Investing Like You’ve Been There
Issue #1998
- WEALTHY: Why some beat-up U.S. sectors can make GREAT investments overseas (Andrew Gordon)
- HEALTHY: Go ahead, grab a pillow! (Jon Herring)
- WISE: Warren Buffett on hindsight
ALSO IN THIS ISSUE:
- Make your writing 150% more credible in 7 minutes (maybe less)" (Will Newman)
- Michael Masterson on perfecting skills
- It’s Fun to Know… how opportunities on the Internet have exploded
- Add "salutary" to your vocabulary
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"In the business world, the rearview mirror is always clearer than the windshield."
Warren Buffett
Investing Like You’ve Been There
By Andrew M. Gordon
You’ve heard it all your life: Great opportunities come with great risks. And 98 percent of the time, risks come from not knowing what you’re doing and not knowing what’s around the corner. But I’m going to show you a way to find great investing opportunities with hardly any risk at all. And - with apologies to Warren Buffett and his quote above - I’m going to do it by providing you with a windshield that is just as clear as the rearview mirror.
I do it all the time. Like a lot of my investing ideas, I learned this one when I used to do business overseas. Let me tell you how I came across it…
In the early days of my global business dealings, I sold a lot of high-tech equipment - biotech, advanced medical equipment, sophisticated machinery, etc. And I was doing pretty well. So when this businessman I knew - GJ - dropped by to show me some of the technology he was selling to the sheiks in the Middle East, I almost laughed in his face.
"This is ancient stuff," I said. "We did this years ago in the U.S."
He smiled. "You’re right. We went through this phase with our gasoline distribution systems back in the 1960s."
"Let me get this straight. You’re selling decades-old technology to billionaire oil barons in the Middle East who can afford the best the world has to offer?"
His grin got wider. "Not only are we selling it… we’re getting swamped with inquiries."
"How the heck are you getting away with that?"
He then explained to me the secret of his business success and why selling technology whose time has come and gone in the U.S. is the easiest way to make money overseas.
"Because there’s nothing they can ask me about it that I haven’t seen before - first in this country, then in Europe, then in Japan, then in Australia, and now in the Middle East. In all of these countries, the market followed basically the same script."
"Yeah, like the script of a bad horror film," I was thinking. I wasn’t yet sold on his unusual business philosophy.
Then he sat me down and filled me in on the history of the technology. He told me how furious oil companies had been over air-quality legislation that required them to overhaul all the gas depots and stations in the U.S. It was going to cost hundreds of millions of dollars.
And then he explained how they changed their minds a few years later when they discovered that recovering vapor from the evaporation of gasoline and pumping it back into their storage tanks was extremely profitable. For every dollar they spent on the overhaul, they got one dollar back each and every year from then on.
It sounded so promising that I invited GJ to come with me on my next trip to Asia. We decided to target China, Indonesia, and Thailand.
It was a good partnership. My people set up the meetings, and he went around telling his story. And there wasn’t any question that fazed him.
When he was asked, "Why don’t we simply wait for the next generation of equipment to come along?" he replied: "There is no next generation of equipment. The users who adopted this strategy in the U.S. and Japan merely ended up paying more for the same equipment later on. And, in the meantime, they lost customers as cars and trucks gravitated toward stations using cleaner and faster-pumping equipment."
To the question "Why should we want to represent you and market this technology in our country?" he replied: "The market begins in the major cities. Depending on the configuration of gas stations and depots, you’ll make $15 million every year on projects costing between $15 and $20 million per major city. And for every major city you do, you’ll win projects for approximately five smaller cities."
"And how do you know that?"
"Because that’s how the market unfolded in the U.S., Europe, and Japan."
And on it went with GJ. He knew which technologies succeeded and which failed. He knew the profit margins. He knew how the technology spread. He knew exactly how the market was going to evolve in the countries we visited, because he’d seen it all before.
When we had our first post-trip strategy meeting, he knew exactly what we should do. For example, he told me that China’s market was huge but way too fragmented. It would take time. We needed to be patient and grab a giant company like China National Offshore Oil Corporation (CNOOC) to help us pull a few projects together.
As it turned out, we were a little early in China and a little late in Thailand. We decided to drop both of them.
But for Indonesia, our timing was just right. We decided to focus on Jakarta and Surabaya. A few trips and about 500 marketing hours later, we landed our first vapor recovery project.
From the outset of the project, we nailed everything: The blueprint of the new distribution system, the costs, the timetable, the equipment and manpower needed. GJ told me that Indonesia wasn’t so different from Saudi Arabia.
When I began to spend more time investing, I wondered: Could I recreate this amazing advantage that practically lets you see into the future? Could I use it to help me find opportunities I knew would grow and wouldn’t stab me in the back?
I didn’t see why not. Plenty of technologies besides our vapor recovery technology travel from west to east (or north to south). Markets across the globe don’t rise and fall in unison. Countries are early adopters in some markets and latecomers in others.
Sure, no two countries are exactly alike. But they don’t have to be.
One market that’s worked wonders for my portfolio is the auto industry, home to some of the worst deadbeats in the U.S. Ford, Chrysler, and GM are all taking their lumps. Back in the 1920s, 40s, and 50s, the auto industry fed on a rapidly rising middle class, growing population, and cars that became affordable to a majority of the population.
But competition from Japan and other countries proved too much to overcome. The heyday for the American car industry has come and gone. Toyota and Honda would certainly make better investments than U.S. companies, but they’ve grown so much in the past couple of years that they’re due for a pullback.
Too bad. If you had invested in Toyota back in 2003, you would have tripled your money.
And if you had invested in Ford back in the early 1980s - when its stock went for a buck - you would have made over 30 times your stake (if you got out in early 1999 when its shares peaked).
If you could invest in a young Ford or Toyota, you’d jump at the chance, wouldn’t you?
In Japan and the U.S., more than one out of every two people have a car. But I know a big country where only seven people out of 1,000 own cars. And its middle class is growing like gangbusters. Cars are fast becoming affordable in that country. As a matter of fact, there’s one company in that country that has designed a car that will cost around $2,000. Here’s what I said when I recommended that company for subscribers to ETR’s Wealth Advantage service:
"Looking at this country’s auto industry, its demographics, its growing middle class … well, it’s almost deja vu. I’ve seen American cars grow up. I’ve seen the Japanese and Korean cars grow up. I can pretty much close my eyes and also see how this company will grow up."
There are plenty of other markets that fit this profile - the airline industry, tobacco, appliances, cellphones, snacks and drinks, big-box hypermarket retailers (like Wal-Mart), and many more.
But those markets can be volatile. So this is what I do. I find big, solid U.S. or European companies that have found a way to ride those overseas markets. Or I find very stable and reputable local companies to invest in.
By investing in what you know, you also participate in markets with exciting growth potential when you follow this strategy. Yes, it still takes some work. You have to find the right company to carry the ball for you. And you should always follow developments in the sector and country you’re invested in.
And you should realize that no investment follows a straight path up. Even Ford, on its way to 3,500 percent gains, had setbacks along the way.
Of course, you know this already. You’ve been there and seen it all before.
[Ed. Note: Let Andrew’s experience help build your portfolio with safe and profitable recommendations for investing in the U.S. and overseas. You could get a total return (dividends plus capital gains) of at least 14 percent this year with the high-dividend-paying companies you’ll find with his INCOMEinvestment service.]
The ETR 2000th Issue Celebration!
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Why Taking a Nap Can Be a Productive Use of Your Time
By Jon Herring
The human biological clock has two cycles per day, with two dips. And for most people, one of those dips occurs shortly after lunch. (The other occurs before bedtime.)
If you have the opportunity to take a nap for 20 or 30 minutes during your afternoon dip, do it. Not only will you likely wake up with more energy and mental clarity, you could also improve your health.
The Harvard School of Public Health recently concluded the largest known study to examine the link between napping and health. The researchers, who followed 23,000 adults in Greece for a period of six years, found that those who took a half-hour midday nap break at least three times a week were 37 percent less likely to die of heart disease as compared to those who never napped.
While one study is not conclusive, the results of this research do make sense. We know that the three basic keys to good health are diet, exercise, and rest. Sleep helps to relieve stress and gives the body a chance to reset the heart rate and blood pressure. So don’t feel guilty about taking a little nap in the afternoon. You will probably be more productive when you arise, and you could even live longer for it.
Research Tip: How to Search for "Scholarly" Data
By Will Newman
The credibility of your writing - whether it’s a sales letter or a proposal for a new product - often depends on how well you’re able to prove what you say. Frequently, this means relying on scholarly publications, like journals, for specific data. Google has a free search service called "Google Scholar" that lets you do this easily.
Go to the Google Simple Search link (scholar.google.com) and click "Advanced Search." Advanced Search lets you weed out returns you won’t need by specifying results:
- with all of the words
- with the exact phrase
- with at least one of the words
- without certain words
- where the words occur (anywhere or in the title of the article)
You can also (but don’t have to) specify results by:
- author
- publication (specific journals)
- publication date
Or you can specify articles in these subject areas:
- Biology, Life Sciences, and Environmental Science
- Business, Administration, Finance, and Economics
- Chemistry and Materials Science
- Engineering, Computer Science, and Mathematics
- Medicine, Pharmacology, and Veterinary Science
- Physics, Astronomy, and Planetary Science
- Social Sciences, Arts, and Humanities
Note: While searching is free, some results require payment if you want to see the full article. Still, Google Scholar is a great way to at least scan the abstracts and start your research.
[Ed. Note: Will Newman is the editor of AWAI’s The Golden Thread online newsletter - a free weekly alert loaded with writing and marketing secrets, tips, and insights.]
Treasures From the ETR Archives: Michael Masterson on Perfecting Skills
[Ed. Note: Our mission at ETR is to help you reach all your goals - and to celebrate our upcoming Issue #2000, we are presenting you with some of Michael Masterson’s most powerful, life-changing messages to date. To read each full article, click the link embedded in the text.]
"Here’s a great way to become perfect at just about anything: When you practice, don’t ever do it wrong. If you practice perfectly, you will become perfect.
* * * * *
"I have no great natural talent for submission wrestling, but I am improving every day because I am willing to do what it takes. Making myself a better wrestler is no tougher than improving my Spanish language skills. I simply have to set myself specific goals, put in the time to practice, and keep at it until I succeed."
[Ed. Note: Learn how you can be part of an exclusive group of 25 to 50 ambitious businesspeople that Michael will be leading through an elite 5-day program that can help you dramatically increase the profitability of your business here.]
ETR Contributors Weigh In On Our 2000th Issue Celebration: "My biggest regret is that ETR was not available to me at the beginning of my career."
"Reading ETR and working with Michael Masterson and his team has given me more knowledge in how to succeed in business in a few years than I had accumulated on my own in several decades. My biggest regret is that ETR and the wealth of business wisdom it dispenses was not available to me at the beginning of my career. I suspect I’d be several million dollars richer if it had been."
Bob Bly - editor of ETR’s Direct Marketing Masters Edition and ETR contributor
ETR Issue #2000 Celebration - It’s Fun to Know: How Opportunities on the Internet Have Exploded
Way back on July 3, 2000, Michael wrote this in Issue #121:
"Six years ago [1994], only 80,000 Americans were on the Internet. Most of them were college professors. Today [2000], that figure stands at almost 100 times that number (80 million). During the same time period, online retail sales have gone from nothing to $20 billion per year. Industry sources estimate this number will quintuple by 2003."
Since then, opportunities to do business on the Internet have exploded. And every step of the way, ETR has been passing on ideas to help our readers profit from the still-growing possibilities.
Take a look at these current stats:
The latest figures put the number of American Internet users at 211 million, which means 70 percent of the population is online. The number of American Web surfers has grown 121 percent since 2000. Online retailing has also grown over the years, with e-commerce sales rising to an estimated $109 billion in 2006.
[Source: Internet World Stats and U.S. Census Bureau]
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Word to the Wise: Salutary
Something that’s "salutary" (SAL-yuh-ter-ee) - from the Latin for "healthful" - is beneficial, tending to promote health and well-being.
Example (as quoted by Patricia T. O’Conner in a New York Times review of When You Catch an Adjective, Kill It, by Ben Yagoda): "[Yagoda] admires the ’salutary emphatic redundancy,’ as in ‘"Raid Kills Bugs Dead" (written by the Beat poet Lew Welch in a stint as an adman).’"
[Ed. Note: Become a more persuasive writer and speaker… build your self-confidence and intellect… increase your attractiveness to others… just by spending 10 VERY enjoyable minutes a day with ETR’s new Words to the Wise CD Library, on-sale now through the 28th to celebrate the 2000th issue of ETR.]
Michael Masterson
Copyright ETR, LLC, 2007