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international investment trends

International Investments & Nike

international investment trends

Gary Scott

Spotting trends can bring more profit than any other investing activity. Yesterday's message looked at the potential trend of a revival of Converse tennis shoes.

Converse after being a leader in tennis shoes production dwindled into bankruptcy in 2001. Nike bought the firm in 2003 and in 2004 awarded the Sausalito California ad agency Butler, Shine, Stern & Partners a $10 million Converse account.

The agency persuaded Converse executives to outsource ads to fans in an innovative process that lets the public play in an ad game. (Some call this brand democratization.) The agency solicited 60-second films from anyone with an idea about Converse and a camera. Seven films about Converse came in and were put on the Internet. This opened the floodgates and many more films flooded in.

Over 30 films ran online and on MTV. Each filmmaker was paid $10,000, (versus $300,000- the cost of a normal 30-second TV spot).

The agency was able to create 81 ads at a fraction of the normal price. The Converse website began getting hundreds of thousands of unique visitors a month, up 40% . Converse sales rose 12%.

The question is however is the Converse boom big enough to help push up the value of Nike shares?

A Forbes article thinks Nike is a good bet and says:

"Banc of America research analyst Robert Ohmes maintained a 'buy' rating and $110 price target on Nike (nyse: NKE - news - people ) in anticipation of strong fiscal second-quarter results and a positive 2006 outlook driven by a favorable product line-up." Shares have been trading on the $88 range so rising to $110 would be a good rise.

The market however appears to have some concerns. A Business Week article says:

"DEC. 21 9:31 A.M. ET investors rushed to sell off shares of Nike in premarket trading on Wednesday after the company reported decent second-quarter results, but said growth in international markets was sluggish."

However you?ll never get rich taking advice you read in newspapers and magazines. We need better clues.

Certainly the way Nike has been reviving Converse shows that Nike knows how to market footwear.

Second, Converse could especially appeal to the Boomer market which is especially large and rich. Third, there could be a health transformation that could give the Converse brand a huge extra punch. Here is a snippet I ran across in my research: "65 percent to 80 percent of all runners - joggers and elite marathoners alike - are injured in an average year, according to Dr. Davis. Aching Achilles tendons, sore knees, inflamed arches and hobbling plantar fascia pain are as common today as they were when boot camp grunts were jogging in canvas Converse Chuckies."

The article goes on to say that recent research shows that the current "high support" running shoes create a lazy foot syndrome which enhances injuries. It points out that minimum support (such as in Converse shoes) can be better. If this trend catches on with runners we could see another Converse wave.

Whether Nike shares rise or not because of the Converse revival, they are worth consideration. Plus at the least we can see how observing our wants/desires/feelings and actions can help us in our business and investing.

I cannot say buy Nike shares for sure, but the All Americans have my full endorsement. I love my new Converse shoes! On way to improve your equity investing decisions is through technical analysis. You may want to consider following an investment blog.

A CNN article entitled "Best financial blogs" says there are thousands of sites devoted to finance but lists just 10 that Forbes says "may just help you make some money".

One of the ten blogs the article recommends focuses on CANSLIM investing and is a blog where I am a guest author

Forbes article also recommends this sight. The article explains that William O'Neil, founder of Investors Business Daily was also the creator of a widely followed seven-criteria investment philosophy known as CANSLIM which stands for various fundamental and technical hurdles like choosing Leaders over Laggard stocks. DETAILS

Whether you watch broad parameters, currency interest rates or daily technical moves and use the CANSLIM approach, I wish you good global investing!


P.S. Join us in sunny Ecuador this winter.

Join Merri, Thomas Fischer and me for International Business and Investing Made EZ plus the Andes and learn more about the MultiCurrency Sandwich. DETAILS

Continue on to the High Andes. For a real estate tour. DETAILS

Tour the country with us on our import-export expedition. (Don't come if you want a "class room experience". See DETAILS

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international investment trends


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