Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Thursday, May 19, 2005: Nice
pop yesterday. While it lasts I'll enjoy it. More important: The weather is stunning.
Too beautiful to sit in front of a screen. Yesterday I explored Central Park on
my bicycle. Today I'll tour some more and play tennis. There are roses to smell,
balls to hit.
I'm worried by
China. Our Administration is reacting like a spoiled child faced with a rival
who's working harder and smarter. The Administration has slapped quotas on Chinese
trousers, underwear and cotton shirts and it's pressuring China to up the value
of its currency. It seems to forget that China is one of the biggest buyers
of our treasury notes. Without China, interest rates here would be higher (to
entice others to buy those Treasuries) and our underwear would cost more. I
hope this doesn't produce a full-blown financial crisis.
inverse relationship? There
is an inverse relationship between the quality of an investment and the
effort put into promoting it. Superfund can't spend enough money to get
you to invest in that piece of drek. The most phone calls I've ever received
have always been for investments I don't want. The hard ones (to get
into) are not necessarily the ones I want also. But they tend to be of much
better quality. A couple of overly aggressive salesmen badgered me into having
breakfast with them this morning. I feel stupid that I said yes. They bribed
me with offers of fresh bagels and cream cheese.
Is Whole Foods the next Starbucks? One
of MSN's reporters, Robert Walberg, thinks it is, though he recommends for a
pullback of 10% to 15% before buying. I've been waiting also for that pullback
to buy more, but have despaired and bought some more yesterday. For Walberg's
here. WFMI is on a tear. Even Cramer is
touting it. Like all of us, he believes it's barely scratched surface on the
number of stores it can open.
Cramer's Top Ten:
I do like watching him. He's biased, opinionated, smart and enthusiastic. He
comes out with great quotes that may or may not mean anything, but are at least
funny. I love his characterization of fickle hedge investors as "clueless
rich guys." I like his explanation of momentum investing -- "Buy High.
Sell Low." I like his aphorisms: "Don't buy stocks
that have spiked. Buy stocks that haven't moved up."
I do like his
idea of buying "best of breed." Here's his Top Ten recommendations
from last night. Interesting list:
10. Zimmer Holdings
9. Comcast (CMSCA)
8. UnitedHealth Group (UNH)
7. McDonalds (MCD)
6. Automatic Data (ADP)
5. Citigroup (C)
4. Cendant -- travel and leisure (CD)
3. Yahoo! (YHOO)
2. Intel (INTC)
1. UPS (UPS)
I don't own any
of Cramer's Top Ten. I'd like to own Zimmer -- but the Fed investigation bothers
Berkshire a cockroach stock? It's hard to tell. Its reinsuance arm
has "iffy" deals with AIG and now I hear (from my friends in Australia)
that National Indemnity, the US reinsurer owned by Berkshire, recorded a reinsurance
policy sold to Rodney Adler's FAI Insurance in 1998 as a loan. The contract,
and others written by General Re, another reinsurer owned by Berkshire, enabled
FAI to inflate its profits before its takeover by HIH Insurance. The way the
contract was recorded by National Indemnity is of interest to the Australian
Prudential Regulation Authority and the Securities and Exchange Commission of
the US, which are becoming increasingly concerned that financial reinsurance
contracts do not always involve any transfer of risk, and are sometimes being
used to boost the profits of the buyer. In the HIH Australian royal commission,
APRA concluded that the contract between National Indemnity and FAI Insurance
involved "no genuine material risk transfer." Someone has already
gone to jail because of the failure of HIH. See below.
Buying a house or an apartment, make sure you check everything. And I mean
everything. Better (and cheaper) to have the seller fix all the minor and major
problems. We missed a few areas and now they're coming back to haunt us -- including
one expensive windows that won't open.
you thought the U.S. press had some problems with the facts. Several
Tehran newspapers, including Kayhan and Jomhuri-ye Eslami newspapers, claim
America controls Al-Jazeera, Al Qaida and the Taliban. They are our "servile
groups." We control them in order "to present the world with a
tarnished image of Islam." America does this to "have an excuse
to keep a heavy military presence in the area and continue 'its imperialism
and war-mongering policies' -- right on the border of Iran." I don't
make this stuff up.
This is Thomas Friedman's Op-Ed piece from
yesterday's New York Times:
It is hard not
to notice two contrasting stories that have run side by side during the past
week. One is the story about the violent protests in the Muslim world triggered
by a report in Newsweek (which the magazine has now retracted) that U.S. interrogators
at Guantánamo Bay desecrated a Koran by throwing it into a toilet.
In Afghanistan alone, at least 16 people were killed and more than 100 wounded
in anti-American rioting that has been linked to that report. I certainly
hope that Newsweek story is incorrect, because it would be outrageous if U.S.
interrogators behaved that way.
That said, though,
in the same newspapers one can read the latest reports from Iraq, where Baathist
and jihadist suicide bombers have killed 400 Iraqi Muslims in the past month
- most of them Shiite and Kurdish civilians shopping in markets, walking in
funerals, going to mosques or volunteering to join the police.
Yet these mass
murders - this desecration and dismemberment of real Muslims by other Muslims
- have not prompted a single protest march anywhere in the Muslim world. And
I have not read of a single fatwa issued by any Muslim cleric outside Iraq
condemning these indiscriminate mass murders of Iraqi Shiites and Kurds by
these jihadist suicide bombers, many of whom, according to a Washington Post
report, are coming from Saudi Arabia.
The Muslim world's
silence about the real desecration of Iraqis, coupled with its outrage over
the alleged desecration of a Koran, highlights what we are up against in trying
to stabilize Iraq - as well as the only workable strategy going forward.
we face in Iraq is so steep precisely because the power shift the U.S. and
its allies are trying to engineer there is so profound - in both religious
and political terms.
if you want to know how the Sunni Arab world views a Shiite's being elected
leader of Iraq, for the first time ever, think about how whites in Alabama
would have felt about a black governor's being installed there in 1920. Some
Sunnis do not think Shiites are authentic Muslims, and are indifferent to
At the same
time, politically speaking, some Arab regimes prefer to see the pot boiling
in Iraq so the democratization process can never spread to their countries.
That's why their official newspapers rarely describe the murders of civilians
in Iraq as a massacre or acts of terror. Such crimes are usually sanitized
as "resistance" to occupation.
the Washington bureau chief for the London-based Arabic daily Al Hayat, wrote
the other day: "What is the responsibility of the [Arab] regimes and
the official and semiofficial media in the countries bordering Iraq in legitimizing
the operations that murder Iraqis? ... Isn't their goal to thwart [the emergence
of] the newborn democracy in Iraq so that it won't spread in the region?"
(Translation by Memri.)
the problem, though, Mr. Na'mat also identifies the solution. If you want
to stop a wave of suicide bombings, the likes of which we are seeing in Iraq,
it takes a village. I am a big believer that the greatest restraint on human
behavior is not laws and police, but culture and religious authority. It is
what the community, what the village, deems shameful. That is what restrains
people. So how do we get the Sunni Arab village to delegitimize suicide bombers?
obviously, credible Sunnis have to be brought into the political process and
constitution-drafting, as long as they do not have blood on their hands from
Saddam's days. And outside Iraq, the Bush team needs to be forcefully demanding
that Saudi Arabia and other key Arab allies use their media, government and
religious systems to denounce and delegitimize the despicable murder of Muslims
by Muslims in Iraq.
If the Arab
world, its media and its spiritual leaders, came out and forcefully and repeatedly
condemned those who mount these suicide attacks, and if credible Sunnis were
given their fair share in the Iraqi government, I am certain a lot of this
suicide bombing would stop, as happened with the Palestinians. Iraqi Sunnis
would pass on the intelligence needed to prevent these attacks, and they would
deny the suicide bombers the safe houses they need to succeed.
That is the
only way it stops, because we don't know who is who. It takes the village
- and right now the Sunni Arab village needs to be pressured and induced to
restrain those among them who are engaging in these suicidal murders of innocents.
The best way
to honor the Koran is to live by the values of mercy and compassion that it
city boy and the donkey
A city boy, Rodney, moved to the country and bought a donkey from
an old farmer for $100. The farmer agreed to deliver the donkey the next day.
The next day the
farmer drove up and said, "Sorry son, but I have some bad news, the donkey
"Well then, just give me my money back."
The farmer said,
"Can't do that. I went and spent it already."
Rodney said, "OK
then, at least give me the donkey."
The farmer asked,
"What ya gonna do with him?"
going to raffle him off."
You can't raffle off a dead donkey!"
I can. Watch me. I just won't tell anybody he is dead."
A month later
the farmer met up with Rodney and asked, "What happened with that dead
raffled him of. I sold 500 tickets at two dollars a piece and made a profit
the guy who won. So I gave him his two dollars back."
Rodney grew up
and eventually became the CEO of Enron, WorldCom, AIG.....
This story came
from Australia and was originally about Rodney Adler (now in Jail) and Australia's
largest insurance collapse, FAI / HIH.
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 .
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