Harry Newton's In Search of The Perfect Investment
Technology Investor. Auction Rate Securities. Auction Rate Preferreds.
8:30 AM EST Friday, May 16, 2008: The
mining boom continues. BHP shares are at peak. Ditto for most Australian miners,
especially the ones I've mentioned. Oil is high, but gold and silver have pulled
back from their peaks in March. You play this with a broad range of holdings
- from the commodity ETFs, OIL, SLV and GLD -- to miners like BHP, Rio, Kagara,
Minara, Oxiana, Apex Minerals, Western Area and Metex Resources.
Solar (FSLR) is falling. I mentioned I had shorted it because it was too expensive,
too hyped, too most everything. A reader emails:
I agree with
your assessment on FSLR, and I am short but with puts, not stock. FSLR's panels
requite Tellurium and it is a very rare metal that was $10/Kg when FSLR started
using it in 2004 but ran up to $860 last year and, as of April 9th, was selling
for $2,060 per kilogram! Why is this? Because FSLR, in order to make just
$158M (at an average of $400 per kg last year), USED UP 10% OF THE WORLD'S
ANNUAL SUPPLY OF TELLURIUM! Their projections call for them to use 750% of
all the tellurium on the planet by 2013, so unless they develop some amazing
powers of manifestation, this stock is heading down (eventually).
speculation: HeartWare makes a little pump
that helps your ailing heart pump blood around your body, and, in turn, keeps
you alive a bit longer.
The company is
well-funded, has received FDA
approval for trials in the U.S., is covered by patents, and, makes the
smallest device around. Small is a huge benefit for surgeons, who have to find
a place in your body to put it. There's a big market for these things, as congestive
heart failure, etc. is rampant. I hear $60 billion a year spent on this disease
in the U.S. alone. You could sell a million of these devices a year, just in
the U.S. HeartWare is Australian. But it's easy to buy shares on the ASX, the
Australian Stock Exchange. Symbol is HTW. The company is moving here (into a
beautiful J&J factory, no less) and will soon be listed here. Meantime,
the investors-who-know are loading the boat. I don't think there's any urgency
about buying since, absent any news this summer, I can see the stock settling
A caveat: This
is not a sure thing. It's easy to kill patients with these things. And something
awry in upcoming patient trials could destroy the company. Meantime, go to HeartWare's
web site and listen to annual meeting presentation by Doug
Godshall. Most impressive. For an overview of the company, go to the
On news that GE may sell its appliances business, The Wall Street Journal
headlined the story:
May Quit the Kitchen
my son, Michael:
Life, the NPR radio show, did a special on explaining the mortgage-driven
credit crisis last week. It is excellent and worth listening to. Nothing they
did is rocket science but it is the best, simplest and most personal (i.e.
stories of people on all sides of the industry from Morgan Stanley
to a borrower in Brooklyn) piece on the topic I have come across. For me,
I knew all the pieces of what drove the crisis but always had trouble boiling
it all down and putting it all together. This piece did it. I think it is
worth the time while at the gym or whatever.
You can download
full MP3 podcast here for free.
I found the download
worked better with Firefox.
my wife, Susan:
is mindblowing, frightening and fascinating. Professor Michael Greenberger
spoke on National Public Radio on "Our Confusing Economy, Explained."
There are more derivatives than there are stocks and bonds. You must listen
to this 39 minute talk. Go
here. If that doesn't work, go to www.npr.org and search for Michael
I couldn't figure
how to download it. It sounds fine listening to it on the Internet.
Peter Coy, who is good, has a big piece in this weekend's BusinessWeek.
At about $124
a barrel, the price of crude oil has more than doubled since the start of
2007. The vast majority of government forecasters, stock analysts, economists,
traders, and journalists who follow oil failed to see it coming. Even now
their price estimates for the next several years are all over the place, ranging
from $70 to as much as $500. How can that be? Its hard to predict what
prices are going to do in the next month, much less the next five years, if
you dont have a handle on current supply and demand. The problem is
that the analysis requires data on production, consumption, and inventories
and those numbers are largely unreliable. The situation is only getting
worse: China, the worlds fastest-growing oil consumer, is also one of
the most opaque. Regrettably, the world oil market is no more transparent
than a barrel of extra-heavy Orinoco crude. All this makes it impossible to
say whether prices are headed for a so-called super spike or a super bust.
I still believe
it's going higher for reasons I detailed here. The easiest way to play oil is
The Top 10 Tech Trends: Eric
Savitz, a talented Barron's reporter, posted this piece, which I've excerpted:
Im at the Fairmont Hotel in San Jose tonight, for the Churchill Clubs
annual Top 10 Tech Trends Dinner. This is the clubs 10th annual tech
trend panel. Making the picks:
Draper Fisher Jurvetson.
Vinod Khosla, Khosla Ventures.
Josh Kopelman, First Round Capital.
Roger McNamee, Elevation Partners.
Joe Schoendorf, Accel Partners.
Tony Perkins, of Always On, is the moderator.
Perkins, McNamee, Jurvetson and Schoendorf have done this before. Kopelman
and Khosla are the panel newbies.
1. From Steve
Jurvetson: Demographics are destiny, creating opportunity.
Baby boomers are an opportunity, including an eBay for information
that exceeds the market for physical goods. This is a U.S./Canada/U.K. trend.
Baby boomers as the first Internet savvy seniors. Smart, active, group, entering
AARP age. 75 million of them, half the U.S. workforce. In 2025, the entire
country will look like Florida does today. Nothing will change that. Demographics
are destiny. Over half of businesses and franchises are started by people
in this group. At home, educated and Internet savvy. Services online will
exceed market for goods online. Another market: the mental exercise market.
2. From Vinod Knosla: The mobile phone will be a mainstream personal computer.
With built in projector. Authentication. Credit cards on SIM cards. ID cards,
passports, drivers licenses. Any information you need. Khosla says he keeps
pictures of his passport electronically on his phone. He says people will
be less likely to carry their laptops. Come near a computer, and physical
hard drive will be yours, including half-sent email message you left at home.
Lose the phone, and all the information is on the network. Imagine what you
want to do, and it should be available anytime. Projectors in cell phones
in next two years. More than one camera per cell phone; high priority for
Texas Instruments. Critical ingredient is high speed networks, which we will
have in next 2-3 years. Jurvetson says the trends are already playing out,
other than the projector piece, particularly in Europe, where cell phones
are 8% of credit card payments. ...
3. From Josh Kopelman: The rise of the implicit Internet.
Today your permanent record exists; you create a trail of data exhaust, digital
bread crumbs. Implicit data that exists in silence. Movie rentals, restaurant
reservations, books purchased, Web sites visited, etc. All of this data existed
in silence. No easy way until now to benefit from the data; but the silos
are coming down. Google, Yahoo, Facebook, Mozilla collecting data. Trend is
that big wave will come to companies that are able to find novel and new ways
to deliver information by crossing these silos, with implicit data on the
4. From Roger McNamee: Betting on smart phones: The mobile device migration
to smart phones from features phones will produce even greater disruption
than PC industry moving from character mode to graphical interface. Used
to be just Palm and Research in Motion. (Note that McNamees firm is
a large investor in Palm.) What you are really doing, is put in real software
environments, with applications layer that separates network from physical
device. Phones far more pervasive than PCs. ...
5. From Joe Schoendorf: Water tech will replace global warming as a global
priority. The world is running our of usable water and will kill millions
more in our lifetime than global warming. Darfur could go down as the first
water war of the 21st century. And with 2 million deaths, might not make the
top 10 list. One billion of 6 billion people do not have healthy water. Were
losing close to 1 million people a year under 5 years old due to dirty water.
Imagine a 60 year drought in this state. Within 15 years, will be up to 3
billion people with a water problem. 70% of water used for agriculture; 90%
for developed countries. If nano technology can work, and can figure out desalinization,
can prevent many wars over the next 30 years. Missing the Al Gore for water.
... T. Boone Pickens is selling oil companies and buying water companies.
6. Jurvetson: Evolution trumps design. Many interesting unsolved problems
in computer science, nanotech, and synthetic biology require construction
of complex systems. Evolutionary algorithms are a powerful alternative to
traditional design, blossoming first in neural networks and now in microbial
engineering. Near-term trend: year or two, components of microbial engineering
products will involve some form of evolution. Design for evolution. Has been
used in neural networks. In microbial work, cripple a microbe, so it can do
the one thing it does better and better. To make industrial chemicals. Applied
to analog circuit design. In the future, artificial intelligence. Most of
the panel seem to have no idea what Jurvetson was talking about, really.
7. Khosla: Fossilizing fossil energy. Oil and coal will have trouble
competing with biofuels. 99% of discussion on the topic is completely irrelevant
to the topic. In 4-5 years will have production proof that can sell biofuel
at well below $2 a gallon at todays tax structure and no subsidy. Cant
imagine how big oil can stay in business if that is an alternative. Zero land
needed to replace 100% of our gasoline. The other major issue is electrical
power generation, which is coal and natural gas. One of his companies signed
deal for 175 MW solar plant at costs below natural gas. Cheaper and less subject
to commodity pricing. All of the panelists agree on that one.
8. Kopelman: Venture Capital 2.0. Venture capital has underwritten
most of the transformative software and Internet companies over last 20 years.
Changing economics will have dramatic impact on the venture capital industry,
in particular for software and IT. Typical $400 million fund, to get 20% return,
have to triple, and return $1.5 billion. ... VC industry is diversifying away
from industry where returns are poor. ...
9. McNamee: Within 5 years, everything that matters to you will be available
to you on a device that fits on your belt or in your purse. Massive shift
in Internet traffic from PCs to smaller devices. You should all get a Kindle,
and study this thing, Roger says. Apple has it in the long run, wrong. Wont
be about watching created content, it will be about creating content. ...
10. Schoendorf: 80% of the world population will carry mobile Internet
devices within 5-10 years. Dial-tone is going to be gone. By next year,
people will put micro cells in your house. China Mobile has 500 million billable
lines. Within 5-10 years will hit 5 billion global wireless phones. Jurvetson
thinks 80% is simply too high; he noes that a quarter of the worlds
population has no electricity. They will concentrate in the richest nations,
it. Lots of mobile phone predictions. Green energy. Water. And more phones.
reasons not to install Vista: Big business starts to sour on Vista,
from this weekend's BusinessWeek.
Vista, the latest version of its Windows operating system, in New York City
in January, 2007, with dramatic fanfare. Performers hung from a seven-story
building to unfurl a Microsoft banner. A rock band blared in the rented-out
Times Square theater. The CEOs of Dell, Toshiba, and Advanced Micro Devices
joined Microsoft CEO Steve Ballmer on stage to celebrate what he called the
biggest launch in software history. But now some high-profile corporate
customers are taking a pass on Vista. In the most recent move, General Motors
says it may take a detour around Vista because preliminary tests have turned
up so many problems and complications. The automaker may wait for the next
version of Windows, due in 2010 or 2011. Were considering bypassing
Vista and going straight to Windows 7, says Fred Killeen, chief systems
and technology officer for GM. Many of Killeens corporate counterparts
are similarly vexed by Vista. The operating system taxes all but the most
modern PCs with its requirements for powerful microprocessors and muscular
memory. It has compatibility issues, so certain kinds of software wont
run smoothly with the operating system. And corporate tech buyers say Vista
has few valuable new features for their employees.
lady inserted an ad in the classifieds:
Next day she received a hundred letters.
They all said the same thing:
'You can have mine.'
When a woman steals
your husband, there is no better revenge than to let her keep him.
A woman is incomplete
until she is married. Then she is finished
Then there was
a woman who said, 'I never knew what real happiness was until I got married,
and by then, it was too late.'
Just think, if
it weren't for marriage, men would go through life thinking they had no faults
At a cocktail
party, one woman said to another, 'Aren't you wearing your wedding ring on the
'Yes, I am. I married the wrong man.'
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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