Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Thursday, January 6, 2005: Yesterday
the stockmarket again fell and The Street.com sent out a memo headed "Sellers
in Control." Which means they hadn't a clue. Frankly, no one else had
either. On an historic basis, the market is overpriced -- P/Es are way high. But
there's more money around and valuations of everything are going up. So I'm guessing
this downdraft will be temporary -- a good time to pick up favorite stocks a little
My one great short -- AT&T (T) -- proved contrary yesterday and went
up. It closed a penny below where I shorted it. I'm still in the money. But
it's not much money. Maybe the sellers will be in control again today and kill
my only short. I'm praying.
I remain dubious about hot stocks -- but with small money -- I own the following
"hot" stocks -- Cypress Bioscience (CYPB), Dynamex (DDN), Greenfield
Online (SRVY), Hana Biosciences (HNAB), HMS Holdings (HMSY), Moldflow Corporation
(MFLO) and TriPath Imaging (TPTH).
Today's Wall Street Journal has its quarterly review of mutual funds. That
might help my "Portfolio Rebalancing" task this week. Thank everyone
for sending me their favorite mutual funds and ETFs. Keep them coming.
not going to believe this: But Smith Barney, the brokerage subsidiary
of Citigroup, has published its "Top Pick for 2005" and it's
-- wait for this -- Time Warner (TWX). Citigroup's four "key reasons:"
First, in a potentially weaker advertising year (2005 versus 2004), TWX has
low ad exposure relative to peers. Exposure is in Cable Networks, the Internet,
and magazines, which should be the three best performing ad mediums in 2005.
Second, TWX will post among the best OIBDA (whatever that is) and free
cash flow growth in 2005 vs. peers. We look for 10% FCF (free cash flow)
growth to $3.6 billion in 05, which would be the 4th straight year of
over $3.0 billion in FCF. Greater predictability will boost valuation, and raise
the likelihood of return of cash to shareholders.
Third, final resolution with the SEC/DOJ facilitates greater financial flexibility
for pursuing strategies, which could include enlarging the cable footprint.
Fourth, starting in 07, increased digital video recorder penetration
should drive a shift of ad dollars away from television towards the Internet,
helping AOL. DVRs also help reduce cable churn, while creating another revenue
Now read the fine
print: Citigroup gets money from Time Warner for investment banking, "non-investment
banking, securities related" and other unspecified things. Citigroup
owns a big chunk of shares in Time Warner. And "an officer or director
of Time Warner serves as a director on Citigroup's board."
The relationship between Citigroup and Time Warner is so incestuous and the
four "key reasons" so flimsy you wonder why they bothered publishing
this nonsense. ... But you really know why. Today, there'll be thousands of
Smith Barney brokers getting on the phone to their unsuspecting clients and
telling them, in hushed, excited tones, of their firm's Top Pick. "Buy
it now," they'll say.
I want to puke.
not going to believe this, part II: Michael Eisner, head of Disney,
hired his best friend Michael Ovitz as Disney's new president, then, within
days figured he'd made a gigantic mistake, fired Ovitz and finally paid him
a severance package of $140 million. For Eisner's sterling performance, the
board gave him a bonus of $8 million and stock options worth $770.9
million. I've never owned Disney and never will with Eisner in charge. I've
run companies, some successfully. Based on what I read, I wouldn't hire Eisner
to organize a queue for an outhouse. You MUST read the entire Eisner/Ovitz
story in the January 10 issue of the New Yorker. You can't get it online.
Looking forward to this new year: This has
been floating around the Internet:
is 1904 ... one hundred years ago.
+ The average
life expectancy in the U.S. was 47 years.
+ Only 14 percent of the homes in the U.S. had a bathtub.
+ Only 8 percent of the homes had a telephone.
+ A three-minute call from Denver to New York City $11.
+ T here were only 8,000 cars in the U.S., and only 144 miles of paved roads.
+ The maximum speed limit in most cities was 10 mph.
+ Alabama, Mississippi, Iowa, and Tennessee were each more heavily populated
+ With a mere 1.4 million residents, California was only the 21st most populous
state in the Union.
+ The tallest structure in the world was the Eiffel Tower!
+ The average wage in the U.S. was 22 cents an hour. The average U.S. worker
made between $200 and $400 per year.
+ A competent accountant could expect to earn $2000 per year, a dentist $2,500
per year, a veterinarian between $1,500 and $4,000 per year, and a mechanical
engineer about $5,000 per year.
+ More than 95 percent of all births in the U.S. took place at home.
+ Ninety percent of all U.S. physicians had no college education. Instead, they
attended medical schools, many of which were condemned in the press and by the
government as "substandard."
+ Sugar cost four cents a pound. Eggs were fourteen cents a dozen. Coffee was
fifteen cents a pound.
+ Most women only washed their hair once a month, and used borax or egg yolks
+ Canada passed a law prohibiting poor people from entering the country for
+ The five leading causes of death in the U.S. were: 1. Pneumonia and influenza
2. Tuberculosis 3. Diarrhea 4. Heart disease 5. Stroke
+ The American flag had 45 stars. Arizona, Oklahoma, New Mexico, Hawaii, and
Alaska hadn't been admitted to the Union yet.
+ The population of Las Vegas, Nevada, was 30.
+ Crossword puzzles, canned beer, and iced tea hadn't been invented.
+ Two of 10 U.S. adults couldn't read or write.
+ Only 6 percent of all Americans had graduated from high school.
+ Marijuana, heroin, and morphine were all available over the counter at corner
drugstores. According to one pharmacist, "Heroin clears the complexion,
gives buoyancy to the mind, regulates the stomach and bowels, and is, in fact,
a perfect guardian of health."
+ Eighteen percent of households in the U.S had at least one full-time servant
+ There were only about 230 reported murders in the entire U.S.
Imagine what it may be like in another 100 years.
Children were lined up in the cafeteria of a Catholic school for
lunch. At the head of the table was a large pile of apples. The nun made a note,
"Take only one, God is watching."
At the other end
of the table was a large pile of chocolate chip cookies. Moving through the
line a boy wrote another note to leave by the cookies, "Take all you want,
God is watching the apples."
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.