Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST Tuesday, May 30, 2006: What
a wonderful weekend. Lots of exercise. Lots of rest. Lots of reading. But not
one brilliant burning stock idea, except that Qwest continues to look
interesting as a takeover target. Dennis Mykytyn, my brilliant hedge fund manager,
sent me Absolute
Software (ABT.TO on the Toronto Stock Exchange)
this morning after I emailed him saying I was drawing a blank on brilliance.
Here's what The Wall Street Journal wrote about them.
war is won with new technology. Whether
it was boiling oil, a ramming machine, tanks, gun powder, airplanes or aircraft
carriers. What bothers me most about the war in Iraq is that our enemies (whoever
the insurgents are) have created a new weapon -- against which we have little
defense. That weapon is the roadside bomb, also called an IED (Improved or Improvised
Explosive Device. This weekend two CBS staffers were killed by a roadside
bomb. This brings to more than 70 the number of journalists killed in Iraq. More
American troops are being killed each week to roadside bombs than any other single
Find Stolen Computers
Every year, as many as 5% of laptops used by companies are stolen, according
to Absolute Software Corp. And Absolute, which makes software that helps pinpoint
the location of stolen computers, would like nothing better than to recover
software, called Computrace, works by sending a regular signal from a computer
to the company's data center in Vancouver, British Columbia. The signal, sent
daily when a computer is online, provides important information that can be
used to locate the machine, such as the computer's IP address and serial number.
When a computer is reported stolen, Absolute flags the machine and asks it
to signal the data center every 15 minutes. When the machine logs on to the
Internet, Absolute knows it almost immediately and gives information to police
to help recover the computer and apprehend the thief.
96 employees include a computer-recovery team that works with police and Internet
service providers. The company recovers about 25 stolen computers a week,
according to Absolute Chief Executive John Livingston.
A laptop stolen
recently from a Fidelity Investments employee, jeopardizing personal data
on 196,000 current and former Hewlett-Packard Co. workers, wasn't equipped
with its tracing software, Absolute says. Other stolen laptops, however, have
been tracked down in far-flung places. Last year, one stolen machine was traced
to Iraq. A U.S. serviceman had bought it not realizing it was stolen. When
contacted, the serviceman readily agreed to ship the machine stateside and
Absolute sent him a replacement, for no charge. (Absolute says this was an
exception -- it doesn't routinely replace stolen computers.)
is embedded in the BIOS, or basic input-output system, of a computer. The
BIOS is a mini-operating system that enables the computer's keyboard and display
screen, among other things. It's extremely difficult to remove from a computer,
remaining on the machine even when its main operating system, such as Microsoft
Windows, is reinstalled. "Our reason for existence," ...
by Dell and other original equipment manufacturers to embed Computrace in
the BIOS was like finding the "holy grail," says Absolute Chief
Financial Officer Rob Chase. The company had tried unsuccessfully for years
to convince OEMs to make the move, he said. Last year, things changed. In
February, Absolute said Lenovo Group Ltd. would begin embedding Computrace
in the BIOS of its machines. Gateway Inc. followed in August, Hewlett-Packard
in October and Dell in December. Absolute pays its OEM partners half of the
contract fee that it receives from subscribers. Consumers typically pay $100
for a three-year contract for the product, called LoJack for Laptops, under
a license to use the well-known name of the stolen-car tracking device.
pay $129 per computer for a three-year contract. While that won't make or
break the fortunes of its OEM partners, Mr. Chase says margins on computer
sales are down, prompting OEMs to look for new sources of high-margin revenue.
Wall Street Journal reports that a surge of violence in the Anbar province
has prompted Gen. George Casey, commander of U.S. forces in Iraq, to call in
the full 3,500-member Second Brigade of the First Armored Division, what
The Washington Post calls the main reserve fighting force for Iraq. The
new deployment adds to the approximately 133,000 U.S. troops already in Iraq,
the New York Times says. This sad development comes after months of hints from
Bush administration officials and Pentagon brass that U.S. troop levels were
on their way down.
due diligence of hiring.
A friend hired a CFO. The CFO had had a "disagreement"
with her previous boss. She told a persuasive explanation. And my friend needed
the employee. But he failed to fully check her story out with her old boss.
New laws such as Sarbannes-Oxley are affecting employees. Be wary of hiring
senior people without thorough background checks.
Medical Guesswork: From heart surgery to
prostate care, the health industry knows little about which common treatments
really work. This issue of BusinessWeek is genuinely fascinating.
You must read BusinessWeek,
May 29, 2006. It demonstrates how many "conventional
wisdom" medical treatments simply don't work and are a total waste of money.
The article will open your eyes.
little information about the immigration debate: The
United States offers only 5,000 permanent visas worldwide each year for
unskilled laborers. Last year, two of them went to Mexicans. In
the same year, about 500,000 unskilled Mexican workers crossed our border
illegally in search of jobs and a better life. Most of them found jobs. "We
have a neighboring country with a population of 105 million that is our
third-largest trading partner, and it has the same visa allocation as
Botswana or Nepal," says Douglas S. Massey, a sociology professor at Princeton.
my many trips to California, I have personally watched Mexicans work in construction,
garden and golf course maintenance, in auto mechanics and in retail. I'm always
been awed by their work ethic and efficiency. I've never understood why they're
consigned to live in legal hell. What makes me, an erstwhile Australian, different
to them? The difference is I got into the U.S. legally because I had "skills"
-- as measured by degrees in economics and business administration. Our Mexicans
contribute far more of substance than I do. The world can live without my words.
But it can't live without the houses they build and maintain, the factories
they work at, and the crops they harvest.
jealous: James Simons of Renaissance Technologies and T. Boone Pickens
Jr. of BP Capital Management pocketed $1.5 billion and $1.4 billion
respectively in 2005, putting them at the top of the Institutional Investors
Alpha magazine list of the Top 25 highest paid hedge fund managers.
goes real estate in San Diego? From my friend, Jim Stanko:
Met the other
day with an owner of a large RE brokerage firm who says prices here in San
Diego are softening on a weekly basis. The reason is that there is an oversupply
of speculative holdings in real estate. Combine that with a tightening and
increased cost of credit you can see why things are weak. The upside is that
California and San Diego are strong and still growing robustly. Therefore
all that is needed is some price concessions to work through the speculative
holdings. He also mentioned replacement costs have continued to go up which
helps set a price floor and that the big builders are all cutting back on
their building and land acquisition plans.
up your hard disk: I run my life on my laptop.
I back up in two ways:
1. File by file. That's for my daily work, not for my software. To back
up, I use a program called FileSync. Click
2. Clone my hard drive. To do that I
use EZ-Gig software from Apricorn and a USB-connected external hard drive that
is the identical drive to the one in my laptop. If my laptop's drive
crashes, I simply replace it with the clone. In fact, I routinely junk my hard
drives every six months. At under $100 a drive, it's now the cheapest sanity
insurance. For more, click
Sell in May and go away:
Excerpted from the May 26 issue of The Economist:
goldilocks economy meets the bears.
AT LEAST until
the markets lurched, Americas economy seemed to be ambling along so
easily that you might have thought Bill Clinton was back in charge. The government
released a first-quarter GDP estimate this week pegging the annualised growth
rate at 5.3%. Inflation is not significantly higher than it was in 2000, even
with oil prices hovering around $70. Unemployment is lower than it was in
1997. Surging tax revenues have allowed the Congressional Budget Office to
revise down the 2006 budget-deficit forecast to a relatively modest 2.3% of
GDP, the very figure Mr. Clinton hit in his fourth year in office. And corporate
profits were almost 25% higher in the first quarter of 2006 than they were
a year earlier.
The equity markets
had seemed more than satisfied. At the start of May the Dow Jones Industrial
Average looked within reach of a new record high that would beat its January
2000 peak of 11,723. Several companies were preparing big share offerings,
including Vonage, a fast-growing high-tech company which has been promising
to disrupt the telecoms industry much as Netscape shook up the fledgling Internet
11 years ago. But analysts preparing to party like it was 1999 found they
were in for a rude shock.
at 11,643 on May 10th, the Dow declined 544 points, or nearly 5%,
in just under two weeks. Other markets around the world shuddered too. Vonage
saw its long-awaited initial public offering tank. The shares fell nearly
25% in two days. A public listing of MasterCard, a payments company, fared
better, raising $2.39 billion, the biggest offering in two years. Even so,
market conditions were so weak that the shares had to be priced more cheaply
than expected, at $39. They bounced up to $46 a useful gain, but hardly
the sort of first-day pop to make investors shout.
are saying, in effect, that things are not as good as they look. A growth
rate of 5.3% is less than many economists were forecasting for the first quarter,
given that the economy was rebounding from a hurricane-induced slowdown in
the preceding three months. Inflation has been stronger than markets, or the
Federal Reserve, would like. Traders are repeatedly revising upwards their
estimates of the Fed's final target interest rate. And though the official
budget deficit may be shrinking, unfunded off-budget liabilities for Social
Security and Medicare are still growing. Even the seemingly strong unemployment
numbers conceal a weak labour market. Average weekly earnings have declined
in real terms since 2000, and the labour force participation rate is 66.1%,
down from 67.3% six years ago.
Are the markets
overdoing it? If the Fed does raise interest rates again in June, that will
still leave the key rate at 5.25%, hardly tight money by the standards
of recent decades. The dollar may be on the slide, dragged down by a big current-account
deficit, but that should help American companies to compete against cheap
may go deeper, down into the increasingly shaky foundations of American prosperity.
Government borrowing may be growing less quickly but households are going
further and further into debt in order to keep on spending. That is what has
been pushing up growth. The personal savings rate is now negative.
Much of this private borrowing has been done against rising house values
and that boom is surely over. If house prices now fall, the whole American
economy could tip into recession. Of course, much of the Clinton-era prosperity
also turned out to have been built on unstable foundations: perhaps nostalgia
is the right mood after all.
can't short a stock until 30 days after its IPO. Which means if you
think Vonage is gong lower, there's nothing you can do about it. I'm sure there's
a logical reason.
The two on the left
cost $20. The one on the right costs $120, but it has more electronics and it's
boosted by external power (i.e. you have to plug it in.) Here's a tutorial on
"Which is the best WiFi antenna for me?"
Click here. Here are some antennas, click
You can easily boost your home or office WiFi network.
You can make it work over farther distances
in your home or office. You can direct it from one building to another. A lot
depends on the type of antenna you choose and what powers it. There's an enormous
array. Simple samples:
on TV -- a review: The New Yorker's Nancy Franklin wrote an
entertaining review of Jim Cramer's TV Show. It's worth reading. Click
abound on bad networks. Log onto a bad
wireless network for as little as 30 seconds and you could be infected with
a horrible virus. You've got to close the hole in Windows that allows creeps
to put files into your Shared Docs folder. Here's how:
Click Start, Control Panel, Security Center. At the bottom, click Windows Firewall.
When the firewall dialog box comes up, click the Exceptions tab, then remove
the check mark next to "File and Printer Sharing"and others you don't
like, e.g. AOL.
There's always a new market: People who
have beautiful, big trees on their property are now installing lightning arrestors
on their trees, hoping to draw lightning strikes away from the tree and thus
protect the tree. Neat.
case you missed Friday's column, what makes me sleep well:
1. A broad diversification of investments (see
2. Sufficient bonds whose interest will pay our family's lifestyle --
if everything else collapses.
3. Saying NO more often, and saying NO to startup ventures I have no
control over or to investments I don't understand -- e.g. investments contrived
by Wall Street.
Here's my present allocation. Improvements needed: More bonds, especially now
they're paying more. More real estate. Problem remains sourcing quality investments.
end muni bond funds
estate syndications at cost
Real Estate Fund**
* Includes money
managers and hedge funds.
** No monies called yet.
The French Open Tennis has begun.
Set your TiVo -- but don't buy TiVo's stock. Its results of late
have been miserable.
For more, click
here or here.
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marry a shiksa:
A Jewish businessman warned his son against marrying a non-Jew.
The son replied,
"But she's converting to Judaism."
matter," the old man said. "A shiksa will always cause problems."
The son persisted.
After the wedding,
the father called the son, who was in business with him, and asked him why he
was not at work.
"It's Shabbos," the son replied.
The father replied: "But we always work Saturday. It's our busiest day."
work anymore on Saturday," the son said, "My wife wants us to go to
shul on Shabbos."
the father said. "I told you marrying a shiksa would cause problems."
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. Please note I'm not suggesting
you do. That money, if there is any, may help pay Claire's law school tuition.
Read more about Google AdSense, click
here and here.