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Time to Buy Subprime Lenders – You Gotta be Kidding!

One of the problems with Financial TV is that they have 24 hours to fill with programming.  How can you fill that much time without including some “not so bright” people?  Every morning I wake up around 5 am or so and turn on Bloomberg.  I lay in bed and catch up on what has happened in the stock markets around the world until around 6:30am.  On yesterday, they had a “not so bright” on who said that it may be time to buy certain subprime lenders.  All I could do is shake my head and turn off the TV.

Apparently there are two kinds of subprime lenders.  Ones who hold on to the loans and the other that sells their loans.  I don’t remember which one he said that it was time to buy, but it doesn’t matter.  Obviously this guy was an analyst for the subprime lenders and his job is to push those stocks.  Whenever you watch these shows you must determine what is the person trying to sell and then determine if you want to believe anything that comes out of their mouth.

Continue reading “Time to Buy Subprime Lenders – You Gotta be Kidding!”

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Building a Better BRIC-Trap

In a 2003 research paper Goldman Sachs argued that the combination of countries Brazil, Russia, India and China (BRIC) has the economic potential to be larger than the G6 in US dollar terms by 2050.  The countries are forecast to encompass over 40% of the world’s population and hold a combined GDP of nearly $15 trillion dollars.  Goldman predicts China and India will be dominant global suppliers of manufactured goods and services and that Brazil and Russia will be dominant suppliers of raw materials. Brazil and Russia would form logical commodity suppliers to China and India;   cooperation amongst the four countries would create a powerful economic block.

Although the relationships are logical, it is not a no-brainer that the potential will be realized.  Take a look at these headlines. Continue reading “Building a Better BRIC-Trap”

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Basket Trading

Individual investors no longer have to wait on Wall Street’s products to address specific areas of interest.  Low cost brokers and basket trading (the ability to trade, manage and track a group of stocks as one entity) have made it financially feasible and practical to create your own “pseudo-ETF.” 

What are the advantages of basket trading? Continue reading “Basket Trading”

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China Railroads: A Must Own Sector?

As mentioned on yesterday, I am looking to include a couple of transportation stocks specifically railways into my emerging market Big-Build Out portfolio (BBO).  So, I have been surfing the internet to see what I could discover on China railroads.  Obviously there is tons of information, but here are a couple of good places to start:

China Railroads: A Must Own Sector
China Railway Development News

Unfortunately, for U.S. based investors there is only one publicly traded Chinese railroad company – Guangshen Railways (GSH).  Others are planning initial public offerings (IPOs) in early 2008.   The BBO has been designed to invest in companies that supply expertise and goods to China; as opposed to directly investing in Chinese companies.  So, from that perspective GSH would not be a good addition.  I will continue my direct investment in Chinese companies through the ETF FXI.

So, where are the companies supplying the expertise and supplies to China? Continue reading “China Railroads: A Must Own Sector?”

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Investing in China Railways

Frequent readers of this site know that I am essentially a theme investor.  The industrialization of emerging markets is one of my current themes.  Each week I track the performance of two portfolios BRIC and Big Build Out (BBO) based on this theme.  Both portfolios returned over 40% last year.

BRIC is simply an equal weighted basket of Exchange Traded Funds (ETFs) representing Brazil, Russia, India and China.  BBO is a basket of world-wide producers of raw materials like iron ore, copper and nickel necessary for industrialization. Stocks include BHP Billiton, Rio Tinto and Southern Copper. The portfolio also includes their suppliers such as Caterpillar.  Refer to Building Wealth One BRIC at a Time for the complete list of stocks. 

I have been considering adding a couple of transportation stocks into the mix.  Supplies have to get there some kind of way.  Initially I was thinking of shipping or air freight companies.  However, after reading headlines such as “China will invest 1.5 trillion (US$190 billion) to increase the nation’s rail network to over 90,000 kilometres by 2010” from the China Daily.  Or quotes such as the following from the China Railway Development Report,

Continue reading “Investing in China Railways”