Tuesday, July 31, 2007

Three International Food and Beverage Plays to Get Away from US Credit Concerns

With the United States suffering a credit crunch, people are suggesting that investors get out of financials and into consumer staples, and companies with international exposure such as Kraft (KFT) or Procter and Gamble (PG). While this is a good idea, another good play would be to play sectors which have a very low correlation to US Financials. Why not invest in international food and beverage companies which are more levered to the economy they serve?

Here are three interesting international food and beverage stocks:

1. Central European Distribution Corporation (CEDC):

CEDC is the largest vodka producer in Poland by value and produces the Absolwent, Zubrowka, Bols and Soplica brands, among others. CEDC currently exports Zubrowka to European and Asian markets. CEDC imports many of the world's leading brands to Poland, including brands such as Remy Martin, Metaxa, Jim Beam, Sauza Tequila, Grant's, E&J Gallo, Sutter Home, Torres, Penfolds and Concha y Toro wines, Corona, Foster's, and Guinness Stout beers and Evian.

CEDC is also benefitting from a strong Polish economy, growing at a good 6.4% rate in the 2nd quarter of 2007. They are even getting Russian exposure, as they recently announced their intent to acquire a significant majority interest in a Russian company which owns the number one premium vodka brand in Russia, Parliament Vodka.

This $1.65 Billion company has a Forward PE of 20.48, and a five year estimated growth rate of 17.5% for a reasonable PEG of 1.17. It is near its 52 week high and there are currently only five analysts covering the stock.

2. Wimm Bill Dann (WBD):

Wimm Bill Dann is a $4.14 Billion Russian Food company offering a range of branded dairy, juice, water and baby food products. It has a forward PE of 20.35, a five year estimated growth rate of 35% for an inexpensive PEG of 0.58 (less than 1 is very cheap).

According to the company, Wimm Bill Dann produces its dairy products in the region where they are consumed. Also, from 1999 to 2003, Wimm Bill Dann had modernized. Prior to 1999, Russia suffered a deficit in raw milk, particularly a deficit in high quality raw milk. The number of head of cattle had diminished while productivity had not grown quickly enough. So Wimm Bill Dann invested in modern Swedish milking and refrigeration equipment and later, invested in harvesting equipment. This modernization program reaped benefits greatly increasing the percentage of high quality milk.

Wimm Bill Dann also has a 20% share in the Russian Juice Market (as of 2005).

TheStreet.com's Ratings consistently rates Wimm-Bill-Dann as one of their top five fast growth stocks.

3. Ambev (ABV):

Ambev is a $43 Billion Brazilian company that produces, distributes and sells beer, carbonated soft drinks and other non-alcoholic and non-carbonated products principally in Latin America. It also bottles, sells and distributes PepsiCo International products outside of the United States. The company has a forward PE of 20.76, a five year estimated growth rate of 13%, for a reasonable PEG of 1.59. The company even has a forward yield of 1%, and only three analysts cover the stock. Institutional ownership of this stock is only 19.80%.

Ambev has an Operating Margin of 29.25%, greater than competitors such as Formento Economico Mexicano (FMX) of 13.2%.

The company Quilmes Industrial (LQU) is a subsidiary of Ambev.


After reading and studying the three companies, I hope that you feel like you are in another world, far away from any United States credit problem. Central European Distribution (CEDC), Wimm-Bill-Dann (WBD), and Ambev (ABV) are three great ways to get away from it all.

Emerging Market Wireless Telecom Boom

The stock prices of wireless handset makers such as Research In Motion (RIMM) and Apple (AAPL) have been soaring. Buying the handset makers would be one way to profit from the Wireless boom, but there are many other overlooked and profitable ways.

Investing in Emerging Market Wireless Telecom Companies is a great way to enjoy the growth.

Emerging market wireless telecom companies are enjoying better growth than Developed Nations. According to the CTIA - The Wireless Association -, the United States as of late 2006 has a 72% wireless penetration rate. Many countries such as Italy, Sweden and the UK already have over 100% wireless penetration (multiple phones per person). It becomes more difficult to grow revenue in these countries.

In Emerging Markets, however, wireless penetration is much less, allowing more opportunities to grow revenue. As an example, in Latin America and South America, wireless penetration is expected to be 60% by 2010.

In Emerging markets, landline phones can be very limited and wireless can be the only way to make calls. Wireless telecommunication is becoming more important worldwide and people in emerging markets such as India are more willing to use the technology including Short Message Service (SMS, or Texting). Mobile phones are easily becoming part of the worldwide culture.

Here are four good ways to profit from the boom in emerging market wireless telecom:

1. America Movil (AMX):

America Movil is the dominant player in the Mexico and the Latin America and South America region. This $107 Billion company has a forward PE of 14.48 and a five year estimated growth rate of 32.1% for a very cheap PEG of 0.45 (less than 1 is very cheap!) According to a research report from Research and Markets, key drivers are low wireless penetration in Latin America, Increasing Demand of Mobile Internet, and Revenue Growth from Mobile Content.

America Movil is also the company that made Carlos Slim Helu the richest man in the world. Jim Cramer has said that we should "start copying the best guy with the best stock ... Carlos Slim."

2. NII Holdings (NIHD):

NIHD is a spinoff from Nextel and serves the Latin America region including countries such as Mexico, Brazil, Argentina, Peru and Chile. This $13.8 Billion company has a forward PE of 22.48, and a five year estimated growth rate of 40% for an inexpensive PEG of 0.56. Together with America Movil, these two companies offer great growth in the Latin American and South American Wireless market.

3. Vimpel Communications (VIP):

Vimpel Communications services Russia and countries in the Commonwealth of Independent States (CIS), countries that were part of the former Soviet Union. This $21 Billion company has a forward PE of 13.40, and a five year estimated growth rate of 24.1% for a low PEG of 0.56. Major competitors include MTS, and MegaFon, but since VIP is an American Depository Receipt (ADR), VIP remains the easiest Russian Wireless Telecom company to invest in from the United States.

Wireless penetration rates in Russia and Ukraine are a little over 100% but wireless penetration is much lower in Kazakhstan (51.7%), Tajikistan (11.9%), Uzbekistan (10.4%), and Armenia (37%).

Vimpel has a 31.7% market share in Russia, 49.5% in Kazakhstan, 3.8% in Ukraine, 8.9% in Tajikistan, 28.2% in Uzbekistan and 38.2% in Armenia.

4. China Mobile (CHL):

China Mobile is now the world's largest mobile operator with its subscriber base exceeding 300 million. This $233 Billion company's five year expected growth rate is 23.85%. With wireless penetration in China at around 30%, there is still a lot of growth.

Julie Pohlig, senior analyst at Vital Wave Consulting, offers interesting insight into Chinese subscribers. Chinese subscribers rely on pre-paid phone cards and pay 80% less than Americans for mobile phone service but their monthly investment per month represents 7% or more of their salary. This says "a lot about the perceived importance of telecommunications in that society," Julie Pohlig points out.

There are many other good emerging market telecom companies out there, but the four companies above represent good wireless telecom companies that cover a good portion of the emerging markets.

Saturday, July 28, 2007

S&P 500 Possible Scenario (July 27, 2007)

As of Friday, July 27, the market and the S&P 500 have been undergoing a correction. The S&P 500 is now at 1458 and many technical indicators are flashing very oversold conditions:

  1. Only 18% of S&P 500 stocks are above their 50 day moving average.

  2. Only 47.8% of S&P 500 stocks are above their 200 day moving average.

  3. The 10 day Moving Average of the Put-Call Ratio is at 1.12 (above 1.0)

  4. The ratio of new highs to new lows on the S&P 500 is only 7.4%

The closest support level is the 200 day moving average at 1448, then horizontal resistance of 1440. The 200 day moving average would be a reasonable bottom target (since we are in very oversold conditions), and this target could be reached intraday. The $SPX should have a bounce (using Fibonacci Retracements) to the 38.2% or 50% retracement which would be somewhere between 1489 and 1501 on the $SPX.

Usually, V shaped bottoms don't last. I expect the $SPX to re-test the previous lows (expected to be at the 200 day MA of 1448).

During the re-test, we can then determine whether the $SPX will continue another leg down (for the next leg in a larger ABC Correction), or, the $SPX may form a double bottom.

We can then come up with a new scenario at that point.

For Today's Chart with Info Above

Trading Advice if Above Scenario is True:

If the above scenario works out, a trader could:

  1. Cover all shorts now.

  2. Get ready to go long on the S&P 500. This could occur very quickly and occur intraday.

  3. Be prepared to play the bounce to 1489 to 1501 then sell the long position, and go short on the S&P 500.

  4. Cover the short once the $SPX re-tests the previous lows.

If one is more of an investor with a longer time frame (multiple years):
  1. Cover all shorts now.

  2. Create a wish list of stocks to go long, and get ready to buy in the very near future (even on Monday!)

  3. Start a 25% position on selected stocks.

  4. After the bounce, look for the re-test. If the $SPX re-test is successful, you can add another 25-50% position on your favored stocks. But watch out if there is another leg down! The $SPX could fail on the re-test.

Jim Cramer's thoughts on Bottom

Jim Cramer in this article, talks about the bottom. One of his indicators is a proprietary S&P 500 indicator that is at -6.5, an extreme reading which has only occurred twice in seven years. He says that the bottom usually occurs within 48 hours.

But even if we do get a bounce, beware of the re-test back to the previous lows. We'll determine what to do after the re-test of the lows.

Otherwise, watch out below. Next support levels on $SPX are 1420, 1410, 1380.

WARNING: You can lose money in the stock market. Please do your due diligence.

S&P 500 Bottom Indicator: High-Low Index Ratio

$RHSPX is the S&P 500 High-Low Index Ratio. This is calculated by taking the S&P 500 New Highs divided by the S&P 500 New Lows. We use this as a contrarian indicator. When the $RHSPX spikes below 20% to some very low number under 10%, this usually means that the $SPX is near or at a bottom.

As of July 27, 2007, the $RHSPX is at 7.4%. While the $RHSPX can continue to go even lower, we are probably near or at a bottom on the $SPX.

Shouldn't be Used By Itself

These indicators should not be used by itself. Combined with other technical analysis such as resistance and support level analysis, these indicators can be very useful tools.

Other Bottom Indicators

  1. The $SPXA50R and $SPXA200R indicators.
  2. Put-Call Ratio
  3. $RHSPX indicator.

Today's Chart with the information above.

Friday, July 27, 2007

S&P 500 Bottom Indicators including Put-Call Ratio

Yes, there is a lot of information in the chart above.

Let us start with the latest S&P bottom indicator, the Put-Call Ratio or $CPC (CBOE Options Total Put/Call Ratio.) A "Put" is an option where the buyer is expecting the stock to go down. A "Call" is an option where the buyer is expecting the stock to go up. So the Put-Call Ratio is the ratio of the total volume of Put Options to the total volume of Call Options. If the Put/Call Ratio is above 1 (for example), this means that there is fear in the market and people want protect their portfolios with Put Options. This is used as a contrarian indicator, meaning when the Put/Call ratio is high, we may have a bottom. The $CPC is the very volatile red line in the middle of the chart above.

However, since the $CPC is very volatile, we want to smooth out the ups and downs. So we use the 10 day moving average of the $CPC. It is the blue line in the middle of the red $CPC line. The general rule is that if the 10 day moving average of the $CPC stays above 1.0, we are near or at a bottom.

Currently, the 10 day moving average of $CPC is at 1.12, suggesting that we are at or near a bottom.

The Black Line in middle of chart

The uptrending black line in the middle of the chart is the S&P 500 index itself, the $SPX.

The top and bottom windows in Chart

The Top and Bottom windows represent the S&P 500 Stocks that are above the 50 day moving average, and the S&P 500 Stocks that are above the 200 day moving average, respectively. I've written about them in the past.

What the Three Bottom Indicators are saying:

  1. 10 Day Moving Average of $CPC: 1.12, which is above 1.0. We are at or near a bottom.
  2. Ratio of S&P 500 Stocks above their 50 day moving average: 18%, which is way below 30% and below 20%. We are at or near a bottom.
  3. Ratio of S&P 500 Stocks above their 200 day moving average: 47.8%, which is below the 50% level. We are at or near a bottom.

Must be used in conjunction with other analysis

We shouldn't use these indicators by itself. This analysis should be used with other aspects of technical analysis such as support and resistance level analysis.

Here's yesterday's Support and Resistance Levels. The only difference is that today, the S&P 500 closed down at 1458, slightly below the 1460-1464 resistance. Next support level is the 200 day moving average at around 1447. There's a possibility that we'll test the 200 day moving average and form a bottom there. The three bottom indicators mentioned above also suggest that we are near the bottom. If we bottom there, then we would have finished an ABC Correction (possible scenario predicted in early June 2007).

Today's Chart with all the info above

Thursday, July 26, 2007

Current Support Levels on S&P 500 (July 26, 2007)

The S&P 500 ($SPX) seems to be lining up perfectly with support and resistance. $SPX is now at 1482. There's resistance at around 1486. Support levels appears to be at 1464 (today, the $SPX nicely bounced off this support), and if it gets worse, we have the 200 day moving average at around 1447.

Don't be surprised if $SPX re-tests 1464 and decides which direction it really wants to take.

To look at the charts in another way, see this article on the $SPXA50R and $SPXA200R bottom technical indicators.

If we do break down below 1464, we may yet have a possible ABC Correction (mentioned in June 2007).

Are we almost at bottom on S&P 500?

The S&P 500 Index (500 of America's most influential and largest companies) $SPX fell 2.33% to 1482.66. Are we near the bottom?

Based on the $SPXA200R and $SPXA50R indicators, we are nearing the bottom.

The $SPXA50R refers to the ratio of stocks in the S&P 500 that are above the 50 day moving average. We use this indicator as a contrarian indicator. When the $SPXA50R goes around the 20% area (meaning 20% of stocks in the S&P 500 are above the 50 day moving average), we are near or at the bottom. Right now, the $SPXA50R are almost at 20%.

The $SPXA200R refers to the ratio of stocks in the S&P 500 that are above the 200 day moving average. Again, we use this indicator as a contrarian indicator. When the $SPXA200R goes below 50, and around the 45% area, we are near or at the bottom. Right now, the $SPXA200R is slightly above 50%. A little bit more, and we should be at the bottom.

Check on Today's Status/Chart

To update yourself on the $SPXA50R and $SPXA200R, use this chart.

Current Support Levels

To help put the $SPXA50R and $SPXA200R indicators in perspective, take a look at the current support and resistance in the S&P 500.

Tuesday, July 24, 2007

Growth in Location Based Services

Many people are now familiar with in-car Navigation Systems and online mapping services such as MapQuest, Yahoo Maps, and Google Maps. While there is growth in these areas, these applications would only be scratching the surface. According to research firm IDC, the Location Based Service (LBS) market will grow to a $3.1 Billion market by 2010.

Aside from the previously mentioned applications, there is a market for handheld GPS (Global Positioning System) devices, cell phones, and other advanced devices such as Research in Motion's (RIMM) BlackBerry, Apple (AAPL) iPhones, and Personal Digital Assistants which have a GPS chip inside. You can have applications that allow parents to track their children in case anything bad happens to them, applications that track your friends and family, emergency 911 tracking (imagine the lives saved!), applications that track fleets, and applications that allow users to get directions on their cell phone or assistance in finding the nearest gas station or restaurant. There are many applications and companies which have not been created yet!

In the Location Based Service world, there are several categories of companies:

Location Based Service Device Makers

These Location Based Service Devices mainly use the GPS system except for LoJack (LOJN), which uses wireless technology instead.

  1. Garmin (GRMN) -- Garmin is the main player in the GPS device market having a market cap of 17.44B and a forward PE of 24.59.
  2. TomTom (TOM2.A2) -- TomTom is the European competitor of Garmin.
  3. Trimble Navigation (TRMB) -- Trimble Navigation is a $4 Billion company that provides GPS solutions to commercial and government users and currently has a forward PE of 23.83.
  4. LoJack (LOJN) -- LoJack provides services to track and recover mobile assets such as automobiles and cargo. This $450 Million dollar company has a forward PE of 17.92.

GPS Chip Makers

  1. Sirf Technology Holdings (SIRF) -- Sirf Techology Holdings is the dominant player in the GPS Chip market. SIRF has a market cap of $1.3 Billion and a forward PE of 18.56.
  2. Broadcom (BRCM) -- Broadcom is now a player in the GPS chip market because it recently bought privately held Global Locate, a maker of GPS chips, for around $146 Million.

Digital Maps

Two companies, Tele-Atlas and Navteq (NVT), were a digital map duopoly. However, Tele-Atlas, a European Digital Map Company, was recently bought out by Global Positioning Device Maker Tom-Tom (TOM2.AS) for $2.6 Billion. Tele-Atlas's main competitor, Digital Mapmaker Navteq (NVT) rose 18% on July 23 on an analyst upgrade by UBS and wide speculation by analysts and many in Wall Street that Navteq could be acquired by Garmin (GRMN), Google (GOOG) or Microsoft (MSFT). So, at the moment, there are still only two dominant companies in the Digital Map area:

  1. Navteq (NVT) -- Navteq is the main player, with a $5.6 Billion market cap, and a forward PE of 34.75.
  2. TomTom (TOM2.AS) -- TomTom, through it's acquisition of Tele-Atlas, is now a player in the Digital Map market.

GPS Integrated Products

Garmin (GRMN) and TomTom (TOM2.AS) are not the only two consumer GPS device companies. We are in the middle of the trend where cell phones, and other portable devices will have GPS integration. Players in this area could be the handset makers, such as Apple (AAPL) and Research in Motion (RIMM).

GPS Service and Application Providers

Telecom Service Providers such as Sprint (S) or AT&T (T) could benefit by offering location based services and charging for added features. Traffic.com, a Navteq company, provides real time traffic data, usually for a fee.

Companies such as Google (GOOG) also stand to benefit from Location Based services. Two years ago, Google confirmed that it wanted to try to setup free wi-fi in San Francisco. Writer Om Malik reports that says that "the initial use of location-based services might be limited to more-focused and targeted advertising." A Google official said that the bid "was in line with Google’s thinking on delivering answers anytime anywhere to anyone, and looking beyond a desktop PC."

Other Players

Previously, there was a company MapInfo (formerly MAPS) that provided Location Based Service software. However, it was bought out by Pitney Bowes (PBI) for approximately $400 Million.

On February, 2007, Trimble Navigation (TRMB) bought out Fleet Tracking company AtRoad for around $500 Million.

All these acquisitions (MapInfo, Tele-Atlas, AtRoad, Global Locate) are part of the consolidation trend in the Location Based Services sector.

Future of Location Based Services

With the great growth and potential of Location Based Services, combined with all the consolidation in the industry, I see a very bright future for many companies in this sector. The companies in this sector are heading in the right direction.

Side Note: Geo-Caching, the Scavenger Hunt Hobby using GPS

The Main Geo-Caching Site.
WallStrip Video on GRMN and Geocaching.

Saturday, July 21, 2007

The Geek Portfolio

A long time ago, the word "Geek" meant "a person often of an intellectual bent who is disliked." Today, the word suggests "an enthusiast or expert in a technological field or activity" such as a Computer Geek. The label "Geek" is often worn with pride. ("Geek Squad", for example, refers to Best Buys (BBY) computer services group.)

If we had to create a "Geek portfolio" what companies might be in it?

1. Red Hat Linux (RHT) -- A good section of Computer Geeks were anti-Microsoft. One of the companies which represented the anti-Microsoft movement is Red Hat Linux. Linux is a Unix based operating system that is very different from any Microsoft Windows Operating System.

2. Sun Microsystems (SUNW) -- Sun Microsystems is another anti-Microsoft play. Among the many things they do, they create the Solaris Operating system, again, a Unix operating system that is very different from any Microsoft Windows variant. They also develop the language Java, which is a computer programming language that can easily be moved from one platform (for example, Microsoft Windows), to another (for example, the Linux operating system).

3. Shanda Interactive (SNDA) and NCTY (The9 Limited) -- Both Shanda Interactive and The9 Limited are Chinese Online Gaming companies. Yes, there are a lot of Chinese online computer geeks who like to play online games. Do you know what "WoW" (World of Warcraft) or "MMORPG" (Massively Multiplayer Online Role Playing Game) means?

4. Comcast (CMCSA) or AT&T (T) -- Geeks need their high speed internet connection, wireless data service, and specialty shows on Cable. Also, the Unix operating system was created by employees of AT&T and Bell Labs (Ken Thompson, Dennis Ritchie, Douglas Mcllroy and others.)

5. Research in Motion (RIMM) -- Producer of the popular handset Blackberry.

6. Corning Glassware (GLW) -- A computer geek may want multiple flat screen high definition monitors and TV sets. Some may even have two large LCD monitors for each computer. Corning is involved in the flat screen LCD market, and they also produce products for the Optical Networking world. Geeks need higher broadband speeds that Optical Networking provides!

7. Discovery Holding (DISCA) -- Discovery Holdings makes programs such as Animal Planet, Discovery Channel and Science Channel.

8. Blackboard Inc (BBBB) -- Blackboard makes education software and applications for the studious geek. They are helping bring education into the 21st century.

9. Yahoo (YHOO) -- They manage lots of internet services such as Yahoo Messenger, Yahoo mail, Yahoo groups, and other social networking activities.

10. IAC/Interactive Corp (IACI) -- Provides a variety of services and internet sites, including sites such as evite.com where invitations to many of life's activities are done electronically. I've been invited to a wedding using evite!

11. Google (GOOG) -- Digital information is everywhere, and Google is there to help bring it to you. They also own YouTube.com, where people can share and view internet videos.

12. Tivo (TIVO) -- Their brand of Digital Video Recorder (digital version of VHS) changed the lives of many people around the country. It became so popular, that "Tivo" became a verb, which means, to record something on cable or satellite TV digitally. Those who have Tivo swear by it, and their lives are truly transformed.

13. Gamestop (GME) -- Video and computer gaming geeks need Gamestop so they can purchase their next gaming console or game.

14. Domino's Pizza (DPZ) -- Geeks need their greasy brain food for late night sessions.

15. Pepsi (PEP) -- Maker of Mountain Dew, other sodas, and snacks. Geeks need some sugar and caffeine to keep them going.

16. Dolby (DLB) -- Audiophile geeks need Dolby.

17. Apple (AAPL) -- Computer geeks like the Mac (another anti-Microsoft play), and many others like iTunes, ipod, and the new iPhone, the latest Geek product from Apple.

18. Ebay (EBAY) -- For Collector Geeks who want to either find a good deal, or hard to find items.

19. Marvel Entertainment (MVL) -- For Comic Book Geeks!

20. Hasbro (HAS) -- Toys for future geeks, includes the Transformer robots.

21. I-Robot (IRBT) -- Produces robots for civilians and the military. Don't true geeks want a vacuum cleaner that is a robot that cleans your floor for you?

22. Bidu (BIDU) and Rediff (REDF) -- There are Chinese and Indian Geeks as well who like to use Bidu's and Rediff's internet services.

23. Garmin (GRMN) and Navteq (NVT) -- Garmin makes GPS products and Navteq makes the digital maps. Doesn't every geek want their automobiles to have GPS? Also, more people are using online services to find directions using Navteq maps. Maybe some geeks have never used a paper map before.

24. McGraw Hill (MHP) -- They publish textbooks and other related products.

25. Thermo Fisher Scientific (TMO) -- Good place to get balances, beakers, test tubes and other related products.

26. Canon (CAJ) -- They make many electronic products including Digital Cameras for Photography geeks.

27. Sandisk (SNDK) -- Geeks need to store their data on portable devices.

28. Shutterfly (SFLY) -- Online scrapbook geeks need a place to put their digital photos.

29. Adobe (ADBE) -- They make Adobe Photoshop and other digital photo and video editing products. Adobe also makes Flash, a special technology for the Internet/Web.

30. Toei (4816) -- Japanese anime company including "Dragonball Z, One Piece, Bobobo-bo Bo-bobo, Yu-Gi-oh, Sailor Moon, Voltron, old Transformer Cartoons, etc."

31. Best Buy (BBY) -- Electronic retailer that Electronic geeks would like.

32. Netflix (NFLX) -- For Movie Geeks.


The ideas above are my own plus a lot of help from the wonderful stock picking social networking site, Stockpickr.com. It's free to join!

Invest in Russian Stocks from the US

Russia is part of BRIC (Brazil, Russia, India, and China), a very fast growing block in International Emerging Markets. Russia became the fastest growing economy in the G8 and is expected to grow about 6.4% in 2007, and grow close to 6% in 2007 and 2008. Russia possesses rich natural resources, a well educated labor force with substantial technical expertise. In addition, there are signs of poor infrastrcture and inefficient supply systems.

One way to play Russia is through the Market Vectors Russia ETF Trust (RSX). Another way is to buy individual companies as Depository Receipts through the major American stock exchanges (Nasdaq, AMEX, New York Stock Exchange-Euronext). The majority of the Russian stocks available directly through the United States appear to be Over the Counter Stocks, and stocks in the "pink sheets." There is not as much information available on them, so it becomes difficult to research them.

Many of the Russian stocks listed here are minerals, oil and gas, and telecom companies.

Russian Stocks Listed on Major American Exchanges

1. Michel Steel (MTL) -- MTL is a 6 Billion Dollar Mining and Steel Company. The produce and sell coking and steam coal concentrate, steam coal, iron ore concentrate and ferronickel that are used in the production of steel. They also produce semi-finished steel products and other metal products.

2. Mobile TeleSystems (MBT) -- Mobile TeleSystems is a 25.8 Billion Dollar company providing mobile telecom services to Russia and parts of Eastern Europe. It's forward PE is 12.29, and is expected to grow at a 5 yr rate of 10.25%

3. Rostelcom (ROS) -- Rostelcom is a 7 Billion Dollar company providing long distance and international telecom services.

4. Golden Telecom (GLDN) -- Golden Telecom is a 2.44 Billion Dollar company that provides internet and telecom services to Russia and parts of Eastern Europe. It has a forward PE of 18.63, and is expected to grow by 15.5% (5 year estimate), for a PEG of 1.20.

5. Vimpel Communications (VIP) -- Vimpel is a 22.9 Billion Dollar telecom company that focuses on wireless telecommunication services in Russia and parts of Eastern Europe. It has a forward PE of 14.45, and an estimate 5 year growth rate of 24.11%, for a PEG of 0.60, a very good value.

6. Wimm Bill Dann (WBD) -- Wimm Bill Dann is a 4.45 Billion Dollar Russian dairy, juice, and food company. It has a forward PE of 21.88, but its 5 year estimate growth rate is 35%, for a PEG of 0.62, another very good value.

7. CTC Media (CTCM) operates television networks that offer entertainment programming in Russia.

The Other Over-The-Counter Stocks

There isn't as much information on the other Russian stocks that trade as "pink sheets." Among these, Lukoil (LUKOY.PK), Gazprom (OGZPY.PK), and Surgutneftegaz (SGTZY.PK) are often mentioned as some of the largest oil and gas companies in Russia. 51% of the Russian Market is in Oil and Gas.

Aside from Oil and Gas, Russian telecom companies seem to be popular Russian stocks that trade OTC.

Norilsk Nickel (NILSY.PK) is also the world's top producer of Nickel.

7. Bashinformsvyaz (BHFZY.PK)

8. Buryatzoloto (BYZJY.PK)

9. Central Telecommunications (CRMUY.PK)

10. Concern (CCKLY.PK)

11. Far East Telecom (FEEOY.PK)

12. Gazprom (OGZPY.PK)

13. Gazprom Neft (GZPFY.PK)

14. GUM (Torgovy Dom) (GUMRY.PK)


16. Irkutskenergo (IKSGY.PK)

17. Kuzbassenergo (KZBGY.PK)

18. Lukoil (LUKOY.PK)

19. Moscow City Telephone Networks (MWCTY.PK)

20. Mosenergo (AOMOY.PK)

21. Norilsk Nickel (NILSY.PK)

22. North-West Telecom (NWTEY.PK)

23. Polyus Gold (OPYGY.PK)

24. RBS Information Systems (RINFY.PK)

25. Rosneftegazstroy (RNGZY.PK)

26. Rostevenergo (RTVPY.PK)

27. Samaraenergo (STBWY.PK)

28. Sibirtelecom (SBTLY.PK)

29. Southern Telecom (STJSY.PK)

30. Surgutnetftegaz (SGTZY.PK)

31. Tatneft (TNTTY.PK)


33. Unified Energy Systems (USERY.PK)

34. Uralsvyazinform (UVYPY.PK)

35. Utair (UTARY.PK)

36. Volga Telecom (VLGAY.PK)

37. Yukos (YUKOY.PK)

Among these

Among all these companies, telecom company Vimpel Communications (VIP) and Wimm Bill Dann (WBD) look the most interesting from a growth at a reasonable price metric. Norilsk Nickel (NILSY.PK), Lukoil (LUKOY.PK), and Gazprom (OGZPY.PK) may be good options too if you can find enough information on them. The other Nasdaq/NYSE/AMEX stocks, such as MTL, may be worth investing too. Please do your due diligence in researching stocks.

Friday, July 20, 2007

Invest in South Korean Stocks from the USA

The economy of South Korea is the "fourth largest in Asia and the twelfth largest in the world in terms of market exchange nominal GDP as of 2006." Korea over the last few years, is averaging a growth rate of 6.5% The country is part of the "Four Asian Tigers" which include Taiwan, South Korea, Hong Kong, and Singapore. The country has even decided to invest in advanced IT infrastructure, having high broadband penetration, and having internet speeds greater than the AT&T's DSL "elite" package.

South Korean stocks make up over 15% of iShares Emerging Market (EEM) Exchange Traded Fund, the largest country position in the fund. You can invest directly in Korea by investing in iShares EWY Exchange Traded Fund.

If you want to invest in individual Korean stocks from the US, you can choose from among a range of solid investment grade companies, to small capitalization, speculative stocks.

Banks and Financial Services

1. Kookmin Bank (KB) is a 30.7 Billion Dollar company, the largest lender in South Korea. There are rumors of HSBC Bank and Kookmin Bank competing over the Korea Exchange Bank.

2. Shinhan Financial (SHG) is another large South Korean Financial Services company with a market cap of 26.75 Billion dollars. Citigroup, on May 14, 2007, Upgraded the stock to a Buy. Its 5 year expected growth rate according to Yahoo Finance is 15.95%.

3. Woori Finance (WF) is a financial services company with a 21.44 Billion Dollar market cap and expected 5 year estimated growth of 10.2%. In 2001, the government put together four smaller banks and an investment banks to create Woori Finance.


4. Korea Telecom (KTC) is a 10.3 Billion Dollar company that provides telecom services in Korea. According to Motley Fool, Korea Telecom, as of March 2007, has a yield of 7% and a 3 year dividend growth of 52%.

5. SK Telecom (SKM) is a 19.85 Billion dollar telecom company with an expected 5 year growth rate of 12.55%. According to Motley Fool, the stock has a 3.2% yield, and "the stock will give you a hedge against the dollar and the potential for some growth in the company's Internet business. Of course, this is also an extremely competitive industry experiencing rapid changes in technology."

Online Gaming

Because of South Korea's great internet infrastructure, Computer Online Gaming has become a national passion.

6. Gravity (GRVY) is a small 179 Million dollar online gaming company. The company offers massively multiplayer online role playing games and offer various mobile games and license of merchandizing of character related products based on its online games such as Ragnarok Online. (Yahoo Finance).

7. Webzen (WZEN) is another small 64 Million dollar online gaming company.


8. Gmarket (GMKT) is a 1 Billion dollar company that operates a retail-ecommerce marketplace in Korea. As of March 31, 2007, "the company had approximately 11.7 million registered users."


9. Korea Electric Power (KEP) is a 32 Billion Dollar company that is expected to grow by 9.8%. It is the third largest South Korean company by market cap.


10. Posco (PKX) is a 45.17 Billion Dollar Company that is expected to grow by 6.28%. It is the 2nd largest South Korean company by market cap, and has a PE of 13. Warren Buffett, as of Dec. 31, 2006, owns 4 percent of Posco. Apparently, Warren Buffett, and other analysts think Korea is now cheap.


11. LG Philips LCD (LPL) is a 16.24 Billion Dollar company, with a forward PE of 11, a 5 year estimated growth rate of 25%, for a PEG of 0.73. The company develops, manufactures Thin Film Transistor (TFT) based Liquid Crystal Display (LCD) panels.

12. Mirae (MRAE) is a speculative, under $2 146 Million Dollar company. The company designs, manufactures and sells semiconductor related equipment.

13. Pixelplus (PXPL) is another speculative under $2 13.7 Million Dollar company. The company is in the semiconductor industry.

Hana Telecom and Wider Than are two other companies that currently trade on the .PK "pink sheets."

Wednesday, July 18, 2007

Investing in Taiwan Stocks from the USA

Taiwan lies 120 km off the southeast coast of mainland China. Taiwan is part of the "Four Asian Tigers", which includes the economies of Hong Kong, Singapore, South Korea, and Taiwan. These four countries pursue an export-driven model of economic development and these countries focus on developing goods for export to highly industrialized nations. "Real growth in GDP has averaged about 8% over the past three decades. Exports have grown even faster and have provided the primary impetus for industrialization. Inflation and unemployment are low; the trade surplus is substantial; and foreign reserves are the world's third largest." (Wikipedia)

The most diverse way to invest directly in Taiwan is to invest in the Taiwan ETF (EWT). This Exchange Traded Fund invests in Taiwanese companies that many people in the US have difficulty purchasing through a US brokerage.

Alternatively, an investor in the United States can purchase stock in certain individual Taiwanese companies through American Depository Receipts (ADR). Many of the Taiwanese ADRs are Semiconductor Companies. Exemptions include Chunghwa Telecom (CHT), a Telecom Company, and AU Optronics (AUO). AU Optronics engages in the "design, development, manufacture, assembly, and marketing of thin film transistor liquid crystal display (TFT-LCD) panels and other flat panel displays."

By the Numbers

Data taken from Yahoo Finance on Wednesday, July 18, 2007:

SymbolStock NameMarket CapMyPEGFwd PE5 yr growthYield
ASXAdvanced Semi Engineering6.42 B0.24 10.3138.17%0%
SIMOSilicon Motion Tech817 M0.38 15.6335.00%0%
TSMTaiwan Semiconductor58.66 B0.46 14.5624.93%3.1%
HIMXHimax Technologies1.03 B0.50 9.9117.50%0%
AUOAU Optronics12.88 B0.53 11.4220.00%0.4%
UMCUnited MicroElectronics12.56 B0.65 18.5820.00%0%
SPILSiliconware Precision Industries6.29 B0.6812.7117.50%0%
MXICMacronix International14.72 BN/AN/AN/A0%
CHTChunghwa Telecom18.46 BN/AN/AN/A5.4%

In order to understand the chart, we have to understand the different elements.


MyPEG is my own variation of the PEG Ratio. A MyPEG of less than one means the stock is cheap relative to its growth. A MyPEG of greater than two means the stock is very expensive relative to its growth. More info on MyPEG in this link. MyPEG incorporates the yield and cash per share.

Forward PE

Forward PE is the Price divided by Forward estimated earnings. When choosing between a stock that has a PE of 15 and a growth rate of 15% vs. a stock that has a PE of 30 and a growth rate of 30% (both have a PEG ratio of 1), I'll prefer the former. The reason is that high PE's are often priced to perfection. Any miss and high PE stocks can get hit very hard. Stocks with Lower PEs have less expectations and have a greater margin of safety. Another reason is that I have more confidence in the forward PE than the 5 yr. estimated growth rate. So the results are better by preferring the lower PE stock given an equivalent PEG or MyPEG because the 5 year growth rate is given less importance. Lastly, stocks can't maintain 30% plus growth for long periods of time, so growers from 15-30% might be preferred.

5 Yr Growth

5 Yr Growth is an estimate by the analysts. As I discussed earlier, the higher the better, though some people such as the legendary Peter Lynch have suggested that buying fast stocks, but not too fast, might be a good idea (from Peter Lynch's One Up On Wall Street : How To Use What You Already Know To Make Money In The Market).


The higher yield, the better. If you have a high yield, high growth, and low PE, that's a good combination.

Video Blog

Here's a WallStrip Video Blog on Semiconductors featuring SPIL and ASX:
WallStrip Semiconductor Video.

The Warren Buffett Challenge (and Index Funds)

Warren Buffett, in the 2007 Annual Berkshire Hathaway Conference, has some interesting comments.

Warren Buffett even offered a challenge:

Name at least ten hedge funds that will beat a low-cost index funds.

His point? For "a know-nothing investor, a low-cost index fund will beat professionally managed money." But you might ask why didn't Mr. Buffett take his own advice on index funds? Warren Buffett said that he thought could beat the S&P by a couple of percentage points, "just not a whole lot better."

Other gems selectively taken directly from a Leslie McFadden Article from BankRate.com:

1. Read and think before you invest. When a 17-year-old who was attending his 10th consecutive Berkshire annual meeting asked how to become a better investor, Buffett offered some simple but golden advice. Read everything on investing you can get your hands on and fill up your mind with various competing thoughts. After doing that, it's time to get started, as investing on paper and dealing with real money is like "reading a romance novel and doing something else."

He added that when you think about buying shares in a company, think about why you might buy the whole business. If you couldn't write an essay about it, then you shouldn't buy any shares.

2. Risk is tied to the type of business and ignorance of the investor. One investor from Los Angeles asked about using volatility as a measurement of an investment's risk. "Volatility does not determine the risk of investing," Buffett said, adding that risk comes with certain kinds of businesses and not knowing what you're doing. A better approach would be to understand the economics of the business you're investing in, he said.

3. What can be done about shorting stocks? "I have no problem with shorts," says Buffett. He added that he didn't think shorting stocks poses any threat to the world. He would be fine with it if someone wanted to short Berkshire stock.

4. Better to invest in businesses tough for competitors to enter. Asked about his interest in investing in Taiwanese high-tech companies, Buffett remarked that "change is wonderful, but not necessarily for investments." In terms of predicting how a business will perform, he said it's much easier to look at consumer behavior and businesses that have big barriers to entry, citing Gillette as an example of a company with a 70 percent market share for men's razors.

5. Value investing -- what else is there? One person asked about whether Buffett's value investing strategy would apply in South Korea. Buffett said investing is all about value. "What other kind of investing is there?" he asked. "Are we going to have nonvalue investing? Are we going to have tipster investing … dream investing? I've never understood what the alternative is."

Tuesday, July 17, 2007

Investing in Indian Stocks from the U.S.

The Indian Economy is the second fastest growing major economy of the world, with a GDP growth rate of 9.2% (as of 2nd quarter 2006-2007). When measured in terms of purchasing power parity, it is the third largest economy of the world. When measured using US Dollar exchange-rate terms, it is the tenth largest in the world. Goldman Sachs expects India to overtake France and Italy by 2020.

For a US investor, investing in India becomes more difficult. There are plans for Indian ETFs, and there are some closed end funds, but the selection is not good.

Another way to play the Indian trend (besides investing in an emerging market ETF such as ishares EEM), is to buy Indian companies as American Depository Receipts (ADR).

Indian Banks

1. Icici Bank (IBN) -- Icici Bank has a market cap of 23.5 Billion, and a 5 year estimated growth rate of 24%.

2. HDFC Bank (HDB) -- HDFC has a smaller market capitalization than IBN with a 9.88 Billion market cap and a 5 year estimated growth rate of 29.6%.


3. Videsh Sanchar Nigam (VSL) -- VSL is a 3.41 Billion telecom company with a forward PE of 29.70, a 5 year estimated growth rate of 10% for a PEG of around 3.

4. Mahangar Tel (MTE) -- MTE is a 2.52 Billion telecom company providing fixed-line, wireless, and other telecom services. It has a forward PE of 22.91, and a 5 year estimated growth rate of 10% for a PEG of around 2.3.

Business Process Outsourcing (BPO) and Information System Services

5. Infosys Technologies (INFY) -- Company has a market cap of 30 Billion, a forward PE of 22.82, and a 5 year estimated growth rate of 26.5% for a PEG of 0.86.

6. Patni Computer Systems (PTI) -- Company has a market cap of 1.79 Billion, a forward PE of 16.53, 5 year estimated growth rate of 21.4% for a PEG of 0.77.

7. Satyam Computer Services (SAY) -- Company has a market cap of 8.91 Billion, a Forward PE of 19.64, estimated 5 year growth rate of 26.83% for a PEG of 0.73.

8. Wipro (WIT) -- Company has a 22.86 Billion market cap, Forward PE of 22.71, 5 year estimated growth rate of 23.18% for a PEG of about 0.98.

9. WNS Holdings (WNS) -- Company has a 1.16 Billion market cap, a Forward PE of 27.41, 5 year estimated growth rate of 34.25%, for a PEG of 0.80.


10. Rediff.com (REDF) -- Company has a 626 Million market cap, Forward PE of 47.82, 5 year estimated growth rate of 45%, for a PEG of 1.06.

11. SIFY Limited (SIFY) -- Company has a 402 Million market cap, and a forward PE of 47.30.


12. Tata Motors (TTM) -- Company has a 7.10 Billion Market Cap and a 5 year estimated growth rate of 20%.


13. Dr. Reddy's Laboratories (RDY) -- Company has a 2.83 Billion Market Cap and a 5 year estimated growth rate of 15%.

Trends in India, a personal take from two Indians

Results of 3 Portfolios: Cheap Growth Ready to Breakout (July 16, 2007)

In a previous article, I described the Cheap Growth Ready to Breakout Screen.

In this post, we will continue to track the performance of three portfolios. We are taking the snapshot as of Monday, July 16, 2007.

Portfolio 1: February 23, 2007

# Symbol Start End Return
1 AMX 47.15 64.87 37.58%
2 TSM 10.91 11.68 7.06%
3 VIP 85.18 112.50 32.07%
4 IPR 74.30 89.00 19.78%
5 AYE 47.90 55.10 15.03%
6 WCRX 14.45 19.17 32.66%
7 BRP 43.42 72.89 67.87%
8 SCS 19.76 18.72 -5.26%
9 MLHR 39.54 33.37 -15.60%
10 AIR 30.61 34.10 11.40%
11 GRT 27.59 24.32 -11.85%
12 DVR 12.49 16.70 33.71%
13 TGI 55.02 70.25 27.68%
14 CRAI 53.88 49.08 -8.91%
15 TLF 7.99 7.10 -11.14%
16 APH 33.89 37.07 9.38%
17 GIL 26.80 35.24 31.49%
18 MIDD 58.88 62.79 6.64%
= Total 15.53%
SPY 144.10 154.83 7.45%
IWM 81.64 84.48 3.48%
EFA 76.68 83.37 8.72%

Portfolio 2: March 14, 2007

# Symbol Start End Return
1 TSM 11.06 11.68 5.61%
2 DISH 42.50 43.92 3.34%
3 WFR 55.05 63.04 14.51%
4 ASX 5.95 7.23 21.51%
5 SPIL 9.18 11.64 26.80%
6 BRP 44.00 72.89 65.66%
7 LAUR 59.28 61.93 4.47%
8 KSU 33.65 40.67 20.86%
9 BEAV 30.73 43.09 40.22%
10 CVO 24.50 23.42 -4.41%
11 IART 43.45 50.30 15.77%
12 KNL 23.00 22.71 -1.26%
13 AIR 30.25 34.10 12.73%
14 MYE 18.24 22.16 21.49%
= Total 17.66%
SPY 138.13 154.83 12.09%
IWM 76.91 84.48 9.84%
EFA 72.83 83.37 14.47%

Portfolio 3: May 16, 2007

# Symbol Start End Return
1 ESV 58.45 60.86 4.12%
2 GSF 65.98 72.07 9.23%
3 TDW 64.90 75.62 16.52%
4 KB 93.35 91.96 -1.49%
5 FCX 71.29 92.94 30.37%
6 VLO 72.03 76.08 5.62%
7 NBG 11.59 12.54 8.20%
8 ACGY 21.35 26.72 25.15%
9 AYR 35.98 38.78 7.78%
10 FTI 73.68 88.97 20.75%
11 HXM 62.29 61.50 -1.27%
12 SZE 57.58 57.11 -0.82%
13 SLB 76.50 90.54 18.35%
14 CLB 92.77 106.41 14.70%
15 CKR 20.38 19.51 -4.27%
16 CEPH 80.14 82.28 2.67%
17 TDK 87.55 92.02 5.11%
18 SNDA 26.65 33.04 23.98%
19 LKQX 24.30 25.38 4.44%
= Total 9.96%
SPY 150.95 154.83 2.57%
IWM 81.26 84.48 3.96%
EFA 80.14 83.37 4.03%

SPY is an ETF that represents that S&P 500 US Large Cap Index.
IWM is an ETF that represents the US Small Cap Russell 2000 index.
EFA is an ETF that represents the developed international market index covering Europe, Japan, and Australia.

Based on this, the three portfolios performed (until July 16, 2007)

  1. February 23, 2007: 15.53% return, outperforming all three indices by 8.94% to 14.19%.
  2. March 14, 2007: 17.66% return, outperforming all three indices by 3.19% to 7.82%
  3. May 16, 2007: 9.96% return, outperforming all three indices from 13.63% to 15.09%

So far, this screen seems to be performing very well. Let us continue to monitor.

Cheap Growth Ready to Breakout Screen

In order to get more consistent results in the market, I've been trying to find good quantitative stock screens.

I managed to find one screen that seems to be working well:

1. Forward PE < 20
2. 5 Years Growth > 20%
3. Price above 200 day moving average
4. Price between 0 to 5% above 50 Day moving average
5. Price within 5% of 52 Week High.

My theory is to buy stocks that have great growth but are undervalued in the market. In addition, the stocks should be making higher highs, be within reach of a breakout, and yet be at a good accumulation point (slightly above the 50 day moving average).

In a question regarding whether to buy 52 week highs or 52 week lows, Jim Cramer on Stockpickr.com) says that:

"They dont get on the 52-week-high list for nothing.
Companies that get on it get there because they are in
the right sector and have the best execution. That's a
better list to buy on than just about anyone i know,
particularly on a 5% pullback.


I like IBD for this and Lee Cooperman, one of the great
investors, who emphasized this view to me when he was
running research at Goldman."

Part of the screen I developed seems to match what Lee Cooperman of Goldman Sachs has found out. It is good to buy 52 week highs especially on a 5% pullback.

Also, rather than using pure PE to Growth ratio, I prefer to use a PE of less than 20, and 5 year growth rate of greater than 20, guaranteeing us a PEG of less than one. Since the 5 year growth rate is less reliable than the forward PE, by choosing stocks with a low PE, we'll have a greater level of safety if a companies 5 year estimate starts going down.

I managed to create three portfolios using this screen in the past and in another article (here), I will check on the performance of all three portfolios.

Trends in India

When investing in stocks or countries, it's a good idea to get a background in the country and the culture:


I'm interested in learning more about India and Indian trends (may affect my investment):
1. Are Indians savers or spenders?
2. Do you know how fast India's GDP is growing?
3. How many cars does an average Indian own?
4. What's the approximate interest rate in a bank?
5. How many Indians own a home? Is it still affordable?
6. What do you think of:
TTM -- Tata Motors
SAY -- Satyam
INFY -- InfoSys
7. Is the middle class growing?
8. How many people have cell phones?
9. How many people have DSL or Cable modem?
10. Are internet cafes popular?
11. Is there a lot of traffic in India?
12. Is there a lot of pollution?
13. Do people text on cell phones (SMS) or use their voice?
14. What are the major trends in India right now?
15. Are workers leaving India in large numbers?
16. How popular is McDonald's or other American Fast Foods?
17. What kind of foods are popular?

Any help is appreciated.


A: "Sony" answers:

1. Are Indians savers or spenders?

It depends upon how the person is earning....if he is earning more than his EXPECTATION, then he will splurge too much...
otherwise, if he is earning the hard way, same way he spends.
Generally, people are savers here, they save more to invest in ways to produce more money.

2. Do you know how fast India's GDP is growing?

check here http://en.wikipedia.org/wiki/India

3. How many cars does an average Indian own?

There is HUGE difference in equality. More than 90% don't have a car at all.

4. What's the approximate interest rate in a bank?

In a savings account, its around 8%.

5. How many Indians own a home? Is it still affordable?

Number of people owning a home is increasing, but the real estate prices are considered high. In metro cities, the prices are considered a BOMB, but still people are buying, as i said, there is a vast difference in equality.

6. What do you think of:
TTM -- Tata Motors
SAY -- Satyam
INFY -- InfoSys

They are top companies in their sectors, they are market leaders in india with an excellent management.

7. Is the middle class growing?

VERY MUCH!!! A common middle class person has a cellphone, watches Movies in malls, eats in Dominoes, buys international brand garments often, wears a swiss watch, has a computer etc. etc.

8. How many people have cell phones?

Even beggars ;-)

9. How many people have DSL or Cable modem?

Not sure. But less than 1%.

10. Are internet cafes popular?

They used to be, but now cos of government's strict rules over some issues, their is very less income left to owners. The internet cafe people are now more interested in group gaming.

11. Is there a lot of traffic in India?

Only in Metros. But throughout india, the road infrastructure SUX!!

12. Is there a lot of pollution?

Only in Metro cities.

13. Do people text on cell phones (SMS) or use their voice?

Most people SMS :D

14. What are the major trends in India right now?

I think everything is booming. IT sector, public services, Electronics Media, BPO's etc are on top.

15. Are workers leaving India in large numbers?

No, not sure. The ones who have been out want to come back, but people who have never been out, become highly excited about going out.

16. How popular is McDonald's or other American Fast Foods?

Very Very Famous. Anything which has rocked the west needs no publicity or hype to make them a success in india.

17. What kind of foods are popular?

People just love to experiment. Everything is welcomed. Mostly pizzas, chinese food etc.

I have answered just in a casual way, don't mind. But the information is true to my knowledge nevertheless. I liked answering ur questions ;-)

B: "For Fun" answers:
answeer to question no 5: if u want to know the answer of this question please take in to consideration the indian culture

everybody dreams of one of his home his ideal home !
it is a thing of pride and respect to construct or purchase his dream house
depending upon what is his financial capacity and where he is living
every indian feels it is his dutry to give this house to his son/s so his sons etc are comfortable and live nicely the way he spent his life !
the house is a great emotional attachment to him and his family and he rarely leaves that place or sells unless he is in great trouble.
if the son sells that house it is shame !
u can say it is deep rooted desire of every indian to have his own house and he will do all possible things to have it!

he dreams the house there for hundred years and his children and grand children living and thanking him for what he did in his life time !

it gives great mental satisfaction and he feels one of his very big duty is carried out by him and is always proud of it

now as the banks and other institutions r givning easy loan for the dream house many peopel r taking advantage of that

it is my estimate that atleast 40% people do have their own home or r in process of getting the same
we can consider the up side % as 55%

the income has gone up very rapidly in last 10/15 years and surely more r in line to have their dream come true!

remeber indian population is one billion + and the people r from all different standerds


Thanks to the nice people at Yahoo Answers.

Monday, July 16, 2007

"How can a teenager (11-17) start investing in the stock market?"


I'm a (11-17) year old student and I have some money I want to invest. How do I start investing?


Congratulations on saving your money and trying to invest it!

In the United States, many US discount online brokerages, such as E*trade (www.etrade.com) require you to be 18 years or older.

So what you can do is ask your parents to open an account for you. One example is an Educational Custodial account. Your parents will control the account until you turn 18 or 21. Read the other requirements and benefits on the website:

There is also a Coverdell Account (formerly known as Education IRA), or an IRA for Minors (for your retirement!)

In the meantime, I recommend that you get your parents involved. Have them learn more about Investing. Both you and your parents should start by reading Investing for Dummies by Eric Tyson.

Once they open the account, you and your parents can decide how to invest.

For amounts $500 or less, you are better off choosing one good mutual fund (you purchase shares in a fund, and at the end of each day, the mutual fund price goes up or down, and you lose or gain money each day. After a period of time (for example, 10 years), you may decide to sell your mutual fund. At that time, you may have a profit (or a loss). The money is all yours now).

You can look at all the choices available in your brokerage account. If you use E*Trade, you can choose from among the more than 7000 mutual funds. Choose only mutual funds that are four or five start Morningstar.com rated and have no-load (you don't have to pay a special percentage to the brokerage when you either buy or sell), and no transaction fee.

Whenever you get more money, you can purchase more shares in the mutual fund. Look for either a good mutual fund that focuses on large US companies, or a diversified mutual fund that invests in international stocks.

If you have $1000 or more, you can choose to have fun. Are you interested in learning more about the stock market? You are young, and that means that you can take more risks with the money. Even if you lose it all, you'll have enough time to make it up in the future.

One good way is to continue reading about stocks and the stock market (Remember the Investing for Dummies by Eric Tyson book above?).

Then, as I mentioned before, get your parents involved. You can research stocks together. A good stock to research would be stocks you already know. Do you like McDonalds? maybe you can invest in "MCD". Do you like Games? Then consider Gamestop (GME). Of course, don't just buy it because you use the product. This is just a starting point. Research the stock!

Since you don't have that much money, just invest in one stock (or ETF, an Exchange Traded Fund. An ETF is a mutual fund that you buy and sell just like stocks) and just see how it goes up and down, and how what you do (for example, buy more Big Macs) affects the companies bottom line.

Also, watch "Mad Money" on CNBC hosted by former hedge fund manager Jim Cramer. Lots of those in Generation Y like him. He may sound a bit crazy on the show, but in reality, he as a very good hedge fund manager before he did the Mad Money show. (Video of Jim Cramer here.)

To be realistic, expect a market return of 10% per year over a long time. Of course, you can lose 40% in a year, or gain 40% of a year, for example. If you hold an individual stock, the stock will be more volatile. Don't be surprised if you go on a rollercoaster ride.

Good luck!


My own experience plus inspiration from Jim Cramer's article on teaching your children about investing.

Saturday, July 14, 2007

The Sectors in Bull Market Mode

We are in a bull market right now, with the S&P at all time highs, and the Dow near all time highs. So what sectors are working now? What are the long term trends worth investing in? (In this article, trends mean 3 years or longer.)

1. Agriculture:

In 2002, there was an influential US Farm Bill, "The Farm Security and Rural Investment Act of 2002." Prior to this, according to a Forbes Article, " few stocks had big moves prior to the enactment of the 2002 farm bill. Consider AGCO (AG), which sells combines and other farm equipment. Over the course of the year prior to the May 2002 signing of the farm bill, AGCO's shares climbed 150%, vs. a 14% decline for the S&P 500. Archer Daniels Midland (ADM) and Deere & Co. (DE), though not as frothy, also rose nicely in that time period." The push towards Ethanol is also another reason for the bull market in agriculture.

Jim Cramer prefers Deere (DE), who makes the agriculture farm equipment, Monsanto (MON), a biotech company that makes the seeds, and Chemical and Mining Co. of Chile (SQM), a fertilizer play in the agricultural sector.

Forbes likes companies such as Archer Daniels Midlands (ADM), AGCO (AG), and CNH Global (CNH), among many companies in the list they provide as beneficiaries of the farm bill.

2. Machinery

Similar to the farm bill, the $287 Billion US Transportation-spending law in 2005 has been good to machinery stocks. Beneficiaries include companies such as Caterpillar (CAT), and Terex (TEX). As a bonus, companies like Caterpillar (makes of construction equipment), have international exposure as well.

3. Infrastructure

In this area, Jim Cramer likes Foster Wheeler (FWLT) and McDermott (MDR). Foster Wheeler, "provides engineering and construction services to the oil and gas, oil refining, chemical/petrochemical, pharmaceutical, environmental, power generation, and power plant operation and maintenance sectors worldwide. It operates through two groups, Global Engineering and Construction Group (Global E&C Group), and Global Power Group." McDermott (MDR) "operates in three segments: Offshore Oil and Gas Construction, Government Operations, and Power Generation Systems."

Fluor (FLR), is another company in this area. Again, this sector also benefits from global growth.

4. Aerospace and Defense

All those old civilian and military planes need to be replaced. We are in the middle of long aerospace cycle. The main play is Boeing (BA), who benefits from the cycle and also from Airbus' troubles. Other companies in this area include BE Aerospace (BEAV), which manufactures and markets cabin interior products for commercial aircraft and business jets, Northrop Grumman (NOC), an aerospace and defense company, Embraer (ERJ), maker of jet and turboprop aircrafts for civil and defense aviation markets, and Transdigm Group (TDG), a 2 Billion Market Capitalized Company that "engages in the design, production, and supply of engineered aircraft components for use in commercial and military aircraft worldwide." Indirectly, companies such as Allegheny Technology (ATI), creator of specialty metals, benefits from this cycle, as newer planes need lighter materials to save fuel.

5. Oil, Gas, and Energy

Oil, Gas and Energy are in bull market mode because demand is high, and supply is low. The US and Emerging Markets need these to continue their fast growth. And supply is limited, so aside from oil, oil services company which do offshore drilling, supply services to oil companies, companies which search for oil, companies that make and manage offshore rigs are benefitting greatly.

Companies include integrated oil companies such as Exxon Mobil (XOM) and Conoco Philips (COP), oil services companies such as Halliburton (HAL), and Schlumberger (SLB), refiners such as Valero (VLO), offshore drillers such as Global Santa Fe (GSF) and Ensco (ESV), transport vessels for offshore oil services such as Tidewater (TDW), and oil services and rig companies such as National Oilwell Varco (NOV) and Transocean (RIG).

6. Minerals

Gold, Copper, Silver, and other materials are in bull market mode. Once again, this is low supply, high demand. The US, as well as emerging and other international markets are growing! They have an insatiable appetite for these materials. Companies include Freeport-McMoran (FCX), a gold and copper company, and Jim Cramer suggests Lundin Mining (LMC) as well, as the runner up.

7. Telecom especially Emerging Market (Wireless) Telecom

Wireless use, and advanced telecom services such as mobile internet, are growing around the world. Products such as the Apple (AAPL) Iphone, and Research in Motion's (RIMM) Blackberry help drive demand, and countries around the world are increasingly using these services. In the US and in Europe and in Japan, wireless penetration is reaching levels from 70-100%. However in Emerging Markets such as Mexico, and Latin America, wireless penetration is at much lower levels, and is expected to hit 60% penetration in the region only in 2010. That means that there is great opportunity and growth in this area. As an example, Mexican (and South American) telecom play, America Movil (AMX), still has a forward PE of only 15.51, and a 5 yr estimated growth rate of 31.6%, for a PE to Growth ratio of around 0.5, very cheap!

While AT&T (T) is a play on North America Telecom, the greater growth (at a reasonable price) is in emerging markets. Companies include America Movil (AMX), for Mexico and South America, NII Holdings (NIHD) for Latin America, Vimpel Communications (VIP) for Russia, China Mobile (CHL) for China, and Vodaphone (VOD) for Europe, Middle East, Asia and Africa.

8. Mobile Convergence/Wireless Integrated Devices/Handsets

Mobile convergence, where different technologies such as voice, data, and video come together in a single handset, is continuing to grow at a rapid pace. Leaders include Apple (AAPL) with their new handset, Research in Motion's (RIMM) popular Blackberry product, and other companies like Nokia (NOK). As new services emerge, the infrastructure to provide fast, high quality video on these mobile devices will play an important role.

9. Location Based Services

Location based services currently depend on GPS, the Global Positioning System. The companies which use these technlogies are doing well in the market, and will continue to do well, as anything that moves, from cars, with automatic navigation devices, to military weapons, to people holding mobile converged devices such as advanced cellphones will have GPS. Garmin (GRMN) is a company which provides Location Based Product devices. Navteq (NVT) is a company which provides the digital maps, and its competitor is a private company called Tele-Atlas. Sirf Technlogies (SIRF) makes GPS chips. Though it has struggled in the recent past, there are signs that the stock is stabilizing. Competitor includes Broadcom, who bought out their competitor Global Locate. Trimble Navigation (TRMB) is another company providing GPS systems. They even bought the company AtRoad, which tracks fleets of vehicles. Software maker MapInfo (formerly MAPS), was recently bought out by Pitney Bowes (PBI). Indirectly, telecoms will benefit, advanced handset makers will benefit, and companies such as Google (GOOG), may be prime candidates in creating location based service applications such as local GPS search supported by location based advertising. There is great growth in this industry!

10. Computer and Video gaming

Computer and Video gaming are in the middle of a strong cycle, as three major gaming consoles are out from Sony (SNE), Microsoft (MSFT), and Nintendo (NTDOY.pk). Sony also has the portable gaming device Sony PSP, and Nintendo has the portable gaming device Nintendo DS. Demographics also support growth as Generation Y is the 2nd largest group (after the Baby Boomers), and many people in Generation Y like to play games. There are many plays in this sector from Retailers (Gamestop (GME)), console makers (Nintendo (NTDOY.pk)), game makers (Electronic Arts (ERTS), Activision (ATVI)), graphic chip makers (NVidia (NVDA)), and gaming accessories (Logitech (LOGI)). More on this sector and analysis by the numbers here.

11. Online Gaming in Emerging Markets such as China

There is great growth in online gaming, especially in China. There is a growing middle class, and increasing broadband penetration (internet cafes included). In China and Korea, online gaming has become a very popular pasttime. Two good online gaming plays in China include Shanda Interactive (SNDA), and The9 Limited (NCTY) who has the right to bring World of Warcraft to China. Shanda Interactive has a free model where people can play the games for free, but pay real money for items in the game. Article on the Growing Online Gaming Market in Emerging Markets here.

12. Internet, Search, and Internet Video

The internet, the backbone of the major Information Revolution, remains strong. People need to find relevant information from all the data, and companies like Yahoo (YHOO) and Google (GOOG) help do this. Google (GOOG), the groups bellwether company, even purchased YouTube, a popular internet video company. Baidu (BIDU) and Rediff (REDF) service both the Chinese and India markets. Brick and Mortar Retailing continues to be challenged by internet retailing spearheaded by Amazon.com (AMZN) and EBay (EBAY). Infrastructure companies, such as Akamai (AKAM), help make delivery of information better and faster.

13. International Emerging Markets

Emerging markets such as Taiwan, Korea, South Africa, China, Mexico, Brazil, India and China are in bull market mode. This trend will last more than a few years, and this would appear to be part of a much longer trend. Since many companies benefit, an investor could invest in a broad based Emerging Market Exchange Traded Fund such as ishares EEM, and Vanguard's VWO.

Other Sectors to Watch

Besides the sectors which are working well right now, there are other sectors worth watching. Some may start their run right now, while others may take more time to make their gains.

1. Optical Networking and Networking

More data is being placed on the internet, especially internet video. High Definition (which requires more bandwidth) will become more of a standard. Advanced services such as Internet TV (IPTV), and video demand will require much greater bandwidth. Eventually, the system will not be able to handle the demand for greater bandwidth. Next generation applications will require much greater bandwidth. Right now, even AT&T's top DSL Broadband package supports 6 Megabits per second (mbps). In Korea, broadband penetration is around 70%, and their internet speeds go up to 50 mbps, over 8 times faster than AT&T's top speed. The US is behind some countries such as Korea!

Optical Networking is a way to get much better download speeds. The best way to play this is througn Corning Glassware (GLW), who have the added benefit of servicing LCD and flat panel displays (another growth area). Ciena (CIEN) is an optical networking play. Speculative plays include $6 stock Level 3 Communications (LVLT) and $4 stock Finisar (FNSR).

I believe we are the verge of a breakout in the Optical area.

2. Obesity

Obesity is a long term problem. Two possible ways to play this trend are through Weight Watchers (WTW) and NutriSystem (NTRI). NutriSystem looks like the good growth play right now.

3. Specialty clothing

Certain companies just have a special story and product. A good example is Crocs (CROX), maker of a very popular type of footwear. Other companies include UnderArmour (UA) and Gildan Activewear (GIL).

4. Long-Term Care Facilities

Parents of Baby Boomers and eventually the Baby Boomers may need to use Long Term Care Facilities such as Manor Care (HCR), Brookdale Senior Living (BKD), and Sunrise Senior Living (SRZ). We need to watch this group for better action.

5. Healthcare Information System

Eventually, healthcare needs to have integrated software systems. The companies which provide these solutions include Cerner (CERN), Allscripts (MDRX), and Quality Systems (QSII). While this is a growth area, we may have to study the companies carefully to determine the better play.

6. Specialty and Niche Product Companies

Companies which provide a specialty or niche product have a competitive advantage. Examples might be #2 Energy Drink Maker Hansen Natural (HANS), and robotic surgery company Intuitive Surgical (ISRG).

7. Gambling Companies

There is great growth in the gambling and gambling equipment industry. Macau, in Asia, is being transformed into the Las Vegas of the East, and many companies can benefit. If internet gambling (which has taken a hit based on some laws restricting them in the US) comes back, this group will grow even more. Some companies in the gambling and gaming area include Las Vegas Sands (LVS), and MGM Mirage (MGM). Gaming equipment companies include International Gaming Technlogy (IGT), Scientific Games (SGMS), and ShuffleMaster (SHFL).

8. Leisure and Entertainment

Baby Boomers are in their peak spending years which may finally peak in 2010, until Generation Y comes of age. Also, Generation Y, as represented by Generation Y reporter of TheStreet.com Cliff Mason, appears to be more willing to spend money on leisure and entertainment. During these periods, leisure and entertainment companies should benefit.

Companies in this sector include gambling companies and gambling equipment companies (as mentioned above), hotels and resorts such as Starwood Hotels and resorts (HOT), Cruise Ship Companies such as Carnival Corp (CCL), and companies such as Vail Resorts (VAIL) and food and restaurant companies such as Darden (DRI). Powershares ETF "PEJ" covers this area, and the companies in the ETF are listed here.

9. Water

Some people say that water, and clean water, may be the next oil. An ETF which covers this area is powershares PHO, which holds companies such as Mueller Water Products (MWA) and Tetra Tech (TTEK).

10. Environmental Cleanup and Waste Management

Some companies have to cleanup our mess and all or waste including industrial waste, and radioactive waste. According to a Motley Fool article, the trends driving growth in this sector include growth in consumer spending on disposable items in growing populations. Also, there is a rise in industrial waste services as more companies utilize hazardous products in production facilities. There is a greater concern for the environment, so these companies will benefit. Companies in this area include Waste Management (WMI), Clean Harbor (CLHB), and American Ecology (ECOL).

11. Stock Exchanges

Stock Exchanges are in bull market mode. There is great consolidation in this area, and people speculate there may be only a few worldwide stock exchanges. Companies include the InterContinental Exchange (ICE), Nasdaq (NDAQ), New York Stock Exchange-Euronext (NYX), CME Group (CME), and Nymex (NMX).

12. Future Gen Y Plays: Housing, Automobiles, Weddings, Babies

Yes, housing is down right now, but we have to look many years into the future. Generation Y is a very large group, second only to the Baby Boomers. They will eventually (many years from now) be buying their first homes. They will also make other large purchases such as automobiles, and many will be getting married, and having babies. This sector trend will be good for companies in these areas, but we may have to wait many years to play these trends.


Through my research and experience, I found these bull markets. Jim Cramer mentions six wild bull markets, and those six are incorporated above (with my comments), and a long time ago, Jim Cramer also suggested looking into areas such as HealthCare Information Systems.