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China Outlook: Trust Stocks, Not the Government

Thank goodness it’s Friday in the Wall Street Daily Nation!

This is the day we abandon longwinded analysis to let some carefully selected graphics do the talking for us.

That means less writing for me… and less reading for you. But don’t let our brevity fool you. Most subscribers tell us this is the most insightful and useful column we write each week.

Yes, picture books can be educational for adults, too! And here’s the latest proof, as we serve up charts on Apple, U.S. healthcare costs and the not-so-bull market in China…

The Apple of Investors’ Eyes

Apple (Nasdaq: AAPL) announced plans to initiate a dividend and a $10 billion stock buyback program this week. How did Wall Street respond? It rejoiced and shares hit a new all-time high because, as many news outlets reported, the tech icon finally decided to spread the wealth.

Really? I know the company’s sitting on $97 billion in cash and all. But come on guys. Longtime investors certainly haven’t been jipped by the late Steve Jobs’ penchant for hoarding greenbacks.

Case in point: Over the past decade, Apple shares soared 4,738%. Even if we factor in its above-average volatility, it ranks as the best-performing stock in the S&P 500 Index on a risk-adjusted basis.

Bottom line: Owning shares, not collecting dividends, is the road to riches with Apple.

Healthcare: A Big (Bleeping) Expense

Last week we celebrated the bull market’s third birthday. And this week, President Obama’s historic healthcare reform package turns two. I wouldn’t expect any big celebrations, though.

Why? Well, it appears what Vice President Joe Biden famously called a “big (bleeping) deal” is turning into a big (bleeping) expense.

The Congressional Budget Office (CBO) says the costs to fully implement the legislation will now be $1.76 trillion. That’s twice as much as the original $900 billion price tag.

Shocker! The government’s going to blow through another budget.

What’s more alarming is the latest analysis from Greg Smith’s former firm, Goldman Sachs (NYSE: GS).

It turns out the United States already spends ridiculously more on healthcare than other OECD countries. Yet it’s getting one of the worst returns on investment. As the chart reveals, the United States ranks low for preventing premature death, or in industry jargon, “improving potential years of life lost.”

China: Look Out Below!

I stand firmly with hedge fund guru, Jim Chanos: China is in for a hard landing. And the latest data continues to support me.

On March 5, the country lowered its GDP growth target to 7.5%. Then, on March 16, China’s National Bureau of Statistics said local officials forced some companies to submit “seriously untrue” numbers for 2011.

Put the two together and that 7.5% growth rate is total bull! Go figure, yet another government we can’t trust.

Even if you’re willing to overlook dubious numbers, you can’t ignore the tape. It doesn’t lie about the future. And it’s signaling a hard landing, too.

As you can see, Chinese stocks continue to underperform U.S. stocks. So again, invest in China at your own risk.

That’s it for today. Before you sign off, though, do us a favor. Let us know what you think about this weekly column – or any of our recent work at Wall Street Daily – by sending an email to feedback@wallstreetdaily.com, leaving a comment on our website, or catching us on Facebook or Google+.

Thanks and enjoy the weekend!

Ahead of the tape,

Louis Basenese