I'm looking elsewhere for value

Right now, I don't see a lot of value in the U.S. market. The S & P 500 is up over 50% from the March 9th low. Many people are clamoring that the a new bull market is afoot. As regular readers of this blog know, I don't believe that. To this end, I've been stockpiling cash, waiting for another downturn. I haven't liquidated any positions, I'm just going to add to them.

I'm starting to look to other markets for values. This is difficult as many major markets have rebounded nicely this year. One of the websites that's been very helpful is ADR Universe. ADR Universe has a good overview of foreign stocks trading in the U.S., as well as closed-end funds. The information is tagged by both country and industry, so finding what your looking for is very simple.

If you would prefer to buy stocks directly rather than go the ADR route, then I suggest that you read, The World is Your Oyster by Jeff Opdyke of the Wall Street Journal. Mr. Opdyke has written a very personable book about his experience investing in international markets. He maintains several brokerage accounts in markets spanning the globe. He makes very solid recommendations about choosing a broker and what to expect. I recommend that you read it prior to committing any of your money.

Another author that I would recommend is Jim Rogers. His books, Investment Biker, Adventure Capitalist, and A Bull in China are fun reads that also give you a hands-on perspective on the perils and pleasures of investing outside the United States.

Also, check out the Emerging Markets Century by Antoine Van Agtmael. Mr. Van Agtmael gives a good overview of the tremendous growth and increasing sophistication of emerging markets. He also provides detailed information about the new class of blue chip companies.

I'm not cashing out, but I'm not buying either

I've written about how I think that this is a sucker's rally several times. I'm stacking cash and waiting for some new bargains to emerge. When I look 52-week lows, there's not a whole to show for it. In fact, I ran MSN's 52-week low power search and two names came up, Tamura Corp.(TMURF) and Volkswagen AG (VLKAF). Neither of these companies interests me. In the meatime, I'll be happy to pile up some cash. In fact, I may take a break from following the market for a few days. That way, I won't be tempted to do something stupid out of boredom.

Is it too late to buy CMTP?

I first wrote about China Digital Communications back on July 20th, 2009. Back then it was trading at ridiculously cheap valuations at a price $2.85 per share. It's still pretty cheap. Check out this piece from TheStreet.com by Rick Pearson. He went to Shenzen and interviewed management and came away convinced that the stock is still trading at a major discount.
The stock has appreciated by nearly 2/3 since I recommended it. As was the case with MNI, I am contemplating taking the money and running.

I agree with Pearson that the company is still undervalued. They are doing everything they can to attract institutional investors and that will be very good for the stock. Still, why not take a little off the table? This is the tug of war that everyone goes through with deciding whether or not to sell a stock. You can follow rules like those suggested in this Kiplinger's article.

They are helpful, but very general. However, if they were specific, that wouldn't work either. The bottom line is that you really have to know what you own and what your risk tolerance is. Neither of these tasks is nearly as simple as it sounds,

Lot of people thought that they had a good handle on Enron, Fannie Mae,Citigroup and lots of other companies that seemed like one-decision, solid blue chip stocks. Even when they acknowledge that they didn't know (remember how people used to say that Goldman was one big hedge fund), they had blind faith as long as the numbers continued to look good.

Risk tolerance is no easier to get a grip on as it has a tendency to mirror market fluctuations. When the market is in an upswing, most people say that they are very risk tolerant. However, during a bear market, most people (including institutional investors who ought to know better) run for the hills.

So what am I going to do? I'm going to hold on to CMTP. Why? I look at it as a long-term holding. Once I double my money, I'll sell half and play with house money the rest of the way. Until then, I'll let it ride.

I'm getting nervous about this rally

I wrote about how to play this rally by buying junk stocks. I specifically mentioned McClatchy (MNI). When I recommend the stock back on August 11th, the stock finished that day at $2.06. It's up about 33% since then. The stock has worked well as a trade, but I would suggest exiting it now. The company has had a nice earnings surprise and has aggressively cut costs, but the song remains the same. Unless you know something novel about the newspaper business in general and McClatchy specifically, you should be happy with a sizable gain that you can now put into cash. Enough is enough. I'm pushing away from the table. There's probably still money to be made in this stock, but I'm fine with it going to someone else.

MNI is a good metaphor for the market's performance YTD. The stock bottomed in March and has been on a tear ever since. However, if you look at the fundamentals, there has been very little in the sense of real change or improvement in the company. I realize that the stock market is a leading indicator, but the market must be looking a decade forward in order to justify the performance of McClatchy and other similarly challenged businesses.

I just don't feel comfortable holding this stock anymore. I've made my money and now I'm moving on to something safer.

Barry Ritholtz knows what he's talking about

Barry Ritholtz gave a very solid interview to TechTicker recently. It is very reasonable and incorporates a long-term view of the markets. Among other things, he cautions against declaring the death of buy and hold investing.

The market hasn't moved in eight years. That means that you might have another chance to buy great companies for the same fire sale prices they had right after 9/11. That sounds pretty good to me.

Take advantage of this opportunity. It won't come around again for a while, if ever. Look at the 52-week lows list.

Bet on Oil?

In the October 2009 issue of Esquire includes some stock tips from Ken Kurson. Off and on throughout the years, Mr. Kurson has written a column called "The Portfoilo" in which he shares his thinking about the markets and he usually gives you a few ticker symbols to consider.
This month, Mr. Kurson focused on oil stocks and how to place your bets on the future on energy. He referenced a small global macro hedge fund called CommonWealth Opportunity capital. Here's a copy of their August letter to shareholders.
Ken Kurson sees oil going higher. He recommends a diversified approach to cashing in on this. He wants you to buy a basket featuring low risk, medium, high risk, and downright speculative stocks that will benefit from oil's upward move. I happen to agree with him so I'm recommending some picks that fit this category.

Low Risk (integrated oil giants): XOM or BP. He recommends them in the article and I agree. No one executes better. These guys don't make too many costly mistakes (see COP and CHK's bad natural gas bets). They're not going to make you rich, but there will be steady capital appreciation and a hearty dividend paid over the next few years.

Medium Risk( oil services): He likes RIG or OIH. I like Noble (NE) better because their cheaper on a PEG basis. I also like HAL or SLB. They are the consummate oil middlemen.

Higher Risk (oil sands explorers): Suncor (SU) is his pick. I'll take Canadian Natural Resources (CNQ). They smartly reduced their exposure to natural gas in 2008. It's cheaper and so I think will benefit more from the rise in the price of traditional crude. Plus, I think that PetroChina's (PTR) recent M & A activity makes it a potential target. Also, Nexen (NXY) might be a possibility.

Highest Risk (Russian ETFs): I can think of something much riskier. It's not really an appropriate long term selection, but more appropriate as a trade. If you really want to make a fortune, play the leveraged ETFs. Try ERX on for size. It's the Energy Bull 3x ETF. Need more risk, than trade the options.

As you can see, there are many ways to skin the oil bull cat.

By the way, I loved Kanye West's outburst at last night's Video Music Awards. I wish that more people in the financial world, say regulators and members of the media, has stones like his.

10 Bubbles?

Clutterstock has named these areas a bubbles in the making. Are they right? What bubbles other than the ten mentioned here, do you think are forming or about to burst? Let me offer my own ten suggestions.

1. The Treasury Bubble

2. The outrage at the evils of corporate America Bubble

3. The Social Media Bubble

4. The Meredith Whitney Bubble.

5. The Dollar Bubble

6. The Blog Bubble

7. The Return of Deflation Bubble

8. The private equity/hedge fund bubble

9. The Obama as Savior Bubble

10. The China is a Bubble Bubble

There's no direct way to short most of these things on my list, but you can still profit from just avoiding them.