Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST Monday, July 24, 2006: For
a while, my theme has been Cash is King. Many people believe we're getting
close to a bottom. Thus it's time to spend the cash and get back in. My friend
and excellent hedge fund manager, Austin Lewis emailed me, "Extreme
bearishness occurs at the bottom more than 90% of the time." Today's
chart shows the S&P at a critical point. If it breaks through, it goes lower
-- big time. If it doesn't, it goes higher.
Hence, the next
few days could be critical.
Oil Sure Bet, Rogers Says; Forget About It, Merrill Demurs.
From Bloomberg this morning:
press. Fewer reporters. Less checking. More mistakes: How
much should you believe what you read? Clearly less than a few years ago when
the newspapers and magazines had money to check their stories. And clearly less
than before the Internet, where anyone (including me) can post anything, make
it look pretty and thus believable. Items:
the co-founder of George Soros's Quantum hedge fund, says oil prices will
reach $100 a barrel, possibly this year. Merrill Lynch & Co.'s
Francisco Blanch says no way.
somebody discovers something very quickly and very accessibly, we're all going
to be dumbfounded at how high the price of oil will go, including me,'' Rogers
said in an interview in Singapore.
Lebanon between Israel and Hezbollah forces, backed by Syria and Iran, helped
send New York crude oil for August delivery to a record $78.40 on July
14 on concern the violence may spread through the Middle East, the region
that produces more than 30 percent of the world's crude.
Not to worry,
says Blanch, the head of commodities research at Merrill, the world's biggest
brokerage. Oil supplies would have to stop from a country such as Iran,
the second-largest Middle East oil producer, to drive the market higher,
we will see another price rally from here, unless the current conflict expands
beyond its current borders,'' Blanch said in a July 17 interview in London.
"You'd need physical disruptions, and large ones, to bring the price
to $100. You'd probably need to lose Iran.''
A growing number
of Wall Street traders are siding with Rogers. Bets on futures contracts for
$100 oil tripled in the past three months, helped by demand for fuel
from China, the world's fastest-growing major economy.
Oil has tripled
in four years to more than $74 a barrel and gasoline pump prices reached $3
a gallon in the U.S., threatening to damage economic growth. Rogers says the
rally will accelerate as supplies decline from aging fields and reserves become
more difficult to find.
investors looking for $100 oil will see it,'' said Philip K. Verleger, an
economist who founded PK Verleger LLC, a Newport Beach, California-based energy
consulting firm. Only a U.S. recession can stop the advance to $100
a barrel before the end of next year, said Verleger, also a visiting fellow
at the Institute for International Economics in Washington.
Oil prices have
also climbed because of pipeline attacks in Nigeria and concern Iran might
cut exports to fight efforts to curb its nuclear program. Iran, which says
it seeks nuclear energy for peaceful uses, has the world's second-largest
U.S. crude inventories
are swelling as OPEC members pump almost as much as they can. U.S. oil stockpiles
are 9.5 percent higher than the average level of the last five years, according
to the Energy Department.
new rigs and refineries is paying off, increasing the cushion of spare capacity
that protects against shortages. The Paris-based International Energy Agency
estimates OPEC's idle crude oil capacity will reach 4.2 million to 6.1 million
barrels a day in 2011, up from about 2 million a day now.
Oil at $100
a barrel is "a very low probability,'' said Tim Evans, an energy analyst
at Citigroup Inc. in New York.
The $100 level
became a market benchmark in March 2005, when Goldman Sachs Group Inc. analyst
Arjun Murti wrote that ``we believe oil markets may have entered the early
stages of a `super spike' period, which we now think can drive oil prices
toward $105 per barrel.'' The report indicated a range between $50 and $105
through 2009. Oil last closed below $50 a barrel in May 2005.
The number of
futures contracts bearing the option to buy crude at $100 this year is 53,047,
triple the amount on April 21. The contract gives a buyer the right, but not
the obligation, to buy a commodity at an agreed price within a set time period.
The figures are for the September through December contracts.
is not a ridiculous idea,'' Paul Horsnell, head of commodities research at
Barclays Capital in London, said in a July 17 interview. "It is a possibility''
should the Middle East conflict cut off supplies, said Horsnell, the second-best
oil- price forecaster surveyed by Bloomberg last year.
an analyst who correctly predicted in July 2004 that oil would reach $67 within
"months to years,'' said she expects oil to reach $84 a barrel in the
"short term,'' then keep rising. ``I wouldn't be surprised to see oil
in excess of $100,'' she said. Oil was near $40 when she made her 2004 prediction.
It reached $67 a barrel in August 2005.
inflation, oil exceeded $86 in early 1981, when Iranian production collapsed
following the country's 1979 Islamic revolution, according to U.S. Energy
The first so-called
"oil shock'' was in 1973 and 1974, when inflation-adjusted oil prices
rocketed fivefold to about $50 a barrel. It occurred after Saudi
Arabia and other Arab producers halted exports to the U.S. The embargo, protesting
U.S. support for Israel, resulted in American motorists waiting in long lines
Horsnell and Kevin Norrish in January raised their 2006 New York oil price
forecast to $68, including $72.20 for the fourth quarter, citing increasing
risk to Iranian oil supplies because of the nuclear dispute. Goldman Sachs
increased its 2006 forecast the same day, to $68.50 a barrel.
oil prices for the first quarter of 2007 are already trading at $80 a barrel,
so to go to $100 would be the same as getting to $25 when oil was at $20,
and there are a number of events that could do that,'' Horsnell said. Prices
of $100 are not in their base forecast, he said.
declining supplies from existing fields and a lack of new oil discoveries
will drive prices higher.
market has about 10 or 15 years to run,'' he said. "How high it's going
to go I don't have a clue during that time, certainly over $100 a barrel or
over $150 a barrel before it's over.''
1. Reporters have their own shtick. Often they "write" the story before
they research it. The "facts" better correspond, or are made to correspond.
2. Checking the facts is expensive. When I worked at Business Week, they used
to have a team whose job was to call all the reporters' sources and verify quotes
and numbers. Now most publications can't afford that team.
3. Reporting has become political. CNN will do a very different slant on the story
to Fox News. And Al Jazeera will report in an even different way. Ditto for the
New York Times and the Wall Street Journal.
4. Most business reporters are critical of business. They often search for the
seedy aspect. They think that gruesome "sells" more than praise. This
makes many businessmen shy of reporters.
What go me started on this was the following story. It originally came from Ad
Age. To check it, I called Stefano and asked "Was the story accurate?"
Her answer: an email explaining "a few corrections in the Ad Age article."
Her corrections were not minor. The reporter should have gotten the facts right.
Border crossings are the classic captive audience. Thousands of bored drivers
sit in their cars and wait. They can now watch and react to giant screens, courtesy
of Border Billboard, LLC:
have video, audio and text-messaging features. Two LED display video boards
show commercials and are flanked by tri-vision ad panels (a tri-vision panel
can hold three advertisements that rotate one after the other). Advertisers
pay $10,000 to $25,000 a month.
People stuck in
traffic can to listen to messages on their car radios and send text and picture
messages via their cellphones and participate in contests and product giveaways
sponsored by the advertisers. Amber ticker displays relay the text messages
as well as news headlines and weather updates. "Full video, captive audience,
multi-sensory -- the combination of those three is what makes it so exciting,"
said Jennifer Stefano, owner and CEO of Border Billboard.
Averaging a billboard every two years, Border Billboard hopes to dominate the
border, having boards at all 13 crossings within the next five years. Next up
for the company is the crossing between El Paso, Texas, and Ciudad Juarez, Mexico,
where each day 148,000 consumers, says the company, sit in bumper-to-bumper
Panasonic's new mother of a TV:
The pink models are not midgets. The 1080p TV measures nearly nine feet wide
by six feet high.
Panasonic said last week that it would begin selling a 103-inch flat-panel
plasma television in the United States in time for the holiday season. The TV
is about as big as a queen-size bed and, Panasonic says, the largest
on the market. It will sell for $70,000. Panasonic expects it to be a
"niche product." With the frame and speakers, it weighs 450
pounds and must to be shipped in a box with a specially designed suspension
system. Clearly more fun than losing $70,000 on the market.
Correctness (PC) from Iran: I invite the faithful to wait for
good news, Irans President Mahmoud Ahmadinejad said last Tuesday.
We shall soon witness the elimination of the Zionist stain of shame.
Iran finances and arms Hezbollah (the army of God). Iranian rockets continue
to fall on Israel. That people can hate so intensely is very depressing.
the doctor's office:
A gorgeous young redhead goes into the doctor's office and said that
her body hurt wherever she touched it.
says the doctor. "Show me."
The redhead took
her finger, pushed on her left breast and screamed, then she pushed her elbow
and screamed even more. She pushed her knee and screamed; likewise she pushed
her ankle and screamed. Everywhere she touched made her scream.
The doctor said,
"You're not really a redhead, are you?
she said, "I'm actually a blonde."
so," the doctor said. "Your finger is broken."
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 .
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