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8:30 AM Thursday, July 14, 2005: If you're above water for the first half, you're doing better than most. Most hedge funds are flat or marginally up for the first six months. Not atypical: Paradigm Equities Fund 0.66%, Paradigm Master Fund 0.45% and Paradigm Multi Strategy Fund 0.19%. By contrast, my LBO announced a big sale on an asset it earned four times its investment.

The lessons remain:
+ Diversification counts.
+ Allocation is key.
+ Results are unpredictable.

I bought a little (emphasis on the little) Insite Vision (ISV) yesterday. It's a biotech company that may have something. Description:

InSite Vision Incorporated (InSite Vision) is an ophthalmic product development company focused on ocular infections, glaucoma and retinal diseases through three technology platforms that include its time-release opthalmic anti-infective DuraSite, genomic research for the diagnosis, prognosis and management of glaucoma, and a retinal drug delivery device. The Company is focusing its research and development and commercial efforts on AzaSite (ISV-401), a DuraSite formulation of azithromycin, a broad spectrum antibiotic; AzaSite Plus (ISV-502), a DuraSite formulation of azithromycin, and OcuGene glaucoma genetic test. It is also developing AquaSite.

CEO of Briefing.Com turns bullish: Yesterday Dick Green wrote:

Six months ago, Briefing.com moved its Market View from Moderately Bullish to Neutral. Since then, the S&P 500 has been stuck in a trading range and is now almost exactly even with the level when we made that call. We have now moved back to a Moderately Bullish stance. There are a number of reasons for the more optimistic view.

First, the market has come to grips with the reality that the very strong economic and earnings growth rates cannot continue into 2005. Moderate growth is expected.

Second, the interest rates outlook is more favorable. The market is starting to look past the current round of Fed tightening to stable short-term rates. Even more encouraging, long yields did not rise as expected. Inflation has remained very much under control, allowing the 10-year yield to stay under 4%.

Third, valuations have improved. Earnings growth in the past six months has been good. Stock prices have been stable. This has lowered the price/earnings multiple on the S&P 500 for operating earnings to just 16.7. That is extremely reasonable for the current interest rate environment.

There are still risks. A spike in oil prices would be a problem. The economy may stall due to exogenous factors. But the potential rewards are also more clear. Even moderate earnings growth through the second half of the year will lead to an increase in the S&P 500 index, so long as the current P/E holds. It should.

Our outlook is for the index to end the year with a mid-single digit gain.

Cramer was right about UnitedHealth: Last night UnitedHealth posted a 36% rise in profit and boosted its outlook. The company said it extended its services to two million new consumers during the first six months of the year, including 580,000 people in the second quarter.

Is an Endless Pool in my future? I'm in a Swim-Bike-Run store in Manhattan. They have great carbon fiber bikes and a pool with a gorgeous triathlon lady swimming. I didn't have a camera. But I went to the Endless Pool's web site and found pictures of inside and outdoor installations.

I like the idea. It's 8' x 15' x 39" deep. It has a motor that makes the water come at you while you swim in place. Think of a treadmill for swimming. You can adjust the speed or turn it off altogether. It costs $18,900. You fill the pool with a garden hose,. It has its own filter, heater, and copper/silver purification system. It needs a little chlorine -- about a cup of unscented Clorox bleach each day. I like the idea of a pool in the basement of our country house. Click here.

I really like York Photo: Their handsome 4" x 6" color prints are now 10 cents. Their uploading software is simple and efficient, though you must use Internet Explorer.. The only drawback is the time it takes to upload your photos. My technique: Start uploading before bedtime. Go to sleep. Choose pictures in the morning. Click here.

Traveling with a cell phone overseas: Take your dual or tri-band American phone with you. But use it only for emergency incoming calls. For outgoing calls buy a pre-paid SIM card in each of the countries you're visiting. You'll need a GSM phone to put the SIM card in. Buy a cheap one. You don't need the latest model. Make sure your GSM is unlocked. Many phones sold by U.S. cell phone companies are locked so you can only use their service. Semi-useful sites: telestial.com, planetfone.com and cellularabroad.com.

I'm having a colonoscopy soon:
A physician claims that the following comments were made by patients (predominantly male) while he was performing their colonoscopies.

1. "Take it easy Doc you're boldly going where no man has gone before."
2. "Find Amelia Earhart yet?"
3. "Can you hear me now?"
4. "Are we there yet? Are we there yet? Are we there yet?"
5. "You know in Arkansas, we're now legally married."
6. "Any sign of the trapped miners, chief?"
7. "You put your left hand in, you take your left hand out."
8. "Hey now I know how a moppet feels!"
9. "If your hand doesn't fit, you must quit."
10. "Hey Doc, let me know if you find my dignity."
11. "You used to be an executive at Enron, didn't you?"
12. "Now I know why I'm not gay."

And, best of all
13. "Could you write a note to my wife saying my head is not up there."

Recent column highlights:
+ 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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