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8:30 AM Tuesday, January 11, 2005: Allocation. That's this week's theme. I'm not pushing percentage allocations. I'm pushing opening our eyes to alternatives which, Wall Street brokers don't present us. Today's theme is commodities. (Yesterday's was real estate.) The biggest proponent of commodities is Jim Rogers, author of his latest bestseller, Hot Commodities -- How Anyone Can Invest Profitably in the World's Best Market. Rogers is a man you can't fail to love, especially if you've watched him talk or being interviewed.



In its latest issue, Fortune raves:
"Investing history is filled with contrarians, the lonely figures in the woods. They buy when and where nobody else will. And the savvy ones know that as soon as their opinions grow popular, it's time to move on. For more than a generation, Jim Rogers has been one of the most successful and colorful practitioners of this art. He was the small-town boy turned Wall Street wunderkind, joining George Soros in the 1970s to form one of history's most storied investing teams, up 4,200% in a decade in which the S&P 500 rose just 47%. Then he became the showoff on the Barron's Roundtable, teasing readers with buys such as a Malaysian rubber-farm operator or "white pepper" when the familiar pitch was GE at 24 times earnings. Then he was reinvented as the "Indiana Jones of finance," taking his motorcycle around the world, occasionally risking life and limb, all the while making wildly profitable investments in the unlikeliest places-and writing a best-selling book about the journey to boot. Then, as the mature adventurer traveling around the world again, through even more Third World nations, landing himself in the Guinness Book of World Records for a second time, finding more improbable yet highly lucrative investments-and writing another bestseller. ...

Nobody has gotten it more right lately than Rogers. Just look at the Rogers International Commodities Index. Since Aug. 1, 1998, when Rogers launched a private futures fund to track the index he created, the RICI has produced a total return of 194%, making it the top-performing investment index in the world over the past six years, according to Barclay Trading Group. Not just of commodities-of anything. It has more than doubled the return of the Russell 2000 value stock index over the same period. It's been three times better than the Lehman Brothers Long-Term Treasury portfolio. The Nasdaq? Rogers's index has lapped it 35 times. After fees, Rogers's private fund has returned 153%. A public version of the index fund, launched in 2001, is up 75% since then.

And according to Rogers, the real money has yet to be made. ... The bulk of the [new book] is devoted to demystifying the process of investing in commodities and analyzing the supply-and-demand scenarios for raw materials such as lead and sugar. But the most compelling aspect of the book is its central thesis: For the next decade the value of basic materials will go sky-high. There is a bull market underway but not in the familiar terrain of U.S. stocks. If his record is any indicator, you should take note.


I bought a copy of Roger's book yesterday and read it until I fell asleep last night. Here's what he calls his Review Box: The Brief For Commodities (pages 30-31):

+ The 1980s and 1990s saw a bear market in commodities. ...

+ The long-term bear market in commodities has a created a sharp reduction in capacity -- and thus large supply and demand imbalances. Quite simply, demand is increasing and supply is extremely low and declining and it will take years for this imbalance to improve.

+ As economies in Asia continue to grow, there will be a strong worldwide demand for all commodities. China, in particular, has quickly moved from a major exporter to an importer of commodities, consuming iron ore, copper, oil, soybeans and other raw materials voraciously.

+ Historically, the prices of commodities show a negative correlation to the price moves of stocks, bonds and other financial instruments. When stocks are down, commodities are up, and vice versa. That means if you are not investing in commodities, you are not genuinely diversified.

+ Commodities are tangible assets that offer different characteristics -- and no credit risk. They are also liquid. Commodities are traded on open markets throughout the world, and their prices are listed in the press and other media.

+ Commodity prices can rise even when the economy is stuck in reverse.

+ Commodity returns outpace inflation.

+ Stock prices can go to zero. Commodities cannot. Unlike shares in a company, commodities are real things that are always likely to be worth something to somebody.

+ The U.S. Federal Reserve and other central banks in the world have been pursuing a policy of debasing their paper currencies. Hard, tangible assets will once again, be the place where value and growth can be found -- the real money.

+ The U.S. Federal Reserve's policy of monetary stimulus and rapid credit expansion will continue to push up the prices of hard assets such as precious metals and other commodities -- as more and more money chases a diminishing supply of assets. And while central banks have the power to create money as quickly as they can warm up the printing presses, they cannot create new raw materials or foodstuffs out of thin air or speed up the customary procedures for bringing what is available to market.

+ History shows that war and political chaos only push commodity prices higher, unfortunately.

It isn't as easy as this excerpt suggests. Rogers believes the end of commodity boom is at least a decade away. To his credit, he ends his book, "Consider this book the beginning of your new expertise as a commodities investor. Do your homework and keep learning. Luck always follows the prepared mind." I like that. "Luck always follows the prepared mind."

Google Alerts are really good: My only short is AT&T (T). (So far, I'm losing a few pennies) It's good to know the latest scuttlebutt which may affect the price of the stock. The easiest way to keep up is through Google Alerts. Sign up and you get the main stories your stock, your basketball team, your favorite person, etc. is mentioned. Here's a copy of the memo I received late last night. I'm showing it to you to give you a decent view of this powerful, new, free tool.

Google Alert for: AT&T

AT&T CHIEFTAIN AN 'EMPTY SUIT': GRUBMAN
New York Post - New York,NY,USA
January 10, 2005 -- Star stock analyst Jack Grubman so despised newly appointed
AT&T CEO C. Michael Armstrong in 1997 that he was telling top clients the ...

AT&T Vs. MCI
Forbes - USA
But two of the biggest telecommunications companies in the world--
AT&T and MCI--have spent the last year making themselves look more attractive to buyers, and ...

users bad-mouth cell-phone firms
Sun-Sentinel.com - Fort Lauderdale,FL,USA
... followed by Nextel. AT&T Wireless, which merged with Cingular in October, after the survey was taken, finished last. A Consumer ...

Gates makes new fashion statement
Seattle Times - Seattle,WA,USA
... Executives of the former AT&T Wireless are busy lining up new gigs these days as the company works to combine with Cingular Wireless. ...

Alltel Buys Western Wireless for $6 Billion
NewsFactor Network - Woodland Hills,CA,USA
While the Alltel-Western Wireless merger pales in comparison to the Cingular-
AT&T and Sprint-Nextel blockbuster deals, says IDC analyst Keith Waryas, it ...


 This as it happens Google Alert is brought to you by Google.

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Taser Surprise. Surprise: From USA Today, "Top Taser (TASR) executives and directors sold $91.5 million of stock in the stun-gun maker in the final three months of 2004, a time when some securities analysts say the company appeared to struggle to make year-end sales targets. The amount of the insider selling confirmed Sunday by the company is almost double the combined $41 million in annual weapons sales Taser booked for the prior three years. ... The Securities and Exchange Commission has opened an informal probe into the Scottsdale, Ariz.-based company's statements about the safety of its stun guns. The SEC also is looking into Taser's Dec. 31 delivery of $1.5 million of stun guns to a Prescott, Ariz., firearms distributor. ... Some analysts, including Rob Miceli of Gradient Analytics, say that without the deal, Taser's fourth-quarter revenue would have missed its guidance to Wall Street. ... Amnesty International estimated in a November 30 report that Tasers contributed to the deaths of more than 70 people. ... Taser ranked as one of the hottest stocks in 2004, quadrupling in value. ... Smith dismissed suggestions that Taser insiders, including his father and chairman Phil and his brother and CEO Patrick, sold stock ahead of a sales slump and tougher competition.

"We haven't sold everything," Smith said. "But we didn't see why management shouldn't be allowed to participate along with investors in the growth story we've seen in the last three years."

Phil Smith, who retired from day-to-day responsibilities as chairman on Dec. 31, sold $35.4 million worth of stock in the fourth quarter. That accounted for nearly 40% of insider sales at a time when Taser stock was reaching highs."

In Robert Mugabe's Zimbabwe ...
The economy has halved in value over the past five years. With inflation rampant, bank notes are printed on only one side and carry an expiry date. Unemployment is over 80 percent. Food production in 2004 was less than half that of 2000; it is forecast to be 15 percent of normal this year. Twenty years ago, life expectancy in Zimbabwe was 58; in 2002 it was 33 and dropping. It's gets worse. Refuges leaving Zimbabwe for other countries carry AIDS and HIV and infect the local populations. Even worse; No Africa leader has spoken out against Mugabe. Worse offender: South Africa's president Thabo Mbeki has kept quiet.

Old and Stupid, but Men enjoy this "Joke"
A man boarded an airplane and took his seat. As he settled in he glancedup and saw the most beautiful woman boarding the plane. He soon realized that she was heading straight towards his seat. As fate would have it, She took the seat right beside his.
Eager to strike up a conversation he blurted out "Business trip or pleasure?"
She turned, smiled and said, "Business, I'm going to the Annual Nymphomaniacs of America convention in Chicago,"
He swallowed hard. Here was the most gorgeous woman he had ever seen sitting next to him and she was going to a meeting for nymphomaniacs!
Struggling to maintain his composure, he calmly asked, "What's your business role at the convention?"
She responded. "I am the lead lecturer where I use information that I have learned from my own personal experiences to debunk some of the popular myths about sexuality."
"Really," he said, "and what kinds of myths are there?"
"Well, she explained, "one popular myth is that African-American men are the most well-endowed of all men, when in fact it is the Native
American Indian who is most likely to possess that trait. Another popular myth is that Frenchmen are the best lovers, when actually it
is the men of Jewish descent that are the best. I have also discovered that the lover with the absolute best stamina is the Southern Redneck,"
Suddenly the woman became a little uncomfortable and blushed. "I'm sorry," she said, "I shouldn't really be discussing all this with you.
I don't even know your name."
"Tonto," the man said, "Tonto Goldstein, but my friends call me Bubba."


Harry Newton


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 is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam.
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