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8:30 AM EST Thursday, August 10, 2006: "Cash is King," I've been writing. And I've been getting flack for it.

"How can you recommend cash when your earnings on cash won't keep up with inflation. You'll be broke by the time you're 85."

If I have the choice, I'd rather be 85 and broke, than be rich and dead.

"Cash is King" is a slogan. It doesn't mean I have cash money in my mattress (though my grandfather did). My "cash" is in triple tax-free muni bond floaters, which are presently paying me 3.39%. That's better than inflation. It's also the equivalent of earning 5.5% interest taxed as ordinary income.

Nor do I have 100% of my assets in "cash." Some is in real estate, private equity funds, etc. I'm diversified. My preference

"Cash is King" is my rallying cry for my belief that I don't like the stockmarket at present. It's done well since the Tech Wreck of 2000-2002.

But its run is over. I'm dubious about the stockmarket's immediate prospects -- for all the reasons I've bored you with in recent weeks.

That doesn't mean I've retired to a cave in Outer Mongolia or Upper Volta. I'm still actively looking at new investments, including in recent days a private equity fund, some real estate and some short-selling.

The world, however, has changed BIG TIME. For changes think:

+ Residential real estate.
+ Interest rates.
+ Technology slowdown.
+ Terrorism and War.
+ Budget deficits.

Virtually all my money managers have lost me money in the last four months. My real estate money managers have done brilliantly. That's what portfolio diversification is all about.

When times are uncertain and tough -- as they are now -- it's perfectly reasonable to hang back. Enjoy the nice weather. Hug the kids. Get some exercise. And watch for opportunities. No one went broke by having a little cash in the bank.

How to read newspapers and magazines: There are now three ways to read newspapers and magazines:

1. The dead tree editions, also called paper.
2. Their web sites.
3. Newsstand.com.

I've spelled out the pros and cons of each. My recommendation is simple. Go to Newsstand.com -- click here -- and try reading a magazine or newspaper online. Sample issues are free or cost a dollar or two. I think you'll be pleasantly surprised.

That's it for carrying your laptop on your next plane ride. This terrorist stuff is getting very serious very quickly. The British said this morning they had thwarted a terrorist plot to blow up several aircraft mid-flight between the United States and Britain using explosives smuggled in hand luggage.

The British Department of Transport advised all passengers that they would not be permitted to carry any hand baggage on board any aircraft departing from any airport in the country. Passengers faced delays as tighter security was hastily enforced at the country's airports. British Airways said some flights were likely to be canceled. Laptop computers, mobile phones, iPods, and remote controls were among items banned from being carried on its planes.

London's Heathrow airport was the departure point for a devastating terrorist attack on a Pan Am airplane on December. 21, 1988. The blast over Lockerbie, Scotland, killed all 259 people aboard Pan Am Flight 103 and 11 people on the ground. A dear friend of mine and business partner lost his wife on Flight 103. I've watched him struggle to bring up his daughter without her mother.

The explosive on Pan Am Flight 103 was hidden in a portable radio in checked baggage.

How scary is it getting? Read this article from yesterday's Wall Street Journal. The author is one of the world's leading authorities on the Middle East. His books are brilliant. His insight is deep. I pray he's wrong.

August 22
by Bernard Lewis, professor emeritus at Princeton and author, most recently, of "From Babel to Dragomans: Interpreting the Middle East" (Oxford University Press, 2004).

During the Cold War, both sides possessed weapons of mass destruction, but neither side used them, deterred by what was known as MAD, mutual assured destruction. Similar constraints have no doubt prevented their use in the confrontation between India and Pakistan. In our own day a new such confrontation seems to be looming between a nuclear-armed Iran and its favorite enemies, named by the late Ayatollah Khomeini as the Great Satan and the Little Satan, i.e., the United States and Israel. Against the U.S. the bombs might be delivered by terrorists, a method having the advantage of bearing no return address. Against Israel, the target is small enough to attempt obliteration by direct bombardment.

It seems increasingly likely that the Iranians either have or very soon will have nuclear weapons at their disposal, thanks to their own researches (which began some 15 years ago), to some of their obliging neighbors, and to the ever-helpful rulers of North Korea. The language used by Iranian President Ahmadinejad would seem to indicate the reality and indeed the imminence of this threat.

Would the same constraints, the same fear of mutual assured destruction, restrain a nuclear-armed Iran from using such weapons against the U.S. or against Israel?

There is a radical difference between the Islamic Republic of Iran and other governments with nuclear weapons. This difference is expressed in what can only be described as the apocalyptic worldview of Iran's present rulers. This worldview and expectation, vividly expressed in speeches, articles and even schoolbooks, clearly shape the perception and therefore the policies of Ahmadinejad and his disciples.

Even in the past it was clear that terrorists claiming to act in the name of Islam had no compunction in slaughtering large numbers of fellow Muslims. A notable example was the blowing up of the American embassies in East Africa in 1998, killing a few American diplomats and a much larger number of uninvolved local passersby, many of them Muslims. There were numerous other Muslim victims in the various terrorist attacks of the last 15 years.

The phrase "Allah will know his own" is usually used to explain such apparently callous unconcern; it means that while infidel, i.e., non-Muslim, victims will go to a well-deserved punishment in hell, Muslims will be sent straight to heaven. According to this view, the bombers are in fact doing their Muslim victims a favor by giving them a quick pass to heaven and its delights -- the rewards without the struggles of martyrdom. School textbooks tell young Iranians to be ready for a final global struggle against an evil enemy, named as the U.S., and to prepare themselves for the privileges of martyrdom.

A direct attack on the U.S., though possible, is less likely in the immediate future. Israel is a nearer and easier target, and Mr. Ahmadinejad has given indication of thinking along these lines. The Western observer would immediately think of two possible deterrents. The first is that an attack that wipes out Israel would almost certainly wipe out the Palestinians too. The second is that such an attack would evoke a devastating reprisal from Israel against Iran, since one may surely assume that the Israelis have made the necessary arrangements for a counterstrike even after a nuclear holocaust in Israel.

The first of these possible deterrents might well be of concern to the Palestinians -- but not apparently to their fanatical champions in the Iranian government. The second deterrent -- the threat of direct retaliation on Iran -- is, as noted, already weakened by the suicide or martyrdom complex that plagues parts of the Islamic world today, without parallel in other religions, or for that matter in the Islamic past. This complex has become even more important at the present day, because of this new apocalyptic vision.

In Islam, as in Judaism and Christianity, there are certain beliefs concerning the cosmic struggle at the end of time -- Gog and Magog, anti-Christ, Armageddon, and for Shiite Muslims, the long awaited return of the Hidden Imam, ending in the final victory of the forces of good over evil, however these may be defined. Mr. Ahmadinejad and his followers clearly believe that this time is now, and that the terminal struggle has already begun and is indeed well advanced. It may even have a date, indicated by several references by the Iranian president to giving his final answer to the U.S. about nuclear development by Aug. 22. This was at first reported as "by the end of August," but Mr. Ahmadinejad's statement was more precise.

What is the significance of Aug. 22? This year, Aug. 22 corresponds, in the Islamic calendar, to the 27th day of the month of Rajab of the year 1427. This, by tradition, is the night when many Muslims commemorate the night flight of the prophet Muhammad on the winged horse Buraq, first to "the farthest mosque," usually identified with Jerusalem, and then to heaven and back (c.f., Koran XVII.1). This might well be deemed an appropriate date for the apocalyptic ending of Israel and if necessary of the world. It is far from certain that Mr. Ahmadinejad plans any such cataclysmic events precisely for Aug. 22. But it would be wise to bear the possibility in mind.

A passage from the Ayatollah Khomeini, quoted in an 11th-grade Iranian schoolbook, is revealing. "I am decisively announcing to the whole world that if the world-devourers [i.e., the infidel powers] wish to stand against our religion, we will stand against their whole world and will not cease until the annihilation of all them. Either we all become free, or we will go to the greater freedom which is martyrdom. Either we shake one another's hands in joy at the victory of Islam in the world, or all of us will turn to eternal life and martyrdom. In both cases, victory and success are ours."

In this context, mutual assured destruction, the deterrent that worked so well during the Cold War, would have no meaning. At the end of time, there will be general destruction anyway. What will matter will be the final destination of the dead -- hell for the infidels, and heaven for the believers. For people with this mindset, MAD is not a constraint; it is an inducement.

How then can one confront such an enemy, with such a view of life and death? Some immediate precautions are obviously possible and necessary. In the long term, it would seem that the best, perhaps the only hope is to appeal to those Muslims, Iranians, Arabs and others who do not share these apocalyptic perceptions and aspirations, and feel as much threatened, indeed even more threatened, than we are. There must be many such, probably even a majority in the lands of Islam. Now is the time for them to save their countries, their societies and their religion from the madness of MAD.

The photo may be doctored: This was the photo of Condoleezza Rice that USA Today ran on its web site:

This was the photo as it was originally taken:


This is the original photo after I sharpened it in Photoshop. Most digital camera shots are "sharpened" before being posted on a web site or published in a magazine.


USA Today apologized:

Editor's note: The photo of Condoleezza Rice that originally accompanied this story was altered in a manner that did not meet USA TODAY's editorial standards. The photo has been replaced by a properly adjusted copy. Photos published online are routinely cropped for size and adjusted for brightness and sharpness to optimize their appearance. In this case, after sharpening the photo for clarity, the editor brightened a portion of Rice's face, giving her eyes an unnatural appearance. This resulted in a distortion of the original not in keeping with our editorial standards.

Here are two more photos. The photographer, Adnan Hajj, has been accused of doctoring a photo of an Israeli air raid on Beirut. The manipulated image is left, and the original picture is on the right. Hajj worked for Reuters which sent many of his manipulated photos to U.S. newspaper in recent years and were published in those newspapers. The doctoring is very amateurish. He probably used Photoshop's cloning tool, its easiest. The theory is that Hezbollah was pressuring him (and other photographers) to make the destruction in their photos more devastating.



Employee of the month: I have no idea if this picture is a fake, except that friends say it happens at every high tech company:

The clumsy pirate
A pirate walked into a bar. The bartender said, "Hey, I haven't seen you in a while. What happened? You look terrible."

"What do you mean?" said the pirate. "I feel fine."

"What about the wooden leg? You didn't have that before."

"Well, we were in a battle and I got hit with a cannon ball, but I'm fine now."

"OK, but what about that hook? What happened to your hand?"

"We were in another battle. I boarded a ship and got into a sword fight. My hand was cut off. I got fitted with a hook. I'm fine, really."

"What about that eye patch?"

"Oh, one day we were at sea, and a flock of birds flew over. I looked up and one of them crapped in my eye."

"You're kidding," said the bartender. " You couldn't lose an eye just from bird crap."

"It was my first day with the hook."

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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