Taipan Online: Hotline

At the start of a New Year, many folks use the opportunity to take stock of their lives – their health, wealth and happiness. Many decide to make resolutions, based on that.

So as an investor, what should be on your mind as 2006 gets underway?

Well, for a start, the “January Effect” in full swing – a time when the stock market historically rises, given that the holidays are out of the way and investors have renewed vigor.

One other theory often touted at this time of the year is the “Dogs of the Dow.” This basically means that of the 30 companies in the Dow Jones Industrial Average, you buy the ten worst-performing stocks from the previous year. The theory is that they’ll rebound and hand you some tidy gains. But as with a lot of theories, it sounds good on paper, but is by no means a certainty.

What you definitely should be doing, though, is diversifying your portfolio. One of the most popular ways to do that these days is by investing in emerging markets, where profitable opportunities are abundant – providing you know where to look. After all, when you consider that America could suddenly be faced with a nasty bout of inflation, or the American dollar might plummet in value, you can minimize your losses if you’ve got some investments tucked away on foreign shores.

For example, my colleagues at the American Capitalist tell me that Russia’s RTS Index soared an amazing 98% in 2005, the Egyptian CMA doubled and the Turkish stock exchange galloped ahead 55%. Compare those outstanding performances to the US, where the Dow posted a slight loss and the NASDAQ recorded only a marginal gain and you’ll see what I’m talking about.

The AC folks also tell me that one of the best ways to invest in foreign markets is through American Depository Receipts, commonly known as ADR’s. Although the company trades overseas, shares trade in the US on the NYSE, NASDAQ or AMEX and can be easily purchased through a regular broker.

Simply put, an ADR is a certificate issued by a bank that represents a specific number of shares of the foreign stock. For example, one share of an ADR here could be equal to ten shares on the country’s native exchange. But you don’t need to worry about these conversions, because it trades just like an ordinary stock. Buying an ADR assures that you won’t have to deal with foreign currency and offshore brokers. Check out: www.adr.com. It’s a great site where you can find more information and track specific stocks.

Go Global, Baby!

OK, so once you’ve made the decision to allocate some of your investment capital overseas, just how much should you invest in foreign assets? Lucky my colleague and former financial planner Andrew Snyder is around to shed some light on this tricky question.

Andy says: “Most experts agree that a country’s market capitalization, not its GDP, should determine its weight in your portfolio. What this means is that a country such as China that only has a 1.37% global market capitalization should get a fairly small part of your money, even though its economy is one of the world’s largest.

“With 46% of the world’s publicly-traded companies listed on the American exchanges, I would recommend that you put as much as 75% of your portfolio in domestic securities. The remainder should be intelligently divided across the globe. Why? Well, the fact is, you aren’t making as much money as you could or maximizing your investments if all your money is stuck in domestic equities.

“Besides ADR’s, I think one of the best ways to profit from foreign stocks is to watch the ETF’s (exchange-traded funds) that track them. Of the dozens of ETF’s I follow each day, funds that track emerging markets have been one of the best performers over the past year. Buying an ETF is a simple investment to start you off and with a little research, you can find some phenomenal foreign investments.

Eureka! Uranium!

“For example, I recently recommended a small, non-American uranium mining company. It has incredible profit potential as uranium overtakes coal and natural gas as the world’s preferred fuel for power generation – and gives you the perfect opportunity to diversify and protect your portfolio, while raking in some hefty gains.

“Let me break down the good news for you:

“Its mining process is like no other. It’s cheap, easy, and, most importantly, highly profitable. After all, it invented the process and nobody else can do it.

“Its mining efforts are focused in Kazakhstan – an area known for its uranium rich land.

“Despite the incredible run for uranium companies over the past year as demand for uranium has surged, Wall Street has totally missed it!

“You see, that rapid climb has focused primarily on the larger, full-service uranium companies, while the smaller ones have been neglected because they only tend to operate a couple of mines and there’s little information available on them.

“But having spent countless hours poring over the world’s uranium mining companies, this one is the runaway leader in terms of the best investment potential. It has lower costs, more mines in the most uranium-rich countries, and it utilizes a very safe and inexpensive mining process.

“Better yet, the price of uranium shows no sign of declining. It’s also become an economically viable alternative energy source, especially now that the federal government is working tirelessly to get new plants built across the nation. As a result, demand for uranium has increased exponentially faster than demand for oil.

“The big bullish run of big uranium stocks like Cameco Corp. (CCJ:NYSE), Frontier Development Group (FRG:AMEX) and International Uranium Corporation (IUC:TO) over the past few years has made them all very expensive – especially considering uranium has not even quadrupled in price.

“As you know, the best chance to grab a bigger slice of profits comes not from investing the big boys, but from the smaller, undervalued companies whose growth potential is far greater and more explosive. And this company represents the only true value left in the uranium industry, best positioned to benefit from further increases in the value of uranium ore. The Wall Street fat cats haven’t taken notice yet, but it’s only a matter of time before the institutional investors latch on to it and this is a great opportunity to get in on the ground floor.”

Interested in finding out more about this opportunity? I urge you to check out all the details here:

http://www.isecureonline.com/reports/RTD/ERTDG108/

Enjoy the rest of your weekend.

Martin Denholm

Executive Editor, Taipan

MMM

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