Newton's In Search Of The Perfect Investment. Technology Investor.
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%
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
+ 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
+ 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,
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."
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 ...
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,
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 ...
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. ...
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,
This as it happens Google Alert is
brought to you by Google.
Remove this alert.
Create another alert.
Manage your alerts.
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.
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."
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
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
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
I don't even know your name."
"Tonto," the man said, "Tonto Goldstein, but my friends
call me Bubba."
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
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.
I have no role in choosing the Google ads. Thus I cannot endorse any,
though some look mighty interesting. If you click on a link, Google may
send me money. That money will help pay Claire's law school tuition. Read
more about Google AdSense, click
here and here.