EVEN BEFORE SARS

and

, I was never much of a traveler. Despite the depressingly dark winter months, I'm perfectly content to spend the vast majority of my life within a 50-mile radius of Chicago's Sears Tower. But just because I'm a homebody doesn't mean my money has to be. It's a

out there, with plenty of promising investing opportunities.

As longtime Tradecraft readers know, we've espoused the virtues of international investing on more than a few occasions. Most recently, we've had success in Latin America. The handful of stocks we first highlighted late last year have been, for lack of a better term, en fuego. Many have risen 100% or more.

I'm not a raging bull on stocks right now, but most of those I do own happen to be foreign. As is usually the case, the companies to which I'm most attracted are those perceived to be the riskiest. That's leading me to a number of emerging-market opportunities in countries whose markets are showing positive price action. Most are telecom-related; all are largely unknown among U.S. investors.

One the most appealing aspects of emerging markets is their relative illiquidity, which makes many of them essentially off-limits to larger institutional investors. This is a perfect example of where "the little guy" has a distinct advantage.

Consider Peruvian stocks, which, like many of their Latin American counterparts, have outperformed big-time in recent months. Yet the turnover on the Lima Stock Exchange isn't just small, it's nearly infinitesimal. On a good day, the exchange will trade $11 million worth of stock. I think my neighborhood Starbucks does more business.

For most institutional investors, this makes Peru all but off limits. For instance, in order for the roughly $11 billion Janus Worldwide fund to put just 5% of its assets in Peruvian stocks, it would need to purchase the entire average turnover traded on the Lima exchange for more than two months. Simply put, it can't be done.

Compania de Minas Buenaventura is the best-known Peruvian ADR, and has benefited handsomely from higher gold and commodity prices. Individual investors might also consider tiny Telefonica del Peru, a small telecom name that sports strong price action and a dividend yield of nearly 7%.

One of the most appealing attributes of many emerging markets is that there are only a handful of ways a U.S. investor can actually get exposure. To me, that's an encouraging and often bullish indicator. Because if the "herd" is always late to the party, mutual-funds marketers are usually only a step or two ahead. Think about it: Most technology mutual funds were rolled out in late 1999 or early 2000, just in time to see that market peak.

So although Turkish stocks are on a roll, there are less than a handful of ways for investors to take a position. Currently, the most diversified route I can find would be an allocation to the Turkish Investment Fund, a $30 million closed-end fund we last wrote about more than a year and a half ago.

Fact: The herd can't buy stocks they can't pronounce. So while your cocktail party pals brag about how they're betting on a recovery in Cisco, you can tell them your money is in Dogan Burda Rizzoli Dergi Yazincilik Ve, just one of the unowned (in the U.S. anyway) companies that make up the Turkish Investment Fund's portfolio. And although the performance has been strong, up 23% over the past year, the fund still trades at a considerable discount to its net asset value.

The other alternative for getting exposure to Turkey is via buying shares in Turkcell Iletisim Hizmetleri, the country's dominant voice and data provider. The stock is up almost 40% over the last 52 weeks.

Gobble Gobble

APPLET PLACEHOLDER: archive= height=300 width=450

Data from July 14, 2000 to Sept. 12, 2003 Source: Reuters Investor

As we've often pointed out, markets don't reflect news, they anticipate it. By the time the story is out, the real move in an investment has already been made. And that's another reason I'm favoring emerging markets over U.S. stocks right now. Because while domestic stocks are up sharply this year, so are the expectations and outlooks of most analysts. These days, pundits aren't questioning whether a robust economic recovery will take place, but when.

What I especially like about many emerging markets right now is that the price performance is encouraging. That's because the news is still quite bleak. Take Venezuela, for example. Just six months ago, the country suffered a crippling general strike. According to the CIA Factbook, 2002 inflation was more than 30% and unemployment over 16%. Almost 50% of the nation lives below the poverty line, with a per-capita gross domestic product of $5,500. By comparison, the U.S.'s is greater than $37,000.

When it comes to Venezuelan stocks, again, U.S. investors are faced with slim pickings, as most are traded exclusively off-exchange. The most widely held name is Compania Anonima Nacional Telefonos de Venezuela, the main telecom provider. Although it trades below book value, like everything related to emerging markets, this one is high risk, high reward. It's currently bid at around $14 a share, down from a late 1997 high of more than $40 a share.

Speculation hinges on uncertainty. Sometimes you walk on water, while other times you can barely stand on two feet. It has always been my philosophy that the best rewards come not from avoiding risk, but managing it. And while the U.S. is seen as the engine that drives the world economy, it's my continuing belief that the best returns will be found by looking overseas. Emerging markets, especially those relatively less liquid areas without large amounts of domestic participation, offer unique opportunities for investors willing to venture off the beaten path.

Jonathan Hoenig is Managing Member at Capitalistpig Hedge Fund LLC. At the time of writing, Hoenig's fund held positions in many of the stocks mentioned in this article.