I am an old friend of Bob Hormats's, so I was curious about the following e-mail I received:

“Larry Edelson predicted a great bull rally in gold just before it exploded to over $1,900 per ounceand now, in his newest video briefing, he's making a prediction that will shock you ...

“Dear Investor,

“It's one of those factoids that experts often overlook ... or misunderstand.

“But it could help make you rich in the next two years.

“It comes from Robert D. Hormats, Under Secretary for Economic, Energy and Agricultural Affairs. He was speaking at the World Investment Forum in Xiamen, China when he said:

'Foreign investment has accelerated at a breathtaking pace and shifts in the flow of this investment are now reshaping the global landscape. We have seen inward foreign direct investment stock [in the U.S.] roughly triple worldwide over the past decade.'

“Did you get that? We're talking about trillions in capital, from all over the world, flowing into U.S. equity markets, driving up stock values.

“It's just one of the reasons why I'm convinced that the Dow will rocket up to 31,000, and possibly beyond, by 2016. This represents the play of a lifetime for you ...”

There is one simple problem with Mr Edelson's commentary. Foreign direct investment doesn't go into stocks on Wall St. That's called portfolio investment. When foreign company funds flow to the USA for direct investing, the money goes not to Wall St., but to Main St. Anyone who ever dealt with balance of payments statistics knows the difference. Bob Hormats, by the way, is no longer at State, but works for Kissinger Associates. He worked with Kissinger when he was at the National Security Council as senior international economist when Kissingr headed it, back in the 1970s. He is now out of govt again.

And as for predicting the price of gold rising to $1900, look at where it is today! You have to know when to hold them and when to fold them. This is gee-whiz marketing aimed at people who have no economic background and are innumerate.

One of large holdings is up 7.7% in the last week according to today'sFinancial Times. More importantly for long run gains, 4 stocks we sold were among the FT's worst performers last week or last mongh: China Minsheng Bank, Barrick,Tesco, and Nintendo. The listing is only of large-cap shares, and our real forte is small-to-mid-size company picks.

*Our stock which rose 7.3% last week is Nokia, NOK.

*I am following up as promised on the Portugal Telecom proxy whose call options for Oi shares depend on monetizing the assets hidden in Luxembourg entities by the former family owners of Banco Espirito Santo of Portugal. The Portuguese bank has now been recapitalized as Novo Banco and the rest is up for grabs. It is held by a bunch of Swiss and Luxembourg interconnected holding companies, the top one of which is Rioforte, which owes PT the repayment of a short-term private placement of euros 897 mn. totalling Here are some of the deals being cooked up now for operations directly controlled by Rioforte, as tabulated by Neue Zuericher Zeitung:

1. Tranquilidad, the insurance giant, with sales of euros 1 bn and net profits last year of euros 19 mn is being bid for by US Apollo Global Mgm for an estimated euros 215 mn, including ~150 mn to recapitalize the firm. That means about euros 65 mn in cash is being paid. There are also other insurers like BES Vida, Seguros Logo, T-Vida, and so on;

2. Espirito Santo Saude (Healthcare) controlled through Rioforte and another holding co., is a listed company operating 18 hospitals and clinics and it is a target of a Mexican company, Gruppe Angeles, which offered euros 4.3 per share, or euros 410 mn last week. However, two Portuguese counter-bids, from José de Mello Saude and an insurer, Fidelidade, plus one from the aggressively expanding Chinese Fosun group, which already has bid for a non-related Portuguese bank, and another from Gruppe Amil of Brazil mean this asset is going to be in a global bidding war;

3. The posh Tivoli hotel group which operates in both Portugal and Brazil was already on the market before the BES krach, and the lead bidder was a group headed by Spain's Iberostar hotel chain which offered euros 333 mn but there are rumors that other bid are coming for this directly held bit of Rioforte;

4. So far there are no visible bidders for other Rioforte tourist holdings, lumped together in Espirito Santo Viagens, which include some gems like Top Atlantico, a travel agency; and some global marques like Carlson Wagon Lits. It is directly controlled by Rioforte;

5. Banking assets which presumably are solvents, held via Espirito Santo Financial Group, a sub of Rioforte: Banque Espirito Santo et la Vénétie in Italy, ES Bank Panama, Banque Privée Espirito Santo in Switzerland;

6. Real estate and agriculture companies in Brazil and Portugal directly owned by Rioforte;

7. Energy investments directly owned by Rioforte mostly in Brazil.

These assets are worth money but as noted already: it will take time. PT is not the only creditor and it is an unsecured lender. Claims will probably be pro-rated. The bid prices may undervalue the assets because of the bankruptcy. I am voting Si because there is no real alternative.

Someone at PT should be sacked for having made the placement in Rioforte because there must have been a person at fault. Has PT used Rioforte to earn money on its cash in earlier events, like when it collected from Telefonica de España for selling control of Vivo in Brazil, which it then paid to shareholders of PT with a 9-mo delay partially imposed by the Portuguese taxman? I want also to know if PT sought government regulatory or independent advice from rating agencies or others before trusting its loot to Rioforte, or if the plan was to gain a bit off money offshore not subject to Portuguse taxes.

*The surprise Israeli CB interest rate cut to 0.25% has hit Tel Aviv stocks including Delek Group and Caesarstone along with the Gaza impasse. The Tel Aviv Stock Exchange is proposing to replace Sunday trading with Friday trading, violating the Muslim Sabbath. The TASE grew from a stock exchange which operated before Israeli independence under Turkish and then British rule.

*Alkermes, our Irish drug research firm, was selected as a potential winner from tax inversion, but also for its pipeline. It today filed a New Drug Application with the US FDA for aripirprazole lauroxil, a onece/mo injection to treat schizophrenia and other psychosis. Once in the body it converts into the older standard schizophrenia drug aripirprazole, or Abilify. The main appeal of the new drug is that patients need only to get one jab a month. In phase III trials it reduced positive and negative syndromes in treating psychosis, as measured by the PANSS scale, in a statistically significant degree and also reduced symptoms by other measures. ALKS is up today on the news.

*Bavarian Nordic of Denmark has a filovirus jab in preclinical development as part of its commitment to medical threats to national security, including that of US for whose DOD it does contract research. It is working on filoviruses, part of the filoviridae family, causes of hemorrhagic fevers like Ebola and Marburg, which have no standard treatment or vaccine. While rare they are often fatal. The candidate virus is called MVA-BN Filo. I have no idea if it works. The main scourge BVNKF works on is smallpox.

*GlaxoSmithKline is an obvious targtet of the new Roche push into respiratory drugs. But GSK got FDA approval for a different product altogether last week, its ViiV Healthcare 3-way HIV combo of integrase inhibitors (GSK's Tivicay in combination with generics of Abacavir, and Limvudine.) ViiV is a jv with Pfizer controlled by GSK. Now another entrant has come on board, Japan's Shionogi. It is hard for HIV patients to control the mass of pills they need to take, which is why these drugs are needed. The issue however is how much ViiV will charge given that 2 of the 3 components are already generics.

*Australian biotech Benitec is up today but I cannot figure out why. BTEBY was recommended by Dr KSS on Stockgumshoe.com and he has no update. It develops gene-silencing RNA which can cure genetic and other diseases.

*Also up is Origin Energy on news that the utility site of its business is dropping as Australians use solar power rather than the grid. Its revenues in FY 2013-4 fell 1.8% to A$14.75 bn, on which net profits came in at A$713 mn, off 6%, or 64.8 Oz cents/sh. The solution is for OGFGF to focus on its gas exploration and production business, and notably its stake in the Asia Pacific LNG plant which by 2017 (according to Martin Ferera, our expert) “can throw off $1 bn in cash flow, the reason to hold on to Origin. Origin today pulled its secondary stock issue and will raise money with European debt instead, so the stock is up.” It rose 7.2%.

Fund news:

*On Friday Motley Fool Singapore published an article on “the differences between an Ascendas REIT and Global Logistic Properties” which essentially reported breathlessly that a REIT is a trust aiming at steady earnings while an operating company like GBTZF is a growth vehicle. Today GBTZF rose in Singapore trading while one of the Ascendas family of REITs, Ascendas India Trust which owns India-based retail and office real estate, fell. How foolish. GBTZF doesn't invest in India and the article was really about Ascendas in Singapore itself rather than abroad. ACNDF is down 5.3% on big volume while GBTZF continues its rise.

*I finally capitulated and bought Aberdeen Japan Equity Fund, JEQ, at $7.3399/sh. Make that $7.34.

*Top changes at our companies matter. Yandex has moved its CFO Alex Shulgren to become its new COO for Russia as part of a likely split of its Russian business away from its operations in “the near abroad” like Ukraine, Turkey, Belarus, and Kazakhstan. YNDX.

*After its former CFO was fired for her husband's insider trading, Compugen has finally found a replacement, Ari Krashin, CPA, formerly CFO at Gilat Satellite Networks and before that with the Israeli arm of Price Waterhouse. CGEN.

*Ghoulish note: While Australia's wine industry fell into the dumps after we sold Treasury Wine Estates, it may gain from the Napa earthquake.