Bombed in Bali:
Getting ready for blood-in-the-street profits again!

If you still have not signed up for our daily email alert, the Taipan Group’s 247profits e-Dispatch, you’re missing out on tremendous short-term windows of opportunity. Like the one opened by the vicious bombing of a Bali resort club. The day after, I wrote in the e-Dispatch:

“Bombs in Bali—BUY TLK! On Saturday night in Bali, a bomb tore through a nightclub, killing at least 216 people and injuring more than 300. Victims were mostly Western tourists on vacation in the island paradise.

“Today, despite the intervention of the government, the stock market opened down more than 10% as money fled the county and the rupiah fell 3.6%. Our favorite Indonesian play, PT Telekomunikasi Indonesia (TLK: NYSE), fell more than 25% to a major support level of US$5.30 (it trades as an ADR).

“This is one of those blood-in-the streets opportunities the late Baron Rothschild dreamed about: Buy low when the cattle are stampeding. Sell high when they come sauntering back in.

“TLK had a great last year, growing revenues 33%. EPS almost doubled from 251,888 rupiahs to 421,630 rupiahs. The company is majority owned by the government. There is little chance they will go out of business. They have a P/E of 8 and pay 55 cents a share annually.

“We’ve made money on this stock every time I’ve bought it for Taipan. Buy it now below US$5.50 and look to sell over US$8. The irrational sell effect from the bombing won’t last long.”

You know Taipan by now: there’s nothing we at the Taipan Group despise more than cutthroat cowards who try to barter their way into Paradise by indiscriminately slaughtering innocent civilians. But let’s maker no mistake about it: massive selloffs like the one in October are not triggered by noble sentiment. They’re triggered by vulgar fear and greed. As such, they create incredible buying opportunities for those who let reason dominate their assessment of the situation.

Markets have no emotions. They’re not moral beings. The people who make markets… at least the majority of them… are not any more moral than the markets themselves.

Nor should they be. They have a job to do. Make a profit, any which way, for their funds, their portfolios, their clients, their companies, their families, themselves. Independent of what the markets are doing.

That is the nature of the market. It’s the core experience we at Taipan have had over and over again in the 15 years we’ve made money on world markets. Here, emotion that transcends the primal drives of fear and greed and sentiment that transcends the calculation of risk and reward are as misplaced as approaching a Kodiak bear with the intent of putting a pink bunny suit on it.

On October 31, TLK:NYSE clocked in at US$6.91. The ridiculous knee-jerk share dump was followed by the cool light of reason. Those of us with the guts to buy panic made a profit yet again. TLK has just submitted plans to the government for a rate hike of 45.5% over the next three years. The 15% jump last year has been the major driver of growth for this company.

I am maintaining my medium-term price target of US$8. n