Uncommon Wisdom

Low rates, easy money = monetization of many assets …

Larry Edelson — Thu, 18 Mar 2010 12:30:24 +0000

The Fed, not surprisingly, stood pat again this month, and will keep interest rates low as far as the eye can see. Eventually, this will lead to a scenario where many different types of assets become monetized, inflating much higher.

For my latest views on the markets, check out today’s video.

Best,

Larry

About Uncommon Wisdom

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Uncommon Wisdom (UWD) is published by Weiss Research, Inc. and written by Sean Brodrick, Larry Edelson, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in UWD, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in UWD are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

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Who Wants To Be A Billionaire?

Tony Sagami — Wed, 17 Mar 2010 12:30:59 +0000

Forbes has released its list of the 500 wealthiest people in the world and while there is a little juggling at the top, Bill Gates and Warren Buffet are still the richest men in America with a net worth of $53 and $47 billion respectively. That makes them the second and third richest people in the world.

Who is the richest? According to Forbes, it is Mexican telecommunications king Carlos Slim, with a fortune estimated at $53.5 billion.

Despite losing that top spot, the United States has more billionaires, 403 of them, than any country in the world. There is, however, a new #2 … China.

China now has 64 billionaires, way up from the 28 it had in 2008. The richest man in China is Zong Qinghou, who runs the multi-billion-dollar soft drink firm Wahaha Group, and is ranked 103rd on the list with an estimated wealth of around $7 billion.

More impressive is how fast these Chinese entrepreneurs have amassed their wealth. Five years ago there were only 100 people in China with a net worth of $150 million, but today there are more than 1,000.

Carlos Slim (right) has surpassed Bill Gates (left) and Warren Buffet as the world’s richest person.

China isn’t the only country in Asia that is sprouting billionaires. The number of Asian billionaires has increased from 140 in 2008 to 234 last year. There are 49 billionaires from India, 64 from China, 25 from Hong Kong, nine from Malaysia, seven Indonesians, four from Singapore, and two from Thailand.

The wealthiest Chinese aren’t found in mainland China, however. The richest Chinese live and work in Hong Kong or Taiwan. You can invest side-by-side with these brilliant businessmen by investing in their companies. Investing with them could be as lucrative as buying stock in Microsoft or Berkshire Hathaway.

Below is a list of those non-mainland Chinese billionaires, a brief description of their company, and the ticker symbol of their stocks on both the Hong Kong Stock Exchange and the U.S. over-the-counter market.

China’s Five Richest Businessmen
Rank	Name	Company	Worth
103	Zong Quinghou	Wahaha	$7.0
154	Liu Yongxing	East Hope	$5.0
176	Zhang Jingdong	Suning	$4.5
189	Wang Chuanfu	BYD Corp.	$4.4
212	Xu Jiayin	Evergreen Real Estate	$4.0

Li Ka-shing ($21 billion): Li is the majority owner of Cheung Kong and Hutchison Whampoa (0013.HK or HUWHY.PK), which makes him the world’s largest operator of container terminals and world’s largest health and beauty retailer. He also owns the Canadian oil firm Husky Energy (HSE.TO or HUSKF.PK).

Lee Shau Kee ($18.5 billion): Lee is the founder of Henderson Land Development (0012.HK or HLDCY.PK), a real estate development company he founded and one of the largest real estate companies in Asia.

The Kwok Family ($17 billion): This is the clan behind the most prestigious real estate development companies in Hong Kong and China, Sun Hung Kai Properties (0086.HK or SUHJF.PK).

Chen Yu-tung ($6.8 billion): Chen is the founder and majority shareholder of conglomerate New World Development (0017.HK or NDVLY.PK), a property development, infrastructure, transportation, retail, hotel, casino, brokerage and telecommunications companies in China and Hong Kong.

Joseph Lau ($5.8 billion): Lau is the owner of Chinese Estate Group, a holding shell for his three companies: Chinese Estates Holdings (0127.HK or CESTF.PK), Chi Cheung Investment Company (112.HK) and G-Prop Holdings (0286.HK). NOTE: Chi Cheung and G-Prop are not listed in the U.S.

Terry Gao ($5.5 billion): Gao started Hon Hai Precision Industry (2317.TW or HNHPF.PK) in 1974 with $7,500 and turned it into one of largest contract electronics manufacturers in the world.

India has fewer billionaires than China, but boy are they rich! Indian industrialists Mukesh Ambani and Lakshmi Mittal are among the world’s top five richest people. Indians Mukesh Ambani, with an estimated net worth of $29 billion, and Lakshmi Mittal, with $28.7 billion, are the fourth and fifth richest men in the world.

But maybe you’re more of an ETF and mutual fund investor and you just want to hitch a ride of the overall Chinese market instead of investing alongside Chinese billionaires. While I’m quite sure you’ll be leaving a lot of potential profits on the table, you will be investing in the most dynamic and growing economy in the world.

iShares FTSE/Xinhua China 25 Index ETF (FXI) owns the 25 largest and most liquid Chinese companies, so think of this as investing in the Dow Jones 30 Industrials of China. The top 10 holdings make up more than 60% of the fund so you will be heavily weighted with China Mobile. China Construction Bank, Industrial and Commercial Bank of China, China Life Insurance, and Bank of China.

iShares FTSE China HK Listed Index (FCHI), is similar to FXI but only owns Chinese stocks that are listed on the Hong Kong Stock Exchange. It, too, is heavily weighted with financial stocks.

Hong Kong is now home to multiple Asian billionaires

SPDR S&P China (GXC) is managed by State Street and is also a large cap fund with emphasis on financials as well.

PowerShares Golden Dragon Halter USX China (PGJ), isn’t as heavily weighted toward large cap financials. It owns a lot of energy (21%), technology (18%), and telecommunications (16%).

Claymore/AlphaShares China All Cap (YAO) is very different from the above ETFs because of its focus on small caps.

China is creating millionaires and billionaires faster than anyplace else in the world and I don’t expect that to change for years, perhaps decades. You, too, can participate in that phenomenal wealth creation by including a heavy dose of Chinese stocks in your portfolio.

And where do you find those great Chinese stocks? The Forbes list is a great place to start because it isn’t just an interesting piece of news; it is also an investment map of some of the very best Chinese stocks you could own.

Best wishes,

Tony

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Can Sugar Sweeten Up Your Portfolio?

Sean Brodrick — Tue, 16 Mar 2010 12:30:08 +0000

If you are having trouble viewing the above video, click here to download it in .wmv format.

Sugar is oversold and looking ready to bounce — and you can play this with a commodity exchange-traded fund. In this video, I give you the scoop on the potential for sweet, sweet profits.

All the best,

Sean

P.S. This is just the kind of recommendation I issue in Red-Hot Commodity ETFs. If you want to see what you’ve been missing, now is a great time to get onboard. Point your browser to: http://images.moneyandmarkets.com/UWD/339/a03262.html or call 1-800-430-3683 and get onboard today.

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China FXI Blasting Higher!

Larry Edelson — Mon, 15 Mar 2010 13:30:27 +0000

In just the last nine trading sessions, my favorite investment to capitalize on China’s blistering economic growth iShares FTSE/Xinhua China 25 ETF (FXI) — has soared more than eight full percentage points, thrusting through the $41 level.

And in the past month, this China-focused ETF is up more than 13%!

So if you think China’s economy is another bubble in the making — as so many others seem to think — or if you believe that Beijing is deliberately going to slam on the brakes, think again.

A. China’s economy has enough built-in demand and potential to continue its near double-digit economic growth for years to come.

B. While Beijing will try to manage that growth, authorities in China will never do anything to squash it.

Take it from me. I visit China at least twice a year, with an open mind, and my list of contacts in tow.

And based on what I’ve seen recently, there’s no doubt in my mind that China’s economic growth is not only for real, but set to accelerate higher in 2010, and continue for the foreseeable future.

Let’s start by taking a detailed look at just some of the recent economic figures from China …

China’s December imports hit a new all-time high of $112.9 billion, a 55.9% increase over December ‘08, and a whopping 18.8% increase over the month prior, November.

Crude oil imports recently soared to an all-time record high of 21.26 million metric tonnes, up an amazing 24.2% from November, and a whopping 47.9% year-over-year.

And last month, China imported 18.51 million tonnes of crude oil, fully 58% more than in the same month of last year.

China’s iron imports soared more than 21% for November, and 80% year-over-year, while for all of 2009, imports of iron ore by China soared 42% to a record 628 million tonnes.

Copper imports soared 27.3% in December, while scrap copper imports soared an amazing 46.7%.

More recently, in February, China’s exports exploded 46% higher … money supply growth surged an incredible 25.5% … retail sales soared 22.1% … and urban fixed-asset investment gained an amazing 26.6%!

Meanwhile, China’s gross domestic product (GDP) is expected to be at least 8.7% for all of 2010, a conservative figure, I think, based on the economy’s performance in just the last two months.

All told, China is now …

The world’s largest exporter of manufactured goods, surpassing Germany. And it puts China on track …

To surpass the size of Japan’s economy this year and become the world’s second largest economy!

More importantly, and most surprising to most pundits who continually get China wrong, Chinese consumption is exploding higher.

China is now the world’s largest exporter of manufactured goods.

And it’s not just in the urban, eastern seaboard cities where China’s economic growth is cooking. It’s also in the rural countryside, where in 2009, consumption jumped an estimated 15.5% over 2008, outpacing full-year urban spending for the first time ever (versus full-year urban consumption of 15.2%).

It’s critical to understand the importance of the consumption figures in China. Because for years now, every pundit under the sun claimed that China is merely a savings nation.

Ergo, they’ve said over and over again, the Chinese are not big consumers, and therefore, China’s economy would never make it into the big leagues.

But the above figures prove the pundits dead wrong. Indeed, the proportion of China’s economy now driven by consumption increased dramatically in 2009 — to a full 51% of GDP, up from 48.6% in 2008, a giant single year gain by any measure.

Moreover, China’s share of global consumption is also dramatically increasing. Credit Suisse has forecast that Chinese consumption will explode more than 400% higher over the next 11 years, soaring from its current 5.2% of global consumption to 23.1%.

That will put China on track to easily surpass the U.S. as the largest consumer market in the world, spending almost $16 billion a year!

Is it any surprise then that China surged past the U.S. to become the world’s largest automobile market in 2009, with annual vehicle sales at 13.64 million units, up 46.15% over 2008? Hardly!

Or that China’s nationwide housing starts rose a staggering 194% year-over-year in November 2009? Or that new home prices jumped 9.1% in December compared to the same month last year?

Or that China’s new housing starts surged by 37.5% year-on-year in January-February, three times the rate of a year ago?

Again, hardly!

Five Reasons Why Chinese
Consumption Is Exploding Higher

China is on track to surpass the U.S. as the largest consumer market.

First, two years ago, the authorities in Beijing saw the handwriting on the wall: If they didn’t bring economic growth to the rural areas of China, where more than 1 billion people reside, the economy would not continue to grow, and instead, there would be rising social unrest.

Therefore, they started pumping money into the rural areas. Into construction projects … schools … hospitals … a slew of infrastructure improvements … and on the supply side, tax breaks … new laws improving private property rights … and more.

The result: Rural incomes have soared, rising more than 6% in each of the last two years, and quickly gaining traction on urban income levels.

Second, Chinese banks, unlike those in the West, are doing everything they can to support growth by issuing 95.3% more loans in 2009 than in 2008. That’s almost $1.35 trillion in new loans.

And as noted previously, despite some slowing in bank lending, money supply growth in China surged 25.5% higher last month!

As a result, money supply growth in China is also on the fast track, with annual growth last year of nearly 28%. And the new money is, again, unlike the West, flowing into virtually every sector of the economy.

Third, fixed-asset investment is soaring, giving jobs to millions of people temporarily sidelined by the financial crisis. Indeed, China’s urban fixed-asset investments grew a whopping 31% year on year in 2009, the first time the figure has exceeded 30% since 2000.

Fourth, the manufacturing sector is also firing away on eight-cylinders. Thanks to massive government stimulus … record bank lending … and the industrious nature of the Chinese people, China’s manufacturing sector has improved for 10-straight months in a row, and is now nearly back to pre-crisis levels.

Fifth, Beijing is raking in the dough. In the West, especially the U.S., the private sector is largely broke, and so is the government. So no matter how much Washington throws at the economy, private consumption is falling sharply.

Not so in China.

As noted previously, private consumption is soaring. And one of the reasons has to do with Beijing. Because not only is Beijing putting more money into China’s economy than the West is putting into its own, in terms of the percentage of GDP, but psychologically important, Chinese consumers are not worried their government is going broke.

So Why All The Skepticism
From Wall Street And The Media
On China’s Blistering Economic Growth?

The answer is simple: They don’t understand the country, either because they don’t travel there and put their boots on the ground …

… or because they don’t pay attention to important details that make a huge difference on how other cultures not only conduct business, but also how they see the world.

My Suggestions:

Although pullbacks in China’s stock markets are inevitable, I see no reason to be anything but long-term bullish on China and would look to increase exposure to China’s economy and markets on any pullback.

Specifically, I like positions that offer broad-based exposure to China such as the iShares FTSE/Xinhua China 25 ETF (FXI) … and mutual funds such as the U.S. Global Investors China Region Fund (USCOX).

I also like exposure to some of China’s giants, like China National Offshore Oil Corp (CEO) … and Sinopec (SNP).

Best wishes,

Larry

P.S. For more detailed analysis of today’s global economy … the financial crisis … natural resources like gold and oil … booming economies like China … and for razor-sharp timing recommendations for your core portfolios …

I strongly recommend you consider a subscription to my Real Wealth Report. At a mere $99 per year, it’s one of the best bargains of all time.

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Titanic profits from Chinese shippers

Tony Sagami — Sat, 13 Mar 2010 13:30:15 +0000

Chinese exports surge by 46% in February … imports skyrocket upwards by 45%. The Chinese economy has been a two-headed growth story, but up until now, the export side of the economy has been mired in a recession. The new combination of strong domestic consumption and a strong export economy is going to propel China back to 10%-plus growth rates. Many companies will thrive, but the surest winners are the companies that transport the goods and materials across the Pacific Ocean.

View the video to hear my top three shipping stocks, so you too can haul in your own container of profits.

Best wishes,

Tony

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The Coming Emergency in Energy

Sean Brodrick — Fri, 12 Mar 2010 13:30:29 +0000

The good news is there is no shortage of oil in the U.S. … for now. But the price isn’t acting that way. I’d say the price of crude is acting like we’re scraping the bottom of the barrel.

So why, if there is so much crude, are prices going up at the pump? And what can you do about it?

Today, we’ll look at …

Some signs that oil is going much higher — I think the current rally will go to $90 or even $103.
I’ll also tell you about three things you should be doing right now BEFORE oil prices really take off.
What’s more, I’ll give you one pick for your portfolio — and one you should avoid!

Here are some of the bullish signs I see in crude …

China Continues to Build Oil Reserves. China finished filling the first phase of its strategic oil reserves last year — containing about 102 million barrels — and has started construction of the second phase with a total capacity of 170 million barrels. And it’s still not enough. National People’s Congress member Chen Geng told China Energy News that the country needs to step up efforts to build up reserves of both crude oil and refined fuel.

That should help put a floor under oil prices, even as China’s consumer demand for oil and oil products keeps soaring.

Global Auto Sales Are Booming. U.S. auto sales rose 13% year over year in February. But that’s not the bullish news — almost all of those are replacement vehicles. The bullish news is in China, which overtook the U.S. last year as the world’s largest auto market. The China Association of Automobile Manufacturers says that passenger-car sales jumped by 55% to 942,900 units, while total vehicle sales were up by 46% to 1.21 million. And most of those vehicles are NOT replacement vehicles. That means they add to China’s ever-increasing thirst for oil and gasoline.

Other emerging markets are also seeing auto sales boom. In Brazil, sales leaped 10.8% year over year. In India, car sales rose 33% year over year and commercial vehicles rose a whopping 87%! And as new drivers hit the road around the world, they’ll all add to global gasoline and oil demand.

Is it any surprise that the rest of the world wants to drive like big ol’ Americans? This, along with emerging market economies shifting into higher gear, is why The International Energy Agency says oil demand will probably hit 86.5 million barrels a day this year (a thousand barrels a second).

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Oil Majors Chase Smaller Discoveries. Bloomberg reports that oil giants ExxonMobil, BP and Total are investing in assets that previously weren’t worth their time or money because oil-rich nations are reducing access to reserves and exploration drilling faltered.

How bad is the drilling going? Chevron’s exploration failure rate jumped to 35% last year from 10% in 2008. Ouch!

Failure to find new fields squeezes supply and it’s also bullish for the stocks of smaller oil companies. Integrated oil companies announced almost $100 billion in acquisitions in the past year, up 53% from the preceding 12 months, according to data compiled by Bloomberg.

Mexico Is the Canary in the ~~Coal Mine~~ Oil Patch. I talk about Mexico’s grimmer-and-grimmer oil production picture from time to time because it is a major supplier of imported U.S. oil. In fact, in December, it rose to our #2 supplier of imported oil (after Canada). And that means we are relying more and more on a country that is headed for a head-on collision with an export collapse.

Output from Mexico’s giant Cantarell field, in shallow waters near the eastern shore, has been cut in half in recent years. Output at Mexico’s other large field is expected to begin falling in the next year or two.

And while it’s bad enough that Mexican oil production is falling — from 3.5 million barrels a day in 2004 to a projected 2.5 million barrels a day this year — its domestic demand is climbing. Mexican oil exports to the United States have fallen by nearly a third in the last six years to drop to 1.1 million barrels a day. Remember what I said about people in emerging markets wanting to drive like Americans? Mexican auto sales are expected to rise 7% to 10% this year.

What’s the bottom line? If current trends hold, Mexico’s oil and gas exports to the U.S. could go to zero within seven years. How much do you think you’ll be paying at the pump if our #2 supplier of oil disappears from the market?

Wait! It Gets Worse!

So why is Mexico the canary in the oil patch? Because, according to data from BP, 40 out of 54 oil producing countries have flat or declining production. So it’s not just a Mexico production problem — it’s a global production problem.

The amount of oil in new discoveries peaked years ago, and we are rapidly depleting the known fields. Starting in 2011, we’ll see a drop of just over 4 million barrels per day from the fields that are currently producing about 85 million barrels a day. After 2014, world production will go into steeper and steeper decline. Is that bullish for oil prices? You bet!

Individuals like you and me can’t affect the price of oil. But we can plan and make preparations in our own lives to better ride out higher prices.

Tip #1: Consider Buying a More Fuel Efficient Car

Depleting fields and declining production are bullish for oil prices.

For my money, the price of hybrid cars still hasn’t dropped to make them worthwhile, but they’ll look more attractive as the price of gasoline rises. In the meantime, you can buy a gas-sipping car. If you have an older car that’s costing you money in repair bills anyway, it could be the right move to make. Here’s a list of the 15 most fuel efficient cars from Consumer Reports: http://tinyurl.com/
ydlwvo9. And if those cars are too small, you can find out the estimated miles-per-gallon for all types of cars at http://www.fueleconomy.gov
/feg/findacar.htm.

If you switch from a car that averages 20 miles per gallon to one that averages 30 miles per gallon, drive 12,000 miles a year, and gasoline costs $3.00 a gallon, you’ll save 200 gallons of gasoline — and $600. If the price of gasoline goes a lot higher, you’ll save a lot more.

Tip #2: Slow Down

If you’re a habitual speeder, slowing down to 55 miles per hour could increase your fuel efficiency anywhere from 7% to 21%. For every mile per hour faster than 55 mph that you travel, fuel economy drops by about 1%.

Tip #3: Use Web-based Resources to Lower Your Costs

Even if you don’t buy a more fuel efficient car, you can find the lowest gasoline prices in any zip code at http://gasbuddy.com/ and http://gaspricewatch.com. This is one of many recommendations I offer in my book The Ultimate Suburban Survivalist Guide, which has a lot more information on preparing for and riding out a full-blown energy crisis.

Another piece of advice from my book — start telecommuting. According to a report by the American Electronics Association, an estimated 1.35 billion gallons of gasoline could be saved every year if every U.S. worker with the ability to telecommute did so 1 or 2 days per week. If your boss doesn’t like the idea, tell him it’s the patriotic thing to do.

There are a lot more ideas in my book, but you get the picture. The key is to examine your life and see how you can start saving gasoline now. It will be easier to make the adjustment when prices at the pump go higher and higher.

While I expect gasoline and oil prices to go higher, they probably won’t stay that way (this time). That’s because if and when oil climbs over $100 per barrel, it saps economic activity. So, that’s when we could see the next leg down of the recession, and oil prices will go lower again.

But don’t get comfortable with lower oil prices. The big trend is up — way, way up.

What to Do In Your Portfolio

Consider making moves in your portfolio now to prepare for the next leg up in crude oil. For example, you could add an exchange-traded fund that holds a basket of oil companies. But I wouldn’t use the Energy Select Sector SPDR (XLE) — it’s stacked heavily with companies like Exxon and Chevron — the same giants that can’t replace their reserves and have to buy up other companies.

Instead, consider the Oil Services HOLDRs (OIH). It holds companies like Baker Hughes, BJ Services and Cameron International — service companies that will be getting plenty of work as the price of oil goes higher.

For the long haul, you want energy stocks that can do well no matter whether the price of oil goes up or down. Those are the kinds of energy stocks we target in my new service, Crisis Profit Hunter. If you are willing to do the legwork yourself, you can find some of these gems on your own. Just be careful — this market can turn on a dime and accelerate in both directions.

Yours for trading profits,

Sean

P.S. In the next issue of my new Crisis Profit Hunter, I’ll be focused squarely on the coming emergency in energy. I’ll have more energy picks that can shift your portfolio into higher gear. PLUS, with your subscription, you get FOUR bonus reports.

Two of those reports focus on energy, and they have a total of 5 red-hot energy picks that give you a jump on higher fuel prices! And now, for a very short time, I’m offering a special subscription price — just $89 for one year.

If you haven’t already signed up already, don’t waste another minute — get your subscription to Crisis Profit Hunter TODAY!

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Get Ready!

Larry Edelson — Thu, 11 Mar 2010 13:30:41 +0000

Markets still largely betwixt and between, but I do see major moves coming within days in the Dow, gold, and the dollar. Check out my latest video for more.

Best,

Larry

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Follow The Leader

Tony Sagami — Wed, 10 Mar 2010 13:30:29 +0000

While it is hard to get a straight answer from an American politician, they do have the freedom to speak their mind and say whatever they darn well want to.

They may often put their foot in their mouth with exaggerations — “I invented the internet” — or say something they regret later — “you lie” — but they have the freedom to say whatever they want.

That isn’t true in China. Every publicly-uttered syllable that comes out of a Chinese politician or military leader’s mouth is carefully crafted and consistent with the Communist Party’s objectives and philosophy. Television and newspaper comments are usually designed to gauge and influence public sentiment.

Say something that contradicts and — God forbid — undermines the Party’s objectives, and you’ll find yourself out of a job and perhaps even serving hard time in a Chinese prison. I pay careful attention to the economic comments of China’s leaders because it usually contains a clear road map of where the Chinese economy is headed as well as helping me find the next great investment idea.

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Unlike American politicians that have to deal with a two-party system and constituents, whatever the top Chinese leaders want … they get.

Some of China’s most powerful leaders had a lot to say last week and buried in every one of those comments was some actionable advice that you can make money on.

Follow the Leader #1: The National People’s Congress, Chinese legislature branch, convened its annual planning session last Friday with a message from Premier Wen Jiabao. Wen gave a lengthy speech to the 3,000 delegates from around the country that outlined China’s economic and social priorities for 2010.

The two key priorities are to maintain economic growth and increasing rural spending to help narrow the income gap between the prosperous coastal cities and the poor rural interior.

Wen called 2009 a difficult year for the Chinese economy because of the global economic crisis. Despite that, China saw a strong economic growth rate last year of 8.7% and said he is targeting an economic growth rate this year of 8%.

Premier Wen Jiabao is targeting an 8% growth rate for China’s economy in 2010.

Su Ning, a central deputy governor, was even more optimistic. He forecast that China’s economy, will top last year’s 8.7% growth in 2010. “China’s economy will perform better than last year,” SU said.

Investment Opportunity: The Chinese economy and the Chinese stock market will continue to hum. Everybody knows that stock prices follow corporate profits, but the key to rising corporate profits is a healthy, growing economy. The Chinese Premier just gave you the “green light” to stay bullish on China and the fastest way to do so is with a China-focused ETF such as the FTSE/Xinhua China 25 Index, symbol FXI.

Follow the Leader #2: One of China central bank governors, Zhou Xiaochuan, said China would eventually move away from its current exchange rate policies, which he described as a temporary response to the global financial crisis, but he gave no timetable.

“We don’t rule out that during some special periods — such as the Asian Financial crisis and the global financial crisis this time — we adopted special policies, including a special exchange rate mechanism. Sooner or later, we will exit the policies,” said Zhou.

That is a monumental change from the previous, consistent stance of stressing currency stability and rejection of foreign pressure (mainly from the U.S.) to allow the Chinese yuan to strengthen.

Investment Opportunity: A Chinese currency ETF will prosper from this change. There are two: (1) Morgan Stanley Market Vectors Renminbi (CNY) and (2) WisdomTree Dreyfus Chinese Yuan (CYB).

Follow the Leader #3: There is no shortage of China critics and most of them cite the hot real estate market as a bubble waiting to be burst. Real estate markets, China or otherwise, thrive or die on the availability of credit. China’s leaders are making sure that access to credit won’t be a problem in 2010.

China’s central bank plans on increasing the broad money supply by 17% for this year. “If M2 (the broad measure of money supply) growth is 2 to 3 percentage points higher than the combined growth of GDP and CPI, the monetary policy could be seen as easy,” said Su Ning of the central bank.

Investment Opportunity: There are several Chinese real estate stocks listed in the U.S., such as E-House (EJ) and Claymore/Alphas Shares Real Estate ETF, but I think the biggest winner could be China Housing & Land, symbol CHLN. To be fair, I must disclose that my Asia Stock Alert subscribers already own this winner.

Follow the Leader #4: China currently has about 3,300 kilometers of high-speed railways, but it plans to expand the network to 13,000 kilometers by 2012. As part of last year’s US$585 billion economic stimulus package, China invested $88 billion in railway construction last year, but plans to spend another $120 billion in 2010.

China plans to expand its high-speed railway system.

“The massive investment in railway construction last year fueled the demand for 20 million tons of steel and 120 million tons of cement,” said the Ministry of Railways official.

Investment Opportunity: China Railway Construction, symbol 1186.HK or CWYCF.PK, will be a big winner as well as steel and cement companies, like Anhui Conch Cement, symbol 0194.HK or AHCHY.PK. Both are traded on the Hong Kong Stock Exchange and the U.S. over-the-counter bulletin board. Again, Asia Stock Alert subscribers already own both of these stocks.

Hansel and Gretel left a trail of breadcrumbs to find their way back home and China’s most influential leaders left you a trail of breadcrumbs for investment profits. Of course, timing is everything so I suggest you wait for these stocks to go on sale as well as doing your own due diligence to make sure these securities are appropriate for your situation.

But make no mistake about it, the combination of (a) rapidly growing economy, (b) $2.3 trillion of cash, and (c) the communist command economy ensures that China’s leaders are going to get what they want and riding on their coattails could be a very profitable walk through the investment woods.

Best wishes,

Tony

About Uncommon Wisdom

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This Base Metal Could Outshine Gold

Sean Brodrick — Tue, 09 Mar 2010 13:30:37 +0000

Dear #field8#,

The price of iron is poised to jump 80% in one fell swoop. That’s like gold going to $2,040 an ounce! In this video, I give you three ideas on how you can play this move.

If you like the ideas in this video, I have something else for you: I’m giving you a special opportunity to get in on the ground floor of my new monthly publication, Crisis Profit Hunter. If you want to maximize your profits and protect your portfolio while riding trends like the one in iron, here’s what to do: Call 800-400-6916 TODAY and get my special discount price. Or you can order online — just CLICK HERE. You’ll get the first issue PLUS four special reports.

Yours for trading profits,

Sean

About Uncommon Wisdom

For more information and archived issues, visit http://www.uncommonwisdomdaily.com

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Another Peek Into The Future …

Larry Edelson — Mon, 08 Mar 2010 13:30:03 +0000

Readers love my cycles approach to the markets because it lets them peek into the future paths of market action in various assets.

So in this issue, I’ll give you an updated glimpse into the future of some key markets using cycle analysis — the historical study of the internal rhythms and hidden forces that truly drive the markets. It’s the best forecasting method I know of.

I’ll cover what’s foremost on readers’ minds: The Dow Jones Industrials, the dollar, and gold. Then, I’ll show you a startling new forecast.

First, the broad stock markets: As many of you already know, my work on cycles caught the big March bottom last year, to the tee, and also projected a rally into January 2010.

That forecast was right on the money, and, we took advantage of it racking up loads of profits in several of my suggested investments to capitalize on the rally.

So what now for the Dow, the S&P 500, the broad U.S. stock markets?

Consider the following two charts of the dominant 24- and 40-month trading cycles, using the broad-based S&P 500 index.

The first chart shows you the 24- and 40-month cycles separately, while the second chart shows you the same two cycles but as a single synthesized, or combined, projection for the S&P 500.

Looking at the first cycle chart of the S&P 500, you will notice that the 24-month trading cycle is now pointing down. This is the same cycle that gave birth to the sharp decline in mid-January/early February that saw the Dow plunge from 10,729 on January 19, to 9,835 on February 5.

However, the 40-month cycle has not yet topped out. So what did the market do? It has rallied back, to as high as 10,469 as I pen this column. And, it may even move to a slight new high in the weeks ahead, as the 40-month cycle is not due to top until late April/early May.

From there on out, though, we should see both the 24- and 40-month cycles exert a strong downward bias to the market that lasts for up to a full year, with no abating in selling pressure until April 2011.

That does not mean we will see a re-test of the March 2009 lows at 6,469 in the Dow. It’s too soon to say. But I would not be surprised to see the Dow fall at least as low as 9,000, before beginning to recover again going into 2012.

Now look at the second chart above, the composite 24- and 40-month cycle in the S&P 500. It confirms the individual components of these important trading cycles, showing a high due in May of this year, followed by a decline into May 2011.

So what can you learn from these two charts? How should you position your investing and trading for the months ahead?

First, that the downside in the broad stock markets right now is still limited, due to the 40-month cycle that’s still rising. So, I would not be aggressive yet on the short side of the markets.

Second, the broad stock markets are, however, getting close to an important top. So, if you’re long the market and have profits, I would strongly consider grabbing as many of those profits as you can, much like I’ve done for you here in the past few editions of my column.

Third, I would prepare to soon short the broad markets, via inverse ETFs, such as the ProShares Short Trust S&P 500 (SH), an inverse ETF you can buy that effectively shorts the market for you.

What about all the bearish news out there right now? The sovereign debt crisis, the plunging currencies in Europe, the renewed collapse of housing sales, and more? Don’t they scream SELL right now?

No, they don’t. Keep in mind that news should never be used to time your trading and investing. After all, how many times have you bought a stock in anticipation of positive earnings … the earnings were announced and beat expectations … and yet, the stock fell out of bed?

Or conversely, how many times have you seen a stock you expected to fall based on bad news, and instead, the stock skyrockets?

If you’re like the average investor, you’ve seen that kind of supposedly illogical market behavior hundreds or even thousands of times.

The bottom line is that markets and individual securities and asset classes follow their own unique trading cycles and rhythms, and if you try to time your investing and trading based on news alone, or even pure fundamental analysis, you will never make any decent money in the markets, let alone keep that money.

The only, truly accurate and profitable way to invest in the markets is to understand and quantify the markets differing personalities, which is what the rigorous study of market cycles does for you.

Right now, for instance, although we are starting to see more negative news come to the forefront (as compared to the last nine or 10 months where the market was rallying), I can assure, the negative news you are hearing will pale in comparison to the news that will come out in the months ahead as the 40-month cycle for stocks turns down.

Now, let’s take a look at the U.S. dollar cycle chart:

This is a never-before-published chart of my cyclical analysis of the dollar.

It shows you the 15-year cycle in the dollar, the thick red line that spans almost horizontally across the chart …

… as well as the 10-, 19- and 39-month trading cycles for the greenback that I’ve found highly reliable for forecasting short-term moves.

Notice how the trading action for the dollar since 2002 has followed these cyclic projections very closely.

Now, most importantly, what does this chart tell you about the future of the dollar?

First, the long-term, 12- (not shown) and 15-year cycles continue to point lower.

Second, the short-term cycles are now in rally mode. BUT — very importantly — they’re not likely to cause the dollar to rally much, because …

A. They’re short term, and therefore, by definition, weaker than the longer-term cycles that are negatively impacting the dollar.

B. Previous instances of the 10-, 19- and 39-month cycles have NOT produced substantial rallies.

Bottom line: This chart tells me the dollar, as I’ve mentioned previously, is not yet ready to meet its final fate.

Rather, the dollar is likely to experience wild swings both up and down for the next year or so, and then, plunge into a tailspin in 2012, which I believe will also mark the birth of an entirely new monetary system leading to a single world currency, at least for international trade purposes.

So what does this chart mean for your investments, in terms of the dollar?

First, for the short term, say the next year or so, it’s ok to keep your basic cash needs (basic savings, working cash to pay bills, etc.) in dollars.

Second, to the extent you can, you should be preparing for the eventual and inevitable demise of the U.S. dollar as the world’s reserve currency.

By 2012, I expect the U.S. dollar to lose at least 50% of its current purchasing power.

So while the dollar is not yet in danger of a total collapse, now is the time to plan to move most of your assets out of the dollar, with the goal of being 90% out of the dollar no later than this time next year, March 2011.

That’s a bit early according to the cycles, but I would rather be early moving my money safely out of the dollar, than be late and caught in what will turn out to be the biggest currency disaster of all time.

Moving out of the dollar can take many forms, including …

Actually moving money out of the country, into safe offshore banking institutions that give you flexibility to move your money in and out of foreign currencies, stock investments, and especially gold.

Buying contra-dollar investments, such as gold, but also other precious metals, oil, and other natural resources.

I’ll go into details on the above issues — moving money offshore — in future issues. So stay tuned for more on this subject.

In the meantime, suffice it to say that we are in the throes of the dollar’s last days, and while there is no need to panic right now, there will be if you don’t keep the above cyclic picture and timing for the dollar collapse at the forefront of your thinking!

Now, to the only real currency in the world, gold:

First, to the right is a previously published weekly cycle chart of gold, where I forecasted a January 2010 high.

That high came right on cue, at about $1,160 an ounce on January 11.

Since then, gold swooned a bit, but has also now recovered reaching as high as $1,145 on March 3.

Where to now for gold? Referring to the same cycle chart, gold should pullback slightly into late April, but then take off again to another, and probably a new record high, in August of this year.

What’s more, is that the long-term cycles for gold continue to point decisively higher, into the January to March period of 2013, and where I fully expect gold to reach at least $2,300 an ounce, if not much higher.

You can see the long-term cycle in this second chart of gold, which shows the important 8.6 year cycle in gold reaching a peak in early 2013.

Bottom line: Gold’s long-term bull market remains very much intact. After some short-term weakness, gold is set to rally strongly into August 2010. And much higher thereafter going into early 2013.

The above look into the future for stocks, the dollar, and gold — are not something to take lightly. They are your roadmaps for the future, and, they are fully consistent with the underlying fundamentals that are unfolding right before your eyes …

The sovereign debt crisis now hitting Europe, and which will eventually smash upon our shores

The plunging euro, pound and other currencies, which will also eventually smash our U.S. dollar

The flight to quality and safety that is now starting to send gold higher into its next rocket blast to $1,500, and eventually, to $2,300 and possibly much higher

And there’s more, much more, chaos and wild market swings coming in the months and years ahead.

To be forewarned, is to be prepared.

Best wishes,

Larry

About Uncommon Wisdom

For more information and archived issues, visit http://www.uncommonwisdomdaily.com

Attention editors and publishers! Uncommon Wisdom issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:

15430 Endeavour Drive, Jupiter, FL 33478