Catch the Wave in Chinese Micro-Caps

3. Don't start in an arena surrounded by hard knocks. In some instances, perception is everything. China Dasheng Biotechnology (CDBT.OB) is a small Chinese company that makes and distributes additives for livestock feed. Although the company is firing on all cylinders, it's priced to shrink 75% when it just pulled triple-digit growth. The school of hard knocks in investment land is the over-the-counter market as many unloved companies inhabit it. In Hawaii, I started surfing the rockiest I've ever seen and proceeded to get beat up on the rocks. But once I was able to escape the rocks, the panic subsided and things got better. That's what I expect for the stockholders of China Dasheng in the coming year.

4. If you can't do it, don't keep trying; go find another spot. In this regard, China Growth Development (CGDI.OB) might be that spot. China Growth leases units in shopping malls and pulled double-digit growth in the second quarter and is priced to shrink 50%. I learned never to surf a short board, at high tide, in rocky waters. There were definitely safer waters on the big island, as I found out later. China's shopping mall future looks brighter to me than that of the U.S. Why not take advantage of the discrepancy?

The thrill of the chase will get even the most unknowledgeable of investors to launch out and try to make it big. Just look at the parabolic nature of the Shanghai market in the last five months and the Nasdaq in 2001 and you'll see what I call the "wave of ignorance." What people don't realize is that making it big takes practice, persistence, guidance, and a little bit of good fortune. What looks so easy on land or on television is never as easy as it looks as I found out fighting for my life in Hawaii.

-- Written by Glen Bradford in West Lafayette, Ind.

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