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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 Tuesday, December 20, 2005: New York City bus and subway strike. Seven million commuters get screwed. Buy shares in bicycle companies, if you can find one. If you commute by bicycle, cover your ears. It's cold outside. The best is called Robocap from a Swiss company called Assos.

$50 or so. Overpriced, but warm. It covers your ears better than this photo shows.

Predictions. Predictions. Predictions. Some work. Most don't. I'm working on my list for 2006. Meantime, here are some from Red Herring magazine, a magazine that failed, then got resurrected and is probably still losing money, judging by its lack of ads.

1. Online games will boom. That includes both specialty console (Xbox, Playstation, etc.) and online PC games. PC games are growing faster, but their quality "doesn't hold a candle" to console games.

2. Falling flash memory prices will unleash a fresh wave of innovation in consumer electronics. Buy shares in SanDisk? Falling prices means flash will be more practical in automobiles and handheld devices, where a hard drive's moving parts make them impractical.

3. Internet video will make its way into the living room next year as Hollywood embraces the P2P tools it once loved to hate. As more people gain access to broadband, the tools for taking full advantage of bandwidth are moving from renegade to mainstream.

4. Location-based services will finally start to grow up. Sprint Nextel offers driving directions. Verizon announced three new applications for mobile wireless customers that help identify traffic snarls and locate low-price gas stations.

5. No wires, no charge. With wireless broadband, hooking up to the Internet anywhere on the globe seems more like a right than a privilege. With Intel pushing it, WiMAX is poised to boom.

6. Drug bust. As big pharma's blockbuster business model falters, the precision drug strategy begins to gain traction. Personalized medicines may still be a decade or more away.

7. Nickel-and-diming. With the rise of pay-as-you-go content, there's light at the end of the digital pipe for micro-payments. Apple legitimized the need for micro-payments with iTunes -- songs for 99 cents. More content providers are emerging.

8. Sensor motes gain in traction. Sensor motes are typically wireless. They're small, coin-sized wireless devices that are designed to establish network connections on the fly with minimal power needs. What the devices lack in intelligence, they make up for in their ability to quickly wake from hibernation and locate and establish communications with other nearby wireless motes. Using small amounts of energy, they are able to transmit short bursts of data reporting on such things as changes in temperature, light, motion, or even the presence of chemicals. Many of them can work together in concert with so-called "mesh" networks, providing precise information about movements on a battlefield or people walking through a building. Sensor motes are presently used in monitoring leaks in water pipelines, maintaining the temperature in industrial buildings or watching over an industrial process to ensure that humans are alerted before a major breakdown.

9. Hurricane Katrina made companies realize that 2006 will be the year of supply chain. Pilots, train drivers, skippers. The global economy has been growing faster than infrastructure has been added to the system.

10. Molecular cuisine is to food what pharmagenomics is to medicine.
People respond differently to different foods, and one's genetic makeup is the key to learning what foods promote optimal health.

Neat predictions... Time for a sanity check.

From Business Week, The 10 Worst Economic Predictions About 2005

10. "If Microsoft (MSFT ) gets serious about search -- and there is every reason to believe that it will -- Google will need brilliant strategy and flawless execution simply to survive." -- Charles H. Ferguson, author, Technology Review, Jan. 1, 2005

>> REALITY: Google didn't just survive in 2005. It ruled. In the most recent quarter, profits soared 633%, and revenues almost doubled. Microsoft? Profits gained 24%, revenue rose 6%.

9. "The big, big story of 2005 could be the collapse of the dollar." -- Peter Schiff, founder of Euro Pacific Capital in Newport Beach, Calif., Jan. 2, 2005

>> REALITY: Collapse? The dollar surged 14% against the Japanese yen and 13% against the euro from the start of the year through mid-December.

8. Chinese Internet stock (NTES ) -- "organic and innovative" -- will outperform the market. -- Richard Ji, Jenny Wu, and Mary Meeker, Morgan Stanley (MWD ) tech analysts, initiating coverage on Sept. 12, 2005

>> REALITY: In the first three months after Meeker's team recommended NetEase, the company's shares fell 25%. Oops.

7. Calpine, the big electricity generator, "is making progress with a big financial restructuring. If they just liquidated the company, you'd get $6 a share." -- David J. Williams, portfolio manager of the Excelsior Value & Restructuring Fund at U.S. Trust, Dec. 27, 2004

>> REALITY: Calpine's shares were trading around $3.50 when Williams made them one of his top picks for 2005. They're trading now for 31 cents -- down 91%.

6. Overproduction by OPEC could cause a steep decline in oil prices: "We are concerned about the future. We are concerned about a new severe drop in price like we have witnessed in recent days." -- Iranian Minister of Petroleum Bijan Zanganeh, Nov. 22, 2004

>> REALITY: Oil prices were about $50 a barrel when Zanganeh fretted about a severe drop. They hit a record of $70 a barrel in the summer before easing back to "only" around $60 by yearend.

5. Sales of gold by central banks could seal its fate as an economic relic of the Old World. "The pillars of the market are crumbling." -- Andy Smith, a gold analyst at Mitsui Global Precious Metals in London, May 3, 2004

>> REALITY: Those golden pillars didn't crumble in 2005. They turned into rocket boosters. Gold rose 16% to a 22-year high in mid-December.

4. Mechanics at Northwest Airlines (NWA ) will win a strike because other workers will stand up for them. "We know we're not in this alone." -- Ted Ludwig, president of Local 33, Aircraft Mechanics Fraternal Assn., Aug. 9, 2005

>> REALITY: Northwest had little trouble finding replacements for the 4,100 strikers, and no other unions honored their picket line. The continuing strike is considered a near-total failure.

3. The Dow Jones industrial average will finish 2005 at 8,000 points. -- Bernie Schaeffer, Schaeffer's Investment Research, Dec. 27, 2004

>> REALITY: Technically speaking, this prediction could still come true, but it would require the Dow industrials to plummet 26% in the next two weeks. Anyone willing to predict that?

2. 2005 will be "a year of economic difficulty." -- A majority of the American people; 54% of respondents to a Gallup poll, Dec. 17-19, 2004

>> REALITY: For many, it was a difficult year. But the unemployment rate is just 5%, well below its 30-year average. The economy is growing rapidly. And household wealth is at an all-time high. If 2005 was "difficult," then what would you call a recession?

1. The U.S. will have fewer hurricanes in 2005 than in 2004. -- Tropical Meteorology Project of Colorado State University, Dec. 3, 2004

>> REALITY: 2005 broke all hurricane records. Including Katrina and Rita, there were 14 Atlantic hurricanes, 7 of them classified as "intense." The Coloradans had predicted six -- only three intense. Granted, predicting hurricane season half a year before it warms up is no easy task. But guys, come on.

What the wife needs (?)
A husband and wife go to a counselor after 30 years of marriage.

The counselor asks them what the problem is? The wife goes into a tirade, listing every problem they have ever had in the 30 years they've been married. She goes on and on and on.

Finally, the counselor gets up, goes around the desk, embraces the woman, and kisses her passionately. The woman shuts up and sits quietly in a daze.

The counselor turns to the husband and says "That is what your wife needs at least three times a week. Can you do that?"

The husband replies, "I can bring her in on Monday and Wednesday, but on Friday I'm playing poker with the boys."

Recent column highlights:
+ Dumb reasons we hold losing stocks. Click here.
+ How my private equity fund is doing. Click here.
+ Blackstone private equity funds. Click here.
+ 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 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. 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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