whateverworks

Some In, Some Out: Going with the Flow

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I used to screen to find a decently priced growing company with strong financials then glance at its industry briefly to see if there were a predicted downturn. With this bear market, I am choosing an industry first then looking at the companies doing best in it.

I've found some prospects but need to get cash to buy them. Recently I sold all of my Morgan Stanley India Investment Fund, Inc. (IIF) Unfortuntely, none of my current non-performers look to me like clear losers long-term; so Monday I am selling some of them down to a smaller portion of the fund. The stocks I'm partially selling are: Claymore/BNY BRIC (EEB), E-House (China) Holdings Limited (EJ) , Tsakos Energy Navigation Ltd. (TNP), China Moble Ltd. (CHL), iShares MSCI Malaysia Index (EWM), LB Foster Co. (FSTR), HDFC Bank Ltd. (HDB), Hughes Communications (HUGH), Sanofi Aventis (SNY), T-3 Energy Services (TTES), Roper Industries (ROP), Invitrogen Corp. (IVGN).

Here's what I plan to buy unless there's major developments between now and the time my fund has more cash.

New Oriental Education & Technology Group (EDU) is my bet for capitalizing on the August '08 Olympic games in China. It should it be doing well currently, preparing workers to communicate in foreign languages. More important, I believe that the games will give a boost to an ongoing interest in education about the wider world long after the athletes have departed. Unfortunately I believe it is too late to buy some of the other stocks being suggested as Olympic plays because hotels are already booked up, travel plans made, etc. While researching EDU I had a bit of luck stumbling across tiny competitor ChinaEdu Corporation (CEDU) which went public only around 1/1/08. Although too small for the SLO competition portfolio, I added it to my Magic MicroCaps (MMC) fund.

I'm considering buying back Ensco International Inc. (ESV) an offshore contract drilling company which is perhaps on the upswing again. Then, I want to get more UltraShort Technology ProShares (REW) as, unfortunately, I think it will do well between now and the end of SLO2.

Although there will be a continuing need for steel, I've read that steel companies may not make as much money this year due to the increasing cost of iron. So I want to instead invest in more companies directly mining iron ore and have decded on Rio Tinto plc (RTP) and Cleveland-Cliffs Inc. (CLF) In addition, I'm buying Bucyrus International Inc. (BUCY) which supplies industrial tools and services, including mining machinery.

Speaking of supplying services, I'm interested in ICON plc (ICLR), an Irish company doing contract research for pharmaceutical, biotechnology, and medical device industries. Although the big pharma/bio companies go through unpredictable ups and downs depending on product approval, the smaller company doing the testing seems to have steady work and profits regardless.

Then there are investments in gold and in currency trading, two areas where I'll stick to ETFs for the moment as I know nothing about these fields. I plan to buy the ETF streetTRACKS Gold Shares (GLD). When it comes to currency, I'm looking at CurrencyShares Japanese Yen Trust (FXY) CurrencyShares Swiss Franc Trust (FXF) and others. There seems to be no such thing as an ETF which trades in a "basket" of currencies.

In the past the only advice I've read on the subject of currency trading is, "The individual investor should not try it. It's too complex and risky." But that's what they used to say about foreign investing, too. We'll see.