Tips Links and Tidbits Newsletter

Tuesday 3rd October 2006


Basic Computer User

Microsoft to launch video service to rival YouTube SEATTLE - Microsoft will start testing on Tuesday an Internet video-sharing service called Soapbox, the software company’s answer to Web sensation YouTube.

Slow PCs biggest headache for small firms, worse even than spam and sales calls. More

Microsoft mulls free Web-based business software
SEATTLE - Microsoft has said it may offer a free, advertising-supported version of its basic word processing and spreadsheet software, in an apparent bid to fend off a nascent challenge from Google in the business software market.More

Outsmarting Keyloggers
Are you worried that when you use a public terminal, a keylogger might snag your password info? Read today’s tip to learn what you can do to outwit this brand of spy software.More

Sharp Develops Triple-View LCD
Japan’s Sharp Corp. said on Wednesday it has developed the world’s first liquid crystal display (LCD) panel that allows the viewing of three different images on one screen at the same time.More

EBay leads the pack for shopping searches
Consumers on the hunt for bargains.More

CinemaNow Offers ’Download-to-Burn’ Movie
Online movie service CinemaNow on Tuesday said it will offer a version of Universal Picture’s “The Fast and The Furious: Tokyo Drift” that customers can download onto a blank DVD the same day it is available in stores.More

Dash Smart GPS Asks Other Drivers for Fastest Route
Dash Navigation unveiled its Dash Network Traffic Service on Tuesday, allowing drivers to “report” traffic conditions to others on the network.More

Microsoft issues advisory for ActiveX flaw
Vulnerability in Windows Shell could allow remote code execution.More

Internet reportedly plays pivotal role in movie-going decisions
The Internet is playing an increasingly big role in spreading the word about which movies are worth seeing.More

New exploit rocks IE, downloads scores of spyware, adware An unpatched vulnerability in all editions of Microsoft’s Internet Explorer browser is dumping adware, spyware, and Trojans onto PCs whose users simply surf to an infected site.More
Microsoft recommends that users click Start, Run, paste the following line into the input box, and click OK:
regsvr32 -u “%ProgramFiles%\Common Files\Microsoft Shared\VGX\vgx.dll”
After Microsoft releases a patch for the problem, you can easily reregister the DLL by repeating the procedure without the -u switch:
regsvr32 “%ProgramFiles%\Common Files\Microsoft Shared\VGX\vgx.dll”

New security group patches latest IE bug
Microsoft may be waiting until next month to patch a nasty bug in Outlook and Internet Explorer, but security researchers are offering users a more immediate option.More

Microsoft offers early fix for critical IE bug
With attackers finding new ways to exploit a critical flaw in Internet Explorer, Microsoft has released a patch for the problem, ahead of its next scheduled round of security updates.More

Disney CEO touts new iTunes movie downloads LOS ANGELES - Walt Disney chief executive Robert Iger on Tuesday said the company sold 125,000 movie downloads worth US$1 million in revenue through Apple’s iTunes online music store in the first week Disney movies were offered.

Intel offers US$1M PC design challenge
Intel is challenging PC designers and manufacturers to think ’sexy, stylish and small’as they design the next generation of home PCs.More

New tech could nip DVD format war
The format war around next-generation DVDs may be over before it has begun, thanks to a breakthrough from New Medium Enterprises, said a British media technology company.More

Stration worm masquerades as security patch
Users must resist the temptation of opening unsolicited attachments, says security firm. More

Cyber-crooks switch to ’soft target’ home users
Poor security offers rich pickings for hackers and phishers. More

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Advanced Computer User

Intel pushes for 80-core CPU by 2010, faster servers needed to power ’mega data centres’.More

Paid search not much better at turning shoppers to buyers
A Web analytics firm finds that paid search has only a slight advantage over unpaid search in converting online shoppers to buyers.More

Silicon laser could replace copper wiring in PCs
Researchers from Intel and the University of California at Santa Barbara have found a way to build low-cost “laser chips” that could eventually shuttle data around PCs at much higher speeds than today’s copper wire interconnects.More

Windows must change to deal with Web 2.0
Trouble ahead, warns Gartner.More

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NewsTarget Insider Alert (
(Please forward to others who may benefit)

Dear readers,

Vitamin D is essential to bone health -- without it, calcium is virtually useless for strengthening bones. But as with many vitamins, just taking a supplement may not be enough. Read today’s feature article on vitamin D to learn how to get more of this essential nutrient to support bone health, prevent cancer and even fight depression:More


Vitamin K deficiency found to promote osteoporosis in women:More

CoQ10 improves cardiovascular health of heart patients:More

Online shoppers prefer healthier foods, research shows:More

Curcumin halts colorectal cancer, breast cancer by inducing death of cancer cells:More

Jon Barron has a great newsletter, full of natural health info.
You can subscribe here

Just in case you missed the MSG article...
I just read this article and absolutely, positively, unequivocally recommend ANYONE with a body or a child read it! You will need to skip over or look up in a dictionary some medical terms but it is worth it.

NewsTarget Insider Alert ( HEALTH WARNINGS / CRITICISM

Dear readers,

You’ve seen things like MSG, aspartame and yeast extract on labels, but what do they really mean? In this exclusive, eye-opening interview, Dr. Russell Blaylock exposes the truth behind these substances -- largely labeled “harmless” by the food industry -- and their disastrous effects on your body and brain chemistry.

This is a *must-read* interview if you have children (or even if you just want to protect your own body from food industry chemicals):


Minister admits state’s drinking water is part recycled waste

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According to a recent survey on the reason customers “do not come back”:
1% Died
2% Moved location
6% Started dealing with a friend
68% moved to another supplier due to perceived indifference

Wow! The chief bad eggs on this planet are certainly copping some heat at present...More

After Tom Cruise’ exposure of the psych drug fraud last year the FDA ordered those anti-depressants to carry black labels warning citizens that they can cause suicide, violence, psychosis, mania, heart attacks and sudden death and that sales of such anti-depressants fell a 20% - it seems like the psychs & the pharmaceuticals have not forgiven Tom for having cut their income which is higher than $76 billions a year a 20%. That must have hurt. It’s a hell of a lot of money!

Just recently we all heard about the noisy split between Paramount (owned by Viacom) and Tom. Why was Cruise slammed by Viacom’s head when he had made 1 billion for them in the last year just with his last two movies War of the Worlds and MI3? Well, the amount of money made by the movie industry is peanuts compared to the amount of money made by the pharmaceutical industry. In fact, it happens that William Gray, who is part of Viacom’s board of directors, is also on the board of Pfizer (the largest pharmaceutical company by 2004 sales). And Ivan Seidenberg, who is also part of Viacom’s board of directors, is on the board of Wyeth (the 10th largest pharmaceutical company by 2004 sales). You are free to pull the string if you want to know the whole truth... you may be very surprised.

By the way, it seems that Viacom’s shares fell as much as a 10% after the whole thing...

Psychiatry and the pharmaceuticals sure have the resources to create such a huge media wave in an attempt to destroy Tom Cruise, who is putting their risky business in danger just by unveiling the truth. If they were not doing anything wrong why should they care about him and about what he said?

If you not to prejudge and you care to investigate a little bit around on your own you can find very interesting data and evidence in webs such as and others. I have also found very interesting books on the subject. Last but not least, there is an extremely interesting video around on the Internet they sure don’t want you to watch: More Even more

The Daily Reckoning PRESENTS: Dr. John Hussman is one of the great fund managers alive today. His Strategic Growth Fund has averaged a 13.39% annual gain since it was started in July 2000. James Boric explains the key to Dr. Hussman’s success, below...

by James Boric

In today’s era of overhyped profit expectations, a 13% annual return may not turn most novice investors on. But to the seasoned professional, this is an accomplishment worthy of great praise.

Since July 24, 2000, the S&P 500 has averaged a negative 0.75% compounded annual return, the NASDAQ has shed 11% a year and the red-hot Russell 2000 has averaged a 7.32% gain. Hussman beat all of these indexes handily. He also soundly pummeled his peers over the same time frame.

According to Morningstar, Hussman’s Strategic Growth Fund was the best in its category over the last five years. No.1 out of 99 competing funds.

The key to Hussman’s success is threefold. He invests in companies with strong cash flows and attractive valuations. He takes an acceptable amount of risk based on the overall market climate. And he insists on long-term perspective. As he said in his latest annual report (which was just made public this past month):

"The investment objectives of the Hussman Funds are distinctly long-term and ’full cycle’ in nature, placing very little weight on tracking the market over short periods of time."

Hussman admits that in the short term, anything can happen. He isn’t out to beat the market in a given quarter, or even an entire year. In fact, his flagship Strategic Growth Fund underperformed the S&P 500 by 50% in 2004. While investors are quick to get up in arms about such a tragedy, Hussman was just fine with the results.

The good doctor judges his performance over a full market cycle ­ meaning from bull to bear market runs. After all, it is easy to make money in a bull market. Everything rises (a la 2003). But it’s much tougher to survive an ugly bear market and walk away with both your wallet and dignity intact. That’s where Hussman, and his shareholders, thrive.

When valuations are rich, Hussman hedges against the possibility of a falling market. He buys long-dated put options against the major market indexes in combination with buying great businesses on the cheap. As a result of that powerful combination, the biggest drop his fund has ever experienced was a 6.98% fallout during the bear market of 2000-02.

Meanwhile, the S&P 500 fell as much as 47.41% during that same time. And the Russell 2000 fell as much as 37.94%.

Think back to 2000 for a second. How much money did you lose? Was it less than 7%? Or was it closer to the 47% fallout we saw on the S&P 500?

If you started with $10,000 in July 2000 and put that money with Hussman, you would be sitting on $21,074 today. You would have more than doubled your money. Meanwhile, that same $10,000 invested in the S&P 500 would be worth $9,564. Or said another way, even after four years of rising stock prices, you would still be down from the last bear market.

That, my friends, is the difference between losing only 7% versus 47%. So what does Hussman think about the current market environment?

In his latest annual report, he makes it very clear that the market is not an attractive place to be right now. Despite strong earnings growth and fat profit margins over the last four years, valuations suggest the coming years will be tough -- especially in the small-cap sector. Hussman says:

"During the past fiscal year, speculative interest became increasingly concentrated in small stocks with low quality as measured by stability of fundamentals such as earnings and revenues and other financial characteristics. While such companies typically experience very high volatility over the full market cycle, they have become appealing to investors speculating on a continued advance in the small-capitalization sector of the market. As a result, smaller, low-quality stocks may be particularly vulnerable, especially if profit margins contract. I have intentionally avoided such stocks, despite their periodic short-term momentum."

In fact, Hussman goes on to declare that if you look at price-book, price-dividend and price-revenue ratios, “Valuations are at levels rarely seen in history, except during the late 1990s market bubble.” When such conditions have existed in the past, the average returns have lagged those of low-yielding Treasury bills.

Of course, the mainstream is quick to point out that corporate earnings (for S&P 500 companies) have grown double digits for the past 16 consecutive quarters. And as long as profits continue to grow, we are in no danger of a downturn -- no matter what valuations are.

Maybe the mainstream is right. Maybe we should all be bullish about the future. Or maybe not...

The latest Conference Board’s CEO Confidence Survey, a quarterly survey asking corporate leaders whether they are bullish or bearish on the economy, fell to its lowest level since 2000. In other words, despite the incredible profits their companies have been cranking out for the last four years, the men and women running those companies aren’t so sure the future will be as bright:

To see the chart, click here:

This chart (created by William Hester -- a CFA who works with John Hussman) shows corporate CEOs’ expectations of the economy in the future (in blue) and the change in corporate profits (in red).

Notice that when corporate sentiment is strong and the blue line rises above the 50 line (which separates bullishness from bearishness), corporate profits tend to follow suit. It happened in 1980, 1990 and 2002. Likewise, when executives are worried about the economy and their respective industries, corporate profits tend to plunge in the following years. Again, you can see this play out in 1977, 1987 and 2000.

Now take a close look at the data for 2006. Notice the massive divergence between profits and expectations? Corporate profits are at an all-time high, yet the CEOs running these companies are bearish right now. How is this possible?

It’s possible because profits can’t rise at a double-digit clip forever. And with four years of ridiculous growth behind us, combined with rising interest rates and a falling U.S. dollar, corporate executives aren’t certain they can maintain this bullish trend. They are nervous.

As Hester points out, “Since 1976, when CEO optimism has risen above 55, the subsequent 12-month growth in profits has averaged 12%. When the index was below 45, indicating pessimism, profits grew at just 1.1%.”

What would your portfolio look like if all of your stocks grew only 1.1% for the next 12 months? Would you still want to hold those stocks? Something to think about...

Now, I admit, this is just one survey. It may not be entirely predictive of what’s to come for the entire stock market. But before you dismiss it altogether,check this out...

This is a chart that shows the ratio of insider purchases to sells (in blue) relative to the market’s performance (as measured by the S&P 500, in red).

Notice that insider buying and the market move in opposite directions. As the market plummets and becomes cheap, insiders (the people that run the companies you invest in) buy large positions in their stock. But as the market rises (and becomes expensive), insider buying all but dries up.

It is no coincidence that insider buying is at a six-year low right now despite corporate profits being at a six-year high and despite the overall market rising to near-2000 highs. Quite simply, the managers running the companies we invest in know this recent earnings trend is not sustainable.

So what are you to make of all this?

As I have been preaching to my readers for months, now is the time to be careful. Now is the time to weed out the speculative stocks in your portfolio that are rising only because of short-term momentum. And now is the time to buy fundamentally sound companies that throw off lots of cash and are cheap relative to their peers.


James Boric

for The Daily Reckoning

P.S. As I said in the last issue of Small-Cap Strategy Report, there are hundreds of small-cap stocks worth owning -- despite the overall extended market conditions. The key is to stick to your guns and invest in cash-generating, inexpensive and fundamentally sound companies with simple businesses.
The Daily Reckoning is a free, daily e-mail service brought to you by the authors of the NY Times Business Bestseller “Financial Reckoning Day”.

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