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, January 3, 2006: Likely
investment trends of 2006:
1.
Too much money chasing too few opportunities, especially in the United States.
This means real estate profitability continues its declining yield Good time
to sell real estate. Not so good to buy it.
2. Overseas has a shortage of capital and thus higher returns. In 2005,
overseas markets did much, much better than ours. They will again in 2006. You
got to have money overseas.
3.
China, India and many other small countries, like Russia, Chile and Brazil,
will continue to boom. They will consume more
and more of the world's commodities. Prices of commodities will continue to
rise. But no one knows which ones. That's why baskets of commodities make sense.
4. The companies which will do well will apply technology to their business.
See VistaPrint (VPRT) below. Companies that make the technology,
in general, won't do well. Prices are falling too fast. And the bureacracy at
companies like Intel and Microsoft is overwhelming.
5.
Speed is of essence -- even more so than usual. Change has never been faster.
Eternal vigilance is key. The world suddenly got the message that there was
no future in print. Newspaper stocks plummeted in 2005. Ditto for GM and Ford.
Once they started cratering, you had to get out -- FAST.
6.
Allocation remains the ONLY free lunch. But you got to keep looking. There's
no single source to shop for "allocation." Most stockbrokers are useless.
This year real estate will be a smaller portion of your portfolio -- but overseas
and commodities will be bigger.
7.
Move on. Don't berate yourself for lost opportunities. Because of the speed
of change, you have little chance of always being right, or even being right
often. You'll miss big moves. Your own business with control over it yourself
still makes the most sense. Without that, at least organize your investing life
in a disciplined way -- so many hours per week. Stringent stop losses, etc.
Intel
is destroying itself for dubious benefit. The
new CEO is called Paul Otellini. I have been long been an Intel customer, eagerly
awaiting and eagerly buying the newest laptop power by Intel's latest and greatest
microprocessor. Now, Mr. Otellini tells me he's no longer interested in me.
He's going to take Intel into fields he and Intel have zero experience
in. This will fail. Trust me.
BusinessWeek did a big cover piece on Intel's plans. The part that got
me was the interview with Otellini. Read this stuff. Try to avoid throwing up.
I've watched Intel over the years waste hundreds and hundreds of millions on
hot new areas -- like videoconferencing and computer telephony. All have come
to naught. I have a drawerful of Intel teleconferencing devices. They have now
dropped the fabulous tagline "Intel Inside" for "Leap
Ahead." Dumb. Dumb. Dumb. Here's the interview:
BW: Is it fair
to say Intel is exiting the PC era and morphing into something new?
The era we're going into now is one where computing becomes more ubiquitous
and more pervasive and has more uses, so computers are going to become tailored.
The product lines and markets we're addressing today are all focused on where
we think computing is headed in the next four or five years.
Clearly, a
lot of what you're focusing on is marketing. Why is that so important?
We are still a technology company. We spend a lot more on R&D than we
do on marketing. But to sell technology now, you have to do it in a simpler
way. You can't talk about bits and bytes -- you talk about what it does for
you.
Some people
might think it's crazy to tinker with one of the most widely recognizable brands
in the world.
Changing the name of our products goes a long way to put an exclamation
point on the design change that's behind them. Is it orthodox to walk away from
one of the most recognized brand names in the world? Probably not. I don't think
we'll walk away from it overnight. In fact, we will keep it on in a large manner
for quite some time. But the new brand at the top, in terms of where we want
to drive the product, is going to be focused on [the new brand] Core, Core Duo
in particular, which signifies the dual-core nature of it and also the fact
that we have a whole new sheriff in town.
You've brought
in an outsider, former Samsung marketing whiz Eric Kim, to help lead the marketing
changes. Isn't it unusual for Intel to bring in outsiders at the top ranks?
It's hard to come in from the outside at that level at any company. At Intel,
it's traditionally been even harder. But I thought we needed some fresh thinking.
This is one of the areas where change is part of the nature of the job. The
fact that Eric is a bigger geek than most of the other people at Intel turned
out to be a wonderful blessing. He's a highly trained engineer, knows software
in and out, worked Lotus. And he's also an aficionado. He's one of these guys
that builds these home theaters himself and connects things up, so he's a great
litmus test for how this stuff works.
You're also
bringing in key execs in other senior-level positions.
As we move into emerging markets, you tend to buy a more experienced talent
base. I felt in Digital Home boss Don [McDonald's] case that it was particularly
important to get people who had worked in consumer electronics and content before.
Those kind of skill sets didn't exist inside Intel. In Mobility Group boss Sean
[Maloney's] case, wireless technologies is an area where we're still growing
and learning. Those guys are like living gods, and you want to get the best
and the brightest.
These are some
pretty cherished institutions you're dropping -- the Pentium brand, the dropped
"e" in the logo. How much trepidation did you feel?
When Eric asked me if I had any sacred cows, I said no. He asked, what around
the dropped "e"? And I said if it makes sense, it's time to do it.
He was given pretty free rein to change. And when I saw [the new logo], it just
jumped out at me. It reflected that change, where we want to go. There's a feeling
of movement around [the new logo], and the tag line "Leap Ahead"
certainly reiterates that.
How much of
this is in response to the competition you face? Advanced Micro Devices (AMD
) is stronger, and Texas Instruments (TXN ) is pursuing its own digital-home
strategy.
We were certainly cognizant of our competition when we constructed [out
new strategy], but I think it's sustainable from both a competitive and a market
perspective. At the end of the day, the market is what drives our business model.
Tell me about
the Apple (AAPL) relationship. You struck the deal in June for them to use Intel
chips, which was something of a coup. What does that mean for Intel?
At the end of the day, we live to sell chips. First and foremost, it's market-expanding
for us. Secondly, as I said at the developers' forum, the thing that Apple really
brings to the Intel family of customers is their innovation. They [have an]
ability to not just mix hardware and software, which is unique, but also to
drop software upgrades rather frequently to take advantage of hardware changes.
I think what [Apple CEO] Steve [Jobs] said at the forum is they've dropped five
releases of the operating system in the last four years. That alone is very
appealing. [When it comes to design], they are a front-runner -- people copy
some of their design elements. I believe as they start taking advantage of some
of our lower-power products...it will drive a trend toward smaller, cheaper,
cooler.
How hard was
all this change for you as a lifelong Intel man?
I'm quite convinced this direction is the right thing for our company and,
to some extent, the industry. This really is a natural evolution of not where
just Moore's Law takes us, but also where computing has to go. This is the right
model. Now, it's just a matter of playing it out.
What's your
slogan going to be? Andy Grove, of course, will be known forever for "Only
the Paranoid Survive."
He wrote that after he was in the job five or six years. [Otellini laughs.]
Come back to me then.
Which technologies,
platforms, most excite you personally?
I actually think Viiv is a world changer. Independent of the hardware as
it evolves, it's DRM-agnostic, but it protects everything. It allows you to
move things in a free fashion, but still maintain the desire of the content
owners to get paid for what they do. It will change the business models of entertainment
and theaters and Hollywood, and it will be for the benefit of consumers.
My
favorite skiing photo:
Too much skiing, I guess. This young lady
slept the entire way from Denver to New York. She paid extra for those tattered
jeans.
Vistaprint, going higher? I talked about VisaPrint
as a great place to get business cards. I love it. Then it went public. And
its stock started to rise, more and more. Its business model is so good, I bet
it will rise further.
Go to www.Vistaprint.com
and order yourself or your company some stationery. You'll be impressed
how brilliant VisaPrint's system is.
Heartburn
after a big meal? Sleep on your left side or
your back.
SAT
test answers:
The following questions and answers were collected from SAT tests
given to 16 years-old students! One day our social security payments will depend
on these kids.
Q: Name the four
seasons.
A: Salt, pepper, mustard and vinegar
Q: Explain one
of the processes by which water can be made safe to drink.
A: Flirtation makes water safe to drink because it removes large pollutants
like grit, sand, dead sheep and canoeists.
Q: How is dew
formed?
A: The sun shines down on the leaves and makes them perspire.
Q: What causes
the tides in the ocean?
A: The tides are a fight between the Earth and the Moon. All water tends to
flow toward the moon because there is no water on the moon and nature abhors
a vacuum. I forget where the sun joins in this fight.
Q: In a democratic
society, how important are elections?
A: Very important. Sex can only happen when a male gets an election.
Q: What are steroids?
A: Things for keeping carpets on the stairs.
Q: What happens
to your body as you age?
A: When you get old, so do your bowels and you get intercontinental.
Q: What happens
to a boy when he reaches puberty?
A: He says good-bye to his boyhood and looks forward to adultery.
Q: Name a major
disease associated with cigarettes.
A: Premature death.
Q: How can you
delay milk turning sour?
A: Keep it in the cow.
Q: What is the
Fibula?
A: A small lie.
Q: What does"varicose"
mean?
A: Nearby.
Q: What is the
most common form of birth control?
A: Most people prevent contraption by wearing a condominium.
Q: Give the meaning
of the term "Caesarian Section"
A. The caesarian section is a district in Rome.
Q: What is a seizure?
A: A Roman Emperor.
Q: What does the
word "benign" mean?
A: Benign is what you will be after you be eight.
Q: What is a turbine?
A: Something an Arab wears on his head.
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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
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If you click on a link, Google may send me money. Please note I'm not suggesting
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