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I posted a BLOG on Friday's news release from Platina Energy (OTC BB: PLTG) for those that want an update on that situation.

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Where To Find 9% GDP Growth

What happened to 1.3 billion people? Did they just disappear off the face of the earth? Hardly. The entire world financial community is totally focused on outcome of a bunch of bickering Congressional Members. It seems as if we have completely forgotten about globalization and all its ramifications.

Let's face reallity. Here's what's likely to happen. The world financial community will hold its collective breath while the Congress debates this weekend. In my view, it's likely we'll have a framework to move forward tomorrow, and there will be a relief rally in the market.

However, here's the problem. Once we "reliquify" the banking system, we will still be in a recession for the immediate future, and reality will set back in. Economists and strategists will be watching economic data like hawks for signs of a rebound. The market will begin pricing in improving conditions six months before the trailing numbers prove them right.

Markets have collapsed world wide over the last month, but that money has not disappeared. It still exists, and at some point in time it will be looking for superior returns.

So here's the picture. The US is clearly headed for negative GDP growth. As investors, we have been focused on finding growth stories to make the real returns in our portfolio. So, as there is clearly going to be limited growth going forward in the US, we should be looking at opportunities where economies are delivering results like this:

  • Annual GDP Growth has averaged 9.9% since 1978.
  • Inflation has come down in the last year from 6.6% to 4.4%
  • GDP in 2007 was $6.9 Trillion- the 2nd highest in the world
  • The quarterly growth rate in Q2 '08 of 10.1% is expected to slow to 9% for the remainder of 2008
One would think, looking at this moderate slow down, that the market in this particular country would still be in reasonably good shape. These are not the stats of a Bear Market. If fact, the very moderate slowdown of 1% from the torrid pace of 10% GDP growth down to 9% is associated with a 2 percentage point drop in the inflation rate. Seems like a fair trade off.

In my view, when global money stops freaking out about the state of the US economy, and goes looking for superior returns, it will land squarely in this county's stock market where the excesses of the US economy are not being felt to a signficant extent.

So- here's the real kicker. I've given you some statistics demonstrating there is a moderate slow down at best in a major growth economy. Would you believe that the world investment community has decimated this country's stock market by 60%? Yes, that's right. The large cap stocks have been absolutely murdered in knee jerk fashion by an irrational investment community.

Of course, the country to which I am referring is China. One would have thought the world financial community would focus in on China after those spectacular Summer Olympic games. That has not been the case as the US financial markets have distracted the world.

FXI is a US ETF (exchange traded fund). It trades on the AMEX, and represents the behemoths of the Chinese economy- like the GEs, IBMs, Microsofts, and WalMarts, these are the largest companies in China. China Mobile, Bank Of China, PetroChina, and China Life Insurance are a few of the holdings.

So- let's look at the value. I looked at a list of this ETF's largest holdings. They are all large and profitable companies. I found annual growth rates ranging from 10% up to 40%.

The entire portfolio of huge, profitable companies, is trading at a PE Ratio of about 14 with a cash dividend coupon of 3%.

As the financial world turns to some level of sanity, my mission is to find you opportunities to make returns ahead of the big money flows. Today, the financial world is frozen like a deer in the headlights. Tomorrow, it will be looking for growth.

FXI is a stock you should own today, and I'm not talking about your high risk, microcap money. I'm talking about your serious growth money. Capital is going to flow to growth again soon. It won't find it in US markets.

The global world opens opportunity. Use it to your advantage.

Own FXI in the $36 to $38 range. This security is down an absurd 60% from its all time high, and has completed a powerful multi year pullback. It's a great value at these levels.

SSL- below $30. Target- Back to $70 over the next year or two.

I also strongly recommend investing in China Energy Recovery (OTC BB: CGYV) for the speculative end of your portfolio ($2 SSL).

These are the only two stocks I would put new money in right now. US stocks will take some time to get rolling again. This is where the money will flow. Be ahead of it for once.

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