AM Wednesday, January 19, 2005: Everything
is marketing. You have to be wary of it. The drug companies market their pills
too aggressively. Now Merck is in major legal trouble with Vioxx. Hedge funds hype their brilliance over staid mutual funds. Eyeball these numbers
over the results you've read for mutual funds for 2004. Not stunningly impressive.
Remember these are numbers for the best hedge funds. The others no longer
report their results. Hedge funds don't have the visibility that mutual funds
Henry Blodgett is a
poor analyst, but a good writer. In a recent issue of New York Magazine, he says "industries usually progress through four eras --
boom, bust, growth and decay -- and the Internet is now in the
early years of the third. The good news is that this phase usually the longest
and most profitable of the four. The PC industry boomed and busted in the early
eighties: Dell, Microsoft and other postdiluvian survivors have made a killing since."
So, with this background, let's look at Morgan Stanley's 55-page Technology--2005 Outlook report, just out
today. Morgan writes
global technology stock focus list includes ten stocks rated overweight and five
stocks rated underweight. At a high level it's notable that the majority of our
ten overweight stocks should benefit from strong consumer end-market demand
while we believe that all of our underweight stocks should be impacted by
cyclical or competitive trends. Overweight -- Dell, NVIDIA, LG. Philips LCD, Samsung, Cisco, UTStarcom, ADP, Yahoo!, Microsoft, Softbank;
Underweight -- Solectron, Lam Research, Ericsson, Symantec, Rakuten."
Why are I not impressed?
All of Morgan's overweight picks
are mature, boring companies whose big growth is behind them, not in front of
them. I fault Morgan's less than I recognize how difficult it is to pick tiny
tech stocks with big potential. And how their picks are biased
towards investment banking clients, not stockbroking
clients. I recognize (and you should too) that it's not the job of a huge
broker to counsel hot stocks and encourage its clients to play "the quick in and out," to quote the movie,
Clockwork Orange, e.g. my
Ironically, Interchange (INCX) may
now have hit bottom and may be on its way up, again.
When you make
predictions, Blodgett's framework isn't bad. Boom, bust, growth and decay. Two stories I read recently
shows what happens when you get things late and wrong:
cities are spending hundreds of millions of dollars to build convention halls at
a feverish pace, even as the convention industry is contracting and attendance
is falling, according
to a new report by the Brookings Institution. The report comes as New York City, and more
than three dozen other cities in the country, are seeking to expand their
exhibit space or build new convention centers to capture new business, jobs and
revenue. The Brookings report raises questions about the wisdom of joining the
convention hall space race. "You've got cities around the country building new
or expanded convention space at a very rapid rate in a market that is already
glutted and oversupplied," said Heywood Sanders, author of the report, "Space
Available: The Realities of Convention Centers as Economic Development
Strategy." "In an environment where every major center around the country is
sharply discounting rental rates or giving space away and throwing in
incentives, the likelihood of any succeeding is remarkably dim," Mr. Sanders
to the Brookings report, the amount of exhibit space in the United States
has jumped 51 percent since 1990, to 60.9 million square feet from 40.4 million.
And today about 40 cities are planning to add a total of up to 7 million square
feet of space. Yet the report indicates that attendance at the nation's 200
largest trade shows has been falling since it peaked in 1996 at 5.1
million. Computer and technology shows, the glamour segment of the industry in
the 1990's, as well as mainstays like the National Hardware Show, have suffered
declines. Even with a recent upturn, the report said attendance hit only 4.1
million in 2003."
familiar with computer and telecom shows. I used to go to all of them. And I ran
one of the largest -- our peak was 26,000 people at the Los Angeles Convention Center in 1997, the year I sold
it.. Five years later, the new management closed the
show down for lack of atendance.
2. The Book-of-the-Month Club boasted
1.5 million members in 1998. Since
then, membership has fallen to 400,000. Amazon, Barnes and Noble and other
cheap ways of buying books on the Internet killed it. General book clubs are
dead, though specialized ones are in.
dumb can you be? The
U.S. government sued Richard Hatch,
the nudist winner of the first season of the reality TV show "Survivor,"
claiming he failed to report the $1.01 million in prize money he won in 2000,
along with more than $321,000 he earned doing a radio show the next year. Mr.
Hatch agreed to plead guilty to two charges of tax evasion. Each count carries a
maximum fine of $250,000 and five years in prison, but the government said it
would recommend a lighter sentence.
As April 15 gets closer, there will
be more stories of tax evaders caught. The stories are meant to encourage you
and I not to cheat on our tax
to visit Australia? Have some questions?
These questions about Australia were posted on an
Australian Tourism web site. The
answers came from a fellow Aussie.
Q: Does it ever get
windy in Australia? I have never seen it rain
on TV, so how do the plants grow? (UK)
A: We import all plants fully
grown and then just sit around watching them die.
Q: Will I be able to
see kangaroos in the street? (USA)
A: Depends on how much you've
Q: I want to walk
from Perth to Sydney - can I follow the railroad tracks?
A: Sure, it's only 5000km,
take lots of water...
Q: Are there any
ATMs (cash machines) in Australia? Can you send me a list of
them in Brisbane, Cairns, Townsville and Hervey Bay? (UK)
did your last slave die of?
Q: Which direction
is North in Australia? (USA)
south and then turn 90 degrees. Contact us when you get here and we'll send the
rest of the directions.
Q: Can I bring
cutlery into Australia? (UK)
Just use your fingers like we do.
Q: Do you have
perfume in Australia? (France)
No, We wash.
Q: Can you tell me
the regions in Tasmania where the female population is
smaller than the male population? (Italy)
A: Yes, gay
Q: Do you celebrate
Christmas in Australia? (France)
Yes. But only at
Q: Are there killer
bees in Australia? (Germany)
No, but for you, we'll import them.
Q: Are there
supermarkets in Sydney and is milk available all year round?
A: No, we are a peaceful
civilization of vegan hunter gatherers. Milk is
Q: Please send a
list of all doctors in Australia who can dispense
rattlesnake serum. (USA)
A: Rattlesnakes live in
A-meri-ca which is where YOU come from. All
Australian snakes are perfectly
harmless, can be safely handled and make good pets.
Q: I have a question
about a famous animal in Australia, but I forget its name.
It's a kind of bear and lives in trees. (USA)
called a Drop Bear. They are so called because they drop out of gum trees and
eat the brains of anyone walking underneath them. You can scare them off by
spraying yourself with human urine before you go out
Q: I was in
Australia in 1969 on Navy R&R,
and I want to contact the girl I dated while I was staying in Kings Cross. Can
you help? (USA)
A: Yes, and you will still
have to pay her by the hour.
Q: Will I be able to
speak English most places I go? (USA)
A: Yes, but you'll have to
learn it first.
have released their latest video. It's called Second Term. I tried to play
But I couldn't. Too
many other people were trying also. I bought a copy for $3. It's worth every
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.
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
here and here.