Also called "Pace Counter beads", they're used to keep track of how far you've gone while doing land navigation. Great for Scouts, back-packers, people who like dangling bits of string with beads on it...
Step 1: What You Need
550 Cord: A staple of any soldier. I've heard it called "Parachute Cord" too. You can find a 50ft roll of it at any military surplus store for two or three dollars. You should be able to find it at a regular box store too.
Beads: Just about any type will do. I have yet to find the "official" shell-type beads anywhere, but it's not important; as long as they fit through the rope (some guys in my squad have cool-looking skull beads on theirs).
Matches: A lighter will work too. Anything that produces a small, fairly controlled flame. :)
Okay, now that you have that, let's get started!
Step 2: Preparation
Pull out the core. That's the white strings on the inside. This lets you compress the cord, which will be important when you're putting the beads on.
Make a loop in the middle. First, even up the loose ends. Refer to the second picture for how to make a loop knot. Make a small loop if you're going to put this around a shirt button; make a bigger one if you're going to loop it through your LCE/LBE.
Fuse the ends. Using a match or your lighter, wave the cord ends back and forth through the flame until they start turning black. Then quickly mash each end together (not with each other) so it's closed off.