In the brutal patent courts of East Texas, Microsoft may have met its Waterloo. A patent judge granted an injunction that gives Microsoft just 60 days to remove the XML language from its Microsoft Word software. Microsoft appealed the decision with this dire warning:
Unless Microsoft is able to redesign Word and push that redesigned version through its entire distribution network by October 10... Microsoft and its distributors (which includes retailers such as Best Buy and OEMs such as HP and Dell) face the imminent possibility of a massive disruption in their sales.
Microsoft says the injunction would also prevent distribution of its entire Microsoft Office suite, which contains Excel, Outlook, PowerPoint, Publisher, and Word.
Patent courts in East Texas are well known to be plaintiff-friendly. They find for the plaintiff about 45% of the time, versus 25% of the time in the rest of the country. Most judges don't see 40 patent cases in 10 years. The judges in East Texas average more than 130.
My guess is a compromise of some sort will get XML out of Word, while allowing Microsoft to remain in business. XML's owner, a small Toronto company ironically named I4I, would probably take cash... maybe a share in Word revenues for the next several months until Microsoft can excise the offensive code.
So far, Mr. Market couldn't care less about the decision, and the stock is right about where it's been since mid-June.
If the Obama health care plan has you wondering where the opportunity might be, Les Funtleyder of investment firm Miller Tabak & Company, threw out a few ideas in a Barron's interview on Tuesday.
Investors have hit managed care and pharmaceuticals with severe discounts due to fears they may suffer in the new health care environment, he notes. Funtleyder says Congress' failure to send a bill to the president before the August vacation break has ratcheted up the fear and uncertainty. He also thinks the fear priced into health care insurance stocks like UnitedHealth Group and Humana is overdone.
S&A's health care and biotech experts, Rob Fannon and George Huang, have their own ideas about how to take advantage of the current uncertainties. They plan to address this question in the next issue of Phase 1 Investor. To get access to their advice, click here.
Rob Fannon recently helped me out with my latest Extreme Value stock, a wonderful business the pharmaceutical industry can't live without. Though the 50-year-old company is the gold standard in its industry and the largest business of its kind in the world, it's doubtful you've heard of it. It has highly desirable financial characteristics shared by only four other companies I've found in 12 years of researching stocks – and I've looked at tens of thousands of individual stocks. To find out about this cash-gushing business, click here.
Last night, I was looking through some highlighting and notes I'd done on my Kindle, and came across the following quote from Jim Powell's book, FDR's Folly...
Confiscation of wealth may satisfy the vengeful in us. It may sooth the retaliatory spirit. But it is the path to national suicide... There must always be reward motive. To many people, it is but another way to set goals of human ambition... When government kills the opportunity to earn, it sounds the death knell of the opportunity to serve. – David Lawrence, founder of U.S. News & World Report
Our government seems more intent than ever on killing the opportunity to earn and serve. If you agree the United States is on the path to national suicide, you should read Doug Casey's latest advice...
Doug has been around the financial world since he was a young man. He's been to more than 150 countries. Doug says the most important investment decision you can make now isn't among different asset classes. It's political and geographical diversification.
In the latest installment of his Conversations with Casey interview series, Doug tells you where to set up a foreign bank account and where not to, where you can deal in gold and where you can't, what countries to avoid and which ones look most promising (Doug's choices will surprise you).
He's also adamant that you have no time to waste and must act now. In his next installment, Doug will discuss currency controls. You won't want to miss that.
I rarely gush like this about anyone because so few people in the financial world aren't full of it. But I allow myself to gush about Doug because he is intelligent, well read, honest, straightforward, generally unequivocal, and often highly insightful in his views and opinions. I've been reading his newsletter since the early 1990s, and I'm privileged to count him as a friend. Mutual friend Rick Rule says Doug has a 12-cylinder mind in an eight-cylinder world. I agree. He's the real deal. Listen to him.
Subscribe to Conversations with Casey, which is completely free, right now by clicking here.
In a Wall Street Journal editorial on Tuesday, Charles Schwab did a decent job of showing what a bad idea it is to have the government essentially guaranteeing investment returns (which is the implication of the New York Attorney General suing Schwab for not anticipating the freeze of the auction rate securities market).
Schwab reminds me of a point I've tried to make several times here and in the pages of Extreme Value. Trying to eliminate risk through regulation is much more harmful than doing nothing at all. If you leave investors fully vulnerable to risk, the government has far less opportunity to use regulations as it has in the past – to lull investors into a false sense of security. The SEC, for example, was unable to stop Bernie Madoff's $60 billion Ponzi scheme, despite being told about it several times over several years. The solution to this failed regulation will be more regulation, which will fail as well.
You can't be protected from financial risk anymore than someone else can digest your food or live your life for you. Trying to protect investors from financial risk through increasingly Draconian regulation is like trying to protect them from cancer by following them around day and night, trying to change their eating habits and other behaviors. It makes their lives worse, not better. It's completely undoable.
It's like the late libertarian writer Harry Browne said, "No one owes you anything." Your health is your business and only your business... and so is your money. Proceed accordingly.
One risk investors must address these days is the looming possibility of a dramatic rise in inflation...
In a New York Times editorial on Tuesday, Warren Buffett told the world about the danger of inflation. Yesterday, the folks at PIMCO added their voices to the chorus, in a report that said, "There are many reasons to expect a secular decline in the value of the U.S. dollar."
The report, by PIMCO's Curtis Mewbourne, says China is using currency swaps so it can negotiate trade in its own currency, not dollars. PIMCO says several countries will replace a portion of their foreign currency reserves with IMF bonds denominated in special drawing rights (SDRs), a basket of currencies.
PIMCO says currency flows into emerging-market countries "may well mark an important shift in currency preferences." The Coca-Cola of currencies might become the RC Cola.
The only thing I don't like about Buffett and PIMCO's inflation warnings is their ideas are now extremely popular. Everybody and his brother thinks the U.S. dollar is doomed. Time will tell if it's a self-fulfilling prophecy or a contrarian signal.
New highs: none.
Several of us at S&A, myself included, have recommended the purchase of gold and silver bullion, which we've then recommend you hide. Below in our reader mail is a cautionary tale of what happens if you don't follow this all-important advice... Send your advice and warnings to: feedback@stansberryresearch.com.
"I followed your advice & bought some gold bullion last year – when it was about $200/oz less than now. What I did wrong is put it in a safe when we moved to our new house. I had read your articles on where/how to hide physical gold (perhaps you could insert a link here so everyone can read it again) but I procrastinated too long in finding a good hiding place, or at least bolting my safe to the floor. Last week our house was burglarized & they got my safe – along with my tv, computer monitor, & some jewelry. I don't care much about the other stuff, but losing that cash & gold stash hurt. EVERYONE PLEASE LISTEN TO WHAT PORTER & CO ARE SAYING & HIDE YOUR CASH & GOLD VERY WELL – TODAY, NOT TOMORROW. With the numb-nuts we have running the show in Washington, crime will only get worse." – Paid-up subscriber GF
Ferris comment: Sorry to hear of your loss, GF. Thank you for writing in. I speak for everyone here at S&A when I say good luck and we hope you're able to rebuild your stash quickly.
"Ha, ha – our congressmen and Wall St – a bunch of whores and worse. What a laugh. Because they'd do anything for filthy lucre and the power. You know the people who write in to you that just want the financial advice and none of the (conservative) politics, must be whores, too. You can't separate your morals from your money." – Paid-up subscriber Geoffrey Stiles
Ferris comment: There's that word again, "conservative." I'm not a conservative. I don't like labels. But if you must label me, then anarchist is closer to the mark. Libertarian is acceptable. Conservative is way off base.
"My aunt who hated Pres. Kennedy because he was catholic, but when he was killed she cried! When I ask her why, she replied, 'Well he was the president of my country.' I think I know why you have no respect for the leader of the greatest country in the world and insult him in every letter you send, this is not your country! Wonder why you stay?" – Paid-up subscriber Boatman98821
Ferris comment: Go ahead, now... Roll over and wet yourself like a good whipped dog... And by the way, Obama may be your leader, but he is not my damn leader in any way whatsoever. Grown men don't need leaders, at least not political ones.
What is this, the children's corner? Where did all the adults go? Where are the men and women with minds afire and a passion for freedom and independence? To paraphrase the title of Henry Mayer's excellent biography of Patrick Henry: Where are the sons of thunder today?
"All I can say is; I agree 100% with any/all comments you make/say in regards to Obama. Thanks for trying to wake some people up!" – Paid-up subscriber David Holmes
Ferris comment: Thanks. It's a purely selfish indulgence on my part. I entertain no illusions about waking anyone up, and I think they should set their own alarm clocks through study and questioning. But I'm glad you wrote in. I'm only human, and I like to know who's on my side.
Regards,
Dan Ferris
Medford, Oregon
August 20, 2009