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Harry Newton's In Search of The Perfect Investment Newton's In Search Of The Perfect Investment. Technology Investor.

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8:30 AM Monday, August 22, 2005: My latest best investment was Friday's one-day, $2,200 checkup at Scripps Center for Executive Health in San Diego. From 7 AM to 4 PM, I was prodded, poked, treadmilled, blood tested, skin-checked, head-checked, talked to, listened to... and finally massaged. It was fabulous. They call it The WholePersonal Examination. That it was. The focus was on early detection and prevention. They told me how much weight I should lose, how I should change my diet, how I should change my working life, which protective skin cream to use, how I could fix my back, how I should improve my exercise, which tests I should get regularly, and dozens more suggestions, which I'm just writing up. I can
't give you all the recommendations they made, since I'm still awaiting my final blood test results which I get this morning. But, to repeat, it was a fabulous day and one that will reap rewards for the rest of my life. Highly recommended. For more, click here.

Are we running out of oil? This was the cover of Sunday's New York Times:

There are two schools of thought: Oil is and will remain plentiful. Oil has peaked. I belong to the "oil has peaked" theory. Several implications:
1. Oil will continue to rise long-term. It may easily touch over $100 a gallon in the next few years.
2. All of us should prepare for that time by doing obvious things -- like not driving gas guzzlers , insulating our houses better, investigating alternative energy sources -- wind, photovoltaic cells, sun-driven hot water heating, etc.
3. Long-term all of us should re-arrange our lives to minimize our exposure to high-priced and potentially scarce oil. For example by moving back to the city, etc.
4. We need to investigate investment opportunities in areas and industries which now become profitable in our new world of permanently (and much) higher oil prices, e.g. Canadian tar sands.
Excerpts from the Times' article:

+ In the past several years, the gap between demand and supply, once considerable, has steadily narrowed, and today is almost negligible. The consequences of an actual shortfall of supply would be immense. If consumption begins to exceed production by even a small amount, the price of a barrel of oil could soar to triple-digit levels. This, in turn, could bring on a global recession, a result of exorbitant prices for transport fuels and for products that rely on petrochemicals -- which is to say, almost every product on the market. The impact on the American way of life would be profound: cars cannot be propelled by roof-borne windmills. The suburban and exurban lifestyles, hinged to two-car families and constant trips to work, school and Wal-Mart, might become unaffordable or, if gas rationing is imposed, impossible. Carpools would be the least imposing of many inconveniences; the cost of home heating would soar -- assuming, of course, that climate-controlled habitats do not become just a fond memory.

+ Although oil costing more than $60 a barrel hasn't caused a global recession, that could still happen: it can take a while for high prices to have their ruinous impact. And the higher above $60 that prices rise, the more likely a recession will become. High oil prices are inflationary; they raise the cost of virtually everything -- from gasoline to jet fuel to plastics and fertilizers -- and that means people buy less and travel less, which means a drop-off in economic activity. So after a brief windfall for producers, oil prices would slide as recession sets in and once-voracious economies slow down, using less oil. Prices have collapsed before, and not so long ago: in 1998, oil fell to $10 a barrel after an untimely increase in OPEC production and a reduction in demand from Asia, which was suffering through a financial crash. Saudi Arabia and the other members of OPEC entered crisis mode back then; adjusted for inflation, oil was at its lowest price since the cartel's creation, threatening to feed unrest among the ranks of jobless citizens in OPEC states.

+ Without the ability to flood the markets with oil, the Saudis are resorting to flooding the market with promises; it is a sort of petro-jawboning. That's why Ali al-Naimi, the oil minister, told his Washington audience that Saudi Arabia has embarked on a crash program to raise its capacity to 12.5 million barrels a day by 2009 and even higher in the years after that. Naimi is not unlike a factory manager who needs to promise the moon to his valuable clients, for fear of losing or alarming them. He has no choice. The moment he says anything bracing, the touchy energy markets will probably panic, pushing prices even higher and thereby hastening the onset of recession, a switch to alternative fuels or new conservation efforts -- or all three. Just a few words of honest caution could move the markets; Naimi's speeches are followed nearly as closely in the financial world as those of Alan Greenspan.

+ 'You look at the globe and ask, 'Where are the big increments?' and there's hardly anything but Saudi Arabia,'' he said. ''The kingdom and Ghawar field are not the problem. That misses the whole point. The problem is that you go from 79 million barrels a day in 2002 to 82.5 in 2003 to 84.5 in 2004. You're leaping by two million to three million a year, and if you have to cover declines, that's another four to five million.'' In other words, if demand and depletion patterns continue, every year the world will need to open enough fields or wells to pump an additional six to eight million barrels a day -- at least two million new barrels a day to meet the rising demand and at least four million to compensate for the declining production of existing fields. ''That's like a whole new Saudi Arabia every couple of years,'' Sadad al-Husseini, a former Aramco executive said. ''It can't be done indefinitely. It's not sustainable.''

+ Husseini, for one, doesn't buy that approach (taxing gas more). ''Everybody is looking at the producers to pull the chestnuts out of the fire, as if it's our job to fix everybody's problems,'' he told me. ''It's not our problem to tell a democratically elected government that you have to do something about your runaway consumers. If your government can't do the job, you can't expect other governments to do it for them.'' Back in the 70's, President Carter called for the moral equivalent of war to reduce our dependence on foreign oil; he was not re-elected. Since then, few politicians have spoken of an energy crisis or suggested that major policy changes are necessary to avert one. The energy bill signed earlier this month by President Bush did not even raise fuel-efficiency standards for passenger cars. When a crisis comes -- whether in a year or 2 or 10 -- it will be all the more painful because we will have done little or nothing to prepare for it.

To read the Times' piece, click here.

Other weekend reading conclusions:
+ The VIX does not correlate strongly with movements in share prices. It's safe not to worry about today's low VIX.
+ Brokers, analysts, investment bankers, auditors and now, proxy advisory services offer advice tainted by the money they often get from their clients -- the companies whose stocks they are advising to buy or sell.
+ Robert Shiller, Yale economist, famous for his stockmarket book "Irrational Exuberance" published in 2000 now believes that the housing craze is another bubble destined to end badly.

The depressed fellow
A guy had been depressed for months. His friends finally convince him to see a psychiatrist.

He entered the office, lay on the couch, spilled his guts for an hour. Finally, he waited for the psychiatrist's comments.

The psychiatrist nodded and said. "I think your problem is low self-esteem. It is very common among losers."

The Holy Land
A man, his wife, and mother-in-law went on vacation to Jerusalem. While they were there, the mother-in-law passed away. The undertaker told them, "You can have her shipped home for $5,000, or you can bury her here in the Holy Land for $150."

The man thought about it and told him he would just have her shipped home.

The undertaker asked, "Why would you spend $5,000 to ship your mother-in-law home, when it would be wonderful to be buried here and you would spend only $150?"

The man replied, "Long ago a man died here, was buried here, and three days later he rose from the dead. I can't take that chance."

The professor in darkest Africa
A professor is sent to darkest Africa to live with a primitive tribe. He spends years with them, teaching them reading, writing, math, and science.

One day the wife of the tribe's chief gives birth to a white child.

The members of the tribe are shocked, and the chief pulls the professor aside and says, "Look here! You're the only white man we've ever seen and this woman gave birth to a white child. It doesn't take a genius to figure out what happened!"

The professor replied, "Chief, you're mistaken. What you have here is a natural occurrence... what we in the civilized world call an albino! Look at that field over there. All of the sheep are white except for one black one. Nature does this on occasion."

The chief was silent for a moment, then said, "Tell you what. You don't say anything more about the sheep and I won't say anything more about the baby."

Recent column highlights:
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell your stocks. Click here.

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. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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