In this lesson we continue learning how to research investment opportunity in another country.
In lesson one and session one of this second lesson we looked at how Czech built Skoda was recently rated as giving top satisfaction to customers, even ahead of Mercedes. This led us to ask what is going on in the Czech Republic? The first and second lesson of this course has been devoted not to deciding if this is a good place to invest, but is a study of the process of investigation. Good international investors share two traits.
Trait #1: They use common sense to spot distortions (such as seeing that inexpensive cars like Skoda might have a big competitive edge).
Trait #2: They investigate and find out why, how and what they can do about distortions they see.
To begin our investigation last session we decided to get advice from eClub advisors. Here is what we have now received.
The first information about the Czech Republic was a little discouraging when eClub advisor Andy Kaegi (firstname.lastname@example.org) from Zurich wrote:
"At present we do not invest in this area; no emerging market equity investments
at all right now; our allocation for principal reasons is zero in emerging
markets and may stay that way for another few months. If we were to cover it (it
would be small percentage amounts anyway) we would not cover one single country
only and (besides Asia) take a fund covering Eastern Europe; e.g. the Credit
On the fixed income side we also do not consider the difference in net yields of
the Czech Kronorin comparison to Euro large enough. Net yields for 2 - 4 years
on international household names are in a range of 5.9 to 6.9 %.
The corner stone in our equity allocation still is to mix alternative
investments to the traditional markets such as commodities, hedge funds, to a
smaller degree private equity funds, real estate funds and recently we started
to add a World Gold Certificate.
This is good advice for our conservative investors, especially the note about gold, but does not help our research for the Czech Republic.We are not making our decision on whether to invest in this country just on economic conditions. Warren Buffet, one of the world's great investors, confirms this fact with his tips on how to invest:
* Do what you like
* Money isn't everything
* Work only with people you like
* Buy businesses, not stocks
* Invest only in what you understand
* Don't over diversify
* Keep looking for new opportunities
* Buy businesses you plan to keep for life
* Look for businesses that are available at a good price
Economic conditions are not even mentioned by Buffet. However we must continue this investigation because economic conditions will affect whether businesses in the Czech Republic are good value or not. So we continue to look at what other eClub advisors shared.
Our next advisor Richard Radcliffe (email@example.com) a banker from the Isle of Man, gave us this advice:
The attached may be of some use to you in your research on the Czech Republic.
The RZB web site contains some useful notes. This is at http://www.rzb.at/ You can choose the English
version (button in top right quarter of home page) and then select the areas of
interest. I will try to find some more information for you, ideally some stock
ideas. I hope that you and Merri are fit and well.
This advice hit pay dirt. Go to the RZB site and you'll find a wealth of information on the Czech Republic.
So to did out next reply from EClub advisor Larry Grossman (address firstname.lastname@example.org):
Gary, Here are several Czech Republic shares for your investigation. Larry"
So now we are getting into details. Studying these sites will give you a huge volume of information and this is an interactive course so after you have stimulated some ideas to exchange, let's here them here. What do you now think about the Czech Republic?
Until next lesson, good global investing!