The Global Bull Takes A Breather

With all of the focus on the subprime woes of Merrill Lynch and Citibank — and the subsequent high profile resignations of their CEOs — it’s easy to forget that the rest of the world is doing just fine, thank you. Much of your portfolio saw record highs last Monday, before selling off in sympathy with Wall Street toward the middle of the week. By Friday, most of your positions had found their feet and closed the week on a positive note.

Your current Global Bull Market Alert portfolio is broadly diversified over a number of exceptionally strong global investment themes: global steel stocks (PKX, MTL); the commodities boom (BHP); momentum in Chinese markets (EWH); global shipping (DRYS); uranium (CCJ); fast-growth telecom companies (VIP); and Brazilian (UBB) and Indian (HDB) banks roaring ahead on the back of strong (subprime loan-free) balance sheets and booming economies.

The bottom line? I continue to look for strong performance in global markets to round out the year.

POSCO (PKX)

Korean steel giant POSCO had a rough week. But remember that Korea is Warren Buffett’s favorite global market. And POSCO may be his favorite stock. Look for the stock to resume its march upward toward the $200 level soon.

BHP BILLITON (BHP)

BHP hit a record high of $87.43 on Oct. 29. With the stock up 29.80% since late August, and having taken profits of 289.71% just last week in the options, don’t let one bad week in the stock shake you out of this strong performer.

DRYSHIPS, INC. (DRYS)

If DryShip’s price performance is fraying your nerves — well, I can’t blame you. The bulk-shipping industry was hit hard last week as freight rates on the largest vessels dropped for the first time in months. DryShips itself fell a whopping 17.4%. This is classic overreaction and a textbook buying opportunity. The gyrations in this stock might give you vertigo, but I’m betting it will end the year higher than where it is now.

VIMPEL-COMMUNICATIONS (VIP)

VimpelCom hit a record high of $35.00 last week before pulling back. The  traditionally strong Q4 in Russia should ensure that we will be looking at more record prices in the weeks to come.

CAMECO CORP (CCJ)

Our uranium play dropped sharply this week despite reporting increased net earnings of 25% for the third quarter of 2007. Revenue soared 89% year-over-year, as Cameco sold uranium at its highest-ever prices. Look for this stock to continue its already incipient recovery.

ISHARES MSCI HONG KONG INDEX (EWH)

The Hong Kong ETF is up 2.11% since our initial recommendation, and we’ve already taken 85% profits on our first set of options. With so much money flowing into Hong Kong from mainland China, it won’t be long before my #1 Asian momentum play resumes its upward trajectory.

UNIBANCO (UBB)

Your Brazilian banking play has delivered a solid 4.52% return — including 42.86% on the options — in the two short weeks you’ve held the stock. Brazil is pure, passionate, throbbing momentum — with a currency that is soaring against the U.S. dollar. This is a volatile, but profitable ride.

MECHEL OPEN JOINT STOCK COMPANY (MTL)

Your position in this emerging Russian steel giant is up a solid 9.42% during the past three weeks — and the options have clocked a 56.25% gain. Expect this stock to resume its meteoric rise during the next couple of weeks.

HDFC BANK LIMITED (HDB)

This Indian bank offers a terrific way to profit from the explosive growth in India’s booming financial sector. While Chinese banks boast record market capitalizations that exceed that of established capitalist giants such as Citibank and Bank of America, Indian banks are trading at one-tenth the value of their Chinese rivals. Once global markets settle, this one will soar.

Sincerely,

Nicholas Vardy

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