Around the World With Balestra's Melcher

Tell us of sectors that you like.

We like agriculture. We have long-term confidence because people are insisting on eating every day and the population of the world is growing. As the populous countries of India and China are moving rapidly up the standard-of-living ladder, they'll demand more expansive agricultural products, beef and pork as opposed to rice and wheat. We own Bunge(BG - Cramer's Take - Stockpickr). They're in Brazil; they do agriculture products and fertilizers so they cover a lot of areas. It's a well managed company and the stock is attractive. It came down from $65 to $53 and we bought more. We like emerging markets because if the U.S. does OK, the emerging markets will outperform.

We're heavy in Russia. We began to invest just after the crash of 1998, when the Russian market was down 92%. Russia is probably the greatest story in natural resources. We like India. We think it will be the best performing economy for the next 20 years. China will continue to be a great growth story. But we do not trust their securities market because of the lack of regulation. We are in Japan. We're in-and-out short the yen. We have held Japanese equities for several months and it has worked very well for us.

And sectors you don't like?

We're short housing. We are also increasingly short the financial sector. That's because the flattening yield curve squeezes the opportunity for profit and also because of banks' heavy reliance on residential mortgages. The banks currently hold 62% of their assets in residential mortgages compared to roughly a third 25 years ago. And the quality of these mortgages have been dropping very fast because lending standards have been dropping in what has become a competitive lending frenzy.

Get Jim Cramer's picks for 2006.