Is Now The Time To Invest In India?
The Dynamic Wealth Report
January 23, 2009
Have You Seen THIS?
It’s Friday. It’s been a crazy week, and I’m looking forward to
the weekend. But there’s a problem. It’s the first weekend in months
without a professional football game. I’m an addict, I know. I can’t
wait for the Super Bowl… especially since the hometown Cardinals are
making their first appearance ever (Go Cards!).
The Super Bowl is still more than a week away. For now, I need to find
something else to do.
Time to revisit the old “go-to” option – the movies. There’s a huge
movie complex near my house. Notice I called it a complex. This is not
the movie theatre of my youth. The movie complex is huge. The most
important part of the whole adventure is not to forget your popcorn. The
concession stand is a good 5 miles from the actual theatre. You could
miss half your movie trying to buy a bag of popcorn and a drink. But I
digress…
I started looking at the movies now showing. That’s when I stumbled
across Slumdog Millionaire.
Have you heard of this movie? If not, get ready to. It’s about to burst
onto the global stage for a number of reasons. The movie already won a
golden globe. Recently, they were nominated for 10 Oscars. And that’s
just the start of the PR.
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The movie is scheduled to open this week in India.
Apparently not everyone’s happy about its success. Set in the slums of
India, the movie depicts a boy who wins millions on a game show. People
are upset over how the movie depicts poverty in India. Some are calling
it a warped western view of India. They dislike the way the slums are
portrayed.
I’ll admit, I haven’t seen this movie. But given the number of awards
it’s won, and the nominations it’s garnered, I’m sure millions will.
Reading about the movie got me thinking about India… and their economy. Recently, the global recession has been hitting the country hard. They
also uncovered the largest case of fraud… which didn’t help the Indian
markets at all.
I started wondering if India might be an investment to revisit.
If you remember, a few months back I wrote about investing in India. I
highlighted a few key reasons the country might be an interesting
investment.
India has a huge population. Just over 1 billion people call the country
home. They’re second in the world only to China. As more of the
population moves into the middle class, it will be a huge economic
driver for the country.
The country’s GDP has been growing at a phenomenal clip. In the US, GDP
growth is around 1% or 2% (when we’re not in a recession).
India’s GDP has been pushing 8% and 9% over the last few years.
I’m sure some of that growth has slowed because of the credit crisis and
global recession. However, once the global economy normalizes, watch
out… the growth will return.
The government is also working on advanced development and
modernization. It’s estimated they’ll spend more than $100 billion on
roads, bridges, and other infrastructure in the next few years. I liken
it to the US economy in the 1950s and 1960s (and we all know how well
the economy did then).
Now the last time I wrote about India the major indexes were down by
50%. Little did I realize how much further they’d fall. Recently, major
fraud was uncovered at one of India’s largest technology companies. The
market’s dropped like a rock on the news (and for good reason).
I know it sounds strange, but now might be a great time to start looking
at India again.
WisdomTree India Earnings Fund (EPI) is an ETF holding a number of
companies traded on the National Stock Exchange of India. I think this
fund will be a great way to profit from growth in India over the next
few years.
Now I’m not looking for this ETF to rocket back up to old highs. It will
take a while to recover. But given a good long term outlook, now’s the
time to start nibbling at new investments like this.
• Hershey Foods (HSY) was upgraded to a “BUY” at
Citigroup. The analyst figures as the economy worsens, chocoholics will
trade down to cheaper products made by Hershey. Sound’s good to me…
where’s my candy bar?
• Freeport McMoRan (FCX) was downgraded by Friedman
Billings. The analyst fears the company will have a horrible fourth
quarter announcement.
• Merriman Curhan started research coverage on a number of companies in
the solar industry including: Evergreen Solar (ESLR),
First Solar (FSLR), Sunpower (SPWRA),
and Suntech Power (STP).
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