Pettit Funds

For the first time, I’m going to take a chance on a Chinese stock: China Automotive Systems, Inc. (CAAS).

They popped up on my “screen” looking very intriguing, so I actually took a fairly large position in it this morning–after selling off a portion of some of my recent “winners” (I sold off about one-third of my MFW and NVEC, which have been doing very well–I wanted to lock in some of the profits and raise money for the CAAS purchase).

Lots of people buying cars in China these days.

Good luck!

From the NY TIMES:

The debate over economic policy has taken a predictable yet ominous turn: the crisis seems to be easing, and a chorus of critics is already demanding that the Federal Reserve and the Obama administration abandon their rescue efforts. For those who know their history, it’s déjà vu all over again — literally.

For this is the third time in history that a major economy has found itself in a liquidity trap, a situation in which interest-rate cuts, the conventional way to perk up the economy, have reached their limit. When this happens, unconventional measures are the only way to fight recession.

Yet such unconventional measures make the conventionally minded uncomfortable, and they keep pushing for a return to normalcy. In previous liquidity-trap episodes, policy makers gave in to these pressures far too soon, plunging the economy back into crisis. And if the critics have their way, we’ll do the same thing this time.

The first example of policy in a liquidity trap comes from the 1930s. The U.S. economy grew rapidly from 1933 to 1937, helped along by New Deal policies. America, however, remained well short of full employment.

Yet policy makers stopped worrying about depression and started worrying about inflation. The Federal Reserve tightened monetary policy, while F.D.R. tried to balance the federal budget. Sure enough, the economy slumped again, and full recovery had to wait for World War II.

The second example is Japan in the 1990s. After slumping early in the decade, Japan experienced a partial recovery, with the economy growing almost 3 percent in 1996. Policy makers responded by shifting their focus to the budget deficit, raising taxes and cutting spending. Japan proceeded to slide back into recession.

And here we go again.

On one side, the inflation worriers are harassing the Fed. The latest example: Arthur Laffer, he of the curve, warns that the Fed’s policies will cause devastating inflation. He recommends, among other things, possibly raising banks’ reserve requirements, which happens to be exactly what the Fed did in 1936 and 1937 — a move that none other than Milton Friedman condemned as helping to strangle economic recovery.

Meanwhile, there are demands from several directions that President Obama’s fiscal stimulus plan be canceled…[Rest of article]

Leviticus 27:3-7 (Sorry, ladies–but that’s why you get treated like crap by the church…)

Well, I’m going to come out from under the bed and try and give you some picks again.

My last one was back in February, when I finally “lost my faith”. I’ve actually made several selections for myself since then (but not posted here), and all have done fairly well. CALM, recommended here on Feb. 19, is up only 3%, but SBS, recommended the same day, is up 52%. The market as measured by the S&P 500 is only up 16% since then (through end of May).

Unpublished picks since then all have made money: CVA and AMX, both picked on March 11 are up 18% and 46% respectively; STLD, CLF, MBT, and POT (yes, I scored some POT) are up 79%, 54%, 36% and 46% respectively; IAAC bought on April 6 is up 37%; TLVT, bought April 23 is up 22%; and AZZ bought May 14 is up 23% (all through end of May). Having quite a run… (Frankly, it would seem that my forte is picking winners in “up” markets, as I barely hold my own when the market goes down for any length of time).

So let’s try this again: Today’s pick is Brasil Telecom Participacoes S.A. (BRP), which I actually recommended back in June, 2008, when it was $82 per share and it promptly went down to $39. Oops. It’s at about $45 per share now and I’m going back in. I’ll be taking a smaller position in EZCORP (EZPW), which is another stock that I recall having owned a while back and not having done well with. They run a chain of pawnshops. This is a risky one and my first foray back into buying in the financial sector in a while. I feel good about the Brasil Telecom, though.

Good luck!