New Year for China: 2008

With China’s GDP growth rate reaching over 8% over the past 5 years, China still may be in it for another year. China looks good for the long run, but their short run bubble may be a risky investment. With the Olympics coming and FDI in 2007 reaching 67.3 billion dollars, the highest in the world, China may have risk of a slow down. Problems include their 1.5 trillion USD forex reserve and their appreciating currency which are at the forefront of news.

Expectations have been rising faster then…

Quick Look at China’s Currency Policy Position

As we all know there has recently been pressure on China to appreciate their currency because of the trade imbalances seen in Europe and America. As well, other East Asian countries are running into problems with their markets because China’s currency is doing so much better then theirs. Here is a quick run down of the problems, which can help you to analyze the situation.

The biggest problem is that China’s currency is undervalued by as much as what some people think is up to 35%…

Regional Policy Reorientation and its Dilemmas: China’s Past Affecting the Future

Developing the coastal regions for so long during the Mao period has left a huge disparity between the economies of the interior and the coast. The gap is so large that even though the interior in some areas is growing at the same rate as the coastal regions, the absolute gap only grows larger because of the disparity of their starting points.

While the six and seven five-year plans were based on the system that economic development would diffuse into the center from the coastal regions, this was not a good idea…

Rural China left behind

After having the opportunity to visit a rural farming community in China it made me realize many things about China’s impressive growth. It is not an efficient growth, but an inefficient one. We see skyscrapers and massive Olympic structures being constructed every month but this is only a small part of China. Outside the two great cities of Beijing and Shanghai some small communities with de-collectivized farms hardly have any paved roads, and some have none at all. While we see this huge growth in China now, I do not believe that this growth is sustainable. My main reasons are as follows:

1. No infrastructure between inner and coastal China exists. During my visit to a small village the people said…

Investing in Africa

China’s market is getting harder and harder to understand; if they are in a bubble and how long it will last, or if there will be a correction and when, is a major topic with the coming Olympics. So I thought I would move the topic to another area. While there have been huge amounts (more…)

Identifying a Special Situation

Amidst the turmoil and uncertainty that attends the markets these days, I often find it relaxing to sequester myself for a while and do some analysis. Part of my job as an analyst is to discover things that others may have missed. These may be opportunities to identify “Special Situations.” Some very successful opportunities of mine in the recent past have been companies such as Nucor, Landstar System, C.R. Bard, Laboratory Corp., PACCAR, Asta Funding and Student Loan Corp (STU). I have had some excellent runs with these companies because I was able to isolate their uniqueness early – before Wall Street discovered them.

Hunting for Tenbaggers; Catching AERT

Ah, the tenbagger. That mythical creature from stock trading lore that grows 10 times in price. This is what dreams are made of. I like a quote from Jason Kelly’s book, The Neatest Little Guide to Stock Market Investing. “It takes only $10,000 and two tenbaggers to become a millionaire.” It’s simple in concept really. Find a fast growing company, hold on to it for 5 or 6 years, and sell it for a long-term windfall. The equivalent of 50-60% annually. It’s every investor-boy’s fantasy but mysteriously elusive. In fact there may only be a few stocks a year that turn out to be tenbaggers. So the question is how do you find them? Maybe I can help.

Ask InvestorGeeks: How do I invest in a Foreign Company?

Recently one of our readers sent us an email asking us how to invest in a foreign company. Below you’ll find their oringinal question, and a tidier version of my response to it. Which contains a bit more information than when I first responded.

Simple questions: If I found a company (Australia’s Peplin: PEP) that
looks promising, how would I buy shares? How would an American buy PEP,
for example? Could I do this through ETrade?

Microsoft and Web 2.0

John Rhodes over at recently wrote an article on How Web 2.0 Killed Microsoft. The article points out a lot of the hurdles and challenges facing Microsoft as they try to keep up with the movement from desktop-based applications to online services. It’s a long article; here are some highlights:

The disruption afoot in the world of operating systems isn’t tied to the software resident on your own computer. Instead, the disruption is network enabled software, particularly software, data storage, and end user environments that reside squarely on the internet, but probably more specifically on the web. To be quite blunt about this, Google doesn’t give a damn if a web browser of any virtually flavor is running any particular operating system. The network is the computer, after all.

Web 2.0 developers are mostly yawning about Vista because they don’t need it. Like me, I’ll bet you haven’t seen much buzz on Vista coming from developers and designers. In the past, developers needed to care about the operating system, but no more. They obey few corporate masters because they feel liberated. They leash of Windows has been cast off.

As users adopt more and more Web 2.0 tools, they will get more comfortable with them. In turn, they will start to expect and even need these applications in their organizations. The enterprise will start to focus on web applications more and the operating system even less. To put this another way, Google and many other companies playing the Web 2.0 world, will slowly kill Microsoft. The mightly enterprise will move to align with user demands over time. It’ll be a glacial move, but it will happen as Web 2.0 continuosly demonstrates victory, and liberation.

Read on for my response.