“Your big opportunity may be right where you are now.” -Napoleon Hill
Increase Profit Potential. Expand Your Horizons
With the U.S. market down for the count in recent weeks, things appear to be perking up as of late. However, the final outcome of the fight looks increasingly uncertain.
But what if there was a market thriving on exactly that ails ours? Where the middle class was gaining wealth, catching up to an amazingly wealthy upper crust and for the first time becoming qualified for loans. And of course paying back with rapid, almost fanatically religious fervor? 1950’s America all over again anyone?.
More on that in a moment, but first, let’s take a look at one of our newest portfolio companies that could prove to be drastically undervalued at current levels.
Quote of The Day:
“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew.” Abraham Lincoln
EMOT: Severely Undervalued?
Electric Moto Corporation (OTCPK: EMOT) gained nearly 50% on Tuesday, closing the day up $.04 at $.12. After perusing the company’s competitive landscape it finally dawned on me just how undervalued this stock may prove to be.
Vectrix Corporation, a Massachusets-based company that trades on the London exchange under the symbol VCF is one of EMOT’s biggest potential market foes.
With about 265 million shares outstanding, the stock currently trades at a lofty $9 British Pounds (about $20 USD). Just like EMOT, the company’s engineers spent more than a decade perfecting their vehicles. However, VCF, which commenced production and shipping in 2007 and logged nearly $820K in revenues, also had a net loss exceeding $54M (USD) for the year.
With nearly 1/4 of the shares outstanding (65M), EMOT is currently trading at an enormous market discount to VCF. If the market wakes up here soon and the stock begins trading at anywhere near the valuation of VCF, we could have a massively under priced opportunity on our hands here.
Peruvian Profits?
While the market possess its own set of risks including some dandies including poverty, corruption, and labor freedom issues, Peru also holds an exorbitant amount of growth potential.
Peru’s economy grew by about 7.5% in 2007 and is set to expand by about 6.3% this year, while inflation remains low (around 2.3%). The past five years have seen average year-over-year economic growth of roughly 5%. The country is also chock full of natural resources including: natural gas, lead, copper, zinc, silver, gold, iron ore and coal.
In a testament to the country’s growth potential and current strength, Fitch Ratings, a leading independent global rating agency, recently upgraded Peru’s long-term foreign currency issuer default rating to BBB-, investment grade, from BB+, citing strong improvement in fiscal and external solvency ratios.
Boo Yah! Cramer Right On With BAP!
My favorite financial television personality - Jim Cramer - presented a very exciting idea on last Monday’s edition of his Mad Money program. The Boo Yah man himself thinks that Peru is the next hot South American market.
His big play in the market is CREDICORP LTD (NYSE: BAP), Peru’s largest financial services company. With less than 1% of loans due and 2007 loan growth of 40%, Cramer appears to be right on in his assessment of the market being America’s “polar opposite”.
Although the stock appears to be trading at a premium, it is becoming one of the most researched equities on the market today, is well-positioned for growth, and appears to be extremely well-managed. In my opinion, the stock is very interesting, both as a short-term trading opportunity and a longer term value-play. If you have the dough to play with here, this is certainly worth a closer look.
So, there you have it. One large-cap prospect in a hot emerging market that could be in for a small-cap like growth over the next few years and a micro-cap player making moves that could quickly transform the company into much larger industry player. In times where value is of the essence, here are two value picks that should do you right.
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Your trading progress can be easily tracked. In fact, it is black and white, right in front of you all the time. As tempting as it is to track every trade, like balancing a checkbook, it will work against your long term goal of unemotional, decisive, and successful trading.
Think macro, not micro.
One of the biggest challenges we face as traders is the reining of our emotions in times of decision. Trading is a statistics game and emotional trading is far from logical and almost always costly. That being said, evaluating your progress is, naturally, going to generate some emotions.
Let me give you an example. You think you are doing pretty well. You have made 5 trades so far in the day and each one turned out in your favor. Just to give yourself a big ole pat on the back, you decide to tally up the day. So what if it is only 3 hours into the trading day, you may have made enough to sit back the rest of the day and relax. So against your better judgment (and our staunch advice) you tally up your trading profits.
Scenario #1 – You did great. You made even more than you thought you did. Logically, you know that you should continue using your system and be even more disciplined because it has done so well for you. But you are feeling good! Endorphins are surging in your blood and you start thinking you are darn good at this trading stuff. So on your next trade, you take a little more risk that you might have normally because it feels right. You get a little careless. You see it in every movie. Pride cometh before a fall.
Can you see where we are going with this?
Scenario #2 – You didn’t do as well as you thought you did. It seemed like the day was productive but when looking back your profits were mediocre. Not bad, but not that great either. “Hmmm,” you think, “I have time to make up for this mediocre morning.” After all, you want to hit that daily goal and at this conservative rate, you may not. You let loose the reins just enough to squeak in an extra trade or two – so what if they are not ideal circumstances.
Can you see where we are going with this?
Bottom line is, tallying up your progress is something best done when your results will not affect that way you trade. If you have a system that works 70% of the time (more if you are in our chat rooms), you will end up ahead no matter when you tally up. Preferably, you should sit down and graph out your progress at the end of each month but we know how much restraint and patience that requires. If you must, tally up weekly on Friday afternoon AFTER YOUR TRADING DAY IS OVER!
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