Monday, December 3, 2007

Market Opportunities

Here's a few items that I'm thinking about today:

1) I'm weighing the prospects between a fair amount of negative indicators vs. just plain negative sentiment. The key is determining what is a threat to the economy, and what is just perma-bear chatter. I like that the Fed is being more open with their opinions on the economy. I don't like their willingness to promote over-legislating. If the market needs a rate cut to keep liquidity manageable, then fine. But if its just to prop up the market because we're heading into an election year, then I don't like it. I don't like the talk of legislating to either re-negotiate or freeze rates on sub-prime mortgages. The banks made mistakes in issuing these loans, and people who couldn't afford them made mistakes of making these purchases. Both groups deserve the consequences. Most people don't get bailed out for making poor decisions, and this case should be no different.

2) Is the emerging market boom going to continue? Signs right now point to a normal correction, with further gains ahead. There is simply too much growth as these economies develop, and the markets have to keep up. But we can't overlook the effect that a US recession would have. That's what makes this a difficult call until we know more about the US situation.

3) I'm looking at Japan for an investment. I've covered this in a post or two earlier. If the Yen gains versus the Euro, then money will head back into Japan as investors who borrowed there will pay off their loans. Most stocks there are attractively valued, and would could be the next group to benefit. It is a good hedge against a reversal of the Yen carry trade. I would play this opportunity through an ETF, like I do with most international investments. Symbol here is EWJ.

4) Here's a couple of companies I'd like to establish a long position in, or add to a current position.

News Corp. (NWS-A) They are closing on the Dow Jones deal in December. Owning these publications will give them a big boost and will correlate with newly launched Fox Business Channel. I also love the prospects for Based on what was paid for a portion of their business, myspace carries a huge future value for News Corp. I'd like to buy this stock under 20.00.

SAP Software. (SAP) I've discussed this company a fair amount here. I like their global reach, as well as their domestic business in Germany. I just feel there is so much business infrastructure growth that they will have to benefit. I also like their new strategy to work with mid-size businesses as well.

Manitowoc. (MTW). I currently own a small position in this crane manufacturer. They have a great reach into growing economies, particularly Dubai and India. They are a global leader in all types of cranes, and have a backlog way out for purchases. I'd like to pick up more shares if the market declines.

That's all for now. Have a great day!

Disclosure: Author owns shares of Manitowoc Corp.

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