Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Wednesday, October 12, 2005: I
heard the R word for the first time from a housing developer/financier.
He sees high-end development evaporating. He is now concentrating on entry-level,
less expensive homes.
A "recession" won't hit all sectors of our economy equally.
But it absolutely will adversely affect the stockmarket and make picking good
stocks to hold even harder. As I've written before, my brain is turning increasingly
to shorting stocks. My erstwhile favorite shorts include housing, banks
and finance stocks. I now include tech stocks. My biggest recent "gains"
have been in stocks I haven't been in -- like Microsoft, Intel, GM, TiVo, Apple,
Commerce Bancorp, Powerwave, Best Buy, Dell and others which brokers have been
hammering the table for.
Today's adage remains:
bad is the mutual fund industry? If you own a
mutual fund, you must subscribe to fundalarm.com.
It will send you an email when things change
at your fund. Here's how they explain it:
When in doubt,
stay out. Or sell a little short.
is a free, non-commercial Website. Our view of the mutual fund industry is
slightly off-center. We help you decide when it's time to sell a fund,
instead of when it's time to buy. The mutual fund industry is full of broken
promises, arrogance, greed, hypocrisy -- the list goes on. We try to shine
a light in the darker corners, and poke holes in balloons that could use some
recently at the Generation Wave Growth and Vice Funds and FundAlarm
alerted its readers thus:
Manager Dan Ahrens abruptly resigns as manager, and leaves the firm that manages
this fund. Ahrens is replaced by Michael Henry, who won't be encumbered by
previous bad habits, since the 25-year old Henry has absolutely no experience
managing a mutual fund, or executing a strategy anywhere close to the strategy
this fund is supposed to follow. This has always been a silly gimmick fund,
but at least Ahrens seemed to have some real passion about the fund's silly
mission. ... There's also been some hint that Ahrens steppped down because
he didn't want to be involved with some kind of impropriety at the fund management
company. This could get good. But if you own this fund, you absolutely, positively
want to observe the fun from the sidelines, so you might want to get your
money out, fast. Ahrens, who also managed Generation Wave Growth, has been
replaced at both funds by 25-year old Michael Henry, who has no prior mutual
fund management experience.....In fact, as far as we can tell, Henry has no
experience whatsoever executing the type of investment strategy practiced
by either of the funds he's now running.....Prior to 2002, Henry wasn't even
in the investment business: According to his resume, he was a sales rep for
a tool and equipment company."
Came After Years of Battling the System:
This story from yesterday's New York Times tells a lot about innovation
in general and in the pharmaceutical industry in particular. You must read it:
When two Australian
scientists set out in the early 1980's to prove that a bacterium, Helicobacter
pylori, caused stomach inflammation and ulcers, they met opposition from a
medical-industrial complex entrenched in the belief that psychological stress
was the cause.
their radical thesis came from doctors with vested interests in treating ulcers
and other stomach disorders as well as from drug companies that had come up
with Tagamet, which blocked production of gastric acid and was becoming the
first drug with $1 billion annual sales.
was lucrative for surgeons who removed large portions of the stomach from
patients with life-threatening bleeding and chronic symptoms. Psychiatrists
and psychologists treated ulcer patients for stress.
of curing ulcers with antibiotics seemed preposterous to doctors who had long
been taught that the stomach was sterile and that no microbes could grow in
the corrosive gastric juices. A bacterial cause "was just too wild a
theory for most people" to accept, and something so ingrained as stress
causing ulcers was too difficult to dismiss, Dr. J. Robin Warren, one of two
who won the 2005 Nobel Prize for Physiology or Medicine on Oct. 3, said in
a telephone interview.
on psychological stress in part because many patients had stressful lives
and scientists lacked another explanation. Also, Tagamet and similar drugs,
known as H2 blockers, safely made ulcers and their symptoms disappear. But
the H2 blockers were not one-shot cures. Ulcers often recurred, requiring
repeated courses of the drugs, providing a steady stream of profits.
we got from the drug industry was basically inertia," said Dr. Barry
J. Marshall of the University of Western Australia, the other Nobel winner,
and "because the makers of H2 blockers funded much of the ulcer research
at the time, all they had to do was ignore the Helicobacter discovery."
drug companies were truly into discovery, they would have gone straight after
the Helicobacter," Dr. Marshall said, but they did not because of the
success with H2 blockers.
drugs not existed, the drug companies would have jumped on our findings,"
Then, too, the
fresh thinking was coming from what many doctors regarded as a medical outpost,
Perth. All the factors created a type of rigidity that many doctors say still
exists for better or worse.
Marshall said, "The fact that the big drug companies who were supporting
the journal articles ignored H. pylori was far more effective than actually
saying that a bacterial cause was not true because if they had said it was
false, or not important, they would have created a controversy and maybe media
Right from the
moment in 1979 when Dr. Warren, a pathologist, first saw bacteria in stomach
biopsies at the Royal Perth Hospital, he said: "I met skepticism from
my colleagues who mostly did not want to know, or believe, what I was describing.
Anyone could see the bacteria through a microscope, but the clinicians did
not want to see them."
Why was he the
only one seeing the bacteria? Why had others not described them earlier? He
did not know, Dr. Warren said in answer to the skeptics who asked. "Once
I started looking for them, they were obvious," he said, "but convincing
other people was another matter."
who peered down the barrel of a microscope and did agree bacteria were present
said they must be opportunists, not the cause of stomach ailments. Dr. Warren
pointed out that the bacteria were all the same, not the variety that would
be expected of secondary invaders. But, he said, "It was hard for me
to prove them wrong."
Proof took years.
came from Dr. Marshall's efforts in the library and laboratory. Aided by a
librarian in Perth, Dr. Marshall painstakingly searched for papers published
decades earlier than those listed in the United States National Library of
Medicine's electronic data base that starts about 1965.
Although a few
doctors had described the curved bacteria in the late 19th century, the findings
were passed over in the hundreds of peer-reviewed articles published thereafter.
Then Dr. Marshall performed a famous self-experiment in which he swallowed
a culture of H. pylori, got sick, documented that he developed an inflamed
stomach and was cured of the gastritis with an antibiotic.
took notice of the bacterium's dangers, Dr. Warren said.
As a practicing
gastroenterologist, Dr. Marshall saw many patients go to surgery for ulcers
and some die from internal bleeding. His top priority was to determine which
combinations of antibiotics cured ulcers. "There was a lot of urgency
to publish data because" the medical world wanted convincing proof, Dr.
But many American
researchers, he said, "seemed more interested in carefully studying the
mechanism of how H. pylori produced stomach damage rather than driving straight
in to treat people."
There were many
reasons for the different tacks. Dr. Warren said that "the medical profession
is brought up to be very careful with new findings, and that is probably a
good thing for most patients because you have to be fairly careful with new
findings or otherwise you may do something stupid."
A cardinal rule
of medicine is: First, do no harm. Experience has taught that rushing to use
a new therapy without the backing of findings from controlled trials can have
serious, if not lethal, outcomes. One example was that freezing the stomach
cured ulcers, when it sometimes resulted in dead tissue.
It can be hard
for doctors, like others, to admit error. Sometimes the caution is excessive
and it, too, can cost lives.
Dr. Alfred Sommer,
the former dean of the Johns Hopkins Bloomberg School of Public Health, recalled
how medical leaders in the 1980's rejected evidence that inexpensive vitamin
A pills could prevent death from infections as well as blindness.
Now it is standard
Dr. Samuel Hellman,
a former dean of the University of Chicago's Pritzker School of Medicine,
said that doctors "often fall in love with a hypothesis, and that holds
in my field, cancer."
system for deciding what articles to publish and which grants taxpayers should
support "discriminate against the truly inventive, exciting, far-out
ideas, Dr. Hellman said.
"tends to adhere to things that are consistent with prevailing beliefs
and models," he said, and "really new ideas usually just get thought
of as crazy."
Institutes of Health, a federal agency, supports biomedical research at its
campus in Bethesda, Md., and in medical schools and centers throughout the
country and abroad. But, Dr. Hellman said, "innovation does not get funded
at the N.I.H. right now because it can pay for only a very low percentage
of approved grants."
When this reporter
interviewed American medical leaders about the Australian findings in 1984,
some dismissed them as unimportant because a bacterial cause of ulcers had
not been discussed at recent national scientific meetings.
his road to the Nobel Prize, Dr. Marshall said: "In the 1970's and 1980's
there was a bit of a mind-set that all the important stuff in medicine had
we started something that was more important than we thought because Helicobacter
has opened people's minds to the possibility of an infectious cause of all
those other diseases whose cause is unknown."
you buy a new digital camera, check dpreview.com:
This site has detailed reviews (or at
least detailed specs) on the newest digital cameras. Items:
+ Point and shoot (i.e. automatic) digital cameras now sport as many as 8 million
pixels -- which can produce phenomenal clarity and enlarging capability.
+ Some new cameras sport a large LCD screen, but no viewfinder. I find
framing a photo backwards to be disconcerting and slow.
+ Most new cameras have little or no shutter lag. But you must
check. Take a few photos before you buy.
+ Pre-focusing or turning off automatic focusing will speed shutter lag.
+ There is a big difference between optical zoom (that uses the lens)
and digital zoom (which enlarges part of the image, discarding many pixels
and often producing a blurry photo.) You don't want to use or rely on digital
+ The tiniest cameras generally produce the worst photos. Conversely,
the biggest, heaviest and most expensive ones produce the best images.
For ultra-convenient, infrequent photo taking, nothing beats a $10 disposal
but still wonderful:
If you remember the Original Hollywood Squares and its comics, this may bring
a tear to your eyes. These great questions and answers are from the days when
Hollywood Squares game show responses were spontaneous and clever, not scripted
and (often) dull, as they are now. Host Peter Marshall asked the questions.
Q. Do female frogs
A. Paul Lynde: If you hold their little heads under water long enough.
Q. If you're going
to make a parachute jump, at least how high should you be?
A. Charley Weaver: Three days of steady drinking should do it.
Q. You've been
having trouble going to sleep. Are you probably a man or a woman?
A. Don Knotts: That's what's been keeping me awake.
Q. According to
Cosmopolitan, if you meet a stranger at a party and you think that he is attractive,
is it okay to come out and ask him if he's married?
A. Rose Marie: No; wait until morning.
Q. Which of your
five senses tends to diminish as you get older?
A. Charley Weaver: My sense of decency.
Q. In Hawaiian,
does it take more than three words to say "I Love You"?
A. Vincent Price: No, you can say it with a pineapple and a twenty.
Q. It is considered
in bad taste to discuss two subjects at nudist camps. One is politics, what
is the other?
A. Paul Lynde: Tape measures.
Q. When you pat
a dog on its head he will wag his tail. What will a goose do?
A. Paul Lynde: Make him bark?
Q. According to
Ann Landers, is their anything wrong with getting into the habit of kissing
a lot of people?
A. Charley Weaver: It got me out of the army.
Q. Back in the
old days, when Great Grandpa put horseradish on his head, what was he trying
A. George Gobel: Get it in his mouth.
Q. Who stays pregnant
for a longer period of time, your wife or your elephant?
A. Paul Lynde: Who told you about my elephant?
Q. Jackie Gleason
recently revealed that he firmly believes in them and has actually seen them
on at least two occasions. What are they?
A. Charley Weaver: His feet.
Q. According to
Ann Landers, what are two things you should never do in bed?
A. Paul Lynde: Point and laugh.
+ How my private equity fund is doing. Click
+ Blackstone private equity funds. Click
+ Manhattan Pharmaceuticals: Click
+ NovaDel Biosciences appeals. Click
+ Hana Biosciences appeals. Click
+ All turned on by biotech. Click
+ Steve Jobs Commencement Address. The text is available:
Click here. The full audio is available. Click
+ The March of the Penguins, an exquisite movie. Click
+ When to sell stocks. Click
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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