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Most Read Posts (64 articles) – Discover which articles Underground Investor™ readers are most interested in. See the full database, including the most recent articles that may not be listed below,  by clicking the link above.

Sept. 27, 2007 – 101 Reasons Why Managing Your Money is the Quickest Way to Build Wealth
Sept. 25, 2007 – 10 Surefire Ways to Make an Investment Fortune
Sept. 15, 2007 – Why the U.S. Feds 0.50% Rate Cut Won’t Save the Markets
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Aug. 20, 2007 – How Much Does the Gov’t Really Manipulate Markets
Aug. 9, 2007 – More Gov’t Foolishness (or Lies) Again: Markets are Sound…NOT!
Aug. 9, 2007 – Chinese Tariffs and the Nuclear Option
Jul. 24, 2007 – How to Invest Like the World’s Greatest Investors
Jun. 17, 2007 – Get Out of Dollar-Denominated Bonds While You Still Can!
May 1, 2007 – Uranium Stocks are Finally Getting the Attention They Deserve
Apr. 23, 2007 – The Emperor’s New Clothes Abound in the Investment Industry. Don’t Get Cheated by Your Advisor
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Gold Investments (37 articles) - Use traditional rules to invest in gold stocks and you’ll lose money hand over fist with this asset class. Learn more about one of the most important components of every portfolio for future years to come. See the full database, including the most recent articles that may not be listed below, by clicking the above link.

April 23, 2008 – Will U.S. Markets Crash Now or Later?
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Jan. 5, 2008 – A Sneak Peak at Our Premium Level Information
Nov. 4, 2007 – Is Hyperinflation Coming to the U.S.? It’s Time to Stock Up on Gold.
Nov. 4. 2007 – Gold is the Best Investment Today, History Tells Us So.
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Feb. 23, 2007 – Uncover the Ignored Asset Classes
Feb. 12, 2007 – How Do I Know that Institutional Money is Still Not on Board with Gold?
Jan. 25, 2007 – If You Don’t Own Gold Stocks, You Need To
Jan. 23, 2007 – Building Wealth Requires More than Just Contrarian Investing
Jan. 14, 2007 – Use the Long Tail of Investing to Accurately Predict the Price of Gold
Jan. 11, 2007 – The REAL DEAL about Gold and Energy
Dec. 13, 2007 – Commodities and Asians: Apparently We All Look Alike
Nov. 6, 2006 – Sometimes Silence is Golden
Oct. 10, 2006 – Shock and Awe Awaits Global Markets
Oct. 4, 2006 – Is Gold’s Correction Over Yet?
Oct. 2, 2006 – Fiat Currency Concerns Give Rise to a Gold & Silver Backed Currency System
Oct. 1, 2006 – The Gold Timeline – A History of Gold Prices
Sept. 16, 2006 – Has the Commodities Bubble Burst? No, No, No!
Sept. 13, 2006 – Sell the Rumor, Buy the News
Sept. 11, 2006 – Gold’s Speculative Stigma is Unwarranted
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Aug. 14, 2006- Knowing Your History is More Important to Creating Wealth than Fundamental Analysis

Financial Crisis, Dollar Crisis & Recession Proof Investing (30 articles) – Foolish investors’ eyes lit up as New Century Financial dropped from $30 to $20 a share during the recent subprime mortgage fiasco. Their hearts thumped with excitement as shares dropped from $20 to $10 and they doubled down. When shares dropped to $5 they thought it had to be the bottom and put their last remaining money into New Century. A month later, they lost everything. There is similar optimism surrounding the dollar today from self-declared currency experts. Discover why the dollar is much more likely to go the way of New Century than experience a comeback like Muhammad Ali’s Rumble in the Jungle. For the most recent articles, perhaps not listed below, click the above category link.

June 26, 2008 – The One Question That Will Have the Greatest Impact on Your Financial Future
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April 30, 2008 - How Low Will the Feds Go?
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Jan. 28, 2008 – The Outcome of the Fed’s Interest Rate Cuts? History is the Best Oracle.
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May 28, 2007 – The Politics of Higher Oil Prices
May 26, 2007 – Asian Countries Pooling Reserves to Protect Themselves from the Incredible Shrinking Dollar, Part II
May 25, 2007 – Asian Countries Pooling Reserves, Part I
May 3, 2007 – The Death of the 3-Year Treasury Note
Apr. 1, 2007 – The Next Cold War Will be an Economic One
Jan. 25, 2007 – Dollar-Denominated Bonds Faltering
Jan. 9, 2007 – Use the Longtail of Investing to Accurately Predict Dollar Behavior
Jan 7, 2007 – 10 Reasons Why Dollar-Denominate Bonds Aren’t Safe
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Jun. 4, 2007 – To Prove the Effectiveness of Our SmartKnowledgeU™ Investment System, Even Our Weakest Picks that We’ve Given Away for FREE Have Soared
Apr. 29, 2007 – After BAIDU, Possibly Focus Media
Apr. 2, 2007 – Profit, Don’t Lose From Market Corrections
Apr. 2, 2007 – Global Warming Presents Easy 30% Gains for Underground Investor Readers
Mar. 13, 2007 – Beware the Perpetual Bulls, Part II
Feb. 18, 2007 – Banking Sector FY 2008 – Positive for Japan & India, Negative for China
Jan. 4, 2007 – Chinese Technology Companies to Watch in 2007
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Dec. 12, 2006 – It’s Time to Keep a Close Eye on Indian Stocks ICICI & HDFC
Dec. 7, 2006 – The Ocean Becomes a New Growth Point in the World Economy
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Nov. 4, 2007 – Is Hyperinflation Coming to the U.S.? It’s Time to Stock Up on Gold.
Nov. 4. 2007 – Gold is the Best Investment Today, Part II
Oct. 15, 2007 – Our New Forum on Facebook: Crisis Investing
Oct. 9, 2007 – Beware the Turbulence that Lies Beneath the Surface, Part I
Sept. 20, 2007 -The Signs of a Peak Investment Crisis Keep Coming
Sept. 19, 2007 -Why the U.S. Fed’s 0.50% Rate Cut Won’t Save the Markets
Aug. 9, 2007 – More Gov’t Foolishness Again
Jun. 29, 2007 – Don’t Let the Strength of the U.S. Markets in the First Half of 2007 Fool You
Mar. 11, 2007 – It’s the Difference Between Chasing & Building Wealth
Mar. 6, 2007 – What this Correction Means for Gold Stocks
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Jul. 24, 2007 – How to Invest Like the World’s Greatest Investors
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Jan. 21, 2007 – 10 Reasons the Longtail of Investing is the Only Way to Build Wealth
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Oct. 25, 2007 – New Home Sales Went Up. So What?
Oct. 15, 2007 – Beware the Turbulence that Lies Beneath the Surface, II
May 6, 2007 – Economic Reports Drive Short-Term Behavior, but Hardly Represent the Truth
Mar. 21, 2007 – The Short-Term May be Rosy, but Beware the Financial Crisis that is Building Steam
Mar. 4, 2007 – Foreign Markets aren’t as Risky as the Pundits Say
Feb. 23, 3007 – Evolve Your Investment Strategies with Evolving Technology
Feb. 6, 2007 – My Problem with Investment Newsletters (except ours, of course!)
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Jan. 30, 2007 – A New Paradigm of Successful Investment Strategies
Jan. 25, 2007 – Despite Evidence to the Contrary, Millions of Investors Will Believe Whatever they Want to Believe
Jan. 7, 2007 – 10 Reasons Why Dollar Denominated Bonds Aren’t as Safe as You Think
Jan. 5, 2007 – How Understanding MMA Champions will Make You a Better Investor
Dec. 18, 2006 – The True Determinants of Wealth Have Nothing to do with Asset Allocation
Nov. 12, 2006 – The Greatest Investment Myth Exposed: Why Modern Portfolio Theory WILL NEVER Make You Rich.

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Oct. 9, 2007 – Beware the Turbulence that Lies Beneath the Surface, I
Apr. 23, 2007 – Beware the Emperor’s New Clothes -Don’t Get Cheated by Your Adviser
Apr. 20, 2007 – Intelligent Investment Strategies Push Risk Off of You & Back onto Investment Firms
Apr. 19, 2007 – In Risky Markets, Follow the Behavior of the Ultra-Rich, Not the Rich
Apr. 17, 2007 – Why Wealth Literacy is More Important than Financial Literacy, Part II
Apr. 15, 2007 – Why Wealth Literacy is More Important than Financial Literacy, Part I
Apr. 13, 2007 – Pop Investing is All the Rage, but it’s a Loser’s Game
Apr. 12, 2007 – The Secret to Investing in 3 Easy Rules
Apr. 10, 2007 – Build Wealth by Answering These 5 Questions
Mar. 30, 2007 - How to Navigate the Minefields of the Investment Information Highway
Mar. 12, 2007 – The Short-Term May be Rosy, But Beware the Financial Crisis that is Building Steam
Mar. 11, 2007 – The Difference Between Chasing Wealth and Building Wealth
Feb 23, 2007 – Uncover the Ignored Asset Classes
Feb. 21, 2007 – Why Traditional Education Stifles Your Ability to Build Wealth
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Apr. 11, 2007 – Building Great Wealth in Stocks Requires Understanding Politics
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May 14, 2009 – What’s Driving the Price of Oil Higher? It’s the Dollar, Stupid!
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Uranium Investments (3 articles)– The bulk of this information is contained within our members only area, but you’ll find an article or two here. Click the above category link to see the full database of articles, including the most recent articles that may not be listed below.

May 1, 2007 – Uranium Stocks are Finally Getting Some Attention. Better Late than Never.
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China Investments (21 articles) – Articles about Chinese stocks and the Chinese stock market.

India Investments (4 articles) – Articles about Indian stocks and the Indian stock market.

Japan Investments (4 articles) – Articles about the Japanese economy and stock market.

Russia Investments (1 articles) – Articles about the Russian economy and stock market

U.S. Stocks (25 articles) – Articles about U.S. stocks and the American stock market.

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Investment Psychology (22 articles) – One of the most important but yet most overlooked and ignored aspects of investing is psychology. Discover how an improper mindset can be the difference between huge losses and huge gains in your portfolio. Click the above category link to see the full database of articles, including the most recent articles that may not be listed below.

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Options Investing (10 articles) – We don’t discuss options much here but occasionally, if there is a compelling play, we’ll write an article or two.

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The Zen of Investing (42 posts) – Read articles from our resident martial arts expert regarding how understanding principles of martial arts can make you a much better investor. A combination of “The Art of War” and “The Art of Investing” if you will. Click the above category link to see the full database of articles, including the most recent articles that may not be listed below.

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However, risk management controls for many of India’s banks are far more developed. HDFC (NYSE: HDB) and Icici bank (NYSE: IBN) were two such banks I mentioned in a prior blog. At that time, I mentioned that both HDB and IBN had run up in price much too quickly so a pullback in price was necessary for one to have a decent risk-reward scenario for either of these stocks though I favored HDB over IBN. Last week, we saw such a significant pullback in both stocks although both recovered somewhat by the end of the week. However, even with the significant dip in price, I would still approach HDB from the strategy of not rushing in at once, and instead with caution.In Japan, as the economy continues to recover, I also believe that bank stocks will provide some rewards this year as financial stocks typically outperform in countries with recovering economies. Ironically, Japan’s prolonged economic recession over the past couple of decades was triggered by exactly the conditions present in China’s financial sector today – poor risk management and greed spurred by the pursuit of rapid growth and profits. Decades ago, when many Japanese banks made huge bets with high-risk, high interest rate loans that turned sour, they tried to recover from this bad bet by making even higher-risk, higher-interest rate loans to cover for the increasing bad debt in their portfolios.

Of course, this just triggered a downward spiral that eventually necessitated the intervention of the Bank of Japan to prevent a collapse of the Japanese banking industry. Today, we would hope that Japanese banks learned a great deal of “what not to do” from their poor risk management controls that caused a two-decade long recession. In fact, many Japanese banks today stress tight risk-management controls in their marketing materials. While the recent mergers at the top of the Japanese banking sector have produced some banking giants that will provide the more conservative plays, mid-sized Japanese banks, rather than the giants, will probably provide the greatest upside during the continuing future recovery period.

In the end, remember that there are always good stocks in bad sectors and bad stocks in good sectors and that individual stock selection is the key to building wealth.

__________________

J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

Well take a look at the two charts for ICICI and HDFC banks today. I know the charts are blurry because I shrunk them to fit on the page, so the chart for HDFC bank is on the left and the one for ICICI is on the right. The corrections are starting as you can see from sharp declines in both charts. This may lead to a good buying opportunity. Just keep a close eye on this current dip to see how far it progresses.

October 23, 3006 – Last week I wrote that I wouldn’t touch China’s banks with a ten foot pole as in investment vehicle no matter how big Chinese bank IPO’s are splashed all over major newspaper’s headlines. However, India’s banks are a different manner. When it comes to financial institutions I do like the leaders. In India, this would mean ICICI bank and HDFC bank, both of which trade on the New York Stock Exchange as well.

However, as I mentioned before I think both ICICI and HDFC are a little too expensive right now. Compared to big American banks such as Bank of America and Wells Fargo Bank that respectively have P/E ratios of 13 and 15.5, certainly ICICI and HDFC’s P/E ratios seem ridiculously expensive. However, when you look at the much more accurate measure of PEG (P/E to growth), both ICICI and HDFC have PEG’s less than or about equal to 1. All of a sudden, ICICI and HDFC do not appear to be so expensive.

Because I still expect a strong pullback sometime in the near future in the U.S. stock markets, and regional markets tend to follow the U.S. market’s behavior in the short term, I think that there will be ample opportunity in the future to buy both these Indian banks at cheaper prices than today. Furthermore, both ICICI and HDFC have had great runs over the past three months, and as we all know, no stock price goes straight up without experiencing short term corrections.

So why India instead of China?

First of all the India banking industry has been well protected by the Indian government from foreign competition. This has given private banks proper time to implement risk management strategies instead of worrying about having to sell every product out there to compete with a deluge of foreign bank competition.

So compared to China’s NPL (non-performing loan) ratio of 8.9% by year end 2005, the NPL portfolio of Indian banks decreased from 14% in 1999 to 5.5% by the end of 2004 to a current rate of 3.84%. Respectively, ICICI and HDFC banks even fared better than the nationwide NPL ratio. However, just as I believe that China’s nationwide NPL system is actually higher than their officially stated 2005 year end figure of 8.9%, perhaps some of the NPL figures in India should be taken with a grain of salt as well.

That said, I am still much more comfortable with investing in India’s banking industry than China’s banking industry. Many India banks seem to be pursuing growth the proper way – Ensuring that risk management systems are in place before chasing after growth, as opposed to China, where the opposite mentality seems to predominate. Furthermore, for the past three years, Indian banks have the highest ROE (return on equity) of all Asian and Pacific Rim banks, even higher than their more developed peers in Singapore, Japan, New Zealand and Australia (Source: Moody’s).

Though I like both Indian banks as investments sometime in the near future, if I had to choose between HDFC and ICICI, even though ICICI is the giant, I would pick HDFC.

Why?

It simply comes down to management. Years ago, when I was a Private Wealth Manager for a Fortune 500 corporation, I lobbied for a million dollar unsecured line of credit for a client of mine. Management was against an unsecured line because though the client had a net worth in excess of 50 times the line of credit, most of his worth was tied up in real estate. However, I had built a solid relationship with this client and based upon his character I knew that the million dollar line was one of the lowest risk loans the bank would ever make. So I lobbied and lobbied and lobbied until management finally shared my viewpoint and we got the deal done on an unsecured basis. I still stay in touch with this client so I know that his line has never come close to being in default, and it would have been a damaging blow to this client’s relationship with the bank if I had accepted management’s initial refusal to do the deal.

When looking for companies to invest in, if I am on the fence about a decision, I focus on the quality of management and people, just as I did in deciding what clients were worthy of going to war for. Last year, I sought out companies that would benefit from the construction boom in Asia, and I settled on a Mexican company, Cemex.

Why?

I liked the fact that when Cemex top management was looking for companies to acquire in India last year, that they refused to be swept along by the mania that existed at the time. Many companies will grossly overpay to acquire companies in rapidly expanding markets just to get a piece of the pie. Cemex management, on the other hand, at the beginning of 2006, firmly stayed on the sidelines while contemplating how to grow their business in India. They stated that all of the deals presented to them were too expensive and that none” made sense”.

The management of HDFC has the same sensibilities. HDFC Bank’s country head of credit and market risk, Paresh Sukthankar, stated “When the market is growing, you can say ‘I will grab market share and I will figure out along the way how to make money from it’ or you can say ‘I can pick and choose, and still grow.” Companies that pick and choose and still grow, such as Cemex and HDFC, will have much longer and prosperous economic situations in future years. I avoid Chinese banks because I see most of them as taking Mr. Sukthankar’s first approach of “grab[bing] market share and…figur[ing] out along the way how to make money from it”.

Because of HDFC’s strong management, they have among the lowest NPL (non-performing loan) ratios of any bank in Asia, at only 0.24%. This despite tremendous growth. Comparatively, the latest figure for ICICI bank is 1.65%, and nationwide for India is still a very respectable 3.84%.

____________________

J.S. Kim is the Managing Director of SmartKnowledgeU, an online investment education course that utilizes groundbreaking investment strategies to uncover ignored stocks, asset classes, and global markets to identify the best low-risk, high-reward investment opportunities with the best chance of returning high double-digit and triple-digit gains.