Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
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.
Bank is paying 5.05% on its Internet savings accounts. If you're
getting less, you should switch. For more, click
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:
The present issue
of Forbes, has:
1. Few hurricanes.
2. Warm weather.
3. Election "conspiracy" theory.
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.
I believe now is
the right time to investigate weak energy stocks and energy futures. Election
Day is in three weeks. We have time. More on these this week.
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
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.
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%.
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.
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.
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:
two 20 inch Viewsonic computer monitors compare
hours (or 19.2 years at 40/hrs a week)
hours (or 24 years at 40/hrs a week)
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
Korea has a bomb, but little else:
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.
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.
than 500 lawyers were taken as hostages.
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:
With the worst
premonition, he opened the envelope and read the letter with trembling hands.
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
your son, John
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
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
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