How To Conquer The World For Fun And Profit

Regular readers already know my penchant for collecting Napoleon I era gold coins. Just like Napoleon Bonaparte, I too harbor a secret desire to conquer the world. But unlike Napoleon (or George W. Bush for that matter) I don’t want to invade them. I want to prosper by investing in their economies.

The Us economy is no longer the growth engine of the world. Rising prosperity levels in all across the world have caused a massive redistribution in the global economy. So what’s the best way to profit from this? Apart from reading several other posts and forming your own conclusions, you can blindly diversify out of your US and into global ETFs.

Here are some of the ETF/ETNs on my radar. Make sure you don’t blindly invest in them. I typically go to ETFConnect and make sure I read up a little bit on what it invests in, and more importantly that it’s not selling at a massive premium to its Net Asset Value

EWS: iShares MSCI Singapore Index

Singapore’s economy is booming. Their currency is also strengthening against the US Dollar (as is every other currency, so that’s pretty redundant!) and several people think it’ll continue to do exceptionally well in 2008.

EWY: iShares MSCI South Korea Index

Korea is booming too. And Warren Buffett thinks its stock market is at a good valuation. I bought KF instead of EWY, mainly because it very recently returned a 30% dividend which was used to purchase stock at a price which was the lower of the market price or NAV. I basically got re-invested at $28.50 vs an NAV of $31.55, which represents a 9% discount.

FXA: CurrencyShares Australian Dollar Trust

Direct bet against the US Dollar. This is like buying a CD, you get monthly interest currently around ~5%. You can also look at FXE, FXB, FXY, FXC and FXS – whatever tickles your fancy.

JSC: SPDR Russell/Nomura Small Cap Japan

The Japanese economy has been stagnant for a very long time. Looks like things are finally picking up. The Yen is also finally showing signs of strength too.

SWZ: Swiss Helvetia Fund Inc.

This is an ETF that invests primarily in low-risk blue-chip stocks based out of Switzerland. Most of them have a global presence and are household names like Nestle, Roche, Novartis, UBS AG, Credit Sussie, etc. As the carry trade slowly unwinds, the swiss franc should also continue to appreciate.

EWZ: iShares MSCI Brazil Index

This Brazilian ETF has been a stock to own this year. Its up almost 100% in the past 12 months. I’m not saying you should jump in now, but definitely keep it on your watch list.

INP: iPath MSCI India Index ETN

Another doubler, this currently seems overvalued. Its trading at a 20% premium to NAV. If I was a hedge fund, I’d buy the underlying stocks and short this one. But I’m not. So I won’t. But it has stellar companies like HDFC, Reliance Communications, Oil and Natural Gas Corp (ONGC), L &T, Infosys, and Satyam Computers. Definitely something to buy on a pullback.

These are just a handful of stocks to start you on your way to total world domination! Let me know if you have any of your favorites. Happy Investing!

Warren Buffett Now Works For Me!

I finally purchased my first share of Berkshire Hathaway today. Yes, its only 1 share but at $4,700 per share you want to ease into this sort of investment! BRK has two classes of shares. The A-class share (BRK-A) which sell for $140,000 EACH and the B-class share. I obviously bought the poor man’s class.

I had been watching it for the past year and every time I was going to buy, it had jumped 10% in the past week. I kept waiting for a pullback, but the stock would only consolidate and then after forming a base would jump again. I finally took the plunge and put in an order on Sunday, to be executed when the markets opened bright and early Monday morning.

With investments in a variety of different sectors like consumer retail, homebuilding, financials, commodities, currencies and foreign markets, its more diversified than most hedge funds. And it has lower fees than them too.

I’m going to try and attend the annual Berkshire shareholdes meeting in Omaha, Nebraska in the spring. I’ve heard there’s some sort of snobbery attached to owning the A-class shares vs the B-class. Apparently its the first thing other shareholders inquire when they meet each other there.

But even if I could afford to plunk down $140k in one stock, I’d still buy the B-shares. The B-shares don’t carry any voting rights, but I’m not going to delude myself into thinking that 1 lousy A-class share or even 1,000 shares would carry any weight in the running of the company. Warren Buffett owns the majority of the voting shares and besides, most shareholders vote to go with Buffett’s decisions anyway.

The advantage to owning B-class shares is that if you need the money to pay for a new house, a college degree, a heart-transplant or maybe a yacht, instead of selling $140,000 worth of stock in one go (and facing the resulting tax consequences), you can sell the exact amount you need (in ~$5,000 increments) and keep the rest invested. Its up 50 times in the past 10 years, and nearly 30% in the past year. Definitely a stock worth keeping for the long term.

Where else can I get a Billionaire to look after my investments and send me free investment advice every year?

Time To Bail On PetroChina?

I just sold half my stake in PetroChina(PTR).  Actually I put the order in over the weekend and forgot about it. When I bought PTR, the dividend yield was 4.85%, which is more than you get in most bank CD’s. Since the whopping 130%+ run-up in price, the dividend yield has dropped to a mediocre 2.30%.

My first and foremost goal, when it comes to investing, is to get a good dividend yield. Most of my portfolio consists of high-yielding Canadian income funds (Canroys) and is heavily weighted towards oil & gas and mining companies.
Since there’s a lot of excitement surrounding PTR’s Chinese IPO, there’s a good chance that it can rise even higher. However, if the dividend yield doesn’t keep up, it might be a signal that the valuation is becoming too rich. Of course, if the market considers it a growth stock instead of a value stock, it deserves a low yield ( and high PE ratio). However, PTR is already the world 2nd largest company. How much more can it grow?

Will it double from here and become the world first Trillion Dollar Company? I don’t know. But I don’t think so. I’d rather take my profits and invest them in a company which has a better chance of doubling.

Peter Schiff Recommends Bailing On The Dollar

As I’ve been saying for a while, the US Dollar is headed for a slump. Peter Schiff thinks the dollar could lose 50% of its value.

He’s very pessimistic on the state of the economy and the housing market and recommends buying Gold, which he thinks could hit $2,500/Oz.

He also suggests buying foreign dividend-paying stocks, foreign commercial property stocks, foreign government & corporate bonds and investing in commodities.

Check out this short informative video:

Here’s an interesting link on how to profit from dollar devaluation and inflation.

Investing In Japanese Real Estate

In a previous post I had mentioned that a Japanese REIT was going IPO. I was wondering how I could get in on the action. It seems like a good idea – the Dollar should weaken against the Yen and Japan’s Real Estate should appreciate after almost a decade and a half of stagnation.

It seems its rather more difficult than it is in the US. Unless you buying a stock that trades as an ADR, you need to open an account that allows you to purchase stocks on a foreign exchange. Luckily I had already an account with Interactive Brokers to buy Australian dollars which allows me to trade on the Tokyo Stock Exchange.

Unfortunately, there’s a 13 hour time difference and so the trades have to be placed in the evenings. Also its a little bit trickier than placing trades through a US online-trader and there’s no phone support [although there is online chatting] and the Tokyo Stock Exchange doesn’t really provide much information about the individual stocks.

Anyway, here’s a list of Japanese REITs that trade on the TSE. You’ll notice that they have codes instead of ticker symbols. Also their prices are listed in Yen which is currently around 118 yen to the US dollar but that fluctuates minute by minute!

Good luck!

3229 / JP3046460006 Nippon Commercial Investment Corporation.
3227 / JP3046450007 MID REIT, Inc.
3226 / JP3046440008 Nippon Accommodations Fund Inc.
8963 / JP3046190009 TGR Investment Inc.
8987 / JP3046420000 Japan Excellent, Inc.
8986 / JP3046410001 re-plus residential investment inc.
8985 / JP3046400002 Nippon Hotel Fund Investment Corporation
8980 / JP3046350009 LCP Investment Corporation
8984 / JP3046390005 BLife Investment Corporation
8983 / JP3046380006 Creed Office Investment Corporation
8982 / JP3046370007 Top REIT, Inc.
8981 / JP3046360008 Japan Hotel and Resort, Inc.
8978 / JP3046330001 Advance Residence Investment Corporation
8977 / JP3046320002 Hankyu REIT, Inc.
8976 / JP3046310003 DA Office Investment Corporation
8975 / JP3046300004 FC Residential Investment Corporation
8974 / JP3046290007 eASSET Investment Corporation
8973 / JP3046280008 Joint Reit Investment Corporation
8972 / JP3046270009 Kenedix Realty Investment Corporation
8970 / JP3046260000 Japan Single-residence REIT Inc.
8969 / JP3046250001 Prospect Residential Investment Corporation
8968 / JP3046240002 Fukuoka REIT Corporation
8967 / JP3046230003 Japan Logistics Fund, Inc.
8966 / JP3046220004 CRESCENDO Investment Corporation
8965 / JP3046210005 New City Residence Investment Corporation
8964 / JP3046200006 Frontier Real Estate Investment Corporation
8962 / JP3046180000 Nippon Residential Investment Corporation
8961 / JP3046170001 MORI TRUST Sogo Reit, Inc.
8960 / JP3045540006 United Urban Investment Corporation
8959 / JP3045530007 Nomura Real Estate Office Fund, Inc.
8958 / JP3044520009 Global One Real Estate Investment Corporation
8957 / JP3044510000 TOKYU REIT, Inc.
8956 / JP3041770003 Premier Investment Company
8955 / JP3040890000 Japan Prime Realty Investment Corporation
8954 / JP3040880001 ORIX JREIT Inc.
8953 / JP3039710003 Japan Retail Fund Investment Corporation
8952 / JP3027680002 Japan Real Estate Investment Corporation
8951 / JP3027670003 Nippon Building Fund Inc.

Invest In Russian IPOs?

The Washington Post has a great story today about investing in the Russian Energy IPO.

For comic relief, you can’t get much better than yesterday’s prospectus from Rosneft, Russia’s energy giant, seeking $10 billion from Western stock investors gullible enough to believe that Russia can now be trusted as a reliable business partner.Never mind that the company is a financial house of cards, or that its assets have largely been stolen, or that its chairman’s day job is as President Vladimir Putin’s deputy chief of staff. In fact, it says right there in black and white that, because of its ultimate control by the government, the company may, from time to time, “engage in business practices that do not maximize shareholder value” and cause it to “take actions that may not coincide with the interests of minority shareholders.

The new Rosneft investors will join William Browder, arguably the country’s largest Western investor, whose reward for years of evangelizing on Russia as an investment opportunity has been an order barring him from entering the country again — presumably until he calls off his campaign against insiders who strip their companies of valuable assets or unilaterally dilute the stake of minority shareholders.

But a lot people will not read the prospectus and will blindly throw their money away.