In the last two weeks alone, three of the world top oil exporters have warned that their oil production will decline faster than expected in the next one to three years:

In my continued search for opportunities and anomalies to produce above average returns, I developed a special interest for the impact of 'up listing' of Chinese securities from the over the counter market (OTC) to a full fledged exchange. Efficient market proponents would tell you that a move from the OTC to a major exchange should have no effect on a stock, as it does not change the fundamentals of the company, but I beg to differ.

I believe a security 'up listing' from the obscure OTC market to a major exchange has powerful qualitative implications, implications that usually lead to a much higher valuation of the up listed security, as well as an improvement in the business of the 'up listed' company as a result of the higher valuation and the increased visibility of the business.

I have been an investor and a follower of China North East Petroleum (NEP) since mid-2008, and during this time, I have seen the business grow and evolve. The management team has been systematic in its efforts to transform the company from a small oil extractor in the Jilin oil field to a sizable oil player in the nascent Chinese private oil industry. (You may refer to: Tremendous Value Found in China North East Petroleum – January 19^th).

The company has crossed a number of milestones in its efforts to achieve its goals. Most notable was its ability to raise $15m dollars in debt (in addition to $13m in warrants) in March 2008 to quicken the pace of its drilling on its existing leases. This acceleration has lead to the expansion of its production capacity from 370,000 barrels yearly run rate at the time of the financing to 900,000 barrels yearly run rate today, and well on its way of hitting the million barrel a year run rate by the forth quarter of this year.

I have been interested in the inflation phenomena for a long time; however my fascination with inflation and its influence on our economy seemed disproportionate to the interest of others. When I discussed the topic with the average person or the average investor, they often knew of inflation, but were often ignorant of the fact that inflation present a significant tax on a person’s or a nation purchasing power.

The relative disregard for this phenomenon can be tied back to Dr. Albert Allen Bartlett's famous assertion:

In January 2009, I published an article on Seeking Alpha entitled Tremendous Value Found in China North East Petroleum. Today I will attempt to review the company's progress since January and contrast it to my earlier projections. I will also assess whether China North East Petroleum (NEP) remains an exceptional investment.

My assessment will cover the following areas:

Investors and global oil companies such as Shell Petroleum (RDS.A), Eni (E), China National Petroleum, and Exxon Mobile (XOM) who are betting on Iraq are surely to be disappointed.

Ever since the fall of Baghdad in April 2003, we have heard about the unlimited potential for the Iraqi oil, often news reports would mention that Iraq has the 3rd largest oil reserves in the world and the country oil ministry often mentions its goal of having Iraq produce 6 million barrels of oil over the medium term.

Those who know me well know that I look for value. I strongly believe that markets are inefficient and that investors are emotional creatures driven by fear and greed regardless of the fundamentals. As a matter of fact, I even developed a theory called the Cyclical Efficient Market Hypothesis (CEMH) to help me, as well as help fellow investors, better profit from market inefficiencies.

However in this article I will not deal with CEMH, but I will look at stocks which are deeply undervalued or perhaps “insanely” undervalued; If you are looking for companies trading for 50c on the dollar, fast growth companies trading at under 2 P/E or companies with 0.5 or lower PEG, in this article you will learn about them, and you will see that there is a whole lot of them: they are called the Chinese Micro Caps.

China North Eastern Petroleum (CNEH.OB) is a highly profitable low cost oil producer based in Harbin China. The company is part of the nascent private Chinese oil industry which was born about 5 years ago due to Chinese government deregulation of the sector, which was (and still is) mainly dominated by the Chinese majors such as PetroChina (PTR) and Sinopec (SHI).

The company business model is quite simple: the company leases and develops small proven oil fields from PetroChina for 20 years, against a royalty payment of 20% of the oil produced the first 10 years, and 40% of the oil produced the last 10 years.

As Philippe Rothschild once said, "Buy when there is blood on the streets." This piece of Wall Street wisdom has proven its value over the decades again and again; yet despite the knowledge that once a proven way to make money on Wall Street is discovered it usually loses its value, as investors pile on to profit from the discrepancy, the concept of buying “when there is blood on the street” never lost its edge. It would be an interesting exercise to analyze why this investment method is so resilient, but this is not really the scope of this article.

Yucheng Technologies (YTEC) is a little known Chinese IT provider for the growing Chinese banking industry. The company was officially formed in November 2006 as a result of a 3-way merger between China Unistone Acquisition Corporation, Beijing Sihitech Technology Co., Ltd., and Beijing e-Channels Century Technology Co.

The company focuses on financial software development, internet banking, call center installation & support, risk management solutions, information technology consulting, and system integration for the banking industry.

Investing in UTStarcom (UTSI) has been a nightmare for shareholders who have held this stock between 2003 and today. The stock had steadily dropped from the low $40s per share to just $3 as of Tuesday November 6th , 2007, bringing the company's market cap from over $5 billion dollars to the $350 million range, or over $4.7 billion in lost shareholder wealth in the last four years.

The massive decline in the stock price is the result of a multitude of events, some external and some self inflected. The major blow to the company performance has been the phasing out of its Personal Access Technology (PAS) by the Chinese telecom operators (China Telecom (CHA) and China Netcom (CN); in the late 90s and early 2000s, the Chinese fixed-line telecom players opted to use UTStarcom's Japanese borrowed technology as a away to offer limited mobility to their clients since they lacked a mobile license; as a result, demand for the low price PAS exploded, reaching at a certain point over 20% of the fixed-line operators voice revenues.