Two Picks for 2010

If there is a prediction I have a high degree of confidence in, it’s that China’s potash demand will rebound in 2010. I think that potash demand will rebound all over, not just in China.

The chart below is from a recent issue of my newsletter Capital & Crisis:

Global Potash Buyers

Those are big cuts. A rebound is good for the potash producers, namely PotashCorp and Mosaic Co. It will also be good for our certain China-based makers of potash fertilizers, like one that we hold in the Special Situations portfolio.

And while I’m in a predictions mood, here is another: Semiconductors are due for a rebound.

Capital Equipment Growth and Spending

That’s capital equipment spending in the semiconductor space, along with some guesses for next year and beyond. Under the concept of the last shall be first, this is another good bet for a reversal in trend in 2010. It’s already happening, as we’ve noted. We’ve got reports from industry giant Applied Materials showing sizable gains in orders from prior quarters. And guidance going forward from the company also shows 30%-plus gains.

There is a lot of room here on this one for things to get better.

Remember the words of wisdom from Horace, which so inspired investment great Benjamin Graham that he put them on the frontispiece of his book Security Analysis: ‘Many shall be restored that are now fallen and many shall fall that are now in honor.’

When looking for new ideas, remember Horace. The best ideas of 2010 will likely be in stocks rebounding from a poor 2009.

The Daily Reckoning