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8:30 AM EST Monday, April 24, 2006: Another of my building syndicates got sold. This time for a 14% IRR. A couple of my hedge funds are doing really well -- so they'll benefit by a little more investment from me today. It's called re-balancing. I spent much of the last few days checking out some potential deals -- also called "doing due diligence." I said no. The deals look so good, I feel sad saying NO. But my objectives are capital preservation and no warts. I follow Todd's rule, "When in doubt, stay out." The BIG key (at least for me) is accepting that all the work on due diligence was really "work" and not wasted time. I'm learning that doing due diligence which leads to a "No" is a good use of my time.

To make due diligence simpler, I made a little list:

First, check all the principals on Google, and then on Lexis/Nexis, Edgar OnLine and the New York Times archives. It's remarkable how much you can find on anybody online. The Internet may yet be the one tool that makes the world honest. God, I hope so.

Second, check the principals out with your friends. The principal's references are nice. But they're hand-chosen. Think Tarzan. Think leaping from vine to vine. If you stray too far, you'll fall and be eaten by the hungry alligators below.

Third, read the materials. There should be four documents -- a PowerPoint presentation, a term sheet, a private placement memorandum (a PPM) and documents defining the legal agreements between you and them. The BIG areas to check for: Principals' track record in this field, or are they straying? What do you get? What do they get? Who pays for what?

The two happiest days in a boat owner's life: When he buys it and when it sells it. Since a boat is not the perfect investment, the most popular name for a boat in the United State is "Obsession." I don't make this stuff up.

Then and now. A famous comedian remarked:In the 60s when the world was normal, people took acid to make the world weird . Now the world is weird and people take Prozac to make it normal.

Gas is going higher and higher and higher. This weekend I paid $3.35 a gallon. Someone told me it hit $4 a gallon Beverly Hills. In Europe, it costs an average of $4.66 a gallon, with over $6 in some countries. The news today on oil is awful. The Russian government is taking over more and more of the the business there. Venezuela's Chavez is talking about nationalizing the industry there. Thus Russia and Venezuela won't attract the private investments they so desperately need and their oil production will fall. How important is Russia? It has a lot of oil. Some months it pumps more than Saudi Arabia.

All this makes Canadian oil sands companies even more attractive. There is more oil up in Canada than there is in Saudi Arabia. It's just more expensive to get it out of the ground in Canada. But as oil stays high, the economics up in Canada looks fantastic Two companies I own are Penn West Energy (PWTFF.PK) and Canadian Oil Sands Trust (COSWF.PK). When checking these stocks, be careful. There is a difference between the Canadian dollar and the U.S. dollar. I"ll have more on alternative energy in the next few days. Meantime, for my latest list of alternative energy stocks, click here.

My son flew to Dubai on Emirates. He says Emirates is the best airline in the world. On the way non-step from New York to Dubai, his plane flew over Iran, bypassing Iraq which it considered more dangerous. America is not popular presently in Dubai. The ports fiasco didn't go down well. No one likes the mess in Iraq. Dubai is focussed on India where opportunities are considered immense.

How your profession changes your eyesight:

Your house as seen by yourself


Your house as seen by your lender

Your house as seen by your buyer


Your house as seen by your appraiser


Your house as seen by your tax assessor

This is my wife's sort of house. I wonder who owns it?

There's a revolution in the kitchen. I got first entranced by the first rate stuff made by Oxo. Great handles. Brilliant designs. Creative products. Check out Oxo. Click here. Now my wife turns up with this -- a collapsible strainer made by Dexas. It has a great big comfortable handle and saves oodles of space in your kitchen cabinet.

It comes in gray, the color my wife bought. It's more handsome. I couldn't find a gray photo. To buy it -- $14.95 -- click here.

Nevada does not have a State income tax. In fact, the Nevada Constitution states: “No income tax shall be levied on the wages or personal income of natural persons.”

The Economist's survey of New Media: I got rid of all the newspaper and old media stocks my brilliant money manager had bought me. And I've been obsessed since then with just how bad that industry has become. I'm now actively researching shorting many of the stocks. For now, I was fascinated with this weekend's Economist, which contains a huge survey of New Media. I recommend you read it in its entirety. Here's the introduction:

The era of mass media is giving way to one of personal and participatory media, says Andreas Kluth. That will profoundly change both the media industry and society as a whole.

THE next big thing in 1448 was a technology called “movable type”, invented for commercial use by Johannes Gutenberg, a goldsmith from Mainz (although the Chinese had thought of it first). The clever idea was to cast individual letters (type) and then compose (move) these to make up printable pages. This promised to disrupt the mainstream media of the day—the work of monks who were manually transcribing texts or carving entire pages into wood blocks for printing. By 1455 Mr. Gutenberg, having lined up venture capital from a rich compatriot, Johannes Fust, was churning out bibles and soon also papal indulgences (slips of paper that rich people bought to reduce their time in purgatory). The start-up had momentum, but its costs ran out of control and Mr. Gutenberg defaulted. Mr. Fust foreclosed, and a little bubble popped.

Even so, within decades movable type spread across Europe, turbo-charging an information age called the Renaissance. Martin Luther, irked by those indulgences, used printing presses to produce bibles and other texts in German. Others followed suit, and vernaculars rose as Latin declined, preparing Europe for nation-states. Religious and aristocratic elites first tried to stop, then control, then co-opt the new medium. In the centuries that followed, social and legal systems adjusted (with copyright laws, for instance) and books, newspapers and magazines began to circulate widely. The age of mass media had arrived. Two more technological breakthroughs—radio and television—brought it to its zenith, which it probably reached around 1958, when most adult Americans simultaneously turned on their television sets to watch “I Love Lucy”.

In 2001, five-and-a-half centuries after Mr. Gutenberg's first bible, “Movable Type” was invented again. Ben and Mena Trott, high-school sweethearts who became husband and wife, had been laid off during the dotcom bust and found themselves in San Francisco with ample spare time. Ms Trott started blogging—i.e., posting to her online journal, Dollarshort—about “stupid little anecdotes from my childhood”. For reasons that elude her, Dollarshort became very popular, and the Trotts decided to build a better “blogging tool”, which they called Movable Type. “Likening it to the printing press seemed like a natural thing because it was clearly revolutionary; it was not meant to be arrogant or grandiose,” says Ms Trott to the approving nod of Mr. Trott, who is extremely shy and rarely talks. Movable Type is now the software of choice for celebrity bloggers.

These two incarnations of movable type make convenient (and very approximate) historical book-ends. They bracket the era of mass media that is familiar to everybody today. The second Movable Type, however, also marks the beginning of a very gradual transition to a new era, which might be called the age of personal or participatory media. This culture is already familiar to teenagers and twenty-somethings, especially in rich countries. Most older people, if they are aware of the transition at all, find it puzzling.

Calling it the “Internet era” is not helpful. By way of infrastructure, full-scale participatory media presume not so much the availability of the (decades-old) Internet as of widespread, “always-on”, broadband access to it. So far, this exists only in South Korea, Hong Kong and Japan, whereas America and other large media markets are several years behind. Indeed, even today's broadband infrastructure was built for the previous era, not the coming one. Almost everywhere, download speeds (from the internet to the user) are many times faster than upload speeds (from user to network). This is because the corporate giants that built these pipes assumed that the Internet would simply be another distribution pipe for themselves or their partners in the media industry. Even today, they can barely conceive of a scenario in which users might put as much into the network as they take out.

Exactly this, however, is starting to happen. Last November, the Pew Internet & American Life Project found that 57% of American teenagers create content for the Internet—from text to pictures, music and video. In this new-media culture, says Paul Saffo, a director at the Institute for the Future in California, people no longer passively “consume” media (and thus advertising, its main revenue source) but actively participate in them, which usually means creating content, in whatever form and on whatever scale. This does not have to mean that “people write their own newspaper”, says Jeremy Zawodny, a prominent blogger and software engineer at Yahoo!, an Internet portal. “It could be as simple as rating the restaurants they went to or the movie they saw,” or as sophisticated as shooting a home video.

This has profound implications for traditional business models in the media industry, which are based on aggregating large passive audiences and holding them captive during advertising interruptions. In the new-media era, audiences will occasionally be large, but often small, and usually tiny. Instead of a few large capital-rich media giants competing with one another for these audiences, it will be small firms and individuals competing or, more often, collaborating. Some will be making money from the content they create; others will not and will not mind, because they have other motives. “People creating stuff to build their own reputations” are at one end of this spectrum, says Philip Evans at Boston Consulting Group, and one-man superbrands such as Steven Spielberg at the other.

As with the media revolution of 1448, the wider implications for society will become visible gradually over a period of decades. With participatory media, the boundaries between audiences and creators become blurred and often invisible. In the words of David Sifry, the founder of Technorati, a search engine for blogs, one-to-many “lectures” (i.e., from media companies to their audiences) are transformed into “conversations” among “the people formerly known as the audience”. This changes the tone of public discussions. The mainstream media, says David Weinberger, a blogger, author and fellow at Harvard University's Berkman Centre, “don't get how subversive it is to take institutions and turn them into conversations”. That is because institutions are closed, assume a hierarchy and have trouble admitting fallibility, he says, whereas conversations are open-ended, assume equality and eagerly concede fallibility.

Today's media revolution, like others before it, is announcing itself with a new and strange vocabulary. In the early 20th century, Charles Prestwich Scott, the editor, publisher and owner of the Manchester Guardian (and thus part of his era's mainstream media), was aghast at the word “television”, which to him was “half Greek, half Latin: no good can come of it.” Mr. Scott's equivalents today confront even stranger neologisms. Merriam-Webster, a publisher of dictionaries, had “blog” as its word of the year in 2004, and the New Oxford American Dictionary picked “podcast” in 2005. “Wikis”, “vlogs”, “metaverses” and “folksonomies” (all to be explained later in this survey) may be next.

“These words! The inability of the English language to express these new things is distressing,” says Barry Diller, 64, who fits the description “media mogul”. Over the decades, Mr. Diller has run two big Hollywood film studios and launched America's fourth broadcast-television network, FOX Broadcasting. More recently, he has made a valiant effort to get his mind around the Internet, with mixed results, and is now the boss of IAC/InterActiveCorp, a conglomerate with about 60 online brands. Mr. Diller concedes that “all of the distribution methods get thrown up in the air, and how they land is, well, still up in the air.” Yet Mr. Diller is confident that participation can never be a proper basis for the media industry. “Self-publishing by someone of average talent is not very interesting,” he says. “Talent is the new limited resource.”

“What an ignoramus!” says Jerry Michalski, with some exasperation. He advises companies on the uses of new media tools. “Look around and there's tons of great stuff from rank amateurs,” he says. “Diller is assuming that there's a finite amount of talent and that he can corner it. He's completely wrong.” Not everything in the “blogosphere” is poetry, not every audio “podcast” is a symphony, not every video “vlog” would do well at Sundance, and not every entry on Wikipedia, the free and collaborative online encyclopedia, is 100% correct, concedes Mr. Michalski. But exactly the same could be said about newspapers, radio, television and the Encyclopaedia Britannica.

What is new is that young people today, and most people in future, will be happy to decide for themselves what is credible or worthwhile and what is not. They will have plenty of help. Sometimes they will rely on human editors of their choosing; at other times they will rely on collective intelligence in the form of new filtering and collaboration technologies that are now being developed. “The old media model was: there is one source of truth. The new media model is: there are multiple sources of truth, and we will sort it out,” says Joe Kraus, the founder of JotSpot, which makes software for wikis.

The obvious benefit of this media revolution will be what Mr. Saffo of the Institute for the Future calls a “Cambrian explosion” of creativity: a flowering of expressive diversity on the scale of the eponymous proliferation of biological species 530m years ago. “We are entering an age of cultural richness and abundant choice that we've never seen before in history. Peer production is the most powerful industrial force of our time,” says Chris Anderson, editor of Wired magazine and author of a forthcoming book called “The Long Tail”, about which more later. (Mr. Anderson used to work for The Economist.)

At the same time, adds Mr. Saffo, “revolutions tend to suck for ordinary people.” Indeed, many people in the traditional media are pessimistic about the rise of a participatory culture, either because they believe it threatens the business model that they have grown used to, or because they feel it threatens public discourse, civility and even democracy.

This survey will examine the main kinds of new media and their likely long-term effects both on media companies and on society at large. In so doing, it will be careful to heed a warning from Harvard's Mr. Weinberger: “The mainstream media are in a good position to get things wrong.” The observer, after all, is part of the observation—a product of institutional media values even if he tries to apply the new rules of conversation. This points to the very heart of the coming era of participatory media. It must be understood, says Mr. Weinberger, “not as a publishing phenomenon but a social phenomenon”. This is illustrated perfectly by blogging, the subject of the next article.

So, he emails me. I ask him (inquiring minds want to know) to check www.warmsex.com and www.nosex.com. All blocked. In desperation we try (my idea) www.IceColdSex.com. Turns out there is no site called www.IceColdSex.com and the UAE doesn't block it. Perhaps we've found that perfect sex site? The funny thing in all this is that none of the three blocked web site actually show unclad pictures of women. They're all words. They're all links to other web sites. And I suspect they're all hosted by Google on its servers.

Harry Newton

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.
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