World Reports, March, 2000

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Gary A. Scott's World Reports

A Course of Continuing Education Learned Through the Study of Life and Current Global Markets

World Reports

An Exploration of the Inner and Outer Aspects of Wealth

March, 2000

* CASH IN ON THE CARE MARKET. My best investments have come from spotting distortions between markets. Now we can spot distortions between the Information and Imagination era. Learn how this can bring us a fortune below.


* NOURISH THE ROOT to really become rich.

White robed hemlocks shiver standing hushed in the dawn. Sweet silence and snowflakes fall. Clean snow-blankets build in the still air. Pure peace and soft statues, mystical gnomes and fairy castles, rise in magical crystalline form as the day awakens cold. Birds twitter at the trough and tiny tracks on the landscape unveil the night's furtive secrets, warm blooded wanderings warding off the winter's chill. Such sunrised beauty exposing nature's glory even in this most wintery season of all.

February 3, 2000, Little Horse Creek, Merrily Farms, North Carolina. Winter in the high country seems a harsh time at first glance, forlorn grey days, bitter cold and icy, storms. But where would we be without such cleansing. How would we keep the weeds in control? One reason Merri and moved from the city to Ecuador and the Blue Ridge Mountains is to get in closer touch with the law of the farm (if you don't plant in the spring-no matter how much politics are played, you won't get a crop in the fall). Normally though we would not spend winter in these mountains but go to our home in Ecuador.

Fate did not agree this year, she seemed bent on keeping us here, volcanos and political upheaval there and special opportunities here. Why, I often have wondered, but as I look out my window at the creek bubbling through packs of glistening snow, I can clearly see why. Nature wanted me to see the beauty and grace of this season, to understand the power of cleansing, changing seasons and the need in all things of rest, reawakening and change.

This is incredibly true in investing in the short, medium and long term and in this issue I will cover both some short, medium and long term opportunities.

This is the first issue of World Reports delivered via our web site and in a way this change reflects the flavor of what I will have covered here. Using the time tested axiom of “As Above-So Below”, this issue reflects the enormous opportunity all of us have as we evolve from the Information Era into the Imagination Era. (See last month's World Reports posted here.)

The Information Era makes this transmission possible but it is the Imagination Era which creates the big opportunity. This publication with its Information Era format and Imagination Era content is a reflection of the changes of economic seasons. The changes we are making show how the world's economy is and will change (both in function and form).

Information Era investors are approaching the autumn of their cycle. They have harvested untold billions. Imagination Era investors are shivering in the faintest beginnings of spring and the fullest blossoms that will come from their investments are still some time ahead. Imagination Era investing can be very long term.

Yet there is life and opportunity in every season. We can make money in the .coms as well as Imagination Era investments.

In the last printed issue of World Reports (which you can access here on the site) we began looking at markets that will boom in the Information Era. We left off in that report with the market for care.


The market for care is one of the largest in the world. Consider this, it is estimated that the U.S. market for funerals is 20 billion, diet – 33 billion, home furnishings – 40 billion, perfume – 3 billion, jewelry – 16 billion, coffee – 6 billion, tourism – 300 billion, advertising – 291 billion.

But the market for health care alone is over 1 trillion! And health care is just one part of the care market. Other booming areas in care include pets – 12 billion, toys – 30 billion and the undocumented vastly huge market for NGOs (non governmental organization) such as Red Cross and the multitude of organizations that care about something.

All Encompassing Story

But care goes beyond these markets. Almost every product and service can become linked to care. In the Imagination Era the story (not the product) reigns king. Values become more important than value itself. To spot opportunities in the care market we watch for products for care or any products that link themselves to care. Rolf Jensen in his book “Dream Society” points out that the care market has created new products such as virtual pets and influenced markets such as toys (Barbie's newest friend sits in a wheel-chair), pets, (dogs are now offered to be taken for walks at hotels, and there is now even training and certification for therapy dogs which psycho-therapists use). Fast food groups have entered the care market by donating hundreds of millions to needy children, etc. The care market encompasses anything that can serve a father, mother, child, grandchild, friend, poor person, plant, animal, even the water and air.

There is enormous marketing power in care. There is a huge growing compassion flowing through mankind that is getting people off their duffs and leading them to action. The young lady who recently climbed out of a Redwood tree after sitting there for years shows the potency of this earnestness! See the Root

How does this affect investing and business? If we understand the roots of the care market and can see how it will lead people to act, we will be able to more easily spot budding companies before they grow. We will be able to spot success in companies just as they reinvent themselves but before the reinvention causes the business to take off.

The power in the care market comes in part from a counter shock created by the very success of the Information Era. Our ability to merchandise information allows businesses to grow and gain economies of scale by turning humanity into bits of information coded in ones and zeros. Business can grow without using labor by turning customers into numbers. This seems great for the bottom line but is enormously terrible for the heart. Have you ever tried to get a problem solved at your bank or telephone company or utility, etc. and been trapped on an answering machine giving you a bewildering array of choices, none which seem to fit your personal problem?

The benefits of the Information Era have been used in an impersonal way to date. In the race for efficiency in a rapidly growing population, business has given up personalization.

This is why in an era of bank consolidation where banks are trying to become bigger to be more powerful and better, I recently recommended shares in a small community bank that offers personal service. In short I think this bank will succeed because it offers personalized care at a time when most of banking industry is turning its clients into increasing numbers.

Let me share a comparison of how this has worked with me. Let's compare two accounts one at this community bank and the other at Credit Suisse, one of Switzerland's largest banks which has been merging to become even larger. I have been a customer at the new bank for only months (since it has only been operating for a few months). I have been a customer at Credit Suisse for nearly 30 years.

Recently Credit Suisse reorganized and shifted my account from a small branch where I had banked for all these decades to their main branch in Zurich. Since this time I have been plagued with a continuous series of errors from not being able to find my account (imagine your bank telling you your account does not exist when you ask for money) to overcharges in some case double fees) to sending private banking information to the wrong address. Last time I asked for a check to be sent they sent the wrong amount paid payable to the incorrect person. Yet when trying to solve these troubles I have been shuffled from person to person, with no continuity and no one seems to be interested in solving the problems. I have sent dozens of letters, faxes and calls, so far to no avail. My ex account manager (who left the bank at his unhappiness over the changes) has given me the names of all the supervisors and I'm slowly working my way to the chairman of the bank. The frustration, time and waste for me and the bank is immense. Yet no one seems to care.

Compare this to the one branch Citizens National Bank of Southeast Florida.

I opened two accounts and as can happen there was a mixup in how the funds were allotted. However I had been assigned a person to look after the account. After one call, my account manager not only took care of the problem instantly, but faxed me every detail of each step she made. Then personally called me to make sure I understood and to check if I was pleased. She acted as if she cared. Guess who will get more and more of my business. Who would get yours?

Look at how you feel when you are treated impersonally. Look at how you feel when someone acts as if they care about you, your wants, needs and desires. Multiply this all over the world and this will give you a feel of the power of the care market.

The Evil of Specialization

Another root of the care market is specialization. Industry, businesses and professions often become so focused on their piece of specialization that they no longer see all the parts. Take medicine as an example and compare an experience I observed in Ecuador with what might take place in the western world. Merri and I were staying at our house in the compound of Taita Yatchak one of Ecuador's great healers and met a couple who had travelled clear across the country to have their sick baby healed (Taita Yatchak had been referred as a healer of last resort). Since the couple had traveled for an entire day, Taita Yatchak invited them to stay and we listened to the baby cry the night through.

In the morning I happened to be sitting nearby when Taita Yatchak talked to the family. “The baby is fine,” he said. “Your milk is what is wrong,” he said facing the mother. “You have an infection. But then he turned to the father. But it is you and your actions that are the source of the infection. We will work on you and then all will be well.”

Taita Yatchak saw and cared enough to include the whole family. Imagine the result had that baby been treated in the “civilized” world. Maybe after some observation by the GP, the baby would have gone to the pediatrician, then to a stomach specialist, then to a allergy specialist, each time narrowing the problem refining the cure and moving further and further from the source. The child may have ended up on all sorts of drugs which affected it for life. The specialists may never have even met the father or mother.

Personal attention to our whole, our wants, needs and desires is part of care and the areas of health which focus on wholeness. Naturalness with a personal touch will thrive.

Look for businesses and industries that talk this story, and you will be taking a step in the right direction of the Imagination Era.

Milk – Care

With these thoughts in mind I am investigating the shares of the company Horizons Organic Dairy of Boulder, Colorado. They produce organic milk, eggs, cheese and yogurt. Though their products are considerably more expensive than non organic, we started buying their milk at health food stores years ago.

Now Horizons can be obtained at local grocery stores in Jefferson, North Carolina (which in market size terms is the end of the world). I like the product but like their story even more. They appear to care about how healthy my family is. They even write right on the side of their milk cartons, “You deserve delicious foods that are safe and healthy. This kind of quality begins right at the farm. We don't ever use dangerous pesticides or fertilizers that can ruin the bio diversity of the land or run off into water supplies. And by not using pesticides we keep them out of your family's food.”

Imagine that they care enough to help keep my family's food clean.

Eight years ago, two natural food veterans, Mark Retzloff and Paul Repetto, thought that consumers wanted the choice of organic dairy products.

They offered the first organic dairy foods in the marketplace. They began with a supply of organic milk provided by a cooperative of small family farms in Wisconsin and introduced their first product in 1992: organic yogurt. Their success has made them the nation's leading brand of certified organic milk, offering a full line of refrigerated, certified organic dairy products. Additionally, Horizon Organic milk is the only national brand of fresh, fluid milk — organic or conventional.

The founder's backgrounds include founding Alfalfa's Markets, a chain of natural food stores based in Boulder, Colorado and presidency of Vestro Foods, a national organic food company that marketed brands including Westbrae, Little Bear and Bearitos.

Both worked together lobbying for The Organic Food Production Act of 1990, which set the first federal standards for organic food products. In 1993, the company introduced its first line of certified organic milk in half gallons. The same year, the Federal Drug Administration approved the genetically-engineered bovine growth hormone (rBGH) for use in dairy cattle. As a result of controversy over the hormone's safety and economic impact to family farms, demand for organic milk skyrocketed, and in 1994, Horizon Organic Dairy purchased a dairy farm in Southern Idaho.

Then the chief financial officer of the organic tea company, Celestial Seasonings, Barney Feinblum joined Mark and Paul to become Horizon Organic Dairy's president and chief executive officer. Under his leadership, the company bought its second farm on the Eastern Shore of Maryland. Horizon Organic Dairy now ships milk to all 50 states. Horizon Organic Dairy filed an initial public offering in July 1998, and is publicly traded on the NASDAQ exchange under the symbol HCOW.


Spotting a good story is only one step in the making of a good investment. We need to still buy shares that are attractively priced in companies that are well managed. To this end I am still investigating Horizon as the share price has recently dropped from $18 to $10 per share and the CEO resigned.

However the beauty of using the net to deliver these publications to you is that I can update every time I have something worthwhile to pass on. I am no longer constrained by the limits of printing press and post, So I will be updating what I find as the information unfolds.

Let me also add here a short explanation of how the International eClub (if you are a current WR subscriber who has switched form printed to electronic form, you have automatically been made an eClub member for a year) can work to help you be more successful. First I will disseminate what I have found about Horizon to our panel of advisors to see what they know about the company, industry etc. Second I invite each of you to join our “Club Economic Think Tank”. If you have any experience with these shares or know anything about the industry, send us what you know and we'll review it and perhaps pass it along to all readers.

See the Imagination Era Every Day

There are more markets than just care that will unfold in the Imagination Era and we can see them opening up every day. One market we have reviewed is the market for adventure. This has been confirmed again by an article in USA Today, January 21, Section D cover page, entitled Foul Weather Fun. The article tells how a growing number of vacationers are travelling to rough weather spots in the winter. For example, one couple decided to visit Canada's western coast for a weekend squall, braving ten foot waves in oil skins and duck boots amidst hail, instead of their typical flight to San Diego for some play in the sun.

“This place has a rawness and sense of spirituality. It reminds us that nature is in charge.”

The tourists are lured by fireplaces, hot toddies, off season discounts at romantic inns and a sense of drama that the Weather Channel cannot duplicate the article explains. This is an imagination era market emerging. Adventure, romance and spirituality. We looked at the We discovered Adventure and Love markets in the last printed issue of WR. We'll delve into the Spirituality Market next update.


You may have read in the news about the problems of Ecuador in recent days and wondered why I am investing there. One of our goals is to help eClub members get news beneath the news. We are looking for news that is not glamorized and gives a more real picture than the ones news channels use to attract readers. The problem today with popular media is that it has to cater to the lowest links for the sake of volume. Sex, scandal, death and destruction sell and in the mad scramble to fill evry issue with as much attention grabbing horror as possible, most media make over small bits of the most horrifying events of the day and little more.

The eClub's goal is to dig deeper. In this case I have turned to several friends and to eClub advisor Dr. Andres Cordova and asked them what they feel is going on there. I chose them to represent different segments of the population. One is a powerful Guayaquil businessman connected at the highest political levels. The second our eClub advisor is an attorney from Quito. I chose these two because one problem in Ecuador is the continual struggle between the populations in the cities of Quito and Guayaquil. As one Guayaquileno once put it, we make the money here in Guayaquil and they (the politicians) spend it in Quito. The cities have existed for centuries in a state of mutual distrust.

The third is a foreign businessman who has lived in Ecuador for many years and has a very successful business, the fourth, my very good friend, Taita Yatchak, one of the leaders (once a Presidential candidate) for the indiginous population which makes up a huge part of the populace.

The first reply is from my friend from Guayaquil. For reasons that will be obvious he remains unnamed. He is connected at the highest levels of business and government in Ecuador.

My friend writes:

“Ecuador is still under the spell of gloom that befell about two years ago. I saw it one year before that, but I did not know what to do about it, and I did not want to believe it either.

“Now the opposite has happened. There is a small light showing at the end of the tunnel. It is small, but steady. God bless it. We must not talk about it – too much. It is called Manta. The Americans and Congress (of all institutions) have approved a ten year deal renewable.

“The Oro Verde (Swiss hotel) in Manta is already 50 or 60% taken by the Americans. They are renting or buying the suites all around it. Including the Oro Verde Suites.

“The Americans have just come out of Panama, their rock solid base for the last ninety years because they need a base for the problems they have in Colombia. Manta is closer to the problems than Panama was.

“The Americans will build a new run way and our air force will love that. Just wait two years until they offer to build new port facilities. They cannot do that now for PR reasons, but it will come. The people of Quito will love this as it gives them independence from having to come through Guayaquil. The Guayaquilenos won't like it but they will not oppose it. Manta is another coastal town but facing the Ocean.

“Manta did not exist in colonial times. The pirates and sea robbers made it unthinkable to have a port facing the ocean. The nearest port had to be thirty miles in, at least.

“I was in Manta, I had not been there for ten years at least, it has improved a lot in that time. There is so much that can be done. Manta is like a little baby. It does not have a sewage system. It does not have running water. The Oro Verde gets its water by “tanquero” (water truck).

“Let me tell you, Panama, or the Spanish Main, was the unhealthiest place in Colonial Days, and right through the last century. I am not exaggerating, but now it has the best drinking water in the “whole of South America” straight out of the tap. The yanks did this and without much effort. I do not wish any harm to Panama, but even their future as a 'banking haven' is at stake all for being able to say that they own the Canal.

“In Manta, the help can come in little ways, totally invisible to the public that is not “in”. Hospital, schools, Univ., urban development, you name it.

“You know that when the spirit goes up, the locals begin to do things themselves. It will not show that the Americans are doing much, it will be the locals that are making the place grow. I can already see it in the apartment buildings going up and being sold or rented to the Americans.

“As I said, all this is very small right now, but it is moving ahead in the right direction.

“About dollarization? The new President wants to dollarize. A very good thing, he should take this opportunity to do so. He talked to one of my friends, Roberto who has the twenty six or twenty eight steps – a big fat study – that was done during the period of Bucaram to fix the currency in at 4,000, that was close to four years ago. That is not dollarization, but it helps to see what was done. He sent this study to the President with a courier to be delivered personally. Four economists from the Cavallo team have been flown in from the Argentine.

“This is all very complicated, I hope it works for the best. Unfortunately, it brings us close to Bucaram, and that is not what we want, we want to keep him away (in Panama).

“There has been an Indian rising led by a man called Bravo. They have gained attention but unfortunately they do not have a plan, or people, or anything. It was just a rising of “down with everything”. Down with the President. Down with Congress. Down with the Judicial. This is a typical rising of communal soul formation, or soul development, it is basically downs versus ups.

“They are however much better organized and have clearer objectives, and words than they had, say fifteen years ago. Of course they still need another time to be at par as an ethnic group. It will come if you give them time, fortunately.

“The unfortunate part is that it is all taking place at a moment when their negativity can cause a lot of damage, they also say down with dollarization. This is the right time to take the shock of dollarization. I know it will show the poor how dismally poor they are, Let it be, it will only strengthen them in the long run.

“Of course the problem is up in Quito. The organized ones are not in Guayaquil.

“The new President? He is my personal friend, a great guy, but not the right man for the crisis, as he is too flat footed. Mahuad was weak, but at least he is a man of prayer. Mahuad's ouster is a great misfortune, not because of him personally but because in all likelihood all the steps taken will be taken back and nothing would have been done, because it was the initiative of the previous man. Everything the previous man has done is wrong.”

Another Viewpoint

The second insight on Ecuador was sent from International eClub advisor, Dr. Andres Cordova. Dr. Corova is the grandson of Ecaudor's past President and his law firm provides legal counsel for many financial institutions. The firm works with foreign banks established in Ecuador and otherwise and is legal counsel for the Central Bank of Ecuador, the Superintendency of Banks.

Some of the members of the firm have participated in the making of some of Ecuador's monetary and banking decisions and one of the senior partners has been Superintendent of Banks on two occasions.

Though the firm acts as counselors to many of Ecuador's finance and banking entities, they advise on specific areas, upon request, and do not represent, in any way, the institution's position on different subjects so they can offer us an unbiased view.

The firm has information and views from inside Ecuador's finance and banking fields and great contacts so they can prepare reports, furnish helpful information, and answer inquiries promptly for any member who wishes to retain them for any specific project.

Dr. Cordova writes:

“We had quite a scare on Friday, January 21. During the past several months the people of Ecuador had become increasingly infuriated with President's Mahuad conduct of governmental affairs (the freezing of bank accounts is one of the highlights).

“A couple of weeks ago we had an Indian uprising and some military officers took advantage of the situation and supported the Indians in their march into Congress. From then, they began to march to the Presidential Palace. The military renegades used the Indian uprising as a symbol of popular discontent and demanded the President's resignation.

“The President received little military support from the institutional armed forces and, as the march into the Presidential Palace progressed, was “invited” to leave the Palace, for his security could not be “guaranteed”.

“The President left the Palace and at midnight Friday a “Junta” was announced as the new Government. This Junta was comprised of an Indian Leader, a Civilian Personality, and a Military Officer. This Junta lasted only three hours, because no one was going to tolerate it. It was a joke. All of the country demanded a Constitutional solution to the situation.

“The military insurrects did not receive any support, either from the rest of the military or from any other sector of the Country (excluding the Indians), and they were forced to back off.

“We had a situation where very little support was given either to President Mahuad or to this military insurrects. A Constitutional solution had to be applied.

“As much as I believe Mahuad to be corrupt and incompetent, I was deeply angered and saddened by the whole situation.

“The Vice President was called in to fill the void. Mahuad could not return to the Presidency, he had already left the Palace (this has an important symbolic significance) and he had lost all support (this lack of support increased by the day during his Presidency).

“The Vice President constitutionally assumed the Presidency, and Mahuad wished him good luck in his new office. This attitude of Mahuad helped ease tensions in the Country, for he, somehow, accepted the turn of events as they had happened and backed the Vice President in his new post as President.

“The bottom line is that there was some sort of democratic solution to the crisis. The Country is calming down. There is this bitter feeling about the whole situation, but who knows, maybe it was for the best.

“What is going to happen? Well, first of all, most of the country sees this outcome as the proper one, given the circumstances. This is a good thing, for it somehow reestablishes the faith and tranquility we all need. Also, it brings stability, for all major players in this social and economic machinery are in favor of the outcome.

“The Vice President (now President) has given the dollarization plans the go-ahead. There is no going back (at least it seems that way for the moment). The dollar exchange rate is the same. It is fixed at 25,000 sucres per dollar. If he had backed away from the dollarization process, the dollar to sucre exchange rate would have skyrocketed, unless urgent and tough measures were taken.

“The insurrects are facing court marshals and similar procedures. However, a general amnesty is likely to ocurr.

“The international community, represented by the different States, has manifested its approval of this Constitutional solution to the crisis, and is currently supporting Ecuador (at least rhetorically) in its struggle to shape up.

“The new President is regarded to be a good, honest man. He has changed most of the different Ministers and Secretaries of the Government and it is likely we are somehow facing a fresh start. Maybe it's a little bit of wishful thinking on my part.

“These past days we have seen a very good attitude in most of the industrial sector. The have committed to lower some prices and to raise the wages. Somehow a feeling of responsibility and that we are all part of the solution is surfacing. I sure hope so.

“The crisis is very deep and we still have some rough years ahead. I would want to believe that we have nowhere else to go from here but up.

“I think after this episode the Country is going to try and move forward with more enthusiasm and drive. The new President is going to be in power for the next three years. This will help stabilize the country, for no one will be speculating on the elections, as if they were to be held in a few weeks or month's time.

“This new President may do a much better job than the last one. Most of all because he does not come into power all tainted by strings-attached political supports and contributions that he needs to pay back. He can freely conduct the government without having to pay back all sorts of favors. Also, he is apparently an honest man.

“The Country is well aware of this and there is some sense of peace after all. It is still too early to tell how all of this will affect the country in the following months or even years, but it is safe to say that Ecuador still offers good and safe investment opportunities, provided they are well reviewed and screened.

“I understand many foreign investors may view Ecuador as an anarchic country which is falling apart by the day, where their investments are in no way safe. This is not true.

“In this crisis, many good investment opportunities exist. Real estate, for example, offers very nice investment opportunities. This kind of investments are, of course, better on the mid to long term.

“When the better times arrive, hopefully some two to three years from now, and then on and on. As exports grow and the economy improves, the new flows of cash and the economic recovery and good health will make it more difficult to find good deals on certain areas.

“An internal report used by the Central Bank of Ecuador establishes that with the dollarization regime the real estate business may benefit in the mid term. This may be a signal to buy now.” Andres

The Third Viewpoint

The third reply is from my friend, the European businessman who has lived in Ecuador full time for the last six years and has many business interests and real estate holdings:

“Jamil seemed to be a better man but he had done too many dirty deals with the political and specially the financial sector to be trustworthy. Gustavo Noboa seems to be a very honest man with no such connections (he is not even a politician) and that may be what the country need now. 80% of the people still want to dissolve the congress, mainly because of the corruption.

“I do however believe that the president will face huge demonstrations again this summer when they will have to increase the prices of gas, propane, electricity, etc. The country is said to spend US$ 700 million on subsidies this year if they do not increase the prices. A gallon of fuel cost US$ 0.48 at the moment and they have commuted to keep the prices until July. In addition the unions are now starting to ask for an increase in wages much higher than the government can afford. This country may be impossible to run.

“I had lunch with 3 other friends at one of the best restaurants yesterday, starter, main course, dessert, drinks and coffee for less than US$ 15 for the 4 of us! That would hardly cover the coffee and dessert for 1 person in Norway. So it is still a paradise, but for the few of us.”

The final rely may be the most important of all as it is the Indiginistas that (quite rightly) have been making the fuss. Taita Yatchak is a man of few words so his reply was short but surprisingly optimistic.

“I appreciate dear friend that the international news are very alarming; but the reality is very different since here in Ecuador everything follows with tranquillity and in the direction of the improvement of abundance and peace.”

This is why I have already started taking investors to the new U.S. Pacific military base in Manta, Ecuador, a major seaport (350,000 pop.). The flood of Americans will make the town boom. Timing to make money could not be better. Check for more details.

Nourish the Roots – Inspired Investing

Successful markets today could soon see difficult times. Warren Buffet recently states that he believes that Wall Street will see only 4% per annum growth over the next four years. He must be looking at similar information to what I have been sharing for the past several years. Yet inspired investors really don't care much about which way markets are going. In fact many inspired investors prefer falling markets to ones that are hot.

There is an Inspired Investing division at this website. Use it to develop an internal investing guide that works for you so you can gain everlasting wealth through times thick and thin. To end this report I leave you with the words of the 14th century poet, Rumi.

“Come to the orchard in spring.
There is light and wine and sweathearts in the pomegranate flowers.
If you do not come these do not matter.
If you do come these do not matter.”

My next update will highlight the upcoming strength of the spirituality market.

Gary A. Scott