daily reckoning reccommendation, page-6

rumchuck,

this may help you.

the subject is titled.... Innovators, Imitators, and Idiots

here is part of it.


Nick is right about two things. First, there is a long way to go in the
commodities boom. There are more good stocks than analysts in
Australia. That gives you, the individual investor, a huge opportunity
to buy excellent companies with growing earnings at reasonable prices.
It's one of the big reasons I moved to Melbourne in 2005.

Second, there has never been a better time to be an investor in small
alternative energy stocks. Warren Buffett says there are three phases
in any wealth-building cycle: the Innovator, the Imitator, and the
Idiot. There are plenty of Idiots in the financial markets. But there
are also are plenty of Innovators in the energy markets.

You should know that picking small cap stocks was my very first job in
the financial publishing industry ten years ago. I started
conservatively, looking for small cap value using Graham and Dodd style
investment analysis. Over the next five years, I sat on the advisory
board of an organisation of high net-worth investors looking for early-
stage investments in high-growth companies.

It was exciting stuff, looking at a business from the ground
up...running the numbers...talking to the management...establishing a
valuation for the company...and calculating how much investors could
expect to make-if they were will to take the risks that come with
investing in small companies.

Now for my confession. If you're a perma-bear, I hope you'll forgive
me. Over a year ago I began editing a newsletter dedicated to finding
the best alternative energy, technology, and small-cap stocks in
Australia-the companies trying to Innovate their way into the next big
wealth-building cycle and take their shareholders with them.

In the Daily Reckoning my job is to tell you about the problems and
pitfalls you may not otherwise hear about. But let me be clear: I
believe Australian investors can build a world-class portfolio of small
cap alternative energy shares that will do extremely well if global oil
prices remain high (as I believe they will) for years.

How's it going? I won't lie. The market's been tough. Bear markets are
brutal to small cap stocks. But my single best-performing stock so far
is one I tipped at just .63 cents. It's now trading for $3.39...and
believe it or not, that's after a major correction. Yet I believe-for
reasons I've highlighted below-the best is yet to come. It is a world-
class Innovator.

You see with small stocks it isn't so much the number of your winners,
it's the size of the gains. You want to keep your losses small...and
your winners big.

A warning: speculating in small stocks is not for everyone. I
discouraged my own family from following my tips because I knew it
didn't suit their conservative temperament or their investment goals.
Stocks with unproven business models are inherently risky. As with any
stock, your biggest risk is you could lose all your money.

But after careful research and investigation, you may agree that I've
uncovered some of the best alternative energy stocks Australia has to
offer. Of course you won't know until you find out what sort of shares
I'm talking about. To read about my best performer so far and what else
you may want to be aware of in the great period of Innovation ahead, go
here http://www.portphillippublishing.com.au/research/asi/0806.cfm?source=e9aaj705&alias=8L

With regards,

Dan Denning
Editor
The Australian Small Cap Investigator