Brave New World

Many investors/traders haven’t been here before. They weren’t aware or old enough in the 1970’s to remember the last time the inflation cycle kicked into gear. While I wasn’t old enough to be trading or investing in the 70s, I do remember the how everyone it seemed was interested in owning gold as the decade came to an end. Gold on the April delivery futures contract spiked to $890 an ounce on the 21st of Jan. 1980 and hasn’t seen those highs since. Until Jan. of this year, that is. Then, just last week gold closed over $1000 for the first time ever. So how high could it go? Well, for some perspective, adjusted for inflation, gold would have to rise to $2,239.67 just to get back to the 1980 high. And those figures are if you believe the official CPI numbers. I’m a skeptic.

So, to take advantage of the opportunity I’m in the process of opening a Friends & Family Advisor account with Interactive Brokers (IB), the absolutely best (in my opinion) brokerage there is. IB calls itself a brokerage for professionals and their trading commissions are rock bottom. For instance, to trade 100 shares of stock at Bank of America, they charge customers $14, Charles Schwab $12.95, Ameritrade $9.99, Fidelity $8. Interactive Brokerage charges $1. That is money you get to keep. For active traders like me it really adds up to big savings. Another IB advantage is the interest they pay you. For margin accounts they pay you every singly day. So even if you aren’t an active trader, you’ll see your account grow nicely. If you trade very much at all, it’s a huge savings. IB has also been around over thirty (30) years, and they’re safe. They didn’t invest in the same subprime derivatives many Wall Street firms did, and are having to get bailed out because of.

What is a Friends & Family Advisor account? It’s an account that allows me to trade for my own accounts (individual brokerage, regular IRA, Roth IRA) as well as friends and family’s accounts in one location and even one transaction and have the profits prorated to client’s accounts. The setup is very convenient, very slick, and very profitable, if my trading continues to be as successful as it has been in the last few months. And did I mention IB offers trading in futures. What a product.
Several months ago I told a client that I’d like to be able to REALLY profit when I trade well. I felt I was really trading stocks well but the profit just wasn’t that great. Since then I’ve switched my focus to futures trading and it is paying off. Although I’ve traded futures in silver, copper, palladium, platinum, crude oil, natural gas and heating oil, my main focus has been gold. Since refunding my account on November 29th of last year, my account is up 203.26%.

Back in Black

Just as planned, I refunded my margin account. Just in time for the final 8.33333333% of the year that is December. The month is starting well for LDK which gyrated upwards of 28% today and on no news at all. Shorts are running for cover right now as they know news is immanent. I still say LDK has a bright future. Another shining example of richness is GOLD, which just bounced powerfully off its 50 day moving average, and looks headed toward an all time high. I’m in. The last time this gold market flirted with new highs, well, I was a very young man. I wouldn’t miss this run for anything. Maybe a more leveraged play is required here. I’ll have to tell you after the fact.
The only new symbol I’ve added lately is Japan Smaller Cap Fund (Symbol: JOF) which is supposed to be bottoming. Yes, I’ve heard that before too.
It’s a small position, and slightly red still to the tune of 2%. The story is that Japan is beginning to improve so, get there early, take a position and have some patience. It sounds so Warren Buffett, but it’s probably not. The chart looks good though.
I heard Jim Rogers said China is just starting. Their markets look like they’re ready for another run higher and the ADR’s even more. The same list is still good. I’m long um all. Except I sold STP – just took profits – all 78% - yummy!

Get Off the Margin and Lock in profits

In “The Big Picture” article in this Saturdays issue of Investors Business Dailey, journalist Jonah Kery wrote “It’s prudent to get off of margin, cut any losses and focus on a few exceptional leaders, assuming they are acting reasonably well and you have a sizable cushion.” Jonah’s sentiment echoed mine precisely this week as I not only got off of margin in my brokerage account, but I downright liquidated every position in the account. After returning from a long meeting and finding the holdings in that account had taken an 18% swing lower from a being up 10% at the opening, I sold with abandon. In fact I was so busy entering sell orders I actually sold one position of 400 shares twice and found myself 400 shares short which I immediately bought back at a small loss. Many of the stocks I sold in my margin account I also own in retirement accounts or are in accounts I manage for others and we’ll hold them unless this market just falls out of bed so to speak. Later that day I went on line and requested a bank transfer of my profits. Now I'll pay off two verily new vehicles and in doing so reduced my monthly cash out-flow by $800. I’ve made plans to have my trading account refunded to previous levels within weeks and with the market in a confirmed correction maybe the timing is just right. In fact, I’d love it if the market proved my timing wrong. Either way, I've got no regrets. Sometimes, profits are for taking.

Greg's Fundomax Portfolio

Interactive Brokers (Ticker: IBKR) IB continues to hold above support and had a strong day Friday (up 4.20% to $29) IB is only now returning to its IPO price and I expect continued strength. IB is up 17% from $24.75 buy.

Mindray Medical (Ticker: MR) MR beat earnings estimate and moved up 3.16% Friday. The company was confident sales would continue strong growth due to several new products and China’s economic growth. This is a good Dollar hedge too. We're up 27% from $31.30 buy recommendation.

Comtech Group (Ticker: COGO) China ADR COGO has been in a sideways holding pattern for a month now, but remains firmly in a longer term uptrend. Its up 35.52% from $15.06 buy point. Corporate headquarter is in the city of Shenzhen. Getting the picture? Go where the growth is.

Companhia Vale do Rio Doce (Ticker: RIO) Worldwide producer of, um, well, everything. Brazilian based miner and producer of steel, fertilizer, precious metals, batteries and I could go on and on. They’re growing sales at 42% a year. This is a new holding for us.

Home Inns & Hotels (Ticker: HMIN) One of China’s biggest budget hotel operator and fastest growing is considering expending into other Asian countries and possibly further. The company plans to quadruple total units within three to five years. We’re up 39% from $31.30 buy point.

New Oriental Education & Tech Group (Ticker: EDU) China’s private educational services company teaches English to Chinese students among other courses. The company grew earnings at 55% in the latest quarter (year over year). Our buy point was 54, which gives us over 51% gain. Buy the pullbacks.

Suntech Power Holdings Co. (Ticker: STP) is our best performing solar holding is headquartered in Wuxi China. The solar manufacturer grew earnings at 55.60% year over year. The companies stock is currently forming a high tight flag, and remains in a strong uptrend. We're up 39.72% from our $40.80 buy point.

LDK Solar Co. (Ticker: LDK) is our most interesting Chinese solar holding, and recently the subject of several articles from the likes of Barron’s and Wall St. Journal, and not favorable stories at that. Since we bought at a pullback early we’ve never been to far in the red as this stock tumbled from a high over $75 to a recent trading range between 36 and 42, but we’ve given back some stunning profits. We’re sticking with management on this one, the story is worth it. We've used recent weakness to get our average share price to $38.16.

Focus Media Holding (Ticker: FMCN) stocks chart is a thing of beauty, as well as the companies’ fundamentals. The outside ad company grew earnings 126.2% year over year. Our trade is up 71%.

EMC Corp. (Ticker: EMC) Network storage and 90% owner of VMWare, the streets hottest new IPO. Big tech is back and we’re up over 28% from our $19.10 buy point. The stock trades at $24.55 and change and could trade over 30 within months.

Golf ETF (Ticker: GLD) Gold is back within striking range of its all time high near $850 dating back to 1980. We bought the gold ETF at the flag breakout near $67 and it’s up 19% to just under $80. It’s been good Dollar insurance, inflation hedge, and remains in a confirmed rally.

E-House (China) Holdings Limited (Ticker: EJ) is a Shanghai, China real estate services, brokerage and consulting firm that operates in the hot Chinese home building and management market. The very hot stock which IPO’d in August is up 26% from our $26.50 buy point to $33.60. The company is expected to announce earnings on November 15.

Chinese Outdoor Ad Company - Focus Media (Ticker: FMCN)

Chinese ADR holdings continue to out-perform. FMCN is up 71% from buy in.

Gold closes in on all time high

One escape for the Dollar plunge, Gold. Our ETF (Ticker: GLD) play is up 19.04% from break-out.

LDK Solar Flair Up

Even Barron's and WSJ can't keep it down.

LDK - Spring'll be Sprang

Home Inns & Hotels Management Inc.(Ticker: HMIN)

Headquartered in Shanghai, China, 200 hotels, 6300 employees, 67.8% Qtrly revenue growth (year over year), 34.46 million shares, 17 million shares float, 51.4% held by insiders, another China ADR miracle story and Olympics play. .

China 3C Group (Ticker: CHCG) Proof of a bottom...almost?

Good news on financing growth and strong earning could turn this up.

Owning Bowater requires the patience of a Barron's investor

Will patience finally begin to pay off?

E-House - Up on a BIG Down Day

E-House (China) Real Estate Services Company was the lone up-stock on a day when investors sold, and sold, and sold. No panic here.

Another Solar Breakout - Suntech Power Holdings (Ticker: STP)

Free to run.

What is the truth about LDK Solar?

This article sure has the ring of truth.

Gold (Ticker: GLD) The Yellow Metal Powers Higher

Up 11.23% from breakout

Seaspan (Ticker: SSW) Another run higher?

23 containerships, 1.74B market cap, one full time employee and pays 5.50% dividend.

Home Inns (Ticker: HMIN) 2008 Olympics Play

Cup N Handle breakout coming right up.

LDK Solar Eclipse

EMC - High Tight Flag

Dow Industrial in Record Territory

The perfect storm for shorts

Where the chips fell

Focus Media (Ticker: FMCN)

Chinese digital media company Focus Media Holding Ltd. (Ticker: FMCN) recently completed a successful internal audit, released strong earnings and raised full-year revenue outlook to between $440 million and $450 million from prior forecast of $390 million.

Gold ETF (Ticker: GLD) On the Move

Up 9.62% from breakout a month ago.

Limited Options

Q3 2007 - Keeping Score

The Quarter just felt like a 10% plus quarter. Nice and strong. And it was up 11% in fact. The year over year gain of 17.17% had a tough comparison from a year ago. The quarter was up against a great 36.55% yearly gain from the third quarter of last year. Its only trading but I love it. Hopefully a strong fourth quarter will make for a nice year end print. As they say, 'the trend is your friend'.

Home Inns (Ticker: HMIN) Downtrend Broken

and up strongly.

EMC=breakout

Feat Accompli

Home Inns, making a bottom

Mindray Medical Intl. Ltd. (Ticker: MR)

This is window dressing week on Wall Street and it couldn't be better timing for continued strength, with the half point drop in the Fed Fund rates, the market is primed and in motion, mostly up. That goes for the Chinese ADRs as well as Gold with its breakout strength move above $700. If the markets can add bonus point moves to the stocks we're holding, the quarter will be a very strong one. Our holding in Mindray Medical Intl. Ltd. (Ticker: MR) is up 33.75%.

The Golden Rule: Gold Rules

Out Performance.

China ADRs.

• Mindray Medical International Ltd. (Ticker: MR)
• Home Inns & Hotels Management Inc. (Ticker: HMIN)
• New Orental Education & Technology Group (Ticker: EDU)
• Suntech Power Holdings Co. Ltd (Ticker: STP)
• LDK Solar Co.Ltd (Ticker: LDK)
• Focus Media Holding Ltd. (Ticker: FMCN)

US Growth 2%, China Growth 11%

EMC - Pre Ignition…

Breakout over $20 coming?

Gold (Ticker: GLD) Breakout Confirmed

Gold is taking its direction from a weak Dollar.

• Gold (Ticker: GLD) Up 4.37%
  

Showing muscle - Shanghai B Shares

China ADRs continue to out perform. Shanghai B shares are up 7.68% at half day mark today. Best gainers:

• LDK Solar up 38.20%
• Mindray Medical up 23.18%
• FocusMedia up 12.97%
• Comtech Tech up 9.37%

GOLD. Need I say more?

Go for the GOLD - Gold is breaking out

The China Syndrome... in REVERSE!

Stocks Benefiting our Portfolios Now:

• EMC (Ticker: EMC) 50%
• LDK Solar Co. Ltd. (Ticker: LDK) 29.96%
• Mindray Medical (Ticker: MR) 13.37%
• Interactive Brokers (Ticker: IBKR) 8.11%
• Comtech Group (Ticker: COGO) 12.29%

Wake me when the Sub-Prime nightmares over

Outside advertising, online games and information storage, those are the pursuits of the three companies we added to our portfolios this week. Two are China theme companies and one is an US based Technology play, and all three are growing sales and earnings like crazy. [1] Focus Media (Ticker: FMCN) is the dominant leader in new media in China. New media means banks of LCD screens in high traffic areas. Focus Media has $226 million in cash, no debt and grew earnings by 73% year over year in the latest quarter. [2] EMC Corp. (Ticker: EMC) besides being a huge 41.9 Billion market cap company and growing at earnings at 19.80% year over year in the latest quarter, is a proxy play on the spin-off company VMware Inc. of which EMC still retains 87%. VMware Inc. is expected to grow revenue by 60% annually for the next three years. Investors have driven its stock price up over 40% since the initial public offering two weeks ago. [3] The9 Limited (Ticker: NCTY) engages in the development and operation of on-line games in China. The company is expected to announce earnings this week. Last quarter they grew earnings by 12.40% (year over year) but revenue grew 27.30% year over year. The company’s stock has taken a hit lately, trading at $38 and change, down from a high of $52 in July. This could be an interesting week.

Don’t fear the reaper, and Don’t fight the Fed

If the market climbs a wall of worry, this is a high wall indeed we’re up against. Based on Thursday’s turn-around hammer day and Friday’s vault higher, investors definitely are betting Bernanke blinked and will be easing rates from here. Every time interest rates are at the end of a prolonged rise, the Fed waits until something breaks before they start loosening again. It all seems pretty well engineered. With fifteen months to elections, the markets ought to be in full gallop higher, once again proving the four year cycle is alive and kicking. If I’m wrong about that timing it’ll cost me real money because I used the weakness this week to put on some long positions on stocks that had held up pretty well. No doubt, I’ll have to dump some holdings if the market hasn’t really bottomed, but going against the crowd can be rewarding if done right. I’d been watching Money Center Banks and Brokerage stocks for a turn signal and we got the Bernanke bounce Friday, after Thursday’s deep head-fake down then rally into the close. The next test will be recent highs, and I’m sure the shorts will be out sink the market again, but the Fed has signaled they’re here to help, so the shorts will have that to worry about.

Turtle tell-all

The new book by Curtis Faith “Way of the Turtle” is an excellent mixture of commodity trading lore, statistical analysis theory and good sense trading psychology lessons. Curtis Faith was the youngest - he was 19 at the time - and most profitable of the ‘Turtles’, a group of apprentice traders that were trained to trade commodities by the legendary team of Richard Dennis and William Eckhardt, and then gave them trading accounts to trade. In four years Curtis Faith made over 31 million for the team. By strictly following the rules he had learned in only two weeks of training sessions, he parlayed millions. The only part of the book that bored me was one chapter on statistics and gaming theory, there is a lot to absorb there, and a lot of reference material. One subject I really took to heart was letting go of ego. Chapter 14 “Mastering Your Demons” subtitle says “The market does not care how you feel. It will not prop up your ego or console you when you are down.” Another excerpt “If you want to be a great trader, you must conquer your ego and develop humility.” is a lesson the market will teach you if you survive it long enough to learn. It looks like Curtis Faith had all the needed characteristics to begin with because he was extremely successful from the beginning. One concept I did glean from the book that goes against the books subtitle “The Secret Methods that Turned Ordinary People into Legendary Traders” is, there really are no ‘Secret Methods’. For anyone who wants to improve their knowledge and understanding of trading theory, I highly recommend reading Way of the Turtle.

Uncle Bernanke will blink… I think.

Whether the Fed cuts rates or not to stem the current panic in the markets won’t change the way I trade, just the symbols I trade. This week I added all of ProShares ETFs to my watch screen. ProShares offers short and UltraShort (leveraged short) ETFs you can use to get short this market. ProShares has index, sector and style short funds as well as un-leveraged short and index funds. The leveraged funds are very volatile, so be careful trading them.
This week many of the ‘China play’ stocks on my watch screen started flashing buy signals again. It was hard to pull the trigger and ignore the market turmoil, but I did. Maybe the market is going to whipsaw or even continue to dive for awhile, I don’t know, but not taking signals is just as dangerous to a portfolio as ignoring them, which I’ve been known to do.
Actually, three stocks that I did ignore sell signals on fell hard, and have now bounced to where they’re giving buy signals again. Interactive Brokers (Ticker: IBKR), Bowater (Ticker: BOW), and NVE Inc. (Ticker: NVEC) all fall into this camp. All clearly gave sell signals which I ignored. I’d have been a better trader to sell them and buy them back now. I rationalized not selling them by convincing myself that the positions were so small that it wouldn’t affect my performance. I was wrong, it did, and I took a hit for it. Okay, enough confession!
Often, taking the signals correctly will lead to a loss also. That is just part of game. The big gains are made by the few big trends you correctly take and stick with until the run is over. Selling too soon, before the trend ends, can affect the long term performance of your portfolio in a negative way too. The old saying “you can’t go wrong taking a profit” is wrong. If your system is robust and has an edge, over time, you’ll make money by strictly following the rules. If you constantly sell your winners, all you’ll have left is your losers.

It is what it is - why ask why?

Its human nature to try to figure out why the market is doing what its doing, but in reality, does it really matter why? Answer: no. It only matters that it is. Knowing why it does what it does never made me any money. Only reacting, taking action. And you have to decide to react or not. And you have to decide what will be your strategy, what will be your signal?
Hopefully you have a method that has an edge on the market, or you’ll blow your account. After all, isn’t that the markets goal, to separate you from your money? Any investor or trader who survived the dot.com meltdown after 2000 knows ‘buy, hold, and forget’ doesn’t work - unless you’re Buffett - and have 43 billion you need to get invested. Nice problem.
My long position in ProShares UltraShort QQQ (Ticker: QID) has turned into a hedge - my other holdings go down, as it goes up. I guess that beats taking the full brunt of this markets torrid downturn. These late day swan dives make everything move, BIG! Score: IBKR down 4.24%, QID up 4.35%. And their both still flashing ‘buy’ signals… for now.
Like every other trader, I constantly scan the universe of tickers, looking to the sectors moving up. It was right in front of me, but I missed it - Bond ETFs (AGG, IEF, SHY, TIP and TLT). They’re still looking strong, only now they look a little extended. I missed it because I’ve never been into bonds. Why chance loosing money for 5% interest when cash pays that too, and there’s no downside to cash. Maybe I’m missing something. It is what it is – why ask why.

Long a Short

I’ve never mastered shorting stocks or trading options either, but when the market is in an obvious pullback or downturn I look for ways to benefit from it. I recently went long in ProShares UltraShort QQQ ETF (Ticker: QID). This ETF is leveraged so it really moves up sharply if the QQQ is moving down, like it did today. Is this what Cramer means by “there’s always a bull market somewhere”? Works for me! I also took a position in Interactive Broker (Ticker: IBKR) again after their recent earnings announcement and bounce. Cash is still my biggest position though by far.

Getting defensive – Cash is not Trash

I’ve been very busy selling positions this week. When the Dow, S&P500 and Nazdaq all flash sell signals, even stocks that are holding up relatively well become sell candidates, especially if we’re sitting on gains in them. A quick calculation tells me we’re now 67% in cash, and that will grow come Monday as I’ve targeted a couple mutual funds and stocks that just gave sell signals at Friday’s close. All bear markets start as pullbacks so I like to take action quick by beating a path in retreat. I’ll be the first to jump back in when the tone of the market changes, but this is no time to be a hero. Stocks that put me in the “house of pain” (as Jim Cramer likes to say), are the ones I stubbornly refuse to sell or hold because they’re “buy and hold” positions like Bowater, which I’m holding at a 15.82% loss (ouch!), or NVEC which is down about 18% (ouch! Ouch!). Ignoring sell signals can be painful. All said though, we’ve done a great job of locking in profits and becoming defensive quick, without giving back hard won profits.

Current Holdings…. Sold Some, Bought Some

Some Chinese shares hit air pocket

Here I go again, having to turn on a dime. Just when I was getting giddy about some of our China theme holdings, a couple of them give me sell signals. So, I took profit in Home Inns & Hotels Management, Inc. (Ticker: HMIN), and took a loss on China 3C Group (Ticker: CHCG). News on how CHCG was selling 11m worth of stock for 5$ and change a share, way less than I paid, frankly confused me. Sellers drove the price lower which triggered a sell signal.

I traded shares of HMIN for BEAS which is technically looking good. AMAT notched up 5.72% and SNDK was up 4.65%. The NAS is the happy hunting ground again for stocks breaking out.

China 3C Group (Ticker: CHCG) selling cell phones to 1.3 Billion People

The fact that China’s population growth year to date is approximately 8.65 million illustrates how massive the market for consumer products in China is. China 3C Group sells fax machines and chords in one subsidiary, but, the real growth engine is in cell phone sales, China 3C Group holds a 15.7% market share (from here)of total cell phone sales in Eastern China. And, it's in breakout mode.

Other China thematic holdings are:

• Taiwan Semiconductor Manufacturing Co. Ltd. (Ticker: TSM)
• Mindray Medical International Limited (Ticker: MR)
• Home Inns & Hotels Management, Inc. (Ticker: HMIN)