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8:30 AM Tuesday, October 25, 2005: Yesterday stocks surged. No one knows why. The press wrote it was because Wall Street loved Ben Bernanke's nomination to succeed Alan Greenspan. That was a convenient happening. The good thing about Bernanke is he said he would continue Greenspan's policies -- attacking inflation and ignoring bubbles. He said nothing about stopping Greenspan's rate hikes. But Wall Street was guessing -- with a drop in bond yields -- that he might. The reality is that inflation is surging as energy and higher food costs take their toll. Greenspan doesn't retire until early 2006. There's potential for another rate hike, or two.

No one really knows what yesterday's surge meant. Is the gain the beginning of the third quarter rally? Or just a bull blip in a bear market? Earnings for the third quarter should be up 15.8%, which is good. Until yesterday the stockmarket hadn't reacted with glee. The market is still down for the year. I'm crossing my fingers -- while remaining optimistic and opportunistic.

I bought a little Novavax (NVAX), a hot drug maker, that allegedly has a quicker way of making a vaccine for the avian flu. They own patents on a way to make commercial quantities of vaccines without injecting chicken eggs. They will be presenting at 11 AM tomorrow at the The C. E. Unterberg, Towbin, Life Sciences Conference, which runs today and tomorrow at New York's Palace Hotel. For a full schedule, Click here. I'm betting most of the presentations will be available via Webcast. Check the company's own web site.


Novavax (NVAX) on a roll.

I also sent some money to a real restate syndication on a a couple of office buildings in Cincinnati. They're cheaper and offer better returns in the middle of the country versus the two coasts which are overpriced.

My friend just returned from a real estate jaunt in Germany. He says things are perking up there. Companies have tightened up. Earnings have improved. Real estate is attracting interest as Germany inches into the 20th century with new rules on sale/leasebacks and, ultimately, even trading REITs. Money is pouring into German commercial real estate. Countries like Poland and the Czech Republic also look attractive and are securing U.S. Institutional monies.

In short, I'm continuing my slow diversification program -- most recently into commercial real estate and commodities, through a fund called Strategic Commodities Fund. This thing is run by Gresham Investment Management, a small group of talented guys who are knowledgeable about commodities. The fund is marketed by Lehman Brothers, which has broad sales skills but, fortunately, doesn't mess with the management of the fund. .

Independence Community Bank (ICBC) gets bought at $42. I hope many of you kept your shares in my favorite bank. Yesterday, ICBC announced Sovereign Bancorp was buying it for $42 a share -- roughly $10 above last night's close. Congratulations Alan Fishman, ICBC's head.

Research in Motion slides a little more. Yipee. RIM said it could face a court order to stop selling its popular Blackberry handheld in the US, following the latest ruling in a patent dispute. RIM said that the U.S. Court of Appeals in Washington refused to delay proceedings to enforce an injunction at the request of U.S.-based software firm NTP, which claims the popular Blackberry device infringes on its patents. The Canadian firm earlier this year agreed to a $450-million settlement with NTP, which had claimed it owned the patents to the technology used in Blackberry devices. But the deal fell through later and NTP took the matter back to court. An injunction could be a huge blow to RIM, which gets about 70% of its revenues from U.S. Blackberry users.

It couldn't happen to a nicer company. The more I use my Verizon Blackberry, the more I dislike it.


RIMM on the way down. Way down, I hope.

How gullible are Harvard Business School graduates? Plenty! A fellow called "Rod Lutron" calls up, claims to be part of our class of '69, tells a tale of woe -- divorce, bitchy mother-in-law tying up all his money, his business doing OK but short-term lack of money because of mother-in-law, ... can we lend him a couple of thousand? Five years ago he pulled the same story. A bunch of graduates (including me) sent him some money. We never got the money back. Five years later he's back with the same story... Of course, there is no Rod Lutron. It's a scam. Ironically not one of the HBS graduates -- including me -- ever checked his bona fides... The perils of not doing your due diligence, again.

Dr. Daniel Amen on Improving the Brain: Some excerpts from Newsweek.com:

In his latest book, “Making a Good Brain Great,” Amen explains how bad eating and poor exercise habits, sleep deprivation and stress can actually endanger or impede the brain’s ability to function. The good news? By making small changes — like replacing fatty foods with lean proteins and green leafy vegetables or finding ways to lower stress levels — you can actually make your brain perform better.

Does meditation improve the brain?
Amen: Yes. We did a study on a Kundalini Yoga form of meditation that showed enhanced activity in the prefrontal cortex-the executive, decision making part of the brain.

Can you recommend a diet or some reading materials so that I may improve my brain functions such as memory.
Dr. Daniel Amen: Here are 7 simple brain promoting tips:

1. Increase water intake (the brain is 80% water)
2. Calorie restriction (eat less, live longer — obesity is a risk factor for Alzheimer’s disease)
3. Eat fish and take fish oil (to enhance omega three fatty acids)
4. Lots of dietary antioxidants to prevent free radical damage and premature aging
5. Eliminate toxins, such as too much caffeine or alcohol
6. Pick the top healthy brain foods and put them in your diet every week, such as blueberries, oranges, avocados, salmon, spinach, walnuts, beans, red bell peppers, yams, and yogurt.
7. Plan snacks that are healthy and nutritious, such as dried fruit or turkey jerky (free of preservatives)

What kind of mental exercise can we do to improve our brain function?
Amen: Do something that you do not know how to do…that is what is best for you. Break the routine, get out of the box, cross train at work, learn to dance. The studies have shown that people who are lifelong learners have better memories over time.

I did a lot of drugs 25 years ago. I know I probably damaged my brain. I now eat healthy, exercise 5 days a week, and read a lot. Does the brain heal itself after years of abuse?
Amen: Yes, the brain can improve over time. That is the good news. The bad news is that past drug abuse may prevent the brain from being its best, which is the reason not to start in the first place.

I've heard conflicting reports about coffee. Some say a cup a day is good for you and actually increases your blood flow.
Amen: Several SPECT studies state that caffeine clearly constricts blood flow to the brain, which over time is bad for it. It is also addictive in higher amounts. I think a cup or two a day is not a problem, but more than that is trouble.

How much essential fatty acids (such as cod liver oil, olive oil, etc.) are needed daily for the brain in children 5-9 years old and 60 year old adults?
Amen: I recommend 500mg a day of purified fish oil for children and a 1,000mg a day for adults — and much higher doses when I am trying to treat mood disorders, ADHD, or memory problems.

How bad is alcohol for the brain? I've read that a glass of red wine a day is actually good for you. But is it true that alcohol "kills" your brain cells?
Amen: Alcohol is only good in small doses, a glass or two a week. Daily drinking is associated with a smaller brain. When it comes to the brain, SIZE MATTERS.

Ten Reasons Golf is better than Sex. (Frankly I prefer tennis. But this morning I feel very sore. Yesterday I killed a 25-year old at singles yesterday. But the effort took its toll.) Now, for my golf friends:

#10 - A below par performance is considered damn good.
#9 - You can stop in the middle and have a cheeseburger and a couple of beers.
#8 - It's much easier to find the sweet spot.
#7 - Foursomes are encouraged.
#6 - You can still make money doing it as a senior.
#5 - Three times a day is possible
#4 - Your partner doesn't hire a lawyer if you do it with someone else.
#3 - If you live in California, you can do it almost every day.
#2 - You don't have to cuddle with your partner when you're finished.
---- and the #1 reason why Golf is better than Sex...
#1 - If your equipment gets old and rusty, you can replace it.

Recent column highlights:
+ Dumb reasons we hold losing stocks. Click here.
+ How my private equity fund is doing. Click here.
+ Blackstone private equity funds. Click here.
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell stocks. Click here.

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. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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