WSJ: When Investing, Try Thinking Outside the Box


Sometimes it pays to look beyond the obvious when it comes to investing.

That means adding some exotic investments to a portfolio laden with blue-chip stocks and Treasury bonds. Think platinum and pipelines.

The popularity of blue chips has driven the Dow Jones Industrial Average to levels not seen since before the financial crisis. And investors so crave Treasurys that yields have plunged and remain close to historic lows. The way to find bargains is where others aren't and that means going off the beaten path.


Now is one of the rare times in history when an ounce of platinum is cheaper than an ounce of gold. Platinum is going for $1,712 an ounce, compared with $1,775 for an ounce of gold.

Market observers say platinum prices are down due to unwarranted worry over the health of the global economy, while gold has held up as a haven.

But that relationship may change. If the economy warms up, so will demand for platinum—likely pushing up the price. The metal is used to make catalytic converters for automobiles. When more cars are made, more platinum is needed.

"The price is very attuned to the economic cycle," says Matthew Turner, a strategist at Mitsubishi Corp. in London.

In addition, intensifying supply problems could further boost prices, Mr. Turner says. Most of the world's platinum comes from South Africa and failing infrastructure in that country could curtail production, he says. The last time a major supply shock happened, in 2008, platinum prices catapulted to over $2,000 an ounce.

For investors looking to get their hands on some physical platinum, the U.S. Mint manufactures platinum coins, which it sells through approved dealers. You should buy only those coins whose price is based on the metal content, not the coins' finish. The latter can be harder to resell.

Another option is an exchange-traded fund that holds bars of physical platinum, such as the ETFS Physical Platinum Shares.

Shipping Stocks
Shipping stocks have had a rough trip lately as a slew of new vessels has pushed freight rates down. But the supply of vessels looks set to moderate in the near future—meaning there could be profits for those with the guts to take the plunge.

Freight rates for hauling dry products such as coal and iron ore have fallen near multi-decade lows, as measured by the Baltic Dry Index. In some cases, the cost of a voyage is about the same as the revenue.

"I think freight rates will bounce to more healthy levels," says Natasha Boyden, a shipping analyst at Cantor Fitzgerald in New York, but she adds that it could take a year before we see a solid recovery.

For investors willing to ride some bumpy waves, Ms. Boyden recommends Navios Maritime . She says it has good long-term contracts (meaning the company is less exposed to the gyrations in freight rates), a strong management team and healthy balance sheet. Navios trades at $4 a share, but she says the stock is worth $6.

Ms. Boyden also likes Diana Shipping, which has $400 million cash on its balance sheet and long-term contracts.

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