Cocoons of Wealth


This October 18 Gary A Scott message shows how a reader and USA Today lead us to perhaps the hottest international investing and international business trend right now.

An alert reader just asked this question: I've been considering the world situation, the US election and the current terror threat relative to some shorter term investment decisions. My trend of thinking was stimulated yesterday by the announcement that the Senator from Minnesota was closing/moving his office until after the election. He did so after a high-level briefing from the intelligence committee. He obviously knows something.  What would be the most favorable short-term investment position to both protect oneself and capitalize on the likely attempt to terrorize us just before the election? Obviously, the precious metals make some sense. Do other options come to mind for you?  Many blessings. See you at the November conference.

My thinking on this may be useful to investors and business people alike.

Three general areas offer extra potential now, space, relaxation and security.

The investment and business on our farm are certainly built around this belief.  People want what they feel they have lost.  As the world becomes more crowded, just getting away becomes increasingly important. 

There is also a huge growth market for helping people deal with the stress of adaptation.  Everything is changing faster and faster.  This confuses and bewilders people and creates stress. 

Finally people have increasing fears of terrorism.  There is a good likelihood that these fears will increase.

Business opportunities created by these problems manifest themselves in interesting ways. A recent USA TODAY article Cocooning is back with a vengeance by Mike Snider, showed that businesses that deal in home entertainment, comfortable beds, relaxation and entertainment in the home were cashing in on this.

The article says: Trend forecaster Faith Popcorn, who coined "cocooning" two decades ago, says that behavior has metamorphosed into something more.

Sanctuary involves finding a safe place, Popcorn says. I think as the threats get larger, the need for a safe place gets stronger. We are feeling extremely vulnerable and threatened by orange alerts and things like the fact we can't eat fish more than once a week.

Adds Dianne Hadaway, editor of the Home Improvement site on women's Web site bellaonline.com: We get so much stimulation from the outside world, from traffic and work, that the ability to come home to a sanctuary is very stress relieving.

The article outlines that control is a key component of the sanctuary and services such as internet connections and TiVo and DVD let us watch the movies without the irritations of expensive popcorn and crowds.

This sanctuary appeal even reaches our cars. Apple iPods shut out the noise of the outside world. Vehicle guidance systems show us where we are.  Satellite radio services let us listen to what we want on the way.

Some of the winners to date include restaurant-style kitchens, luxury spas, baths with steam rooms, whirlpools and heated floras, Big-screen TV home theaters and high-speed connections such as a cable modem or DSL.

Home offices are sanctuaries for businesses people that cannot secure employees.  These home offices provide safety  from invasions, whether by computer viruses or terrorists.

Home entertainment is a sanctuary that keeps kids and family safe.

The new cocooning growth is possible in part because technology allows the home to offer space, relaxation and safety. One can now have work, their entertainment and even rapid communication with the outside world at home.

Anything that helps people slow down and stay at home may be good such as home delivery of anything, games, movies, any entertainment in the home may be a big winner. 

This brings the question of what type of investment vehicle makes sense. Shares are obviously one option. Buy shares now in companies that manufacture such goods.  Or remain liquid and wait until the next terrorist event, If this sends the entire market tumbling, buy such shares then.

Another option would be lower quality bonds issued by companies in this field. Chances of their default will fall as they do well, plus their capital value may rise on longer issues.

One company to check out is Tomkins Industries, a leading engineering company listed on the London Stock Exchange.  They own Lasco Bath Products, the largest manufacturer of bath units in the USA.   They sell one in every four baths in the states and offer a unique steam bath shower combo.  I am recommending this from the consumer end as we just installed one of their steam bath condo units in our new home.

Details about both their ADR and London share price are at http://www.tomkins.co.uk/docs/investor/overview.jsp

You can buy the London shares from Jyske Bank. Details are available from Thomas Fischer at FISCHER@jyskebank.dk

Gary


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