NEW YORK (TheStreet) -- On Friday I had the pleasure of interviewing a well-respected and refreshingly candid editor and investment analyst.Dr. Steve Sjuggerud is the publisher and editor of DailyWealth, which is widely followed by a loyal base of long-time readers. He's also the writer-editor of two services True Wealth and True Wealth Systems, which yours truly has subscribed to for years. Sjuggerud is a big believer of going with the trend, and he told me his mantra is "I want that which is cheap, hated and in an uptrend!" This approach has served him well, especially when he's been willing to be somewhat aggressive and speculative. Back in November 2012 he told his True Wealth subscribers that smaller-cap stocks based in India were remarkably inexpensive. His friend "Rahul" who owns a money management company in India, encouraged Sjuggerud in 2008 to come to India "...to show me the extraordinary opportunities he was finding there." That's exactly what he did, and in Sjuggerud's words, "Long story short, the investment opportunities Rahul showed me on our trip was absolutely incredible. You could hardly lose money buying these companies at these prices. (And I don't have that feeling very often)." Sjuggerud told me that in 2008, "On paper, small Indian companies were ludicrously cheap... Their stocks had fallen over 75% in less than a year -- from above 1,700 in January to below 400 in October (as measured by the MSCI India Small Cap Index). This left many companies trading for less than their cash in the bank." Now the opportunity in these stocks as represented in the Market Vectors India Small-Cap ETF ( SCIF) is even better than it was in 2008! "In the last two years, small Indian stocks have fallen by 60% from peak to trough, and they've bounced along those lows all year. During that same period, U.S. stocks are up over 30%. They've come back a little but have a long way to go on the upside" he told me.
Like the new "wealth effect" that is beginning to blossom in the U.S. India's economy is just getting started. Sjuggerud told me that's partly because it is one of the last great economies in the world where interest rates are still high. "Once the Indian Central Bank begins to lower interest rates to help accommodate economic growth the smaller-cap, publicly-traded companies will begin to take off," he opined. "Some of the individual companies in the SCIF-ETF are trading at just one or two times earnings. Once India enters a rate cutting 'virtuous cycle' these companies will begin to trade at higher multiples." Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements. He told his subscribers back in November 2012 the same thing Sjuggerud told me today,"We want to own a basket of smaller companies in India. Our preferred way to do this is to buy SCIF
Sjuggerud said with the Federal Reserve's current monetary policies, which he calls "The Bernanke Asset Bubble," TWO could go higher. It pays a very generous double-digit dividend and maintains shares of SBY that it claims it will distribute later to shareholders as a sort of special bonus. When it comes to SBY, Dr. Sjuggerud said it was managed by Two Harbors. "SBY owns thousands of single-family homes in Florida, Arizona, California and Nevada," he said, and "80% of those homes are rented out to create an income stream for the company and eventually for shareholders." He anticipates SBY becoming a REIT which obligates it to distribute 90% of its "fund-from-operations" to unit holders. "Silver Bay has no debt and sufficient cash to deploy to keep buying homes in areas where there's a big need for rental houses". You can learn more about SBY by visiting TWO's Web site and reading the press releases from the end of 2012. "Cheap, hated and in an established uptrend, that's the kind of investments I'm looking for and my readers want to learn about," Sjuggerud concluded our interview. Sometimes they're not easy to find, but his experience and my own is when you find them early on, the upside potential is outstanding. You can learn more about Sjuggerud's work and opinions by visiting his archive of interesting and relevant articles. He certainly thinks "outside the box" and his track record is nothing short of impressive. At the time of publication the author had a position in TWO and buy-limit orders for SCIF and SBY. Follow @m8a2r1 This article was written by an independent contributor, separate from TheStreet's regular news coverage. Make smarter trading decisions and provide investment ideas that could help make you richer. Bryan Ashenberg does the dirty work so you don't have to!