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Harry Newton's In Search of The Perfect Investment Technology Investor. Auction Rate Securities. Auction Rate Preferreds.

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9:00 AM EST Wednesday, July 9, 2008: A delightful 18-year old visited me last night. He interviewed me for a book he's writing on life-skills for schoolkids. Think of all the skills your kids need. Suddenly you realize how few of them they learn at school.

Some skills needed:

1. How to solve problems -- i.e. deductive reasoning.

2. How to sell.

3. How to handle your personal finances.

4. How to write business English.

5. How to present, and publicly speak.

6. How (and why) to start your own business.

I bet you can think of a dozen more. Since they don't teach this stuff at school (or college), it's your job to teach them at home.

I said NO to ethanol investment proposals. I thought they just didn't make economic sense. Most tellingly you needed heavy government subsidies and unlimited ultra-cheap corn. Worse, each gallon of ethanol used more energy to produce it than it produced. The whole corn-based ethanol just looked dumb. If I put a notional value of 25% IRR on all those projects I've said NO to over the years, I'd be a zillionaire. From Yahoo! Green:

Ethanol plants based on food crops are taking a serious hit because of the price hike for grains and the flooding in the Mid-west that has wiped out a significant number of crops. In just the most recent news, Heartland Ethanol is tossing plans to build seven corn ethanol plants in Illinois, and even worse, they’re dissolving the company – all due to feedstock prices. VeraSun Energy is delaying construction at two of their plants because of the flooding.

With corn passing $8 a bushel and a 10% drop in production over the last year, it seems that corn ethanol is finally reaching the end of its popularity (of what little it had left) and corn ethanol plants are either already in, or nearing the red without the prospect of getting funding thanks to the credit crunch.

Corn ethanol is likely just the first of many crop-based ethanols to take an immediate dive, despite the best efforts of biofuel companies. Ethanol stocks are getting downgraded since Citi analysists are predicting more large-scale shut-downs as small and midsize producers will be forced to shut down due to the price issues, representing a loss of between 2-5 billion gallons of ethanol per year. Citigroup analyst David Driscoll is predicting that about 76% of ethanol plants are at risk of shutting down in the next few months. Earth2Tech has counted 11 plants whose operations are suspended just since May (see the above map). Feels a little bit like a rapid downward spiral, doesn't it?

What does this mean for the future of biofuel? Well, most likely it means more research will be going in to cellulosic ethanol and creating fuel from municipal waste, and those companies already working on that technology will get a little more wiggle room from competitors for awhile. Figuring out how to turn trash to fuel is a whole lot more logical than turning crops to fuel anyway. And I suspect fuel from algae will gain in popularity pretty quickly, making coal plants happy since it’s an opportunity for them to “green up” their image among the general population. I highly doubt the shutdowns will do much to change grain prices in the short term.

However, it’s tough to mentally dig ourselves out of yet another boom-to-bust industry in our already flailing economy, especially one that once held so much hope for those that wanted to "go yellow." We’ll just have to watch, wait, and hope that necessity is indeed the mother of invention and some awesome new cellulosic ethanol technology will bust wide open.

Way to go, dude. From the Yuma Sun:

Golf carts take to the streets
Spiking gas prices have driven some resourceful commuters to complete more than a round of 18 holes in their golf carts.

"Based on 11 cents per kilowatt hour, it comes out to 3 cents per mile to drive a cart," said Greg Nelson, owner of West Coast Golf Cart in Yuma. "Even the Yuma Police Department is using golf carts."

Google "golf carts" and you find wonderful designs.

The YPD began using golf carts to patrol the wetlands parks seven years ago to provide greater mobility options, according to Officer Clint Norred, YPD spokesman.

"They're street legal, but for us it's a utility type thing to handle off-road terrain where a police car can't get to," Norred said. "It was not in response to the rising cost of gas but it's a useful thing to have."

But before that golf cart can leave the lush green fairway for the blacktop, the typical golf cart must have all the required safety equipment, cautioned Nelson.

To be "street ready," they must include windshield, rear-view mirror, turn signal lights, brake lights, electric horn, four-way flashers, license plate and license plate light. They also need seat belts if they go more than 20 mph, but unless the power is increased, they typically do only 17 mph. ...

Golfcart roadster

"I just called Geico (insurance company) and they quoted me $50 a year for insurance," Nelson said. ...

Sales of golf carts this year are up 35 percent, Nelson said. And every golf cart he sells includes a charger that is "very user-friendly" One cable from the charger plugs into an outlet under the driver's seat and the other cable goes to any standard 115-volt household outlet.

After use for 30 hours, a full recharge will take four to five hours and can be done as little as once a week, but it is recommended on a daily basis. Batteries should be filled with distilled water and a tire pressure check done once a month, along with an annual servicing.

Nelson pointed out that he is selling way more golf carts to street users than golfers, who comprise just 25 percent of his business. They are popular among seniors, especially those who reside in recreational vehicle parks, and he sold over 300 golf carts to Cocopah Bend RV Park alone, he recalled. ...

Michael Aitken, a retired maintenance electrician who also uses the golf cart, said a round trip to Wellton takes 10 minutes by truck but 30 by golf cart, yet his truck burns $4 of fuel while the cart costs only 46 cents.

A typical street legal golf cart costs new $12,000 to $15,000. A whole industry has grown around customizing them, e.g.

Custom paint job, 20inch rims, Gucci seats, TV/DVD combo, visor monitors — the creation of “Bad Ass Golf,”. Only $38,000.

The Linksys WRT54G2 Wireless-G Broadband Router. You plug one of these into your cable or DSL modem.
Then you plug your computers in. Bingo, you can now
share your broadband line among four computers attached by cables and/or many more wirelessly.

The big pluses about this gadget over earlier routers is:

1. You can set up so only you and your family can get on your network -- not your neighbors.

2. You can use it to network all your printers so everyone can print from their PC or Mac.

3. You get a remarkably good hardware firewall -- useful in today's mean and nasty world.

4. You get a remarkably useful, ultra-reliable, easy-to-set up gadget. All for only $48.

Many earlier routers did not have a firewall. You may consider replacing your old one with this one.

Best free podcasts: From Anne Himpens and Michael Newton ... drumroll... their three favorite podcasts... The Bugle; Wait, wait, don't tell me and This American Life. All available for free from iTunes.

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 on this site. Thus I cannot endorse, though some look 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 Michael's business school tuition. Read more about Google AdSense, click here and here.

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