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8:30 AM EST Thursday, May 11, 2006: Economist John Kenneth Galbraith coined the term Conventional wisdom to mean ideas, explanations or assumptions that are ingrained in the public psyche as true. For example, you can't get a drug through the FDA for less than $500 million. You can't make a full-length feature film for less than $50 million. You can't build run a decent hedge fund with less than $100 million. You can't invest any more money in real estate. Conventional wisdom is often not true. What's hard is that getting your conventional wisdom brain to wrap itself around non-conventional wisdom ideas.

A young lady stood in front of me yesterday and said she could make a full length movie for $1.6 million. (And I believe her.) Would I like to invest? (I'm reading the script.)

Interest rates continue to rise: The Fed raised short-term interest rates by 25 basis points yesterday to 5%.


This is the Wall Street Journal's chart of interest rate movements of the last six years. It's gotta stop soon.

The Fed's constant rate increases -- this is their 16th -- is bringing up long-rates, dampening real estate, and making borrowing by businesses more expensive. The Fed could care less about real estate or the cost of doing business. It is obsessed with inflation. If inflation rears its ugly head, the Fed raises rates. Beginning and end of story. It's hard for you and I to see inflation's ills today. A lot of stuff we buy -- computers, electronics, clothes, shoes -- is cheaper than it was ten years ago. But the Fed has its own basket of things it "buys." For the last couple of years, it thinks those things are rising in price. The reality? Who knows.

Mild inflation (which we probably have at present) is generally positive for corporate profits. It allows price increases. Hence it's good for stock prices.

Here is yesterday's statement from the Fed. Notice how carefully the Fed continued the Greenspan tradiiton of using words to say basically nothing:

Economic growth has been quite strong so far this year. The Committee sees growth as likely to moderate to a more sustainable pace, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained. Still, possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures.

The Committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives.

InSite Vision is on track to file an NDA for its major drug AzaSite with the U.S. Food and Drug Administration by the end of the second quarter. This morning InSite reported its first quarter results. To read them, click here. This stock will go higher.

The silly season has arrived. Friends, relatives and my lawyers are in bed with "Herniated disks." My sympathy would run high if it were not for the abject stupidity. They all lifted heavy boxes. Bingo, their backs went "out." Dah!


This is not any of my lawyers. But it could be for all their complaining and queatching about ruptured disks and horrible pain.

It's nice to get MRIs and X-rays. You think you're doing something. You're not. 99% of back problems start to get better in three days and cure themselves within three weeks. The BIG problem is that you now have a back problem for the rest of your life. If you're intelligent, it won't bother you. If you're stupid (most of us are), your back will go "out" regularly. Here are keys to staying back problem free (based on 40 years experience):

1. Don't pick up heavy things. Pay someone. A porter. The kid down the block. Break the load into smaller chunks. Do anything. But don't pick up heavy loads.
2. Live without putting pressure on your back. Use your arms to lift yourself out of your office chair. Use your arms and elbow to slide into and out of cars. Bend with your legs, not your back. etc. etc.
3. Get lots of exercise. Any exercise works better than no exercise. Walking up stairs works better catching an elevator. Bicycling to the store is better than taking the car. Swimming is good. Tennis is fine. Anything.
4. Get lots of rest. Grab a 20-minute nap at lunchtime. Grab one when you come home.
5. Learn to cope with stress. Everyone has their own technique to handle stress. I step back and ask myself, "How important is this? Is it out of my hands? Will it solve itself?"

The vagaries of real estate: One of my syndicated buildings in Washington, D.C. is about to be sold. IRR will be around 20%. The previous one went for 14%. And the one before that -- 35%. The expected / targeted rate on all of these was 15%. The returns aren't shabby. I'm not complaining. What I'm amused by is the wide distribution of returns. Which proves four things:

1. It's hard to predict.
2. Luck plays a huge role.
3. You got to be in to play.
4. Better to have a little of many than much of one. Re-read point 1.

The Cycling Commute Gets Chic. I travel Manhattan on my Dahon Helio SL folding bicycle. I rise it to the building, fold it and carry it with me to my meeting. I've "parked" it in coat closets, in chic boardrooms and under desks. I throw it into the trunks of limos. When it rains, I carry it on the subway.


This is my Helios SL folded and unfolded. This year's model is called the MU SL. If you must pay retail, it's $999. For more, click here. I've made two modifications to my bike:
1. A mirror.
2. Lights on the front and the back.

Harry's Safety Rules include:
1. Always wear a helmet.
2. Turn your lights on at night.
3. Stay away from stationary taxis and limos. The idiot passenger is about to fling open the back door without looking. (Bike messengers in Manhattan call this "being doored." It's painful.)
4. Beware of Chinese delivery bicyclists carrying large plastic bags. They have zero control.
5. Do not ride against the traffic. You'll hit a pedestrian who looked the "wrong" way.

The Wall Street Journal today discovered Biking:

Commuting to work by bike has renewed appeal right now. On top of health benefits -- like offering a chance to exercise without taking extra time -- it saves on the growing cost of fuel and even carries a certain cachet at the office. A growing number of cities are making it easier to ride your bike to work -- erasing hurdles big and small, from securing bikes safely downtown, to taking bikes on public transit, to finding a discreet place to shower.

Eager to reduce traffic jams and pollution, cities including Chicago; Louisville, Ky.; and Portland, Ore. are adding biking-policy departments at city hall, constructing bike lanes or building bike stations where riders can park and shower. A 2004 survey of American cities found that more than 80% planned to build new bikeways. A new contest over which American cities are friendliest to cyclists has attracted 160 municipal contestants, each bragging about its bike lanes and lock-up racks.

Nationally, a bill introduced in the Senate last month would give employers a tax incentive to offer employees $40 to $100 a month to cycle to work, and a similar bill is pending in the House. Buses and trains are allowing bikes to come on board in cities including Albuquerque; Washington, D.C.; and Boulder, Colo. In Chicago, Allison Krueger, a 26-year-old botanist, now can ride three miles to Union Station, catch a train to the suburbs, then cycle three more miles to her office. "The best part of cycling is the sheer joy of riding past people stuck in traffic," she says. Plus, she adds, "Biking is definitely fashionable in Chicago."

There are other signs that the cities' efforts are working. New York City opened a 17-mile bike trail on the West Side of Manhattan, along with bike paths on the bridges connecting the island to Brooklyn, in 2003 -- and has seen a 50% increase in cyclists since 2000, to 120,000 cyclists a day, according to advocacy group Transportation Alternatives. A three-year-old bike station in Chicago is poised to sell out 500 memberships for the third year in a row.

Since Louisville installed bike racks on its buses four years ago, cyclist boardings have nearly doubled to 91,000 in 2005 from 48,000 in 2002. And the percentage of commuters using bikes rises a point for every mile of bike lane added per square mile of American cities, said a 2003 study on bike lanes in the journal Transportation Research Record. The name of the study: "If You Build Them, Commuters Will Use Them."

One of the newest urban innovations: bike stations, which an increasing number of downtowns from various California cities to Washington, D.C., have added or are considering adding. Bike stations offer a safe place to park, along with lockers, showers and repair shops. The Chicago bike station, built and owned by the city, is run by a private company, which charges members $99 a year for showers, towel service and a personal locker. Denver, Seattle and Berkeley, Long Beach and Palo Alto, Calif., all have similar bike stations.

The rising price of gas is adding to the appeal of cycling. Shipments of bicycles in the last year have been extraordinarily strong -- one of the two best years in the past two decades, says Tim Blumenthal, director of an industry coalition called Bikes Belong. "There's a lot of buzz right now about high gas prices," he says. "The 5,000 miles I'll cycle this year are 5,000 miles I'm not putting on my car's odometer and fueling with high-priced gas," says Eric Carter, an attorney in Portland whose two-wheeled commute has helped him knock off 30 pounds.

In a trend reminiscent of previous public-health fashions, affluent professionals seem to be leading the charge of commuters on bikes, just as they were among the first groups to embrace organic food, to stop smoking and to return to feeding babies healthier breast milk rather than formula. "So far, it's a white-collar movement," says Dave Growacz, a Chicago biking official and author of the book "The Urban Bikers' Tricks & Tips."

Cycling has some serious disadvantages. A cyclist may arrive at work dripping sweat and with helmet-mashed hair -- and that's in good weather. J.P. Morgan Chase Vice President Luz Byrne no longer cycles on rainy days. "I got tired of washing the mud out of my hair in a sink," she says.

Managing the logistics of work-out clothes and office apparel is difficult. Jerry Roscoe, a cycling attorney in Washington, D.C., arrives each morning in biking clothes, grabs a shirt and suit from his office, goes to a nearby gym to shower, then returns to the office ready to work. "It's complicated," he says.

Of course, many bikers don't shower upon arriving at the office. Mr. Growacz's book offers tips on how to wear a helmet without messing up your hair. The biggest downside of cycling is wrecks, particularly with cars. Per kilometer traveled, a cyclist in America is 12 times likelier than a car occupant to be killed, according to a 2003 American Journal of Public Health article.

Yet the number of cyclists killed in America fell nearly 10% to 724 during the decade that ended in 2004, according to federal statistics. And studies show that as the number of cyclists increase, collisions with automobiles decline because motorists become more alert to bikers' presence. As cycling in London increased 100% from 2000 to 2005, the accident rate for cyclists fell 40%, according to Transport for London.

The danger of cycling is far outweighed by the benefits, says Rutgers University's John Pucher, a professor of urban planning specializing in cycling issues. Cycling builds muscle, deepens lung capacity, lowers heart rate and burns calories. "The health benefits of cycling outweigh the health risks by two to one, if not something like five to one," says Dr. Pucher, whose voice mail describes him as "car-free John."

Q: What do you call a handcuffed man?
A: Trustworthy.

Q: What does it mean when a man is in your bed gasping for breath and calling your name?
A: You did not hold the pillow down long enough.

Q: Why do female black widow spiders kill their males after mating?
A: To stop the snoring before it starts.

 
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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