This from Taipan Publishing:

In my last post, I noted that Krakow was “under construction.” Well, I’d like to extend that to more than just the city. There was barely a road I travelled on that wasn’t coned off and rerouted for some kind of improvement. And one of the reasons Poland is spending so much time updating its infrastructure and roads is to become more attractive to foreign investors.

On one stretch of highway, I saw two major manufacturing plants: BASF (BAS:Frankfurt) and Daewoo (004550:Korea).

Interestingly, the Slovak roads are in much better condition. Investment is still going strong, though, and one major private investor is expanding a huge resort here in the High Tatras, in the Pieniny National Park.

Now, that brings up an interesting point to growing so quickly…

And sometimes, fast growth comes at the cost of quality. Take the Czorsztyn-Niedzica-Sromowce Complex for example. This is the dam provides only half the electricity it could have had it been built right. It was finished in 1994 and has a capacity of 160 million kWh of generation a year. That’s less than what Rhode Island uses in a month…

But Slovakia is certainly breaking away from the past, and it’s financial markets are trying to do the same. The SAX Index on the Bratislava Stock Exchange (BSSE) has climbed 3.54% in August, year over year.

That said, investors considering the Slovak exchange need to be extra dilligent. The BSSE has three different markets: the main listed market, the parallel listed market, and the regulated free market. It gets a bit confusing, and to top it off, most investors aren’t looking at companies… They’re looking at debt.

Also, as the first half of the year has been extremely scary for the rest of the world, the same goes for Slovakia, too.

If you’re interested in looking further at how the market has performed, check out the Semi-Annual Fackbook 2008. Lots of great information there. I’ll be digging through it for the next few days to see if there are any gems worth taking a closer look.

As of now, a better bet might be to look at the international companies investing in the area. Of course, technology and electronics companies are flocking to this region, like Canon (NYSE:CAJ), Ericsson (Nasdaq:ERIC), and Motorola (NYSE:MOT), and automanufacturing is also a big sector. You’ll recognize names like Nissan (Nasdaq:NSANY), Renault (Paris:RNO), Volvo (OTC:VOLVY).

With the euro coming in January, 2009, this place is on the tip of a lot of people’s tongues, and investors already have their ears to the door.

Source: International Investing: Crossing Borders

I warned him it was crazy to have his entire financial future riding on one stock, especially since he was retired. “That’s what everybody keeps telling me,” he said. “But the stock keeps going up. I’m glad I ignored them all.”

I congratulated him that the stock had appreciated so nicely. But I reminded him there might come a time when it didn’t do so well. But he was stubborn. He wouldn’t part with a share. Furthermore, he grew weary of having the same conversation. He transferred his account out again.

You may already know how this story ends. From a high of over $105 in March 2000, Ericsson took a breathtaking dive. It traded at less than $5 two years later. This is the kind of mistake – especially when you’re already retired – from which recovery is simply not possible. However, I sometimes see other investors making similar mistakes.

Every so often a reader will come up to me at an investment conference and proudly announce, for example, that he has his entire IRA invested in one of my stock recommendations. This is meant as a compliment, I realize. He wants to show me he has confidence in my stock selections. But it makes me cringe inside…

Properly Diversify With Basic Position Sizing

Just as the Ericsson shareholder failed to diversify properly, so do many investors who fail to follow our basic position-sizing strategy.

You shouldn’t put more than 4% of your equity portfolio in any single stock. (At least initially, anyway. It may grow to be a much larger percentage. But that’s fine as long as you protect your profits with a trailing stop.)

Here’s why you should follow this advice, especially if you consider yourself risk averse:

• Our policy is never to let a stock fall more than 25% below our purchase price without selling it.
• If you take the maximum loss (25%) on your maximum position size (4%), it means the value of your stock portfolio has fallen just 1%.
• And if you have no more than 60% of your portfolio in equities, as we currently recommend, the maximum potential harm done by a single stock cratering is this: Your total portfolio is worth six-tenths of a percent less.

Most grandmas could live with that.

How to Maximize Returns & Limit Risk

Everything we do – asset allocation, trailing stops, position-sizing and stock selection – is done with an eye to not only maximizing returns but also limiting risk.

It’s fine if an individual stock grows to become a significant percentage of your total portfolio, provided you are running a trailing stop behind it to protect your profits.

But don’t let your confidence in any stock – or any stock picker – allow you to abandon basic money management principles.

As Thomas Jefferson once remarked, “In matters of style, swim with the current. In matters of principle, stand like a rock.”

Good Investing,

Alex

Source: The Best Way to Lose Everything