Forum Archive Index - January 2002

[Ross Drummond <rs.drummond@xtra.co.nz>]

I support Snoopys endorsement of second line shares as well as his caution.

They can be difficult to trade, news is hard to come by, and often you can 
not always understand what the business involves.

If you understand the companies business, trust the management, and keep an 
eye on the sector in which the company operates you can pick up some gems.

Scott Technology is one of these companies. It will be the beneficiary of the 
increasing prosperity of large numbers of the worlds population. As soon as 
those who are disadvantaged cross the poverty line to modest prosperity they 
will want to purchase a washing machine.

If you are a washing machine manufacturer in some developing country that is 
actually developing, faced with rising demand for you products, who you gonna 
call?

Companies such as Scott who are narrowly focused with a global outlook 
are often worthy of close scrutiny.

The scenario I am suggesting is not easy as you have to do the detective work.

An alternative strategy is to apply your own professional expertise. Your 
task in the daily grind may be for example be fitting gudgeon pins into crank 
rods. In the course of your daily effort you become aware of a company in the 
same field with superior technology or other competitive advantage and come 
to the conclusion that this company knows what it is doing.

Now remember you are an expert in gudgeon pins and crank rods. The rest of us 
out there haven't a clue. Use your expertise, get in early and watch with 
satisfaction as dawns on the rest of the sharemarket that the company you 
picked knows what it is doing.

Boop-boop-de-do Marilyn


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