Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Monday, December 19, 2005: Think
tax losses. If you realized gains this year you may have expensive ordinary
income. Hence now is a good time to get rid of some dogs. A by-product of tax-loss
selling is that some "dogs" are being unloaded. Their prices are declining.
Soon some will become a good buy as they will surely pop in the New Year. I'll
give some examples of "good buys' as the end of the year gets closer. It's
called the January Effect. All the people who sold stocks for tax-loss selling
towards the end of the year now wait 31 days, then buy their stock back and
start all over again.
friend Jack Burns, broker: His advice today:
+ Buy dividend stocks, the government is giving you a deal at 15% taxation
+ Sell covered calls against low beta blue chips in an IRA. Not many people
know you can.
+ Max out your IRA and 401-k's. The government is telling you it might not be
there to help you when you retire.
+ Hold stocks for the long term (if you can). Tax make more sense.
+ Use disciplined stop losses, 7 to 8%. Live to see the next day. (Harry's note:
I've always pushed 15%. Jack's lower number makes sense in today's volatile
+ Albert Einstein said the best invention ever was compound interest. (So did
Cramer pop: He hypes it. The following day
it pops, then drops. Here are the charts on the two stocks he pushed most on
Thursday night. You could have made money trading them -- buying on opening,
then selling an hour or so later. If you hung on through the day, however, you
had a 50-50 chance of losing money. Up with Sara Lee (SLE). Down with
Cummins (CMI) I'm not recommending you play this game,
simply commenting on it.
How retailers are conspiring to part you from your
money: In the current issue of Psychology Today, Michelle
Bryner reveals some tricks of the trade:
shoppers turn right, probably because most are right-handed. The right-hand
thoroughfare attracts the highest traffic anywhere in the store. It is the
perfect location for high-profit merchandise."
+ Stores like
Target and Old Navy that provide a shopping cart or basket to
hold potential purchases sell more than those that don't.
+ Shoppers tend
to move quickly through stores. To slow them, retailers provide mirrors wherever
they can "because most people like to check out their hair as
much as they do the clothes."
+ Those neatly
folded piles of clothes intimidate some shoppers, who are afraid of messing
up the stacks. So today's salespeople are trained to leave a few items unfolded,
encouraging shoppers to look and touch.
+ The best place
to put the cosmetic counter is across from the shoe department. Waiting for
their size, shoppers are a captive audience.
rise of organized middle eastern crime in Australia: The
article starts "I BELIEVE that the rise of Middle Eastern organized
crime in Sydney will have an impact on society unlike anything we have ever
seen." It was published in early 2004. It's written by a now-retired
detective. It tells the story of a society trying to do "the right thing,"
but taken advantage of by a bunch of imported thugs. Read it. It's fascinating
and totally prescient, given the recent race riots in Sydney, my birth place.
How to get TiVo'ed shows onto a DVD: Burn your
TiVo DVD as a "data DVD." You won't be able to play it in your DVD
player (the one attached to your TV set, but you will be able to play it on
any PC. In case you missed it, on Friday I showed you how to program your TiVo
remote to fast forward 30 seconds at a time. Click
of the best financial journalists in the country:
OK. I'm a James Surowiecki fan. He writes The Financial Page for the New
Yorker magazine. He's also written several books. This man is smart. Here's
his latest piece in the New Yorker. It explains what's happening with
Research in Motion (RIMM) and its present patent fight. Fascinating:
Since it was
introduced, in 1999, the BlackBerry, a handheld device that provides wireless
e-mail access, has become not only an enormous financial successnearly
three million Americans now use onebut also the quintessential symbol
of todays connected world. Last month, though, it became clear that
a patent-infringement case could force the BlackBerrys manufacturers,
a Canadian company called Research in Motion, to kill the service in the United
States by the end of the year. Then the BlackBerry will become the quintessential
symbol of something else: a patent system that is out of control.
for R.I.M. started in 2001, when it was sued by a small Virginia company called
N.T.P. for infringing on five patents that described the design and operation
of a primitive wireless e-mail network. In 2003, a judge granted an injunction
saying that R.I.M. needed to cut a deal with N.T.P. or shut down the BlackBerry
service. R.I.M. appealed, but to no avail. The injunction is still in place,
and R.I.M.s only chance of keeping the BlackBerry alive is to pay N.T.P.
an enormous ransominformed estimates run as high as a billion dollars.
Whats more, theres speculation that, once R.I.M. settles, N.T.P.
could go after the cellular companiesCingular, T-Mobile, and so onthat
offer the BlackBerry.
you might say. After all, we want to reward innovation and protect people
from having their ideas stolen. Unfortunately, the real innovations in this
case are not technological but legal. N.T.P. is a company without employees
or products. It never tried to build a real business around its patents, and
it never licensed them to others, until R.I.M. demonstrated just how lucrative
wireless e-mail could be. No one alleges that R.I.M. used N.T.P.s patents
to build the BlackBerry; it invented its system from scratch. N.T.P., holding
the patent on an idea and a crude design, waited until another company created
a successful business based on similar ideas, and then headed to court. It
is not alone in such endeavors. There are many companies, known unaffectionately
as patent trolls, that thrive by suing other companies. Close
to three thousand multimillion-dollar patent lawsuits (some valid, some questionable)
are now filed annuallya number that has more than doubled in the past
fifteen yearsand many of them rely on what a federal judge termed a
combination of blitzkrieg and Shermanesque tactics.
Over the past
two decades, the U.S. has taken the view that the stronger patents are, the
better. But patents, by their nature, are imperfect. They may encourage innovation,
but, by allowing the patent holder complete control of an invention, they
also limit it. Patents reward some inventors at the expense of others: more
than one person can have an idea, but only one can patent it. That may be
why, in a study of a hundred and fifty years of patent protection, Josh Lerner,
of the Harvard Business School, found that countries that introduced stronger
protections for patents saw no increase in innovation by their citizens. Similarly,
in a study of nineteenth-century innovation based on data from two Worlds
Fairs, Petra Moser, an economist then at Berkeley, found that countries with
patent laws (like Britain) did not innovate more than those without them (like
the Netherlands and Denmark).
holders rights is important, of course, but the system needs to be rigorous
in the way it hands out patentscareful not to grant patents for ideas
that are obvious, already well established, or too broad. And it needs to
be nuanced in matters of enforcement, weighing the interests of society alongside
those of the patent holder. The U.S. fails on all counts. In the first place,
too many patents are granted. According to a recent National Academy of Sciences
report, ninety-five per cent of all patent applications in the U.S. are approved,
compared with just sixty-five per cent in Europe and Japan. Understaffing
at the United States Patent and Trademark Officethere are thirty-four
hundred examiners and three hundred and fifty thousand applications a yearmeans
that patent examiners dont have enough time to properly research an
ideas originality. And since the office is funded by patent fees, as
opposed to getting its budget from Washington, it has a financial incentive
to process applications as quickly, rather than as diligently, as possible.
(Generally, examiners spend somewhere between eleven and twenty-two hours
per patent, and no extra time is allocated for commercially significant applications.)
The appellate court responsible for patent cases also tends to be patent-holder-friendly.
Injunctions of the kind that N.T.P. got against R.I.M., for instance, are
usually employed only to prevent irreparable harm, but in patent
cases they are now routine.
have never been easier to get or more lucrative to hold. Unsurprisingly, people
have been patenting everything in sight. Since 1980, the number of applications
has tripled, and the number of patents granted has nearly quadrupled, effectively
allowing patent holders to rope off more and more of the economy, even though
the quality of patents has been steadily declining. (A recent Federal Trade
Commission report warned that questionable patents are a significant
competitive concern and can harm innovation.) The BlackBerry mess is
a case in point: in the past year, the Patent Office has reëxamined N.T.P.s
eight patents, and issued preliminary rulings declaring them, and the nineteen
hundred claims they contain, invalid. Until those patents are formally invalidated,
however, R.I.M. is still on the hook, so it may end up paying for infringements
that it never committed. Now, thats innovative.
A newlywed couple wanted to join a church. The pastor told them, "We
have special requirements for new parishioners. You must abstain from sex for
one whole month."
The couple agreed and, after two-and-a-half weeks, returned to the Church. When
the Pastor ushers them into his office, the wife is crying, and the husband is
obviously very depressed.
back so soon...Is there a problem?" the pastor inquired.
"We are terribly
ashamed to admit that we did not manage to abstain from sex for the required
month," the young man replied sadly.
The pastor asked
him what happened.
first week was difficult. However, , we managed to abstain through sheer willpower.
The second week was terrible, but with the use of prayer, we managed to abstain.
However, the third week was unbearable. We tried cold showers, prayer, reading
from the Bible...anything to keep our minds off carnal thoughts. One afternoon,
my wife reached for a can of paint and dropped it. When she bent over to pick
it up, I was overcome with lust and had my way with her right then and there,"
admitted the man, shamefacedly.
this means you will not be welcome in our church," stated the pastor.
said the young man, hanging his head, "We're not welcome at Home Depot,
+ Dumb reasons we hold losing stocks. Click
+ 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
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.