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 23, 2006: I
have this mortal fear that once I discover it, it's too late and bound for The
Big Crash. Or,
by the time I jump in, there's so little left, I have to short-time it, watch
it hawklike, grab a few pennies and get the heck out before The Big Crash.
Which means time it. None of us -- least of all me -- is good at timing. It
goes up. We figure we're geniuses. We stick with it. Then one lovely day (or
week) we get busy and don't pay attention. And by then The Big Crash
and it's all over.
in point: If you held on...
.. Our Bird Flu portfolio is down 16.9%.
.. Our China portfolio is down by at least 20%.
.. Our Alternative Energy portfolio is down 24.8%
.. Cramer's "Fast and Furious" portfolio is down by 21.3%
Within each of these, there are stocks above what we "paid"
for them. But not many. Finding them is not easy. For example, only four of
the 21 stocks in the alternative energy portfolio are up, as of last night.
Now check this uranium chart. It's from this week's Economist:
That's more than
a fourfold increase in the price of uranium in three years. Bubbly? You
betcha. Is it too late for you and I? Probably. Read the Economist's
As the price
of uranium rises, ever more firms seek to cash in on it
Call it a boom
within a boom. The prices of various metals continue to set new records: on
August 16th, for example, a tonne of nickel traded for more than $29,000.
Mining firms, meanwhile, are as sought-after as the stuff they produce: this
week, Xstrata, a Swiss mining group, won a battle to buy Falconbridge, a Canadian
one, while CVRD, a Brazilian firm, became the third bidder for Inco, Falconbridge's
former suitor. Yet even by these standards, uranium and the firms that dig
it up are hot commodities.
The price of
uranium oxide, from which fuel for nuclear power plants is made, has risen
from $7.25 a pound in 2001 to $47.25a record in nominal terms. In the
same period, the shares of Cameco, the Canadian firm that is the world's biggest
producer of uranium, have risen from less than $3 to over $38 (see chart).
In part, the
rise simply reflects the cyclical nature of most commodities. But the changing
fortunes of nuclear power have accentuated the ups and downs for uranium.
In the 1970s miners expanded their output, and generating firms built up stocks
of fuel, in anticipation of a steady expansion of nuclear power. But after
nuclear accidents at Three Mile Island in America in 1979 and at Chernobyl
in the Soviet Union in 1986, nuclear power fell out of favor. The end of the
cold war made matters worse for miners: America and Russia began converting
enriched uranium from decommissioned nuclear weapons into fuel, adding to
supply just as demand was ebbing. The price of uranium duly tumbled, and lots
of mines closed.
half of the uranium needed to run the world's nuclear power plants comes from
mines. Existing stocks, former nukes and reprocessed fuel provide the rest.
But these secondary supplies are beginning to run low. Demand, meanwhile,
is rising27 new nuclear plants are under construction, to add to the
442 already operating, according to the International Atomic Energy Agency,
the United Nations' nuclear watchdog. Many countries are planning to build
more, or are at least contemplating the idea. Moreover, since nuclear plants
are cheap to operate but expensive to mothball, they are often run at full
tilt even when demand for power slackens.
uranium is expensive and time-consuming. Equipment and engineers are in desperately
short supply for all mining projects at the moment. In many countries planning
restrictions have become more onerous since uranium's heyday in the 1970s.
Australia, for one, has the world's biggest reserves, but only three mines.
The country's federal government recently decided to drop its long-standing
ban on new mines, but state governments have yet to follow suit.
have not deterred several new firms that hope to strike it rich with uranium.
Andrew Ferguson, who manages Geiger Counter, a nuclear investment fund, reckons
that more than 200 uranium-mining firms have listed on stockmarkets around
the world in the past 18 months. Geiger Counter itself listed on the London
Stock Exchange (LSE) last month. A Canadian-based firm with mines in Kazakhstan,
UrAsia Energy, will join the LSE's Alternative Investment Market (AIM) later
this month. Unlike other commodities, uranium itself does not trade on any
exchanges. But earlier this year, Nufcor Uranium, a firm that simply stockpiles
uranium, also listed on AIM, allowing investors to bet on the price, rather
than on specific mining projects. Shares in another such firm, Uranium Participation
Corporation, have risen by more than half since their listing in Toronto last
Most of these
start-ups, however, do not have any uranium in handjust plans to look
for it. John Wilson, of Resource Capital Research, says it takes at least
five years to develop new mines once the stuff is found. By then, analysts
guess, the price will have fallen back a bit, along with some of the wilder
feel pretty. Oh so pretty.
I don't do this often. But you MUST go to Nike.com,
wait for it to load and the play the Sharapova commercial. The song is from
Leonard Bernstein's West Side Story. Remember, it was Maria who sung
this song in West Side Story. And Sharapova's first name is.... Whoever
put this commercial together is a creative genius.
passed it by three law firms." Yesterday's investment
pitch was riddled with typos and spelling mistakes. The idea -- it wasn't yet
a product -- was far too early. They needed money for R&D. And they were
valuing their startup at $50 million -- about ten times too high. But they asked
why I said "No." And I stupidly answered.
Rule Number One. Never explain why you don't like it. Just say "No,
thank you. And the best of luck." If you say why, you'll find yourself
in an endless discussion. And you'll be told that "we passed it [the pitching
document] by three law firms." What do lawyers know of typos, spelling
mistakes and lousy layout? What do lawyers of raising money?
two and cross your fingers: I
love Men's Health magazine. It has wonderful nuggets. The latest is a
special report into "off-label" drug use -- exploding and dangerous.
Explains the magazine:
Once a medication
is approved by the FDA, your physician is allowed to dispense it as he or
she sees fit. This makes a certain amount of sense. To gain FDA approval,
a drug company must prove that its product is both safe and effective -- a
process that can take several years, tens of millions of dollars, and multiple
major studies. If, after all that energy and expense, the FDA says a medication
can safely treat condition X, why not let doctors prescribe it to try to remedy
Y and Z, too?
When a drug
is used this way -- that is, for something other than what's listed in the
package insert -- it's called an off-label use. The classic off-label drug
is minoxidil, which began life in the 1970s as Loniten, a pill for treating
high blood pressure. Patients taking Loniten began reporting an unusual side
effect: hair growth. It wasn't long before some ingenious pharmacist began
crushing Loniten pills and dissolving them in a solution that balding men
could then rub onto their scalps. Minoxidil is now a baldness treatment named
Rogaine, available at your local CVS for $25.
If there's a
lesson here, it's that drugs generally work across a wide range of body systems,
often in ways even their makers don't understand. For example, another class
of blood-pressure-lowering medications, known as beta-blockers, have been
used off-label for years to quell stage fright. That's logical, since beta-blockers
work by lowering the heart rate. Older SSRI-class antidepressants such as
Zoloft and Prozac can help control premature ejaculation. The anti-anxiety
medication Xanax has been found to relieve irritable-bowel syndrome, of all
things. Ritalin is used to combat fatigue. And so on.
of off-label uses are so common they're routine. Exact figures are difficult
to pin down, but most sources estimate that one in four prescriptions in the
United States is written for an off-label purpose. With total annual U.S.
prescriptions over 3.6 billion, that works out to almost 1 billion off-label
prescriptions in 2005. It's a staggering number of scripts, and some would
say evidence of how essential off-label drugs are for treating patients --
and for advancing the art of medicine. ...
... Still, off-label prescribing comes with undeniable risks. Once your physician
departs from FDA guidelines, he -- and you, the patient -- may be sailing
into a foggy sea, with little solid research to guide the way. Very often,
off-label drug uses are supported only by very small, uncontrolled studies
-- or, worse, by anecdotal physician experience. In fact, a new study in the
Archives of Internal Medicine reveals that nearly 75 percent of the drugs
prescribed off-label in 2001 had "little or no scientific support"
for their use. One of the worst offenders was gabapentin. The researchers
singled out gabapentin for the disturbing disparity between how often it was
used off-label (83 percent of gabapentin prescriptions written -- more than
any other drug) and how few of those prescriptions were backed up by sound
science (just 17 percent). Gabapentin's brand name: Neurontin.
drug prescriptions without scientific data aren't necessarily dangerous situations,"
says Randall Stafford, M.D., Ph.D., the lead study author and an associate
professor of medicine at Stanford University. "But there are situations
in which our knowledge is really limited, and that creates the potential for
you using a drug for off-label treatment, you must read this article.
here. Even better, pick up a copy of the September
issue of Men's Health at your local newsstand.
How doctors work:
A man comes into the ER and yells, "My wife's going to have her baby in
the cab!" I grabbed my stuff, rushed out to the cab, lifted the lady's
dress, and began to take off her underwear. Suddenly I noticed that there were
several cabs -and I was in the wrong one. -- Dr. Mark MacDonald, San Antonio,
2. At the beginning
of my shift I placed a stethoscope on an elderly and slightly deaf female patient's
anterior chest wall. "Big breaths," I instructed. "Yes, they
used to be," replied the patient. -- Dr. Richard Byrnes, Seattle, WA
3. One day I had
to be the bearer of bad news when I told a wife that her husband had died of
a massive myocardial infarct. Not more than five minutes later, I heard her
reporting to the rest of the family that he had died of a "massive internal
fart." -- Dr. Susan Steinberg, Manitoba, Canada
4. During a patient's
two week follow-up appointment with his cardiologist, he informed me, his doctor,
that he was having trouble with one of his medications. "Which one?"
I asked. "The patch. The nurse told me to put on a new one every six hours
and now I'm running out of places to put it!" I had him quickly undress
and discovered what I hoped I wouldn't see. Yes, the man had over fifty patches
on his body! Now, the instructions include removal of the old patch before applying
a new one. -- Dr. Rebecca St. Clair, Norfolk, VA
5. While acquainting
myself with a new elderly patient, I asked, "How long have you been bedridden?"
After a look of complete confusion she answered..."Why, not for about twenty
years - when my husband was alive." -- Dr. Steven Swanson, Corvallis, OR
6. I was caring
for a woman and asked, "So how's your breakfast this morning?" "It's
very good, except for the Kentucky Jelly. I can't seem to get used to the taste"
the patient replied I then asked to see the jelly and the woman produced a foil
packet labeled "KY Jelly." -- Dr. Leonard Kransdorf, Detroit, MI
7. 7. A nurse
was on duty in the Emergency Room, when a young woman with purple hair styled
into a punk rocker Mohawk, sporting a variety of tattoos, and wearing strange
clothing, entered. It was quickly determined that the patient had acute appendicitis,
so she was scheduled for immediate surgery. When she was completely disrobed
on the operating table, the staff noticed that her pubic hair had been dyed
green, and above it there was a tattoo that read, "Keep off the grass."
Once the surgery
was completed, the surgeon wrote a short note on the patient's dressing, which
said, "Sorry, had to mow the lawn." Submitted by RN no name.
8. As a new, young
MD doing his residency in OB, I was quite embarrassed when performing female
pelvic exams. To cover my embarrassment I had unconsciously formed a habit of
whistling softly. The middle-aged lady upon whom I was performing this exam
suddenly burst out laughing and further embarrassing me. I looked up from my
work and sheepishly said, "I'm sorry. Was I tickling you?" She replied,
"No doctor, but the song you were whistling was, "I wish I were an
Oscar Meyer Wiener". -- Dr. wouldn't submit his name.
peach season. Where I am, they're out of this world.
I ate four yesterday.
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 .
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