Technology Investor 

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 EST Tuesday, November 21, 2006: There's an old joke about timing.

"Ask me two questions. OK?"

" The first is, Are you the world's greatest Polish comedian.

"Are you the world's greatest Polish comedian?"

"Now, ask me, "What's the secret of your success?"

"What's the ....."


The interruption is what makes the joke.

The dynamics of today's stock markets are:

1. Huge monies sloshing around looking for the hot new thing -- a quick profit.
2. Hot things -- market segments, stocks -- come into vogue, skyrocket and then crash.

In this insanity, there are three keys to success:

1. Find the new areas as they're getting hot. Ride along.
2. Get out quickly with a profit. Don't be greedy.
3. Stay in cash until the next hot stocks come along.

The Exchanges have been hot. This morning I've updated the chart I ran on Monday morning, November 13. We've made a profit on them. Now's the time to get out. Why? The stocks look like they're getting "frothy." The last few days have seen heavier volume. The "smart money"
is getting out. And heck, no one went broke making a profit.

The Exchanges Blast Off A Little More.
Close Nov. 10
Last night's close
Price/Earnings Ratio
Chicago Board of Trade (merged with CME)          
Chicago Mercantile Exchange
Intercontinental Exchange
International Securities Exchange
Nasdaq Stock Market
NYSE Group

Alternative Energy and Windmills
The Economist has a cover story on alternative energy.

Points made:
1. Venture capital investment in alternative energy -- especially solar photovoltaics and windmills -- is exploding. It's the next big thing -- if someone can figure the magic technological bullet that will finally make it economical.
2. Dirty energy is still cheaper.
3. To justify installing solar or windmills you need heavy government incentives.
4. Government incentives are fickle. Here one year, gone the next.
To read the Economist's piece,
click here.

Yesterday I wrote about a new backyard windmill. It's a ten-year payoff, without incentives. A little less with incentives. My friend Frank Derfler writes:

As a ham radio operator I've had 40 to 70 foot towers next to my houses for decades. All of them take maintenance in the form of corrosion control of some kind. Who is going to do that every couple of years and what will it cost?

I'm a pilot, I know that mechanical things spinning in the wind require skilled periodic maintenance. Stuff has to be torqued, balanced, lubricated, etc. Who does that a couple of times a year and what does it cost?

I'm a boater. I know that wind generators on the back of boats are noisy. They also wear out. Nothing moving and rotating like that is going to last for 10 years. You are going to have a replacement cost before your idealized payback time.

I won't even get into the NPV (net present value) of the money you are using to buy and maintain all of this.

I'm not saying windmills aren't a good idea and that they won't make you feel good. But, figuring ROI in dollars is an exercise in futility if you take any measure of "real costs.' For now, stick with insulation.

eWeek's Ten Emerging Technologies to track. Maybe we can find a hot stock involved in one of these:

1. Quad-code servers. Intel and AMD are making microprocessors -- the computing guts of a computer -- with two and four microprocessors. This is more efficient (and cooler) than simply making the microprocessor faster, which is what happened in the PC's first 20 years. The problem: Most of today's software has no clue about multiple core microprocessors.

2. Blog servers. There are zillions of blogs (like this one). Many do a much better job with providing up-to-the minute information via RSS feeds, etc. There's a huge business in improving and protecting the specialized computers which carry blogs.

3. RFID. 14,089 pieces of luggage disappear every day from airlines' baggage handling. By attaching a small radio frequency ID chip to the bag, you should be able to track it better

4. Encryption. 50% of the best-in-class businesses surveyed by the Aberdeen Group (consultants) expect to add encryption in the next 12 months to data that's sent to and from, and stored on portable devices, such as laptops and PDAs.

5. Enterprise service bus. Another new way of getting in and around and joining computers.

6. Software as a service (SAAS). You get and use your software over the Internet. SAAS generated only 5% of business software revenue in 2005, but will grow to 25% by 2011, according to Gartner consulting. Microsoft is starting Office Live.

7. IP Video. Video has a huge application in business -- from digital signage to on-line video auctions (why eBay bought Skype). Google bought You Tube for consumer video. We haven't scratched the surface of potential applications.

8. Applications accelerators. Make it faster and they'll buy. Make them wait, and you'll lose them. The concept is easy to understand, not so easy to implement.

9. WiMax and mesh networks. Wireless is hot. WiMax promises broadband wireless to a community, offering a potential competition for cable modems and DSL. It seems to work. Intel is behind it.

10. United communications software. Think all the ways you can reach someone -- landline, cellphone, email, instant messaging, voice over IP, video IP, etc. Now, somehow, integrate that. You may be able to deliver better customer service. Cisco is playing around with the idea.

Harry's techie holiday presents -- Part I

1. The Apple iPod Nano:

Weighs basically nothing. No moving parts. Smaller than ever -- 3.5 inches tall, 1.6 inches wide and a quarter of an inch thick. Nearly 24 hours of battery life. $149 for 2GB and 500 songs , $199 for 4GB and 1,000 songs. $249 for 8GB and 2,000 songs. Click here.

2. The Canon SD700: Still my favorite point and shoot.

$359 from B&H Photo
. Click here.

Favorite billboard:

Buying breasts on margin
An old man on the beach said to a beautiful girl in a bikini, "I want to feel your breasts!"

"Get away from me, you crazy old man!" she replied.

"I want to feel your breasts, I will give you twenty dollars," he said.

"Twenty dollars, are you nuts!? Get away from me!"

"I want to feel your breasts, I will give you $100!" he stated.

"NO! Get away from me!"

"$200", he offered.

She paused to think about it, but then comes to her senses and said, "I said NO!"

"$500 if you let me feel your breasts."

She thought, well he is old, and he seems harmless enough ... and $500 IS a lot of money ... "Well, OK ... but only for a minute."

She loosened her bikini top and he slid his hands underneath and began to feel. Then he started saying, "OH MY GOD ... OH MY GOD ... OH MY GOD ..." while he was caressing them.

Out of curiosity, she asked him, "Why do you keep saying, 'Oh my God, oh my God'?"

While continuing to feel her breasts he answered, "OH MY GOD ... OH MY GOD ... OH MY GOD, where am I ever going to get $500?"

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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