Wrong and Strong

 | Jun 10, 2014 | 11:00 AM EDT  | Comments
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Stock quotes in this article:

bfr

,

rig

I've been publicly bearish over my last several articles. Whoops, that didn't work out so well. But I tend to stay pretty close to home, and I run net neutral, so I wasn't harmed too badly. Actually, I've done OK. My point still stands that tech is absurd (witness the valuation on Uber) and, frankly, I would rather just buy other stuff. The good thing for us is that there's a lot of other stuff to buy.

There are, for instance, Argentine banks. See, I like to look for value in out-of-the-way places. I can give you a brief history.

Over the last 10-odd years, Argentina has been devastated by country's current and former presidents -- Cristina and NĂ©stor Kirchner, respectively. The Kirchners have done so much economic damage that Argentina has been kicked out of the emerging-market indices. It's now a frontier market! It is ranked near the bottom of the Heritage Foundation's economic-freedom rankings.

But Christina Kirchner's party lost the midterm elections, so she cannot run again. All three of her potential successors are very free-market, relatively speaking. The Argentine Merval Index has begun to levitate -- and a lot of Argentine companies are tradable in the U.S. as American depositary receipts. I personally like the Argentine banks, and I own BBVA Banco Frances (BFR).

It's a full 18 months until the election, and I think Argentine stocks have a long way to go.

Back in the U.S., I've mentioned before that I also like the drillers. Talk about cheap assets. Talk about massive dividends. I view the drillers as cheap convertible bonds with massive coupons and at-the-money options on the price of oil. The sector is hated. Lots of people short these names, and that is baffling, considering the dividends. I like stocks that people think are going to go down forever. Drillers will not go down forever -- and I'll get paid to wait in the meantime. I own Transocean (RIG).

I also like commodities plays. For the last three years, paper assets have outperformed hard assets. In 2014, we have started to see a reversal. But, outside of the coffee ETFs, it's been hard to play in equities. That said, since the beginning of the year I've owned Glencore, a commodities trader and miner whose stock trades on the London Stock Exchange under the ticker symbol "GLEN." The stock price is about unchanged for that period.

Glencore is the Goldman Sachs (GS) of the commodities world. It employs the smartest, hardest-working people out there, trading mostly in physical commodities, where the markups can be huge. This company makes a ton of money even in a bad environment. Imagine if commodities really start roaring again.

What do I not like? I don't like Facebook (FB). I mean, over the long term I love Facebook and am actually bullish on it. But I do not want to own it now. Same goes for Tesla (TSLA). Love that stock. But I don't want to own it now. I don't want to own any of that stuff.

Here's the thing. The market is not expensive, but certain parts of the market are really expensive. Why chase this stuff? I know the answer to that question: momentum, blah blah, and that strategy may work in the short run. But, in the long run, it doesn't. Or maybe we're just talking about time preference here. I consider myself to be an investor, not a trader. Note that I don't consider myself to be a deep-value guy. I just cannot be persuaded to buy tech stocks when venture capitalists are making the cover of Forbes.

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