“Good new technologies are a bit like good new roads: their social benefits far exceed what any one person or company can get paid for creating them.”

-- Michael Lewis, author of Liar's Poker

In 1995, NASDAQ was trading around 1000. On 3/10/2000, it hit a peak of 5048. Such euphoria had not been seen since the railroad boom of the 1840s or the automobile boom of the 1920s. Now it is China’s turn.

Last quarter China grew at a brisk 8.9% rate thanks to the government’s aggressive stimulus. The following are 14 Chinese stocks trade in the U.S. exchanges and have dividends over 2%:

Asset allocation is the most influential on investment outcome. There have been growing signs that the worst of the global crisis might have passed. While the US dollar may continue to weaken and the US loses significance in the global landscape, an allocation to other developed markets is deemed necessary. After all, 76% of global GDP is outside the US.

The most popular ETF to provide global diversification is iShares MSCI EAFE ETF (EFA), which tracks Europe, Australasia and Far East Index of developed countries.

This week the market is all gloom and doom. PIMCO’s Bill Gross thinks that the Dow’s fair value should be 7,000. GMO Chairman Jeremy Grantham also believes that the U.S. stock market is almost 25% above fair value.

I went through all DJIA component stocks (Dow 30) to find out what the fair value the Dow is.

The market has spoiled investors over the past 7 months with one direction only: up. This Great Recession seems to turn into the Great Recovery. Are there any cheap growth stocks left for bargain-hunting investors?

I use following 8 criteria to select undervalued growth companies:

By Hao Jin

China's rapid economic growth will be the global story of the foreseeable future. Like the Japanese in 1980s, the Chinese are shopping for Hummers, IBM (IBM) PC's, natural resources and real estate, etc.

China's rapid economic growth will be the global story of the foreseeable future. Like the Japanese in 1980s, the Chinese are shopping for Hummers, IBM PCs, natural resources and real estate.

In addition to growth, many investors look at emerging markets such as China as potential protection against a falling dollar. No one wants to lose money any more after the market crash of last year, but neither can anyone afford to miss out on potential huge growth ahead. Money is flying back to Chinese stocks, causing valuations to rise rapidly. Are there still windows of opportunity left?

One of the most popular ways for investors to select stocks is to focus on companies with long track records of increasing dividends. On Feb 27, 2009, General Electric (GE), once the most prominent dividend aristocrat, cut its dividend 68%, the first time since 1938. Who might be next?

I examined four types of high dividend stocks. Please note all these companies have great balance sheets, greater than 3.5% yield, low P/Es, and low short ratios.

The Fed is going to keep interest rates near zero for the foreseeable future. With 10 year treasury yields around 3.5%, solid blue chip companies offering decent dividends becomes popular. Not only do they offer current income and the possibility of capital gains, they also have better protection against inflation than regular bonds. No wonder Warren Buffett wrote “Buy American. I Am” article on The New York Times last October. (source: NY Times)

However, the economy is still in the bottoming process. There is a potential risk for the economic to backslide. Which blue chips are relatively safe?

Pearson plc (PSO) is known for its Financial Times newspaper and Penguin book unit, and is one of the world's biggest publishers. But as you can see from its revenue distribution chart below, Pearson is dominated by its education units, which consist of North American, international and professional education divisions. These education segments account for around two third of Pearson’s total revenue.

Returns from emerging markets stocks are highly correlated to those from U.S. stocks. Also, many people believed that those countries’ growth prospects were hardly a secret, and they had been more than priced into stocks. Still, from price/earnings to growth (PEG) ratio point of view (a ratio used to determine a stock's value while taking into account earnings growth, according to Investopedia), emerging countries’ PEG is still better than SPY’s, which is 1.4.

From a total of 835 ETFs, I filtered out those ETFs with net assets less than $100 million and average volume less than 100,000. Below are 30 emerging market ETFs, along with their PEG and Price to Cash Flow (CF) ratio.

There were two superpowers in the world – the United States and Moody’s bond-rating service – and it was sometimes unclear which was more powerful.

Many investors thought that they could time the market to their advantage. But actually they just guessed about the psychology of other investors, trying to figure out when others might start selling. In fact this explains why so many investors were holding stocks while they also thought the market was overpriced, according to Robert Shiller from The Washington Post.

In today’s low interest rate environment, yield-hungry investors might want to invest in financially strong blue chip companies that offer the potential for stable and solid dividends. I filtered the 200 largest U.S. stocks (by market cap), and below are 20 highest dividend yield companies (sort by yield %).

Oversupply

Recent reductions in natural gas (NG) price may be related to continued strength in production capacity, specifically in unconventional shale gas fields. The Potential Gas Committee estimated U.S. reserves are 35% higher than just two years ago, thanks to new technology that has allowed producers to drill for gas in shale rock. The committee estimated the country's total natural gas resources at 2,074 trillion cubic feet, an increase of 542 trillion cubic from its last report.

News Corporation (NWS) is a diversified media company including such brand names as Fox, The Wall Street Journal, Barron’s and MySpace. The company derives substantial revenues from the sale of advertising in its TV, broadcast and cable networks, newspapers and inserts, websites and direct broadcast satellite services. Following chart shows its revenue by segments for fiscal 2009 (ending June 30, 2009).

1987’s Black Monday, the Asian currency crisis, the failure of hedge fund Long Term Capital Management and the bursting of the internet bubble – all of these extreme events have been compressed into a fantastically short space of financial history. In the heart of the moment, all seemed to have the power to change the world. All suggested disastrous economic and social consequences but in the end had no serious effects at all: none of them was that a big deal, according to Michael Lewis, author of Panic, The Story of Modern Financial Insanity.

In today’s environment, you could have done better buying certain individual stocks, but you would have also done quite well with an ETF and wouldn't have had to break much of a mental sweat.

“You have to understand accounting and you have to understand the nuances of accounting. It is the language of business and it’s an imperfect language, but unless you are willing to put in the effort to learn accounting – how to read and interpret financial statements – you really shouldn’t select stocks yourself.” - Warren Buffett

Either oil is overpriced or natural gas is undervalued. For hedge, you might want to short United States Oil (USO) and long United States Natural Gas (UNG). But I don’t think NG price will stay in $3.5 - $4 range for long, even though there are plenty of supply, floats of inventories and lots of economic uncertainty. Below chart shows future price for NYMEX Henry Hub Natural Gas ( source: shttp://futures.tradingcharts.com/marketquotes/index.php3?market=NG_). As you can see, Dec 2009’s price is $5.43.