To OTC Journal Members: 
 

I posted a couple of new blog entries since our last newsletter. One was a look at Nuvilex, Inc. (NVLX) - formerly eFoodSafety - and the opportunity the company is facing with their semi-removable, permanent (don't ask) tattoo ink. It's not a billion dollar market, though it could be big for this company that's yet to get any real traction in terms of revenue. Maybe this will be the needed catalyst.

The other entry was some thoughts about Options Media Group Holdings, Inc. (OPMG), and what all the recent volatility could mean for you. Check it out. 
 

Going Global: Not Just Another BRIC In The Wall

Let's admit it; many of us are more focused on surviving the current economic nightmare than living the American dream. 

What ever happened to buying a home with a white picket fence, sitting in your spanking new Chevy and investing in the good old U.S.A.? Well, many people are simply trying to "keep" their houses, General Motors is a dying breed, and investing here at home isn't the best place to achieve wealth. 

That's not to say that the United States won't bounce back. We've been here before (well, not quite here) and come back even stronger. For example, the broad U.S. stock market in eight different years since 1926 has gained at least 37%. 

I'm a believer. It's just that one bit of good news is overshadowed by ten other bits of bad news. The light at the end of the tunnel is very dull, if it's there at all. 

Of course, for you folks following some of our individual stock picks, you know there are nooks and crannies in the market where money can be made in up and coming, fundamentally sound companies in hot industries: IX Energy (IXEH), Options Media (OPMG) and UFood Restaurant Group, Inc. (UFFC) to name a few. 

Since you don't want to sit around twiddling your thumbs waiting for America to shape up, think global. The U.S. has much bigger problems than many other parts of the world, and we have so many opportunities beyond our own borders. 

Five years ago, that might not have been the case. Today, you can easily go where the money is going. 

From 2003-2007, the BRIC countries (Brazil, Russia, India and China) were among the fastest growing in the world, with funds focused on them delivering four-year returns of at least 70%. That came to a dead stop when the global recession hit. 

In recent weeks, however, I've seen the BRICs surging above their 200-day moving averages. We have China and Brazil covered in our EWZ and FXI positions, respectively. 
 

China

The recent upgrading of China's GDP forecasts for 2009 and 2010 from 6% and 9% to 8.3% and 10.9% make me believe that FXI, trading at $36, could easily trade into the $60 to $80 range next year. 

Interestingly, the adjustment in China's GDP is attributed to the global crisis triggered by the financial mess on our turf. Like most global markets, China came tumbling down; although it had its own share of problems to work out. 

However, today they have a $600 billion stimulus package of their own. 

Chinese officials have earmarked a good chunk of the money for an infrastructure overhaul and full medical insurance policies for its population, 90% of which should be implemented by 2011.

Many believe that China will leap ahead of Japan to become the second largest economy in the world. 
 

Brazil, Latin America

Brazil managed to ride out the economic downturn better than its BRIC counterparts, largely due to government policies and actions taken as the crisis worsened. Here are some ways Brazil dodged many bullets:

• A trio of financial heavyweights, retail bank giant Banco de Brasil; the nation's largest mortgage lender, Caixa Economica; and BNDES, a big development bank that feeds credit to favored companies are all controlled by the government. 
• Hugely expensive bank loans, meaning fewer people in debt. 
• Expensive ramifications that discourage private banks from taking wild risks like those taken by their peers in Europe and the United States did. 
• Public-sector debt is below 40% of GDP, previously a problem in the nation. 
• A build-up in reserves to about $200 billion to defend its currency. 
• The economic crisis isn't pushing up inflation, which has been an ongoing problem in the nation. This has enabled the central bank to cut interest rates. 
• Brazil is still a major producer of copper, crude oil, gold, silver, iron ore and coal. All of these commodities are still in demand and that demand is on the rise. 
• As of May 27, Brazil's index, the Bovespa, is up 28.8% year-to-date; the S&P 500 by comparison is up 0.8%. 

We suggested a buy point of $35 for EWZ with a price target of $67 for 2009. It is currently trading at $54.57 for an unrealized gain of 55%.
 

Russia & India

I've never been that excited about Russia or India. Russia has a bad and long reputation for not "playing nice" with other economies, a necessity in this age of globalization.

Second, Russia's economy is perceived as being far too dependent on oil. Oil's record-setting run left it with vast reserves of cash, but when the bubble burst, Russia didn't have other sectors to pick up the slack and oil reserves are waning.

As for India, The International Monetary Fund (IMF) says that Indian companies are paying the price for heavy, heavy borrowing. In the fourth quarter of 2008, the economy grew 5.3%, the slowest rate in five years. 

The government predicts a 6% growth this year while the IMF projects a 4.5% growth.

Now that India's government has changed hands and hopes of a revival in direct foreign investment and economic growth, I'll be keeping an eye on it.
 

Lots of Choices

The investing landscape is a beautiful thing these days. Look at the many ways to invest in the BRICs: 

• iShares MSCI BRIC (BKF): Brazil, 27.4%; China, 23.5%; India, 13.9%; Hong Kong, 12.9% and Russia, 11.9% (Up 61% over three months) 
• Claymore/BNY BRIC (EEB): Brazil, 52.8%; China, 18.3%; Hong Kong, 15%; India, 9.2% and Russia, 3.6% (Up 31% over three months) 
• SPDR S&P BRIC 40 (BIK): China, 31.6%; Brazil, 23.9%; Russia, 23.2%; Hong Kong, 13.7% and India 6.2% (Up 56% over three months) 
• First Trust ISE Chindia (FNI): China, 40.7%; India, 35.6%; Hong Kong, 13.6%. (Up 62% over three months).