. I would have been better off if I had diversified and bought fast-growing U.S. tech companies at huge discounts.

For example, in January of 2009 Amazon (AMZN) shares traded as low as $2.38 (split-adjusted). Today it trades at $222, nearly 100x higher.

That opportunity has passed. But what if there was a similar setup to the Nasdaq in 2009 available today?

I think I’ve found it. But be forewarned, some of you are going to hate it.

I’ve been reluctant to write about it for a while now, but simply can’t hold it in any longer.

It’s… Chinese tech.

China’s Real Estate Disaster

Over the past few years, China’s massive real estate bubble has popped. Our own Jim Rickards nailed this event, writing in July of 2021 that China was a Fragile Giant.

China also confronts an insolvent banking system and a real estate bubble. Up to half of China’s investment is a complete waste. It does produce jobs and utilize inputs like cement, steel, copper and glass. But the finished product, whether a city, train station or sports arena, is often a white elephant that will remain unused. The Chinese landscape is littered with “ghost cities” that have resulted from China’s wasted investment and flawed development model.

It was an incredible call by Jim. In the years following that article, the KraneShares China Internet ETF (KWEB) crashed 80% from its all-time high.

KWEB is China’s equivalent to the Nasdaq 100. So this was China’s version of America’s 2008 bubble crash, on steroids.

Fast forward to today, however, and I believe the bottom is finally in for Chinese tech firms. KWEB still trades about 66% below its all-time high.

Here’s a 5 year KWEB chart:

As you can see, China’s tech sector is still far below all-time highs. If this is the beginning of a new bull market, it’s still quite early.

Importantly, today DeepSeek has changed the narrative around Chinese technology. Whether we like it or not, they’re making major progress in areas such as AI, nuclear, fusion, electric vehicles, phones, satellites, semiconductors, and even planes.

There are certainly problems in China, such as overcapacity and ruthless competition eroding profit margins. And needless to say, the communist government structure isn’t ideal for tech firms.

Nevertheless, China’s tech sector is cheap, hated, and in an uptrend. That is typically a recipe for gains.

Chinese Tech Roars Back to Life

This morning Alibaba (BABA) beat earnings and jumped more than 10% in early trading. As I write this it’s still up around 7% at midday.

Alibaba is the “Amazon of China”. It’s the country’s largest online retailer, and the largest cloud computing provider (just like Amazon). You could also call the company the “Paypal of China”, due to its 33% stake in Ant Group, which owns the all-encompassing Alipay payment app (think Paypal meets Visa).

Alibaba is also one of the top 3 AI companies in China, and its leading AI model, Qwen Max 2.5, is competitive with ChatGPT, DeepSeek, and Google’s top models.

Alibaba has soared 80% over the past year. But it has huge amounts of room to run to get back to all-time highs.

Here’s a 5-year chart of BABA:

So… why did Alibaba shares crash, anyways? The first factor was the real estate bubble popping, which we covered above.

But there’s more to the story. Back in 2021 and 2022, Alibaba was dominating in China a little too much. President Xi and the CCP didn’t like that. Alibaba’s subsidiary Ant Group was making big moves in the financial space, threatening to cut in on state-owned banks and other financial businesses.

So the Chinese government laid the smack down on Alibaba, issuing huge fines and cancelling the IPO of Ant Group (Alipay).

This is a real risk of investing in China. The government has too much power over business matters. But I think that risk has mostly passed.

Today Alibaba and its founder Jack Ma have paid their fines, and their dues. A meeting with President Xi this week sealed the deal. Jack Ma and BABA are suddenly back in polite society.

President Xi and the government have signaled support for the private sector, and are stimulating the economy with QE and cheap loans (as we did in 2009).

To be clear, I don’t think Alibaba will deliver 100x returns from here. It’s already too large for those types of gains. But I think it still has a very nice run ahead of it. The Ant Group (Alipay) IPO could happen in the near future, which would be a major catalyst for the stock.

In full transparency, over the past 7 months I’ve been buying Alibaba (BABA), Xiaomi (XIACY), and BYD (BYDDY). These are some of China’s hottest tech firms. I also recently added a China small-cap ETF (ECNS) and PGJ (China internet ETF). I plan to hold these positions for at least five years, if not longer.

China Trade Deal Imminent?

This week President Trump posted the following message on his Truth Social platform.

Source: Truth Social

Some of you may be surprised by President Trump’s friendly tone here. I am not. We need to make a trade deal with China, and soon, as we discussed last month. It’s in both countries’ interests.

If a trade deal with China does go through, that should throw gas on the fire beneath Chinese tech stocks. Uncertainty around trade wars and tariffs has been a major factor holding back the sector.

Overall I strongly believe the global trade wars are just beginning, but we may see some progress soon on the China front.

To conclude, I believe the setup in Chinese tech today is quite similar to the Nasdaq in 2009. I may be wrong, but am willing to take that chance given the potential upside.

It’s not very often we get a chance to buy fast-growing tech at a 66% discount. I’m not going to miss the opportunity this time, even if it means investing in a communist country. If some of you can’t stomach that, however, I completely understand.

It’s not the hand I would’ve chosen, but it is the one we’ve been dealt.

I believe China’s tech sector is in for a lucrative bull market ahead. Phew, it feels good to have that off my chest.

Disclosure: Of the companies and funds mentioned in this article, the author owns Alibaba, Xiaomi, BYD, PGJ, and ECNS.

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