djn21's  Instablog

I am of the belief that the current rally is unsustainable.  I don't know when a downturn will come, but I suspect it will be somewhat dramatic.  I suspect that Fed liquidity is trying to find a decent return and is pushing the markets higher.  I think within the next year, the current stimilus will be proven to have failed and new systemic problems will arise.  I don't anticipate a true "bottom" until 2011. 

That said, this much liquidity will create a bubble SOMEWHERE.  I do believe something will rise (probably dramatically in price) as all that liquidity chases return from somewhere.  It'll me pretty entertaining to see how it plays out.

I have made my living trading Chinese micro-caps for the last few years, and still like that as an area of focus.  Valuation remain very good and growth remains pretty strong.  They are nice, tradeable positions with a lot of volatility.  The space works perfectly for the limited amount of money that I want to invest.  Currently, I hold CEU, JGBO, LTUS and PUDC.  That said, I cycle through these pretty quickly and have held a wide variety of different stocks in that sector.  I do like those 4 though, and only CEU is on a major exchange, so I look forward to JGBO's uplisting and PUDC uplisting after a reverse split.  LTUS has a trailing P/E of under 2 and some nice growth prospects in its pipeline, so I don't mind holding that for years.

I remain heavily overweighted in cash for the moment, though I am consider various options (outside of equity) as a home for it.