Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST Thursday, August 10, 2006: "Cash
is King," I've been writing. And I've been getting flack for it.
"How can you recommend cash when your earnings on cash won't keep up with
inflation. You'll be broke by the time you're 85."
If I have the choice, I'd rather be 85 and broke, than be rich and dead.
King" is a slogan. It doesn't mean I have cash money in my mattress (though
my grandfather did). My "cash" is in triple tax-free muni bond floaters,
which are presently paying me 3.39%. That's better than inflation. It's
also the equivalent of earning 5.5% interest taxed as ordinary income.
Nor do I have 100% of my assets in "cash." Some is in real estate,
private equity funds, etc. I'm diversified. My preference
"Cash is King" is my rallying cry for my belief that I don't like
the stockmarket at present. It's done well since the Tech Wreck of 2000-2002.
But its run is over. I'm dubious about the stockmarket's immediate prospects
-- for all the reasons I've bored you with in recent weeks.
That doesn't mean I've retired to a cave in Outer Mongolia or Upper Volta. I'm
still actively looking at new investments, including in recent days a private
equity fund, some real estate and some short-selling.
The world, however,
has changed BIG TIME. For changes think:
+ Residential real estate.
+ Interest rates.
+ Technology slowdown.
+ Terrorism and War.
+ Budget deficits.
my money managers have lost me money in the last four months. My real estate
money managers have done brilliantly. That's what portfolio diversification
is all about.
When times are uncertain and tough -- as they are now -- it's perfectly reasonable
to hang back. Enjoy the nice weather. Hug the kids. Get some exercise. And watch
for opportunities. No one went broke by having a little cash in the bank.
How to read newspapers and magazines: There
are now three ways to read newspapers and magazines:
The dead tree editions, also called paper.
2. Their web sites.
I've spelled out the pros and cons of each. My recommendation is simple. Go
to Newsstand.com -- click
here -- and try reading a magazine or newspaper online. Sample issues
are free or cost a dollar or two. I think you'll be pleasantly surprised.
to dispose of
2. Messes up your clothes.
but less and less, as publishers "give away" subscriptions to
searching and archiving. It's usually all there.
2. Some sites -- e.g. the Wall Street Journal and the New York Times --
offer far more than what's in their print editions.
3. Easy to clip pieces and send them to your friends, who (like you) are
overwhelmed with stuff their friends sent them.
omits graphics from the print edition.
2. Some publishers don't post all their articles or wait weeks to post them
after the print edition is out.
sites cost money, but not much.
and feel of the paper edition.
2. Great for overseas publications
3. Easy to get around and get to the sections/articles you want to read..
4. Decent searching
5. Broad options in subscribing -- from one day to a year, etc.
6. Some magazines are free to try.
7. Can be saved to your hard disk for reading on planes, trains etc.
8. Their free Reader (like Adobe Acrobat). works for all their publications.
9. Some publications, e.g. the New York Times, don't require downloading
the newspaper. This is faster reading.
broadband connection and a PC.
bigger your PC's screen, the better.
70% to 80% of a print subscription.
2. No tie-in to print edition, e.g. you don't get a discount if you subscribe
it for carrying your laptop on your next plane ride. This
terrorist stuff is getting very serious very quickly. The British said this
morning they had thwarted a terrorist plot to blow up several aircraft mid-flight
between the United States and Britain using explosives smuggled in hand luggage.
The British Department of Transport advised all passengers that they would not
be permitted to carry any hand baggage on board any aircraft departing
from any airport in the country. Passengers faced delays as tighter security
was hastily enforced at the country's airports. British Airways said
some flights were likely to be canceled. Laptop computers, mobile phones, iPods,
and remote controls were among items banned from being carried on its planes.
London's Heathrow airport was the departure point for a devastating terrorist
attack on a Pan Am airplane on December. 21, 1988. The blast over Lockerbie,
Scotland, killed all 259 people aboard Pan Am Flight 103 and 11 people on the
ground. A dear friend of mine and business partner lost his wife on Flight 103.
I've watched him struggle to bring up his daughter without her mother.
on Pan Am Flight 103 was hidden in a portable radio in checked baggage.
scary is it getting? Read this article from
yesterday's Wall Street Journal. The author is one of the world's leading
authorities on the Middle East. His books are brilliant. His insight is deep.
I pray he's wrong.
by Bernard Lewis, professor emeritus at Princeton and author, most recently,
of "From Babel to Dragomans: Interpreting the Middle East" (Oxford
University Press, 2004).
During the Cold
War, both sides possessed weapons of mass destruction, but neither side used
them, deterred by what was known as MAD, mutual assured destruction. Similar
constraints have no doubt prevented their use in the confrontation between
India and Pakistan. In our own day a new such confrontation seems to be looming
between a nuclear-armed Iran and its favorite enemies, named by the late Ayatollah
Khomeini as the Great Satan and the Little Satan, i.e., the United States
and Israel. Against the U.S. the bombs might be delivered by terrorists, a
method having the advantage of bearing no return address. Against Israel,
the target is small enough to attempt obliteration by direct bombardment.
It seems increasingly
likely that the Iranians either have or very soon will have nuclear weapons
at their disposal, thanks to their own researches (which began some 15 years
ago), to some of their obliging neighbors, and to the ever-helpful rulers
of North Korea. The language used by Iranian President Ahmadinejad would seem
to indicate the reality and indeed the imminence of this threat.
Would the same
constraints, the same fear of mutual assured destruction, restrain a nuclear-armed
Iran from using such weapons against the U.S. or against Israel?
There is a radical difference between the Islamic Republic of Iran and other
governments with nuclear weapons. This difference is expressed in what can
only be described as the apocalyptic worldview of Iran's present rulers. This
worldview and expectation, vividly expressed in speeches, articles and even
schoolbooks, clearly shape the perception and therefore the policies of Ahmadinejad
and his disciples.
Even in the
past it was clear that terrorists claiming to act in the name of Islam had
no compunction in slaughtering large numbers of fellow Muslims. A notable
example was the blowing up of the American embassies in East Africa in 1998,
killing a few American diplomats and a much larger number of uninvolved local
passersby, many of them Muslims. There were numerous other Muslim victims
in the various terrorist attacks of the last 15 years.
The phrase "Allah
will know his own" is usually used to explain such apparently callous
unconcern; it means that while infidel, i.e., non-Muslim, victims will go
to a well-deserved punishment in hell, Muslims will be sent straight to heaven.
According to this view, the bombers are in fact doing their Muslim victims
a favor by giving them a quick pass to heaven and its delights -- the rewards
without the struggles of martyrdom. School textbooks tell young Iranians to
be ready for a final global struggle against an evil enemy, named as the U.S.,
and to prepare themselves for the privileges of martyrdom.
A direct attack
on the U.S., though possible, is less likely in the immediate future. Israel
is a nearer and easier target, and Mr. Ahmadinejad has given indication of
thinking along these lines. The Western observer would immediately think of
two possible deterrents. The first is that an attack that wipes out Israel
would almost certainly wipe out the Palestinians too. The second is that such
an attack would evoke a devastating reprisal from Israel against Iran, since
one may surely assume that the Israelis have made the necessary arrangements
for a counterstrike even after a nuclear holocaust in Israel.
The first of
these possible deterrents might well be of concern to the Palestinians --
but not apparently to their fanatical champions in the Iranian government.
The second deterrent -- the threat of direct retaliation on Iran -- is, as
noted, already weakened by the suicide or martyrdom complex that plagues parts
of the Islamic world today, without parallel in other religions, or for that
matter in the Islamic past. This complex has become even more important at
the present day, because of this new apocalyptic vision.
In Islam, as
in Judaism and Christianity, there are certain beliefs concerning the cosmic
struggle at the end of time -- Gog and Magog, anti-Christ, Armageddon, and
for Shiite Muslims, the long awaited return of the Hidden Imam, ending in
the final victory of the forces of good over evil, however these may be defined.
Mr. Ahmadinejad and his followers clearly believe that this time is now, and
that the terminal struggle has already begun and is indeed well advanced.
It may even have a date, indicated by several references by the Iranian president
to giving his final answer to the U.S. about nuclear development by Aug. 22.
This was at first reported as "by the end of August," but Mr. Ahmadinejad's
statement was more precise.
What is the
significance of Aug. 22? This year, Aug. 22 corresponds, in the Islamic calendar,
to the 27th day of the month of Rajab of the year 1427. This, by tradition,
is the night when many Muslims commemorate the night flight of the prophet
Muhammad on the winged horse Buraq, first to "the farthest mosque,"
usually identified with Jerusalem, and then to heaven and back (c.f., Koran
XVII.1). This might well be deemed an appropriate date for the apocalyptic
ending of Israel and if necessary of the world. It is far from certain that
Mr. Ahmadinejad plans any such cataclysmic events precisely for Aug. 22. But
it would be wise to bear the possibility in mind.
A passage from
the Ayatollah Khomeini, quoted in an 11th-grade Iranian schoolbook, is revealing.
"I am decisively announcing to the whole world that if the world-devourers
[i.e., the infidel powers] wish to stand against our religion, we will stand
against their whole world and will not cease until the annihilation of all
them. Either we all become free, or we will go to the greater freedom which
is martyrdom. Either we shake one another's hands in joy at the victory of
Islam in the world, or all of us will turn to eternal life and martyrdom.
In both cases, victory and success are ours."
In this context,
mutual assured destruction, the deterrent that worked so well during the Cold
War, would have no meaning. At the end of time, there will be general destruction
anyway. What will matter will be the final destination of the dead -- hell
for the infidels, and heaven for the believers. For people with this mindset,
MAD is not a constraint; it is an inducement.
How then can
one confront such an enemy, with such a view of life and death? Some immediate
precautions are obviously possible and necessary. In the long term, it would
seem that the best, perhaps the only hope is to appeal to those Muslims, Iranians,
Arabs and others who do not share these apocalyptic perceptions and aspirations,
and feel as much threatened, indeed even more threatened, than we are. There
must be many such, probably even a majority in the lands of Islam. Now is
the time for them to save their countries, their societies and their religion
from the madness of MAD.
photo may be doctored: This was the photo of Condoleezza Rice that
USA Today ran on its web site:
This was the photo
as it was originally taken:
This is the original photo after I sharpened it in Photoshop. Most digital camera
shots are "sharpened" before being posted on a web site or published
in a magazine.
USA Today apologized:
The photo of Condoleezza Rice that originally accompanied this story was altered
in a manner that did not meet USA TODAY's editorial standards. The photo has
been replaced by a properly adjusted copy. Photos published online are routinely
cropped for size and adjusted for brightness and sharpness to optimize their
appearance. In this case, after sharpening the photo for clarity, the editor
brightened a portion of Rice's face, giving her eyes an unnatural appearance.
This resulted in a distortion of the original not in keeping with our editorial
Here are two more
photos. The photographer, Adnan Hajj, has been accused of doctoring a photo
of an Israeli air raid on Beirut. The manipulated image is left, and the original
picture is on the right. Hajj worked for Reuters which sent many of his manipulated
photos to U.S. newspaper in recent years and were published in those newspapers.
The doctoring is very amateurish. He probably used Photoshop's cloning tool,
its easiest. The theory is that Hezbollah was pressuring him (and other photographers)
to make the destruction in their photos more devastating.
Employee of the month: I
have no idea if this picture is a fake, except that friends say it happens at
every high tech company:
A pirate walked into a bar. The bartender said, "Hey, I haven't seen you
in a while. What happened? You look terrible."
you mean?" said the pirate. "I feel fine."
the wooden leg? You didn't have that before."
were in a battle and I got hit with a cannon ball, but I'm fine now."
what about that hook? What happened to your hand?"
in another battle. I boarded a ship and got into a sword fight. My hand was
cut off. I got fitted with a hook. I'm fine, really."
that eye patch?"
day we were at sea, and a flock of birds flew over. I looked up and one of them
crapped in my eye."
said the bartender. " You couldn't lose an eye just from bird crap."
"It was my
first day with the hook."
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 address is .
You can't click on my email address. You have to re-type it . This protects
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