Country Article / Postcards

Bridging the Bering Strait

Date: 05/10/2005

Dear International Living Reader,

A lot of smart investors are watching Russia, but I doubt many know about this investment idea…even though it's one of the most exciting building development plans on earth.

Like my fellow Swiss investors, I've got a cautious, slow approach when it comes to making investments. We don't chase the latest fads and hypes. Instead we seek investments in sectors where we believe there could be growth and profits for years to come. This is good common sense, I think you'll agree.

Large infrastructure projects can fit this bill. Some establish local monopolies, just the kinds of businesses that reliably spit out money year on year. Container ports are an example of such a business, and so are the hundreds of local railways in Switzerland, some of which are so incredibly profitable that I don't dare spell out the numbers (because no one would believe them!).

Russian utilities are in the same category, but there is another, even more tempting Russian investment opportunity emerging. In fact, it will probably be an American-Russian investment opportunity.

During the Cold War, the two then-superpowers were literally worlds apart. Yet when you zoom in on a map, you find that that in at least one spot they are just 53 miles from each other, where the Bering Strait marks the easternmost point of Russia and the westernmost point of the U.S. state of Alaska. In some places the Bering Strait is only 98 feet deep, and in ancient times this was probably where humans migrated from Eurasia to the Americas.

Today, on the Western side lies the world's largest economy...and the largest consumer of energy and consumer goods. On the eastern side is the country that has one of the world's largest energy reserves (oil and gas).

Why not connect them?

This is not a new idea. The first plans to build a railway link across the Bering Strait were drawn up during the mid-19th century, when railway companies were as hyped as dot.com companies in the late 1990s. Money seemed no object, and with each passing year, ever-grander plans for railway projects were dreamed up, only to go up in smoke during a subsequent stock market crash.

Money aside, such a railway connection wouldn't have been possible with the technology available then. And when later visionaries tried several times to revive the old plan, the icy climate of the region posed too high a hurdle, as did political problems such as the two World Wars.

Now the political tensions between these countries have eased, and in recent years a ferry connection across the Bering Strait has taken up operation again. Put this together with the U.S. desperately searching for new energy sources, and the plan for a permanent Bering Strait link-up is getting attention again.

There are lots of reasons to think it could work this time. Goods and commodities can be transported much quicker and cheaper by rail than by ship. Such a project would also be a visible symbol of different political systems moving closer to each other (thereby, hopefully, securing peace). What's more, it could make a lot of sense financially.

One of the organizations looking at such a potential project is the Russian-American Pacific Partnership Conference (RAPP). This organization wants to develop a trade corridor between Russia, America, and--last but certainly not least--China! RAPP has made it known that they are taking the idea seriously.

The current estimate is that such a project could be realized by 2012, if everyone involved presses ahead at maximum speed. As we all know, though, once politics gets involved, things take longer.

But this might work in our favor in this case, by giving us extra time to figure out how to profit from this trend. When researching this story, I came across several ideas for ways and means to profit from the impending revival of railway companies--and to do so much sooner than 2012!

Until now, you may have come across railway shares only in the form of historic share certificates for companies that have long since ceased to exist--usually wiped out by stock market crashes or bankruptcy. However, some railroad companies survive today, and few realize that they have again become potentially lucrative investments! Burlington Northern Santa Fe (NYSE: BNI), Norfolk Southern (NYSE: NSC), Union Pacific (NYSE: UNP), Canadian National (NYSE: CNI), Canadian Pacific (NYSE: CP), and Kansas City Southern (NYSE: KSU) are all stock market listed firms that are profiting mightily from the growth of the world economy.

Beat Erni
For Profit Hunter and International Living

P.S. Don't believe you could profit from a Bering Strait railway? It may sound crazy but consider the other opportunities Sven Lorenz, International Living's Profit Hunter, has been writing about, and you'll soon agree that crazy-sounding ideas can often pay off big-time--if they're well researched. For example, there was the opportunity Sven introduced to International Living readers in the December 2004 issue ("How to buy into one of Europe's most expensive tax havens at a huge discount"), available in our online archives for paid subscribers to IL in print.

People thought he was crazy when he wrote about this project: a city built on the sea! But recently the development was confirmed as being in the planning stage by Prince Albert of Monaco, the tiny principality that is home to the world's billionaires.

Now those of Sven's readers who acted are making double-digit gains on their special Monaco property play. And the world media is beginning to pick up the scent.

P.P.S. If you're not in on the Monaco trade, don't worry--Sven and our Profit Hunter team are researching plenty of other investments...for one example read here.