We start with the news that as 2005 winds down, the business world is bullish for 2006. According to a survey by the National Association for Business Economics, 45 economists polled believe the US economy is poised to chalk up 3.6% GDP growth this year, with 3.3% to follow in 2006. The latter figure is seen by many as one that will keep the jobless rate steady at 5%.

But with inflation still a threat, the survey also predicts a continuation of the Federal Reserve’s interest rate hiking policy. The economists think the bankers will stop once the base rate reaches 4.75%, 0.75% higher than the current rate.

In keeping with the bullish theme, my colleagues at the Money-Flow Matrix investment team are also upbeat. But their optimism stems from the small-cap world. If you’ve been with Taipan for a while, you should be familiar with both Brit Ryle and Abe Said – guys who pride themselves on finding the elusive “diamond in the rough” stocks. These are the small, undervalued stocks with explosive upside potential that have yet to receive coverage from the big analysts, and don't warrant institutional money that the big stocks get all the time.

As the guys say: “We train our focus on these small-cap stocks because their growth over the past half decade has been truly stunning, and quite frankly, it doesn’t look like that growth is going to let up anytime soon.”

The numbers bear that out. The difference in returns over the past five years has been astounding. As of April 1, 2005, small-cap stocks have outpaced large-caps by an annualized rate of 7.2%, or 42% on a cumulative basis.

Why this stark difference in returns? Small-cap stocks simply have more room to grow. It’s not uncommon to see a small-cap company grow revenues by 50% or even 100% in less than a year. These are the next Dell’s, Microsoft’s and Google’s and the key is to find them before everyone in the world knows about them. Buy these hidden gems before the big money arrives, watch the share price go higher, and get out while the getting is good with huge profits.

TRIPLE-DIGIT PROFITS FROM JUST ONE PHONE CALL

Speaking of Brit Ryle and huge profits, I’d like to draw your attention to a very important, in-depth conference call that Brit hosted earlier this week.

The subject? China – an economy and investment world with which Brit is very familiar, having previously bagged 189% gains on China Brilliance (CBA:NYSE) and 179% profits on PetroChina (PTR:NYSE).

Let me tell you, Brit got well and truly put through his paces! While most interviews with our editors last about 15 minutes, he didn’t get off so easy and the fella was kept talking for over an hour.

That gave him plenty of time to talk about his outlook on China in 2006, global trade and commodities. And instead of making just one top recommendation, he made two.

Over 200 Taipan VIP Inner Circle members participated in the call – and got the chance to hear about an investment opportunity that Brit believes will pull in gains as high as 748% this year.

This was a truly dynamic conference call, so I want to give you the opportunity to listen to it in its entirety. I’ve had a word with the relevant folks here and they’ve agreed to extend the availability of the live recording until December 18.

Here’s what you need to do to listen in:

Simply upgrade your membership to the Taipan VIP Inner Circle level.

You’ll get the phone line to listen in, Brit’s two recommendations right away… and guaranteed benefits worth US$58,707!

Take a look at this link to learn more:

http://www.isecureonline.com/reports/TVL/ETVLFC48/

Shiny 26% Gains From Metals USA

Now for some profits.

When Erin Beale recommended Metals USA (MUSA:NASDAQ) to Taipan readers on November 11, 2004 (for the November 2004 newsletter), it was with the idea that it was a fundamentally attractive company positioned in a booming commodities sector.

But she wasn’t the only one who found Metals USA attractive.

On November 30, Apollo Management completed its acquisition of the company. The good news? Under the terms of merger agreement, MUSA stockholders are entitled to receive US$22 per share in cash, without interest.

Having entered MUSA at US$17.45, this position is now closed, with that buyout price of US$22 per share also being the exit price. That’s a 26% gain.

GIVE THE GIFT OF A GIFT CARD THIS CHRISTMAS

Uh-oh. Tomorrow, my brother and I will brave the madness of crowds and attempt to plow our way through some local stores in the hunt for Christmas gifts.

I must admit, this is an annual physical and mental ritual that I don’t particularly enjoy. I hate crowds and it means I have to get my thinking cap on to figure out what to get my family back in England.

Luckily, I’ve got my colleague Andy Snyder to remind me of the “Godsend Gift.”

Gift cards.

Sure, many traditionalists view them as impersonal and a bit thoughtless. But think about it. They’re often the things that show the most thought, as it’s the one present that most people actually seem to enjoy and save them the hassle of returning it or “re-gifting.” After all, why guess what a person needs but does not yet have and whether anybody else will get it for them? No more guessing and wasting money. Plus, it’s the gift that fits snugly in the back pocket!

According to Bankrate.com, consumers will spend almost US$18.5 billion on gift cards this holiday season. That’s approximately 15% of the nation’s gift budget.

Here’s Andy’s advice:

“Unfortunately, not all gift cards are created equal. You still have a bit of shopping to do. First off, stay away from gift cards offered by the major credit card companies. Most charge fees and are really no different than a gift of cash. If you want to give cash, give cash.

“Also, watch out for expiration and activation dates. If not used, many cards lose value. Stay away from cards with quick expiration dates. By the time the excitement of the holiday season is over, your gift could be worthless.

“Finally, if you are ordering your gift cards online, do it now. With growing demand, many retailers are swamped with orders.”

Top-notch advice!

Have a great weekend.

Martin Denholm

Executive Editor, Taipan

MMM

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