If you're frustrated by frequently losing battery power in your laptop computer, digital camera or portable music player, then take heart: A better source of "juice" is in the works. Chemists at Arizona State University in Tempe have created a tiny hydrogen-gas generator that they say can be developed into a compact fuel cell package that can power these and other electronic devices -- from three to five times longer than conventional batteries of the same size and weight.
The generator uses a special solution containing borohydride, an alkaline compound that has an unusually high capacity for storing hydrogen, a key element that is used by fuel cells to generate electricity. In laboratory studies, a prototype fuel cell made from this generator was used to provide sustained power to light bulbs, radios and DVD players, the researchers say.
The fuel cell system can be packaged in containers of the same size and weight as conventional batteries and is recharged by refilling a fuel cartridge, they say. Research on these battery replacement fuel cells, which they claim are safer for the environment than regular batteries, was described today at the 232nd national meeting of the American Chemical Society.
"We're trying to maximize the usable hydrogen storage capacity of borohydride in order to make this fuel cell power source last longer," says study leader Don Gervasio, Ph.D., a chemist at the University's Biodesign Institute, Center for Applied NanoBioScience. "That could lead to the longest lasting power source ever produced for portable electronics."
One of the challenges in fuel cell development is finding hydrogen-rich compounds for the fuel source. Many different hydrogen sources have been explored for use in fuel cells, including metal hydride "sponges" and liquids such as gasoline, methanol, ethanol and even vegetable oil.
Recently, borohydride has shown promise as a safe, energy-dense hydrogen storage solution. Unlike the other fuel sources, borohydride works at room temperature and does not require high temperatures in order to liberate hydrogen, Gervasio says.
Gervasio and his associates are developing novel chemical additives to increase the useful hydrogen storage capacity of the borohydride solution by as much as two to three times that of simple aqueous sodium borohydride solutions that are currently being explored for fuel cell development. These additives prevent the solution from solidifying, which could potentially clog or damage the hydrogen generator and cause it to fail.
In developing the prototype fuel cell system, the researchers housed the solution in a tiny generator containing a metal catalyst composed of ruthenium metal. In the presence of the catalyst, the borohydride in the water-based solution reacts with water to form hydrogen gas.
The gas leaves the hydrogen generator by moving across a special membrane separating the generator from the fuel cell component. The hydrogen gas then combines with oxygen inside the fuel cell to generate water and electricity, which can then be used to power the portable electronic device. Commercialization of a practical version of this fuel cell could take as many as three to five years, Gervasio says.
http://www.newstarget.com/020961.html
Thursday, May 3, 2007
Plastic circuitry breakthrough may revolutionize electronics industry
(NewsTarget) Researchers from the University of Cambridge's Cavendish Laboratory have a chance to revolutionize the electronics industry if they can develop plastic semiconductors.
The idea is to replace the silicon wafers in standard microchips with layers or circuitry on plastic substrates. While the concept of plastic semiconductors may seem like a pipe dream, Cambridge-based startup Plastic Logic has been talking about commercializing the technology since 2000. The company is putting money where it's mouth is, too, as it has more than $100 million worth of investment funds for a factory that it plans to open in Dresden, Germany.
The technology has "tremendous potential," said Morry Marshall, vice-president for strategic technologies at Phoenix semiconductor research group Semico, adding that it was a "breakthrough that is waiting to happen."
The final product should be a plastic sheet roughly the same size as a piece of A4 sized paper, being produced at a rate of about 2.2 million a year. They will be composed of polyethylene terephthalate -- the same type of plastic used to make soft drink bottles -- and initially supplied to other companies as the basis for pieces of "electronic paper," which can display the pages of thousands of books.
We hope to make it as easy to carry around large amounts of written information using devices based on our technology as it is now to have easy access to large amounts of music using an iPod or MP3 player," said Hermann Hauser, one of Plastic Logic's founders and a Cavendish Laboratory alumnus.
The proposed plastic semiconductors will have one disadvantage compared to traditional silicon-based substrates: There is between 5 and 10 micrometers (1 micrometer is 1 millionth of a meter) between adjacent circuitry lines in the plastic semiconductors, whereas the same space in traditional semiconductors is measured in nanometers (1 nanometer is a billionth of a meter). However, Plastic Logic Chief Executive Officer John Mills said that they are developing plastic circuits with only 60 nanometers between adjacent circuitry lines.
If they could be made smaller, plastic microchips could be used for tasks for which it would not be cost-effective to employ silicon microchips. For example, a toy could have a surface where it could display its own instruction manual.
"Plastic electronics could lead to a fundamental revolution in the way the electronics industry evolves", said Mr Hauser, who also said he would not be surprised if Plastic Logic's chief scientist Henning Sirringhaus was awarded the Nobel Prize for his work in the field.
The Cavendish Laboratory has been lauded for it's discoveries during the past 136 years, including the genetic building blocks known as DNA and the electron.
http://www.newstarget.com/021424.html
The idea is to replace the silicon wafers in standard microchips with layers or circuitry on plastic substrates. While the concept of plastic semiconductors may seem like a pipe dream, Cambridge-based startup Plastic Logic has been talking about commercializing the technology since 2000. The company is putting money where it's mouth is, too, as it has more than $100 million worth of investment funds for a factory that it plans to open in Dresden, Germany.
The technology has "tremendous potential," said Morry Marshall, vice-president for strategic technologies at Phoenix semiconductor research group Semico, adding that it was a "breakthrough that is waiting to happen."
The final product should be a plastic sheet roughly the same size as a piece of A4 sized paper, being produced at a rate of about 2.2 million a year. They will be composed of polyethylene terephthalate -- the same type of plastic used to make soft drink bottles -- and initially supplied to other companies as the basis for pieces of "electronic paper," which can display the pages of thousands of books.
We hope to make it as easy to carry around large amounts of written information using devices based on our technology as it is now to have easy access to large amounts of music using an iPod or MP3 player," said Hermann Hauser, one of Plastic Logic's founders and a Cavendish Laboratory alumnus.
The proposed plastic semiconductors will have one disadvantage compared to traditional silicon-based substrates: There is between 5 and 10 micrometers (1 micrometer is 1 millionth of a meter) between adjacent circuitry lines in the plastic semiconductors, whereas the same space in traditional semiconductors is measured in nanometers (1 nanometer is a billionth of a meter). However, Plastic Logic Chief Executive Officer John Mills said that they are developing plastic circuits with only 60 nanometers between adjacent circuitry lines.
If they could be made smaller, plastic microchips could be used for tasks for which it would not be cost-effective to employ silicon microchips. For example, a toy could have a surface where it could display its own instruction manual.
"Plastic electronics could lead to a fundamental revolution in the way the electronics industry evolves", said Mr Hauser, who also said he would not be surprised if Plastic Logic's chief scientist Henning Sirringhaus was awarded the Nobel Prize for his work in the field.
The Cavendish Laboratory has been lauded for it's discoveries during the past 136 years, including the genetic building blocks known as DNA and the electron.
http://www.newstarget.com/021424.html
When old electronics meet their end, much ends up becoming toxic waste in China
NewsTarget) Old computers and other used-up appliances are creating polluted environments in Asia, the final resting place for much of the world's electronic goods, reports the China Daily newspaper.
Known as "e-waste," more than 75 percent of televisions, computers and other home electronics discarded by the developed world end up bound for Asia. Up to 90 percent of the old electronics goes to China, according to the Beijing-based Science and Technology Daily, the official newspaper of China's Ministry of Science and Technology.
However, only 10 percent of the electronics that go to China are recycled for reuse. The rest gets burned, destroyed or otherwise reduced to poisonous end-products.
Inside computers and other electronics are gold, copper and other reusable precious metals. This makes the 90 percent of discarded electronics not recycled a viable enterprise for people looking to extract those precious metals. However, many of these "electronics harvesters" use simple and environmentally unfriendly processes to get the metals out, such as putting the machines through acid baths.
The result is that lead, mercury and other chemicals are released into the atmosphere – through toxic gasses – and put into lakes and rivers through wastewater systems. The harvesters are burning the plastic cases, melting lead-based monitor glass and simply tossing out the undesirable by-products of precious metal extraction.
In some cities that are hotspots for the metal extraction business, pollution levels are much higher than American or European standards.
In the Guiyu area, an agricultural sector in south China that many e-processers have set up shop, the groundwater became so contaminated that drinking water had to be brought in from an area 18 miles away, according to a 2001 report from the Seattle-based toxic trade watchdog Basel Action Network.
Sediment samples from the area showed that the groundwater had so much lead in it that it would have been considered 212 times more toxified than acceptable standards if it came from Europe's Rhine River.
"Tin was found at levels 152 times the EPA threshold. Chromium in one sample was at levels 1,338 times the EPA threshold level," the report added.
A major source of this e-waste are unsuspecting good Samaritans in America thinking they are helping the environment: Much of the old electronics donated by people and businesses for recycling in the U.S. instead gets exported into the world market.
"Informed recycling industry sources estimate that between 50 to 80 percent of the e-waste collected for recycling in the western U.S. are not recycled domestically," according to the BAN report.
From there, the supply market takes over, and often metal extraction companies win.
The supply market of old electronics sways in favor of these shops because they often offer higher prices for the goods than recycling outfits can.
The supply is good, too: the volume of e-waste from the United States is "estimated at 5 to 7 million tons," the report said.
In China alone – excluding the e-waste that is brought into the country – "about 150 million television sets, washing machines, refrigerators, air-conditioners and computers are discarded every year in China," the China Daily reported, using statistics from the China Home Electronics Association.
For the American market, the BAN report from 2001 posited that e-waste numbers would rise by 2006 thanks to the proliferation of High-Definition Television – flat-screen TVs – obsolescing old television technology, and the fact that most computers bought today are replacements for an old one that must be thrown out.
The world market for e-waste is one that is mostly unregulated, but a limited number of other countries are involved. Outside of China, other countries in the metal extraction business include India and Pakistan. The Middle Eastern country of Dubai is another major collector of discarded electronics, but it acts as a middleman: most of what it receives is re-exported out to China and other countries.
http://www.newstarget.com/021578.html
Known as "e-waste," more than 75 percent of televisions, computers and other home electronics discarded by the developed world end up bound for Asia. Up to 90 percent of the old electronics goes to China, according to the Beijing-based Science and Technology Daily, the official newspaper of China's Ministry of Science and Technology.
However, only 10 percent of the electronics that go to China are recycled for reuse. The rest gets burned, destroyed or otherwise reduced to poisonous end-products.
Inside computers and other electronics are gold, copper and other reusable precious metals. This makes the 90 percent of discarded electronics not recycled a viable enterprise for people looking to extract those precious metals. However, many of these "electronics harvesters" use simple and environmentally unfriendly processes to get the metals out, such as putting the machines through acid baths.
The result is that lead, mercury and other chemicals are released into the atmosphere – through toxic gasses – and put into lakes and rivers through wastewater systems. The harvesters are burning the plastic cases, melting lead-based monitor glass and simply tossing out the undesirable by-products of precious metal extraction.
In some cities that are hotspots for the metal extraction business, pollution levels are much higher than American or European standards.
In the Guiyu area, an agricultural sector in south China that many e-processers have set up shop, the groundwater became so contaminated that drinking water had to be brought in from an area 18 miles away, according to a 2001 report from the Seattle-based toxic trade watchdog Basel Action Network.
Sediment samples from the area showed that the groundwater had so much lead in it that it would have been considered 212 times more toxified than acceptable standards if it came from Europe's Rhine River.
"Tin was found at levels 152 times the EPA threshold. Chromium in one sample was at levels 1,338 times the EPA threshold level," the report added.
A major source of this e-waste are unsuspecting good Samaritans in America thinking they are helping the environment: Much of the old electronics donated by people and businesses for recycling in the U.S. instead gets exported into the world market.
"Informed recycling industry sources estimate that between 50 to 80 percent of the e-waste collected for recycling in the western U.S. are not recycled domestically," according to the BAN report.
From there, the supply market takes over, and often metal extraction companies win.
The supply market of old electronics sways in favor of these shops because they often offer higher prices for the goods than recycling outfits can.
The supply is good, too: the volume of e-waste from the United States is "estimated at 5 to 7 million tons," the report said.
In China alone – excluding the e-waste that is brought into the country – "about 150 million television sets, washing machines, refrigerators, air-conditioners and computers are discarded every year in China," the China Daily reported, using statistics from the China Home Electronics Association.
For the American market, the BAN report from 2001 posited that e-waste numbers would rise by 2006 thanks to the proliferation of High-Definition Television – flat-screen TVs – obsolescing old television technology, and the fact that most computers bought today are replacements for an old one that must be thrown out.
The world market for e-waste is one that is mostly unregulated, but a limited number of other countries are involved. Outside of China, other countries in the metal extraction business include India and Pakistan. The Middle Eastern country of Dubai is another major collector of discarded electronics, but it acts as a middleman: most of what it receives is re-exported out to China and other countries.
http://www.newstarget.com/021578.html
Wednesday, May 2, 2007
Processor Vendors Chip Away in March, Q1
March processor sales totaled $20.3 billion worldwide, or 3.2 percent higher than the $19.7 billion reported for March 2006, according to new tallies from the Semiconductor Industry Association (SIA).
The March growth mirrored growth for the first quarter, when chip sales rose 3.2 percent to notch $61 billion, or almost $2 billion greater than Q1 2006.
However, thanks to heated competition in the market for personal computers, cell phones and other devices such as MP3 players, Q1 2007 semiconductor sales declined 6.5 percent compared to the $65.2 billion reported for Q4 2006.
The SIA said in a statement that price pressures from intense competition in market segments such as DRAMs (define), DSPs (define) and NAND Flash (define) limited growth despite higher unit shipments for these products.
For example, DRAM sales declined by just over 8 percent from Q4 2006 even as units increased over 16 percent. This is due largely to average sales prices dipping close to 20 percent over the same time period.
"Even with continued strength in unit sales of personal computers, mobile phones, and other portable consumer electronic products, an abundant supply of chips for these applications resulted in declining average selling prices as manufacturers sought to hold onto market share," said SIA President George Scalise.
This may make sales executives for the chip and PC makers pull at their hairlines, but it's good news for the consumer, as Scalise noted that the average sales price for a PC fell to $850.
By region, March chips sales in the Americas dropped 2.2 percent to $3.34 billion, yet grew 7.4 percent to $3.95 billion In Japan. Europe's chip sales grew 1.5 percent to $3.39 billion while Asia-Pacific dipped .04 percent to $9.66 billion for the largest share of the $20.3 billion worldwide chip tally.
For the year, Scalise said sales are running slightly ahead of last year's record level, but well short of the 10 percent growth projected in the forecast issued by SIA last November.
He also said reports that China's IT sector is experiencing slower growth coupled with a U.S. GDP growth rate that fell to 1.3 percent in the first quarter may make near-term outlooks more cautious.
http://www.internetnews.com/stats/article.php/3674911
The March growth mirrored growth for the first quarter, when chip sales rose 3.2 percent to notch $61 billion, or almost $2 billion greater than Q1 2006.
However, thanks to heated competition in the market for personal computers, cell phones and other devices such as MP3 players, Q1 2007 semiconductor sales declined 6.5 percent compared to the $65.2 billion reported for Q4 2006.
The SIA said in a statement that price pressures from intense competition in market segments such as DRAMs (define), DSPs (define) and NAND Flash (define) limited growth despite higher unit shipments for these products.
For example, DRAM sales declined by just over 8 percent from Q4 2006 even as units increased over 16 percent. This is due largely to average sales prices dipping close to 20 percent over the same time period.
"Even with continued strength in unit sales of personal computers, mobile phones, and other portable consumer electronic products, an abundant supply of chips for these applications resulted in declining average selling prices as manufacturers sought to hold onto market share," said SIA President George Scalise.
This may make sales executives for the chip and PC makers pull at their hairlines, but it's good news for the consumer, as Scalise noted that the average sales price for a PC fell to $850.
By region, March chips sales in the Americas dropped 2.2 percent to $3.34 billion, yet grew 7.4 percent to $3.95 billion In Japan. Europe's chip sales grew 1.5 percent to $3.39 billion while Asia-Pacific dipped .04 percent to $9.66 billion for the largest share of the $20.3 billion worldwide chip tally.
For the year, Scalise said sales are running slightly ahead of last year's record level, but well short of the 10 percent growth projected in the forecast issued by SIA last November.
He also said reports that China's IT sector is experiencing slower growth coupled with a U.S. GDP growth rate that fell to 1.3 percent in the first quarter may make near-term outlooks more cautious.
http://www.internetnews.com/stats/article.php/3674911
3Leaf Hangs Hat on 'Elastic' Servers
Occasionally, a startup is born to try and challenge or ride the coattails of IBM (Quote), Sun Microsystems (Quote) and HP (Quote) in the multi-billion-dollar market for computer servers.
3Leaf Systems emerged from stealth mode today to announce its candidacy in the server market.
The Santa Clara, Calif., startup unveiled the 3Leaf Systems V-8000 Virtual I/O Server, which aims to offer customers performance-hungry and cost-conscious mainframe-like availability and reliability for x86 commodity systems.
3Leaf CEO Bob Quinn, who secured $20 million last September in a funding round led by Intel Capital, said V-8000 addresses the pain points datacenter managers feel by boosting server resource utilization far beyond its current 10 percent to 15 percent level.
"Due to the transition from scale-up to scale-out computing over the last 10 years, we've had to deal with extremely low utilization on our servers," Quinn told internetnews.com in a recent interview. "That low utilization drives power and space, which really puts the datacenter in a bind today."
Quinn also said the V-8000 will help accelerate the deployment and provisioning of new servers and provide high availability and management.
V-8000
V-8000 Virtual I/O Server.
Source: 3Leaf
"In this day and age, it should be possible, particularly with virtualization, to deploy servers -- maybe not instantly but certainly in under an hour," Quinn said. "Most datacenters take from four to 12 weeks to deploy a new server with a new application stack. That is unacceptable."
Perhaps most importantly, Quinn said customers who try the V-8OOO may realize capital expenditure savings of 50 percent from the get-go, as well as operations savings as great as 60 percent.
The V-8000 aims to boost the efficiency of existing x86 servers by delivering I/O connectivity for machines, eliminating the need for excess network and storage adapters, disks and switch ports.
This is because the servers are stateless nodes that connect to virtual Network Interface Cards, virtual Host Bus Adapters, and virtual disks through the V-8000. Fewer connections to the storage area network (SAN) means significant capital savings, Quinn said, and because there is less to manage, operating expenditures are reduced, as well.
Servers may be deployed faster with the help of the V-8000, too. Because the V-8000 allows servers to be defined in advance, spare nodes can have new profiles applied in minutes rather than weeks. Moreover, network and storage interfaces have been pre-allocated to server profiles to eliminate the provisioning of those products.
Quinn said the V-8000 also offers a kind of "elastic" computing resource, thanks to service policies that allow networking and storage levels to be raised or lowered as application demand changes.
Finally, the V-8000 may go down but it won't stay down. In case of a failure, the V-8000 automatically fails over to a redundant V-8000 with redundant networking and storage interfaces.
3Leaf enters a competitive computer server market, of which IBM, Sun Microsystems and HP command roughly three-quarters. However, Quinn pointed out, 3Leaf systems, recommended as pairs for $100,000 are intended to augment and support those companies' x86 servers, not replace them.
Evidence suggests there may be plenty of datacenter computing business to go around, even for startups like 3Leaf.
With IDC expecting money spent on IT consolidation projects to grow from $18.1 billion in 2004 to $24.7 billion in 2009, virtualization software sales are expected to rise from $340 million to $15 billion during that period.
That should provide more than enough opportunity for 3Leaf to succeed, Quinn said.
http://www.internetnews.com/storage/article.php/3674706
3Leaf Systems emerged from stealth mode today to announce its candidacy in the server market.
The Santa Clara, Calif., startup unveiled the 3Leaf Systems V-8000 Virtual I/O Server, which aims to offer customers performance-hungry and cost-conscious mainframe-like availability and reliability for x86 commodity systems.
3Leaf CEO Bob Quinn, who secured $20 million last September in a funding round led by Intel Capital, said V-8000 addresses the pain points datacenter managers feel by boosting server resource utilization far beyond its current 10 percent to 15 percent level.
"Due to the transition from scale-up to scale-out computing over the last 10 years, we've had to deal with extremely low utilization on our servers," Quinn told internetnews.com in a recent interview. "That low utilization drives power and space, which really puts the datacenter in a bind today."
Quinn also said the V-8000 will help accelerate the deployment and provisioning of new servers and provide high availability and management.
V-8000
V-8000 Virtual I/O Server.
Source: 3Leaf
"In this day and age, it should be possible, particularly with virtualization, to deploy servers -- maybe not instantly but certainly in under an hour," Quinn said. "Most datacenters take from four to 12 weeks to deploy a new server with a new application stack. That is unacceptable."
Perhaps most importantly, Quinn said customers who try the V-8OOO may realize capital expenditure savings of 50 percent from the get-go, as well as operations savings as great as 60 percent.
The V-8000 aims to boost the efficiency of existing x86 servers by delivering I/O connectivity for machines, eliminating the need for excess network and storage adapters, disks and switch ports.
This is because the servers are stateless nodes that connect to virtual Network Interface Cards, virtual Host Bus Adapters, and virtual disks through the V-8000. Fewer connections to the storage area network (SAN) means significant capital savings, Quinn said, and because there is less to manage, operating expenditures are reduced, as well.
Servers may be deployed faster with the help of the V-8000, too. Because the V-8000 allows servers to be defined in advance, spare nodes can have new profiles applied in minutes rather than weeks. Moreover, network and storage interfaces have been pre-allocated to server profiles to eliminate the provisioning of those products.
Quinn said the V-8000 also offers a kind of "elastic" computing resource, thanks to service policies that allow networking and storage levels to be raised or lowered as application demand changes.
Finally, the V-8000 may go down but it won't stay down. In case of a failure, the V-8000 automatically fails over to a redundant V-8000 with redundant networking and storage interfaces.
3Leaf enters a competitive computer server market, of which IBM, Sun Microsystems and HP command roughly three-quarters. However, Quinn pointed out, 3Leaf systems, recommended as pairs for $100,000 are intended to augment and support those companies' x86 servers, not replace them.
Evidence suggests there may be plenty of datacenter computing business to go around, even for startups like 3Leaf.
With IDC expecting money spent on IT consolidation projects to grow from $18.1 billion in 2004 to $24.7 billion in 2009, virtualization software sales are expected to rise from $340 million to $15 billion during that period.
That should provide more than enough opportunity for 3Leaf to succeed, Quinn said.
http://www.internetnews.com/storage/article.php/3674706
Tuesday, May 1, 2007
The Need for Diversification in The Stock Market
Why is it that some people only buy one or two stocks? Others may have 15 stocks but have 50 percent of their investment assets in just one of those 15 stocks. In Wall Street we refer to this type of behavior as concentration. Some firms call it over-concentration. When this happens in a brokerage firm it is always considered dangerous. It is so dangerous, in fact, that if the brokerage firm is using a concentrated stock position as capital, then the market value of the security in question is given a haircut. This means that the full market value of the security is chopped by some fixed percentage in any capital computation. In other words, if you are over-concentrated, you don't get full value.
Some of you may have margin accounts. As you know, StocksAtBottom.com advocates cash ownership of stocks. If you own stocks on margin, it is our opinion that you will get sold out on margin. Normally in a margin account you put up 50 percent of the value of the stock you acquire in cash. If equity falls below 35 percent, you get a margin call. Now, brokerage firms love it when clients have 15 or 20 different stocks in a margin account. If there are some bonds in that account, guess what, they love it even more. Why? Because brokerage firms know that stocks represent risky investments.
Something can always go wrong in any one situation. Maybe something can go wrong in any two situations. It's tough to see something go wrong in 15 situations. That is the essence of diversification. SPREAD THE RISK AROUND. It makes a lot of sense. Some investors own 50 to 100 stocks. This is because they think they need that many to achieve the investment goals that they set out for themselves.
In business school at a master's degree level they teach you that to achieve true diversification you need to own something approaching 14 equity positions. It has been the experience of StocksAtBottom.com that 6 to 10 different equity positions is sufficient to achieve diversification. The one thing we know for sure is that it's not one stock or two stocks. Own one or two and you get killed.
Putting all your eggs in one basket
We advise all investors to own several stocks and to own more than one sector. Own more than one type of investment (that means equities, bonds, real estate, cash, you get the picture) or you will have problems. Sectors refer to stocks with broad themes. Examples are:
* Energy
* Semi-conductors
* Housing
* Auto
* Consumer
* Airlines
* Personal Computers
* Technology in general
If you own 10 stocks, but they fall into only 2 sectors then you really have not achieved diversity in your portfolio. You see, when they come to get Ford Motor, usually General Motors is not that far behind. By the way, it's great on the upside to own everything in one sector when that sector is going your way. There's probably not a greater high in the world than when everything you own is going up. On the flip side, when you are overly concentrated in a sector that's heading down, lower and lower every day, there is no worse emotional low. The depression can be almost unbelievable.
There's also the issue of owning more than one type of investment. There are equity investments, which are stocks. There are real estate investments, and bond investments. There are also venture capital investments, precious metals, and others such as oil and gas. To a large extent, you achieve diversity in your investment strategies by owning different types of investments, as well as investing in different sectors.
Let's go into a few real life examples. We at StocksAtBottom.com believe we have already made the equivalent of a lifetime of investing mistakes, so learn from a few of ours.
Arrow Electronics
It was Christmas week in the early 1980's. One of us was sitting at Bear Stearns as a limited partner at the time. We were doing very well as stockbrokers. It was the period of full commissions (no discounting), and clients were doing 10,000 share trades in $50 dollar stocks. Taking home an income of $500,000 to $1,000,000 in a year was no big deal at the time.
We were loaded up on Arrow Electronics, a NYSE company in the semi-conductor sector. Business was fantastic, the future was bright, and things could not have been better. Since we were involved on the banking side as well, we had an open line of communication to the company. We knew we had a good thing going.
The telephone rang on one of those beautiful days prior to Christmas when New York City is the place to be, Rockefeller Center all lit up with a 50 foot Christmas tree and all. "Hello." A harried response, "There's been a fire at the Tarrytown Hilton Executive Center, a lot of people are dead." "Okay, that's terrible, how does it affect me and by the way, what's for lunch today?" "Buddy, you don't understand," the dead pan voice says. "What don't I understand?" "The entire executive leadership of Arrow Electronics was in that fire." All of them, every one of them had been killed by this monstrous tragedy.
It was the worst Christmas imaginable for the wonderful families of this dedicated group of execs. The families never recovered, the company never recovered in terms of the people that were left, and the stock took years to recover. It plummeted from $32 per share to $4 per share in a matter of days. The recovery was slow and hard, it was agony all the way back on this particular stock.
Arrow Electronics is an example of putting all your eggs in one basket. It is an example of owning just one stock. SAB does not care how much you know about a company, things can go wrong and do go wrong. You simply cannot own just one company because the risk on the downside is too great. YOU MUST DIVERSIFY IN ORDER TO SPREAD THE RISK.
About the Author
Richard Stoyeck’s background includes being a limited partner at Bear Stearns, Senior VP at Lehman Brothers, Kuhn Loeb, Arthur Andersen, and KPMG. Educated at Pace University, NYU, and Harvard University, today he runs Rockefeller Capital Partners and StocksAtBottom.com
stocksatbottom.com
Some of you may have margin accounts. As you know, StocksAtBottom.com advocates cash ownership of stocks. If you own stocks on margin, it is our opinion that you will get sold out on margin. Normally in a margin account you put up 50 percent of the value of the stock you acquire in cash. If equity falls below 35 percent, you get a margin call. Now, brokerage firms love it when clients have 15 or 20 different stocks in a margin account. If there are some bonds in that account, guess what, they love it even more. Why? Because brokerage firms know that stocks represent risky investments.
Something can always go wrong in any one situation. Maybe something can go wrong in any two situations. It's tough to see something go wrong in 15 situations. That is the essence of diversification. SPREAD THE RISK AROUND. It makes a lot of sense. Some investors own 50 to 100 stocks. This is because they think they need that many to achieve the investment goals that they set out for themselves.
In business school at a master's degree level they teach you that to achieve true diversification you need to own something approaching 14 equity positions. It has been the experience of StocksAtBottom.com that 6 to 10 different equity positions is sufficient to achieve diversification. The one thing we know for sure is that it's not one stock or two stocks. Own one or two and you get killed.
Putting all your eggs in one basket
We advise all investors to own several stocks and to own more than one sector. Own more than one type of investment (that means equities, bonds, real estate, cash, you get the picture) or you will have problems. Sectors refer to stocks with broad themes. Examples are:
* Energy
* Semi-conductors
* Housing
* Auto
* Consumer
* Airlines
* Personal Computers
* Technology in general
If you own 10 stocks, but they fall into only 2 sectors then you really have not achieved diversity in your portfolio. You see, when they come to get Ford Motor, usually General Motors is not that far behind. By the way, it's great on the upside to own everything in one sector when that sector is going your way. There's probably not a greater high in the world than when everything you own is going up. On the flip side, when you are overly concentrated in a sector that's heading down, lower and lower every day, there is no worse emotional low. The depression can be almost unbelievable.
There's also the issue of owning more than one type of investment. There are equity investments, which are stocks. There are real estate investments, and bond investments. There are also venture capital investments, precious metals, and others such as oil and gas. To a large extent, you achieve diversity in your investment strategies by owning different types of investments, as well as investing in different sectors.
Let's go into a few real life examples. We at StocksAtBottom.com believe we have already made the equivalent of a lifetime of investing mistakes, so learn from a few of ours.
Arrow Electronics
It was Christmas week in the early 1980's. One of us was sitting at Bear Stearns as a limited partner at the time. We were doing very well as stockbrokers. It was the period of full commissions (no discounting), and clients were doing 10,000 share trades in $50 dollar stocks. Taking home an income of $500,000 to $1,000,000 in a year was no big deal at the time.
We were loaded up on Arrow Electronics, a NYSE company in the semi-conductor sector. Business was fantastic, the future was bright, and things could not have been better. Since we were involved on the banking side as well, we had an open line of communication to the company. We knew we had a good thing going.
The telephone rang on one of those beautiful days prior to Christmas when New York City is the place to be, Rockefeller Center all lit up with a 50 foot Christmas tree and all. "Hello." A harried response, "There's been a fire at the Tarrytown Hilton Executive Center, a lot of people are dead." "Okay, that's terrible, how does it affect me and by the way, what's for lunch today?" "Buddy, you don't understand," the dead pan voice says. "What don't I understand?" "The entire executive leadership of Arrow Electronics was in that fire." All of them, every one of them had been killed by this monstrous tragedy.
It was the worst Christmas imaginable for the wonderful families of this dedicated group of execs. The families never recovered, the company never recovered in terms of the people that were left, and the stock took years to recover. It plummeted from $32 per share to $4 per share in a matter of days. The recovery was slow and hard, it was agony all the way back on this particular stock.
Arrow Electronics is an example of putting all your eggs in one basket. It is an example of owning just one stock. SAB does not care how much you know about a company, things can go wrong and do go wrong. You simply cannot own just one company because the risk on the downside is too great. YOU MUST DIVERSIFY IN ORDER TO SPREAD THE RISK.
About the Author
Richard Stoyeck’s background includes being a limited partner at Bear Stearns, Senior VP at Lehman Brothers, Kuhn Loeb, Arthur Andersen, and KPMG. Educated at Pace University, NYU, and Harvard University, today he runs Rockefeller Capital Partners and StocksAtBottom.com
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Mercedes-Benz is Humming Once Again
A revived Mercedes-Benz focusing on price and quality is determined to be back on the auto industry's center stage along with other auto giants. The German brand name, which is now owned by DaimlerChrysler, is taking its time to recover from its losses.
Now, the automaker's officers can breathe calmly unlike in the past few months because Chrysler operating profit surged by 127 percent amounting to $1.2 billion. Sales increased by 9.3 percent and analysts in the automotive world are positive that the figures will stick. "The downward spiral has changed direction," says Dieter Zetsche, DaimlerChrysler AG chairman.
The prestigious brand is finally emerging from the debilitating stretch in its 127-year history. Its 3-year slump left its reputation for engineering and quality almost beaten. The fall was so steep that the automaker was not able to rise almost immediately.
The bumpy ride leading to a remarkable fall started in 2003 when Mercedes landed near the bottom of J.D. Power's quality survey, which is done every year. The following years Mercedes conducted several recalls. These events further dent the reputation of the automaker. "Mercedes is getting squeezed on all sides by very high-quality cars produced at half the price," says Jay Baron, head of manufacturing at the Center for Automotive Research in Ann Arbor, Mich.
When Zetsche took over DaimlerChrysler 14 months ago, power plan was made. As a result, approximately 9,300 jobs were slashed and Mercedes offered workers buyouts. Additionally, the automaker entertained a significant restructuring and organizing plan that focuses on Mercedes-Benz performance parts including chassis, motors, and electronics systems.
Mercedes is aiming to cut 226 door handle variants to 71, 99 cooling systems to 25, and 171 antenna designs to 53, and more. In addition, some Mercedes-Benz spare parts will be shared by several models so that production and assembly will move smoothly.
"But Mercedes still has a long way to go. Its costs per vehicle are as much as $3,800 higher than for comparable BMWs," says Ferdinand Dudenhöffer, director of the German Center for Automotive Research at the University of Gelsenkirchen. Parts BMW are now enjoying its reputation in the automotive market. Its standing can be a serious threat to Mercedes.
Given that electronics problems became sharp in 2002, the number of flaws has plunged by 72%, to about one per car. And warranty costs are behind by 25% this year. "It's about doing things right 1 million times over," says Mercedes Chief Operating Officer Rainer Schmückle.
About the Author
Jenny McLane is a 36 year old native of Iowa and has a knack for research on cars and anything and everything about it. She works full time as a Market Analyst for one of the leading car parts suppliers in the country today.
Now, the automaker's officers can breathe calmly unlike in the past few months because Chrysler operating profit surged by 127 percent amounting to $1.2 billion. Sales increased by 9.3 percent and analysts in the automotive world are positive that the figures will stick. "The downward spiral has changed direction," says Dieter Zetsche, DaimlerChrysler AG chairman.
The prestigious brand is finally emerging from the debilitating stretch in its 127-year history. Its 3-year slump left its reputation for engineering and quality almost beaten. The fall was so steep that the automaker was not able to rise almost immediately.
The bumpy ride leading to a remarkable fall started in 2003 when Mercedes landed near the bottom of J.D. Power's quality survey, which is done every year. The following years Mercedes conducted several recalls. These events further dent the reputation of the automaker. "Mercedes is getting squeezed on all sides by very high-quality cars produced at half the price," says Jay Baron, head of manufacturing at the Center for Automotive Research in Ann Arbor, Mich.
When Zetsche took over DaimlerChrysler 14 months ago, power plan was made. As a result, approximately 9,300 jobs were slashed and Mercedes offered workers buyouts. Additionally, the automaker entertained a significant restructuring and organizing plan that focuses on Mercedes-Benz performance parts including chassis, motors, and electronics systems.
Mercedes is aiming to cut 226 door handle variants to 71, 99 cooling systems to 25, and 171 antenna designs to 53, and more. In addition, some Mercedes-Benz spare parts will be shared by several models so that production and assembly will move smoothly.
"But Mercedes still has a long way to go. Its costs per vehicle are as much as $3,800 higher than for comparable BMWs," says Ferdinand Dudenhöffer, director of the German Center for Automotive Research at the University of Gelsenkirchen. Parts BMW are now enjoying its reputation in the automotive market. Its standing can be a serious threat to Mercedes.
Given that electronics problems became sharp in 2002, the number of flaws has plunged by 72%, to about one per car. And warranty costs are behind by 25% this year. "It's about doing things right 1 million times over," says Mercedes Chief Operating Officer Rainer Schmückle.
About the Author
Jenny McLane is a 36 year old native of Iowa and has a knack for research on cars and anything and everything about it. She works full time as a Market Analyst for one of the leading car parts suppliers in the country today.
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