Is it time to buy ?

What a week with so much volatility, Dow falling below 13000 and having almost 10% correction from its peak. In my previous posts, I did predict that Dow would touch 13000 again before heading back to 14000. So now question to ask: Is it time to buy again ?

To get to an answer, let's consider some macro factors:

• World's economy is having one of the strongest growth it has seen anytime in history. Almost all countries (save few countries in Africa) are growing at 2 or more percentage with some of the big emerging countries like India and China growing closer to 8-11%.
• Given right policy by central bankers, almost all countries are seeing relatively moderate inflation unlike in past when Latin American countries were known for their hyper-inflation
• Global economy is more integrated than any other time giving rise to productivity as there is most optimal use of capital not within country boundaries but across world
• Dow and all other indexes are going to stay here - they are not heading towards 0. So as long as you believe in long-term macros factors, this is great buying opportunity to invest in stocks and mutual funds. Every six months, one gets such an opportunity - last being in Feb 07 and before that in Jun 06.

Here are some ten investment ideas:

1. ULTRAEMERGING MARKETS PROFUND I (UUPIX): Emerging markets are still hot and this is best (and most risky) mutual fund out there. It has come down from 53 to 34. It has potential to go back over 50 by end of year giving 50% return in less than 6 months
2. VANGUARD TOTAL INTERNATIONAL ST (VGTSX): Best overall international fund. This is fund of funds and gives exposure to European, Japanese and emerging markets. Very low cost. It can return 10% by year end
   
3. FIDELITY LEVERAGED COMPANY STOC (FLVCX): In this market, leverage is bad word. But this fund invests in leveraged assets and has one of the best 3 year record. It can return over 15% by year end
4. FIDELITY INTERNATIONAL SMALL CA (FISMX): Best way to get exposure to international small caps. Can return 15% by year end

Some stock ideas:

1. Apple Inc (AAPL): At 117, it's almost no-brainer. After holiday season, this would be $ 150 giving 25% return
   
2. Alcoa (AA): As soon as takeover rumors gone, this has come down from 46 to 32. Just based on fundamentals and price which Rio is paying for main competitor Alcan, this stock is worth at least 40 giving return of 25%
3. WCI COMMUNITIES INC (NYSE:WCI): This is risky real estate play. However as long as it does not go BK, it can go back to 12 in no time returning over 70%. But again with residential real estate, you never know when it is going to recover. However I have read that whoever invested in real estate during 91 downturn made lot of money.
   
4. LIMELIGHT NETWORKS, (NasdaqGM:LLNW) This is one of the new IPO and main competitor to Akamai. Both companies got penalized due to slowing growth. But at 7, investors have over-reacted to bad earning news. This could go back to 14 in a year for 100% return

And here are last two ideas:

1. If you still believe that Chinese market is going to remain hot at least till Beijing Olympics, best way to get exposure is via ISHARES TR FTSE INDX (NYSE:FXI). At 119, it can return over 20% by Aug 08
2. And finally something in financials: Both Blackstone (BX) and 23 and ICICI Bank ADS at 38 look very attractive and can return over 30 % in next 6-9 months

Good luck in investing

(Disclaimer: I may have investments in some of the securities)