Previous Columns
8:30 AM EST Monday, October 16, 2006: Stunning fall weather. Go for a walk.

The IPO market is popping. Which means you need to pressure your broker to get you in on them. Recent IPOs -- DivX and SAIC (SAI) -- could still be interesting. DivX plays and makes DivX movies. DivX is a video compression technology that squeezes movies. That means you can send movies easily over the Internet. How small? It can squeeze a DVD movie onto a regular CD data disc. DivX is doing for video what MP3 did for music and is becoming the world's most popular video technology. (I agree with DivX's web site on that.) Go download DivX. See what I mean. Click here for Windows. Or Click here for Apple.

SAIC is a huge defense contractor and getting bigger and bigger. I've dealt with them. They're good.

Emigrant Bank is paying 5.05% on its Internet savings accounts. If you're getting less, you should switch. For more, click here.

Energy is in a long-term bullmarket: A successful global hedge fund has averaged over 34% a year for the past ten years. The fund believes, as I do, that there's a long-term bull market in energy, commodities, Japanese stocks and emerging markets. Three reasons to stay bullish on energy:
1. OPEC has pricing power again. OPEC members are financially strong and can withstand production cuts.
2. Developing countries -- China, Russia, India and Brazil -- are taking most of the new oil. And there's no stopping them.
3. Russia is screwing up on the exploration of new fields. President Putin wants the two huge government-controlled energy companies, Gazprom and Rosneft, to develop new fields without the help of Western partners. But the Russian oil and gas are offshore or in the Artic. The Russians they need engineering skills these two don't have. Russia's annual output gains will start declining.

The fund's biggest stock holdings include LUKoil Holdings (Russia), China Mobile, Oregon Steel, Unified Energy System (Russia) and OAO Gazprom (Russia).

I agree about the long-term bullmarket in energy. Our present blip derives from:
1. Few hurricanes.
2. Warm weather.
3. Election "conspiracy" theory.

Jim Rogers, the man who called the commodity boom seven years ago, those are mere blips. This is a great time to invest in commodities, and he's backed this up by investing more of his own money. Supply of things like base metals, oil and rubber is crimped after years of underinvestment in mines and oilfields and farms, he says, so prices are heading up. And they will go up, with some transitory hiccups, well into the next decade and perhaps even the one following. Copper, zinc and oil have all at least doubled in the past three years. You'll see more doublings in many more commodities.

That's the Rogers view. And then there's economist Stephen Roach, the Morgan Stanley bear every bull loves to gore. He thinks Rogers is dead wrong. Roach says commodity prices could fall another third from here, putting an end to silly notions of a so-called supercycle of commodity increases. The culprits: slowing growth in China, a voracious buyer of commodities, and a U.S. housing recession that, he says, will slash demand for building materials like copper and weigh down the global economy.

If you've been distracted by whether the Dow Jones stock index will stay in record-setting territory, there's a less-noticed but raging debate about the future of commodities. This, by the way, is a debate that can get personal. Rogers says Roach "couldn't even spell 'commodities' two years ago." Roach wearily responds that, yes, he used to write "commodities" with one "m" before Rogers kindly set him straight. The sparring recalls a famous exchange a quarter-century ago, during another price runup, when the ever-optimistic economist Julian Simon bet doom-and-gloom environmentalist Paul Ehrlich $10,000 that metals would fall over the next decade, ending 1990. Simon won. He wasn't a pessimist in the manner of Roach. His theory was that technology would eventually find a solution to any raw material shortage. We ran out of whale oil but found petroleum. Copper is expensive, but optical fiber is replacing a lot of it.

If the issue of resource scarcity is similar, the wagers today are a bit bigger. Hedge funds have put $70 billion into energy, double the level of two years ago, says the Energy Hedge Fund Center. Investment banks have beefed up their trading desks with commodities experts. Merrill Lynch paid $800 million for an energy trading unit after unloading a similar business a few years earlier. Bond investors are watching closely, too. Increased commodity prices usually mean inflation is right around the corner.

The peripatetic Rogers, 63, who once set a Guinness World Record by riding his motorcycle around the world, brings a lot of credibility to the bull case. A founder with George Soros of the legendary Quantum Fund, he started a commodities index in 1998 when investors were caught up in the dot-com frenzy. The Rogers International Commodities Index has since returned 16.9% annually versus 13.9% and 11.8% for rivals from Goldman Sachs and Dow Jones-AIG, respectively. This year the gap has widened. Rogers' is up 7% through August. Goldman's is down 0.4%, and Dow Jones-AIG's up 3%.

Rogers, author of Hot Commodities, says his optimism comes right out of the history books. The shortest commodity boom, which began in 1966, was 15 years, he says. The longest: 23 years. The current one: 7 years (forget the slump we're in now). The long trend reflects this fact: Lots of commodities can't be produced quickly. By the time miners or drillers or farmers realize that demand has outstripped supply, it's too late. New sources need to be found underground and regulators need to sign off before a shovel can even hit the ground. Food inventories are the lowest since 1972, he notes. Acreage devoted to wheat, for instance, has been falling for three decades. Cotton could also take off, he says, as clothesmakers switch to natural fabrics to avoid the rising cost of oil used in synthetics. Rogers says "soft" commodities like grains, oilseeds and fabrics, which have generally not shared in the boom, are likely to outperform. Rogers is relatively bearish on zinc and copper, however; they could drop like an anvil after having more than doubled in a year.

Then there's China. Sure, the country's economic growth could slow, but over the long term Rogers is an unabashed bull. So much so that he's taught his 3-year-old daughter Mandarin and, in preparation for moving to a "Chinese-speaking" city with her, has put his Manhattan manse up for sale for $15 million.

LCD computer monitors are SO cheap: There is zero reason you should suffer with a small monitor, or God forbid, only one of them. Item: Costco sends me an offer for a 22" Viewsonic monitor for only $299. I remember when they were 10 times as much. So what's the difference between a cheap LCD monitor and an expensive one? I ran a comparison on two 20 inch Viewsonic monitors:

In short, you get a few more pixels and a slightly more contrasty screen (i.e. the picture will look slightly better). Frankly, the cheaper one is just fine for 99% of us. Meantime, you need to check your image drivers to make sure they can pump out the pixels you need. Some won't accommodate these huge monitors. I'm using three 19 inch monitors and pumping each out at 1280 x 1080, which I find perfectly acceptable. I don't like screens that scrung a lot of pixels. They're hard to read.

North Korea has a bomb, but little else:
This spectacular satellite photo last week from Donald Rumsfeld shows in stark detail the haves and have-nots of the Korean peninsula. The regime in the north is so short of electricity that the whole country is switched off at 9 PM -- apart from the capital of where dictator Kim Jong IIl and his cohorts live in relative luxury. But even there, lighting is drastically reduced. You can tell where Pyongyang is from the map. It's the only bit of light in the north.

I'm hoping that Rumsfeld's people didn't Photoshop the photo.

How to fight the terrorist threat
A group of terrorists burst into the conference room at the Marriott Hotel where the American Bar Association was holding its Annual Convention. More than 500 lawyers were taken as hostages.

The terrorist leader announced that, unless their demands were met, they would release one lawyer every hour.

The Good-Bye Note
A father passing by his son's bedroom was astonished to see the bed was nicely made and everything was picked up. Then, he saw an envelope propped up prominently on the pillow.

It was addressed: "Dad"

With the worst premonition, he opened the envelope and read the letter with trembling hands.

"Dear Dad, It is with great regret and sorrow that I'm writing you. I had to elope with my new girlfriend, because I wanted to avoid a scene with Mom and you. I've been finding real passion with Stacy, and she is so nice, but I knew you would not approve of her, because of all her piercings, tattoos, her tight motorcycle clothes and because she is so much older than I am. But it's not only the passion...Dad, she's pregnant with twins, no less. Stacy said that we will be very happy together. She owns a trailer in the woods and has a stack of firewood for the whole winter. We share a dream of having many more children. Stacy has opened my eyes to the fact that Marijuana doesn't really hurt anyone. We'll be growing it for ourselves and trading it with the other people in the commune for all the Cocaine and Ecstacy we want. In the meantime, we'll pray that science will find a cure for AIDS, so that Stacy can get better...She sure deserves it!! Don't worry Dad, I'm 15, and I know how to take care of myself. Someday, We'll be back to visit, so you can get to know your many grandchildren."

Love,
your son, John

P.S.
Dad, none of the above is true. I'm over at Tommy's house. I just wanted to remind you that there are worse things in life than the report card that's in my center desk drawer. I love you! Call when it is safe for me to come home.

Meantime wedding preparations are going on in the Newton household. The unlimited budget we've established for the wedding looks like being exceeded, already. And we've got 11 months and two weeks to go.

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.
Go back.