Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Wednesday, August 1, 2007: The
best news is my Australian mining stocks -- the ones I've talked about. They've
gone through the roof. One is up threefold -- Apex Minerals. The ones I own
Minerals (AXM), BHP, Kagara Zinc (KZL), Metex Resources (MEE), Minara Resources
(MRE), Oxiana (OXR), Rio Tinto (RIO), Western Areas (WSA) and Zinifex (ZFX).
Metex is the only one I'm down on. All have pulled back, thus representing a
good time to jump in. I bought more Apex last night.
easiest way way to buy more shares is simply to ask your U.S. human broker to
buy them for you. The problem is that it takes overnight and it's hard to fine
tune your price. You can easily open an Australian brokerage account. They do
things like we do. And they speak English -- well, a form of it.
nine-step plan: Last Friday I laid out a nine-step
plan for dealing with this volatility -- yesterday was up 1% and then down 1%
all in one day, the first time since 2003. If you missed my plan,
As I've said,
I'm not panicking. All this will pass. I remain optimistic. Today's good news:
Confidence Climbs to Highest in 6 Years by Bob Willis.
July 31 (Bloomberg)
-- Consumer confidence in the U.S. climbed more than forecast in July to the
highest in almost six years, spurred by job and income growth and lower gasoline
The New York-based
Conference Board's index of consumer confidence rose to 112.6 in July from
a revised 105.3 the prior month. The index averaged 105.9 in 2006.
would help consumer spending, which accounts for more than two-thirds of the
economy, pick up from a second-quarter slump. Greater job stability, cheaper
gasoline and rising stock prices through most of the month outweighed concerns
about falling home values.
economy, once again, remains on a firmer footing than it has generally been
given credit for,'' said Richard DeKaser, chief economist at National City
Corp. in Cleveland, whose forecast of 111 was the most accurate. ``There is
a generally healthy disposition among consumers. Even in spite of the pause
in spending, we will see them come back.'' ...
The share of
consumers who said jobs are plentiful increased to 30.5 percent, the highest
since August 2001, from 27.6 percent. The proportion who said jobs are hard
to get fell to 18.4 percent from 20.5 percent. ...
The number of
Americans filing for jobless benefits last week unexpectedly fell to the lowest
in two months, a sign the job market remains resilient. Unemployment is at
4.5 percent, close to a six-year low. ...
Wage gains are
also helping soften the effects of high gas prices and declining home values
for the consumer. Average hourly earnings were up 3.9 percent in June from
the prior year, the government said June 6.
from my friend Jim Kingsdale. Jim is a very
savvy energy investor. He writes the new, excellent blog, "Energy
Investment Strategies," He has just posted:
Sub-Prime is Hard to Figure
But Mexico Is a Clear and Present Danger
Nobody can know
the impact that sub-prime mortgage defaults will have on the broader stock
market and the economy. Its clearly a negative vector for U.S. economic
growth, but the question is whether it is a strong enough vector to outweigh
such positive vectors such as excellent foreign growth, especially for Chindia.
I doubt that and I also think any U.S. recessionary evidence (of which we
have seen none thus far) would likely be rapidly met by the Fed lowering interest
rates since we are headed into a Presidential election cycle.
The most likely
future, therefore, continues to be mild economic growth, benign interest rates
and an upwardly biased stock market. Thus, my investment strategy has not
changed; I am staying long. I could be long and wrong, but I think the major
impacts of the sub-prime fallout will be better lending discipline
and less LBO activity, both of which could help to keep interest rates
low and therefore be a good thing for both stocks and for the economy longer
term. While the current correction in stocks could certainly last longer I
am very confident that in three years few people will remember this event.
we should keep in mind that a U.S. recession would likely cause the price
of oil to fall, thus potentially causing a double-whammy for the
now popular energy stock sector. So with oil prices approaching historical
highs, this is a time of heightened risk to the energy investor. On the other
hand, the global supply/demand relationship for oil, which seems fairly tight
now, looks to tighten further based on rapid decline levels that are occurring
in places like
Mexico is a
highly predictable vector for higher oil prices, particularly because of its
critical role in supplying the U.S. market. The short story is this: The U.S.
currently imports about 1.5 million barrels of oil from Mexico every single
day, our third largest source of oil after Canada and Saudi Arabia and fully
7% of all the oil used in the U.S. Within a period of five years, Mexico
may not be able to export a single barrel of oil to anyone.
The full story
is that Mexico faces increasingly higher probabilities of rapidly declining
oil production, financial collapse, and political upheaval. The indisputable
facts are stark and nearly self explanatory:
primary oil field, Cantarell, which produces 60% of all Mexican oil, has entered
into a very rapid state of decline, a prime example of the rapid decline of
oil fields that have been subjected to many years of Enhanced Oil Recovery.
Production from Cantarell is declining at about 15% per year. At the same
time domestic Mexican oil consumption is increasing at about 2% per year.
decline of Cantarell is behind a recent news release that starts as follows:
27 (Prensa Latina) Petroleos Mexicanos (PEMEX) announced that oil reserves
may run out in seven years.
of this economically exploitable resource are running out, informed
a report sent by the state owned company to the United States stock market.
Constitution gives PEMEX, the national oil company, the monopoly on Mexican
oil production and prohibits it from sharing ownership of its oil reserves
with either private Mexican companies or foreign entities. This severely limits
the incentives Mexico can offer to attract outside capital and skills to the
very difficult and time consuming project of exploring for and developing
new oil fields in the Gulf of Mexico.
revenue from oil exports provide 40% of the funds spent by the Mexican
government. Clearly, to the extent that oil exports decline (at a rate greater
than the increase in the price of oil), the Mexican budget will have less
funds to spend. This is likely to reduce Mexicos ability to provide
both police security and social services, thus increasing social unrest.
Mexican government is currently fighting a two-front war for social calm.
One front is the drug dealers corruption of the regional police. Since
taking office and through June of 2007, President Calderon has replaced 284
officers of high rank in the regionally-based federal police forces. The other
front is against the socialist and largely Indian (Mexicans of native and
mestizo descent) political forces led by the former Mayor of Mexico City who
was very narrowly defeated in the 2006 Presidential election, which was disputed
in much the way Bush-Gore was in the U.S. Recently, Mexican terrorists blew
up oil and gas pipelines in three explosions, so it seems that the government
is already being challenged militarily. Any significant diminution of the
federal governments financial capabilities from reduced oil income will
hurt their ability to pursue this war on both fronts and thereby increase
the likelihood of social unrest throughout the country.
enters a period of increased social unrest and civil strife, the job of developing
additional Mexican oil reserves will be made that much more difficult.
One cannot review
these facts, it seems to me, without concluding two things:
1. Mexico faces
an extremely difficult near term economic and political future, and
2. U.S. oil
supplies will be made increasingly tight over the next five years by reduced
Mexican imports which will require the U.S to import more from other countries.
Such substitution can only occur by means of the U.S. bidding more aggressively
in the global oil auction process. That will substantially increase the pressure
for higher oil prices.
oil moved over $78 a barrel --the highest ever, I believe.
Businesses having second thoughts about Vista: I remain unimpressed
with Microsoft's new Vista. I still looking for its BIG pluses. I'm not thrilled
about having to re-learn how to do things. And my Windows XP machines are working
just fine. In fact, remarkably fine. (Though I'm reluctant to write this for
fear of jinxing them.) There's an old rule among old IT (Information Technology)
managers: "If it works, don't mess with it." From the computer
30, 2007 (Computerworld) -- Fewer businesses are now planning to move to Windows
Vista than seven months ago, according to a survey by patch management vendor
PatchLink Corp., while more said they will either stick with the Windows they
have, or turn to Linux or Mac OS X.
In a just-released
poll of more than 250 of its clients, PatchLink noted that only 2%
said they are already running Vista, while another 9% said they planned to
roll out Vista in the next three months. A landslide majority, 87%,
said they would stay with their existing version(s) of Windows.
contrasted with a similar survey the Scottsdale, Ariz.-based vendor published
in December 2006. At the time, 43% said they had plans to move to Vista
while just 53% planned to keep what Windows they had. ...
of heart may be because of a changed perception of Vista's security skills.
Seven months ago -- within weeks of Vista's official launch to business, but
before the operating system started selling in retail -- 50% of the CIOs,
CSOs, IT and network administrators surveyed by PatchLink said they believe
Vista to be more secure than Windows XP. The poll put the security
skeptical at 15% and pegged those who weren't sure yet at 35%.
PatchLink, only 28% agreed that Vista is more secure than XP. Meanwhile, the
no votes increased to 24% and the unsure climbed to 49%.
a new laptop: If I visit Starbucks, everyone
is using a Mac. That's point one. If I look at the new laptop, Toshiba sent
me yesterday to play with -- the Toshiba Tecra M9 -- I yawn. Some moron changed
the keyboard layout, putting the Ins and Del keys in a different (and virtually
inaccessible) place. The screen is smaller and harder to read than the previous
model (the one I'm writing this column on), the M5. Why mess with a good thing?
For now, the best strategy is: Buy more memory,
a new keyboard and a new screen for your existing laptop. It'll feel like a
How one idiot ruined a great country: Zimbabwe's annual inflation
rate could exceed 100,000 percent by the end of 2007 if current trends
continue, Reuters reported, citing Abdoulaye Bio Tchane, director of the International
Monetary Fund's Africa department. Tchane said bleak economic prospects and
price controls are likely to fuel the inflation increase.
Unemployment must now be over 90%. Many people in Zimbabwe are now starving.
This is seriously sad.
awaits us -- part 3
A very "self-important" college freshman attending a recent
football game, took it upon himself to explain to a senior citizen sitting next
to him why it was impossible for the older generation to understand his generation.
"You grew up in a different world, actually an almost primitive one."
The student said,
loud enough for many of those nearby to hear. "We, the young people of
today, grew up with television, jet planes, space travel, men walking on the
moon, our spaceships have visited Mars. We have nuclear energy, electric and
hydrogen cars, computers with light-speed processing and...," pausing to
take another drink of beer.
The Senior took
advantage of the break in the student's litany and said, "You're right,
son. We didn't have those things when we were young, so we invented them.
Now, you arrogant
little man, what are you doing for the next generation?"
The applause was
This column is about my personal search
for the perfect investment. I don't give investment advice. For that you have
to be registered with regulatory authorities, which I am not. I am a reporter
and an investor. I make my daily column -- Monday through Friday -- freely available
for three reasons: Writing is good for sorting things out in my brain. Second,
the column is research for a book I'm writing called "In Search of the
Perfect Investment." Third, I encourage my readers to send me their
ideas, concerns and experiences. That way we can all learn together. My email
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