Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Tuesday, December 20, 2005: New
York City bus and subway strike. Seven million commuters get screwed. Buy shares
in bicycle companies, if you can find one. If you commute by bicycle, cover
your ears. It's cold outside. The best is called Robocap from a Swiss company
$50 or so. Overpriced, but warm. It covers your ears better than this photo
Predictions. Predictions. Some work. Most don't. I'm working on my
list for 2006. Meantime, here are some from Red Herring magazine, a magazine
that failed, then got resurrected and is probably still losing money, judging
by its lack of ads.
1. Online games will boom. That includes both specialty console (Xbox,
Playstation, etc.) and online PC games. PC games are growing faster, but their
quality "doesn't hold a candle" to console games.
2. Falling flash memory prices will unleash a fresh wave of innovation in
consumer electronics. Buy shares in SanDisk? Falling prices means flash
will be more practical in automobiles and handheld devices, where a hard drive's
moving parts make them impractical.
3. Internet video will make its way into the living room next year as Hollywood
embraces the P2P tools it once loved to hate. As more people gain access
to broadband, the tools for taking full advantage of bandwidth are moving from
renegade to mainstream.
Location-based services will finally start to grow up. Sprint Nextel offers
driving directions. Verizon announced three new applications for mobile wireless
customers that help identify traffic snarls and locate low-price gas stations.
5. No wires, no charge. With wireless broadband, hooking up to the Internet
anywhere on the globe seems more like a right than a privilege. With Intel pushing
it, WiMAX is poised to boom.
6. Drug bust. As big pharma's blockbuster business model falters, the
precision drug strategy begins to gain traction. Personalized medicines may
still be a decade or more away.
Nickel-and-diming. With the rise of pay-as-you-go content, there's light
at the end of the digital pipe for micro-payments. Apple legitimized the need
for micro-payments with iTunes -- songs for 99 cents. More content providers
8. Sensor motes
gain in traction. Sensor motes are typically wireless. They're small, coin-sized
wireless devices that are designed to establish network connections on the fly
with minimal power needs. What the devices lack in intelligence, they make up
for in their ability to quickly wake from hibernation and locate and establish
communications with other nearby wireless motes. Using small amounts of energy,
they are able to transmit short bursts of data reporting on such things as changes
in temperature, light, motion, or even the presence of chemicals. Many of them
can work together in concert with so-called "mesh" networks, providing
precise information about movements on a battlefield or people walking through
a building. Sensor motes are presently used in monitoring leaks in water pipelines,
maintaining the temperature in industrial buildings or watching over an industrial
process to ensure that humans are alerted before a major breakdown.
Katrina made companies realize that 2006 will be the year of supply chain. Pilots,
train drivers, skippers. The global economy has been growing faster than infrastructure
has been added to the system.
10. Molecular cuisine is to food what pharmagenomics is to medicine. People
respond differently to different foods, and one's genetic makeup is the key
to learning what foods promote optimal health.
Time for a sanity check.
Business Week, The 10 Worst Economic Predictions About 2005
10. "If Microsoft
(MSFT ) gets serious about search -- and there is every reason to believe that
it will -- Google will need brilliant strategy and flawless execution simply
to survive." -- Charles H. Ferguson, author, Technology Review, Jan. 1,
Google didn't just survive in 2005. It ruled. In the most recent quarter, profits
soared 633%, and revenues almost doubled. Microsoft? Profits gained 24%, revenue
9. "The big,
big story of 2005 could be the collapse of the dollar." -- Peter Schiff,
founder of Euro Pacific Capital in Newport Beach, Calif., Jan. 2, 2005
Collapse? The dollar surged 14% against the Japanese yen and 13% against the
euro from the start of the year through mid-December.
8. Chinese Internet
stock NetEase.com (NTES ) -- "organic and innovative" -- will outperform
the market. -- Richard Ji, Jenny Wu, and Mary Meeker, Morgan Stanley (MWD )
tech analysts, initiating coverage on Sept. 12, 2005
In the first three months after Meeker's team recommended NetEase, the company's
shares fell 25%. Oops.
the big electricity generator, "is making progress with a big financial
restructuring. If they just liquidated the company, you'd get $6 a share."
-- David J. Williams, portfolio manager of the Excelsior Value & Restructuring
Fund at U.S. Trust, Dec. 27, 2004
Calpine's shares were trading around $3.50 when Williams made them one of his
top picks for 2005. They're trading now for 31 cents -- down 91%.
by OPEC could cause a steep decline in oil prices: "We are concerned about
the future. We are concerned about a new severe drop in price like we have witnessed
in recent days." -- Iranian Minister of Petroleum Bijan Zanganeh, Nov.
Oil prices were about $50 a barrel when Zanganeh fretted about a severe drop.
They hit a record of $70 a barrel in the summer before easing back to "only"
around $60 by yearend.
5. Sales of gold
by central banks could seal its fate as an economic relic of the Old World.
"The pillars of the market are crumbling." -- Andy Smith, a gold analyst
at Mitsui Global Precious Metals in London, May 3, 2004
Those golden pillars didn't crumble in 2005. They turned into rocket boosters.
Gold rose 16% to a 22-year high in mid-December.
4. Mechanics at
Northwest Airlines (NWA ) will win a strike because other workers will stand
up for them. "We know we're not in this alone." -- Ted Ludwig, president
of Local 33, Aircraft Mechanics Fraternal Assn., Aug. 9, 2005
Northwest had little trouble finding replacements for the 4,100 strikers, and
no other unions honored their picket line. The continuing strike is considered
a near-total failure.
3. The Dow Jones
industrial average will finish 2005 at 8,000 points. -- Bernie Schaeffer, Schaeffer's
Investment Research, Dec. 27, 2004
Technically speaking, this prediction could still come true, but it would require
the Dow industrials to plummet 26% in the next two weeks. Anyone willing to
2. 2005 will be
"a year of economic difficulty." -- A majority of the American people;
54% of respondents to a Gallup poll, Dec. 17-19, 2004
For many, it was a difficult year. But the unemployment rate is just 5%, well
below its 30-year average. The economy is growing rapidly. And household wealth
is at an all-time high. If 2005 was "difficult," then what would you
call a recession?
1. The U.S. will
have fewer hurricanes in 2005 than in 2004. -- Tropical Meteorology Project
of Colorado State University, Dec. 3, 2004
2005 broke all hurricane records. Including Katrina and Rita, there were 14
Atlantic hurricanes, 7 of them classified as "intense." The Coloradans
had predicted six -- only three intense. Granted, predicting hurricane season
half a year before it warms up is no easy task. But guys, come on.
the wife needs (?)
A husband and wife go to a counselor after 30 years of marriage.
asks them what the problem is? The wife goes into a tirade, listing every problem
they have ever had in the 30 years they've been married. She goes on and on
Finally, the counselor
gets up, goes around the desk, embraces the woman, and kisses her passionately.
The woman shuts up and sits quietly in a daze.
turns to the husband and says "That is what your wife needs at least three
times a week. Can you do that?"
The husband replies,
"I can bring her in on Monday and Wednesday, but on Friday I'm playing
poker with the boys."
+ Dumb reasons we hold losing stocks. Click
+ How my private equity fund is doing. Click
+ Blackstone private equity funds. Click
+ Manhattan Pharmaceuticals: Click
+ NovaDel Biosciences appeals. Click
+ Hana Biosciences appeals. Click
+ All turned on by biotech. Click
+ Steve Jobs Commencement Address. The text is available:
Click here. The full audio is available. Click
+ The March of the Penguins, an exquisite movie. Click
+ When to sell stocks. Click
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 address
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