Get Two Cuddly Interface Reports from the Pros.


Since we have been looking at the future of the net and the potential of TV and phone interface I have asked International eClub advisors to give us their thoughts on specific ideas that might be profitable in this arena now. I have enclosed two of their replies for your study. First let me answer a reader question that could have an impact on the data you read.

Gary:

Your borrow-low strategy interests me. I've traded currencies since 1973..sometimes well, and not-so-well. I understand timing is everything! How do you handle that problem, and what is the percentage winners vs. losers? If I could verify the results you show in your letter, I'd be very interested. Jerry S.

 

Jerry, I luckily have never had a losing position in the Borrow Low Deposit High Strategy because I do not view the strategy as a currency trade. I view it as a long term strategy that takes advantage of interest rate differential. I also only use the strategy when I feel totally confident that the currency I am borrowing is overvalued and when I can afford to hold on for long periods of time. Even then I am conservative in my leverage.

I cannot give you a track record and would not try to do so anyhow because what I do is not what others do. Let me give an example. In the mid 90s I recommended borrowing the yen and investing in the US dollar. The yen was at 111 yen per dollar and could be borrowed at about 3.5%. Dollar investments paid about 8% and I felt that the yen was overvalued. Over the next five years the yen rose to 79 before finally dropping to 146. I held this wonderful position all the way through, but I have to admit was sweating blood when the yen was so strong. But I was convinced and of course was paid the positive carry (the difference between the dollar and yen interest rate) for holding on. Plus I had only borrowed double my investment.

Then at a seminar I was conducting I was met by two medical professionals. One told me how happy they followed my letters and had borrowed four to one and had made a fortune on the investment. The other was upset because he had also followed my letter but had six to one and had bailed out when the yen peaked and lost every penny invested. Same advice, three totally different results. The point is that it is not the advice that counts but how that specific advice works for each specific investor. I will shortly be posting an indepth report on this strategy for International eClub members showing how to calculate the risk and when and when not to use the strategy.

But beyond the advise in this report some golden rules of all speculative investing are: never invest more than you can afford to lose. Never leverage without calculating in advance how much the losses can be. Only invest in what you know well enough to keep the courage of your convictions. Invest in long term ideas that you can afford to hold.

All readers should keep these facts in mind as they share the thoughts below.

The first reply is from my London stock broker Barrie Martine of NCL Finance.

To: Gary Scott:

Thank you for thinking of NCL. I would agree that overall both China and India are more likely to use the TV to access the internet than via the PC. Therefore the demand for set top boxes (which convert an analogue TV to enable it to receive digital signals) and new digital TV's is going to be enormous.

The company which I think will be well positioned in the future to benefit from this growth is TCL International. The company has the best selling colour TV in China, and is aggressively moving into Set-top Boxes while maintaining it's position in Refrigerators. Last year ending in December both sales and earnings grew by 50%. However this is expected to moderate as margins are squeezed at home. On the other hand they have recently entered into two joint ventures in India.

The stock is listed in HK and surprisingly cheaply rated when compared with Legend (the PC manufacturer) for example.
Kind Regards
Barrie

You can get further information on this from Barrie at: B.MARTIN@NCLInvestments.co.uk

The second reply is from Scott Baker at my Canadian portfolio managers Nigel Stephens Counsel.:

Hi Gary,

One of the larger supplier of infrastructure to all elements of telephone and Internet infrastructure is Lucent Technology (LU) which we also currently feel is trading at a reasonable price ($US 62). Lucent will be spinning off its optical division (fiber optics) and its microelectronics division, two moves which we feel will begin to unlock the value of this company which we feel is north of $80. The cable companies also stand to benefit from any move of the Internet onto the TV and as well they benefit from hooking up PC's to the cable network. We like Shaw Cable in Canada ($Can 37 target $45). Another interesting US company, although an extremely volatile stock, is Winstar Communications (WCII $42). Winstar uses microwave technology to connect small to mid sized commercial buildings to Winstar's high-speed telecommunications network. The use of microwave technology allows these smaller buildings to have a similar capacity as bringing fiber-optics into the buildings but at 1/10 the cost and time to install. As the Internet becomes more of a TV type medium, the need for extremely high-speed networks becomes the critical enabler. Regards, Scott

Readers who want more detail on any of these companies or links to their web sites can get in touch with Scott at web sites Scott Baker at ScottB@nigel.com

Our webmaster suggests looking at the web sites of Sun and Cisco and to check out http://www.ibutton.com/ – wearable computers!

Additionally this message:

A Bicycle with an IP Address

http://www.ibutton.com/TINI/bicycle.html

Here is the interesting thing…

An IP address is the numerical address used to address computers on the Internet. The current version of the IP standard defines computers in terms of four sets of three digits – for example 207.159.137.10 – the next version of that (called IP 6) will provide six batches of three numbers – like 121.564.897.123.467.842

What is the point?

This will provide enough numerical addresses so that your pen, theoretically, could have its own IP address – no more lost items you just send a "request" for where they are located, for example.

This technology is stranger than we imagine!

webmaster@garayscott.com

There are more reports at the International eClub site. For details click on http://www.garyascott.com/eclub/

Have a great day and good investing!

Gary


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