To OTC Journal Members: 
 

Finally, I'm Nearly Ready

On Friday morning, October 1st, it became official. I started my new service. As many of you are aware, I have decided to branch off in new directions. I am launching a subscription based newsletter devoted to investing in China based companies with US listings.

On Friday morning we officially finalized the first selections for the portfolio. There are 12 companies- some of them will be familiar to OTC Journal subscribers, and some will be new. We inputted the selections, and chose October 1st as our official starting date to begin establishing a track record.

By the end of next week every OTC Journal  member will have the opportunity to become founding subscribers. Be prepared to invest about $1 per day for the service. However, I'll give you the first two weeks for free, and I'll also give you a money back guarantee for the first six months. If, at any time in the first six months, if you decide it's not for you, just give me a call, and I'll give you a full refund. With an offer like that, how can you go wrong?

I divided the portfolio up into two sections. There are 6 stocks in each. The first is all small to mid cap stocks that are highly liquid and more tradeable. With this portfolio, I'm going for 100% plus returns. The second grouping of 6 is micro to small cap stocks. These stocks require a longer term perspective and are not as liquid. However, here I'm looking for much greater returns- 300% plus- triples or better. Every one of the 12 stocks is growing rapidly, very profitable, and undervalued by any fundamental measure.

Next week I'll let you know how to enroll. I'm hope there's a bunch of you who choose to come along.
 

News From China- And, It's All Good

I guess I'm a bit of an old timer. I long for the days when the great growth investors dominated the headlines. Do you remember names like Peter Lynch and Sir John Templeton? These were the great mutual fund managers who made money for decades by investing in growth companies for the long term. They didn't buy and sell minute by minute from an algorithm programmed into a computer.

Perhaps the last of the dying breed is the greatest one of all- Warren Buffett. Buffett could go down as the greatest growth and value investor of all time. All he does is buy great stuff when it's cheap, and sell it when it becomes more expensive. He doesn't watch markets or trade on momentum- he just knows how to invest.

The Oracle Of Omaha, at the age of 80, was traipsing around China this past week, and he has some interesting things to say about their economy. He's visiting China with Berkshire Vice Chairman Charles Munger and Microsoft founder Bill Gates.

Bloomberg interviewed Buffett last Thursday, and here are some quotes from the interview:

• "Almost anyone, a third-grade child from America, can see that this economy is booming," Buffett said at a briefing today in the southern Chinese city of Changsha. China's transformation is "unlike anything that's ever taken place in history." 
• "China's a very big economy and it's going to get a lot bigger," Buffett said. "That means it has large investment opportunities and that's what Berkshire Hathaway is looking for. We need to put large sums to work, so China is a logical place." 

Today's environment for China stocks is a lot different. FXI is back to $43, and China stocks have been clobbered since March. Like Buffett, I'm investing now.

And, as if to make Warren Buffett even more prophetic than he already is- despite all the forecasts of the so called experts who have been predicting a dire slow down in China, manufacturing statistics out of China were outstanding on Friday.

The Official PMI number for Chinese manufacturing in September came in at 53.8. The median forecast was 52, and in the dark science of economics, this was a big miss for the positive. Commodity prices jumped around the world on this number as the market now perceives China will need even more copper, oil, high end machinery, and the like.

The OTC Journal started down the comeback trail this week on the China front as well. Three of my 10 core ideas had a great week: China Education Alliance (NYSE: CEU), China MediaExpress (NASDAQ: CCME), and Longwei Petroleum (AMEX: LPH) all were up very nicely this week- about 30% on average.

My of my three new ideas in smaller stocks traded very well: Both China Electronic Holdings (OTC BB: CEHD), and GHN Agrispan (OTC BB: GHNA) traded nicely above their entry levels. Bohai Pharmaceuticals (OTC BB: BOPH) remains about a break even.

Next week I'm going to tell you what China is doing to prevent its residential real estate from overheating.

Disclosure: I'm long CEU, CCME, LPH, and BOPH

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