Tuesday, November 28, 2006

Berkshire Hathaway - Update

Berkshire shares may face some short-term fall due to an article by Jim Jubak, noted columnist in MSN money. Jim has loyal followers, he issued "Sell" on Berkshire. You can read his article here -- http://articles.moneycentral.msn.com/Investing/JubaksJournal/WhyWarrenBuffettsAGeniusAgain.aspx?page=all

It's not that Jim doesn't like this stock. He thinks high of this, but he wants to sell it now because of lack of opportunities for Buffett to invest. If you want to be a long-term holder of this stock wait for few days, I think Jim's gang would bring down the price.

Monday, November 27, 2006

Dow down 158!

Market went down today due to couple of reasons. Report of weak sales in Walmart and falling dollar. Moreover, many people made big gains in the last 4 months, it’s time to take profit for these guys. A little bit of profit-taking is healthy at this point.

I don’t worry too much about today’s decline. I think it’s an opportunity to buy stocks. Regarding Walmart, as usual wall street over reacted. I personally think it’s the time to buy Walmart and also its Indian partnet Bharti. If they pull off the retail venture in India, it’s going to be huge for both the companies.

An Evening with Andy Grove

If you live in Bay area, it’s the opportunity to meet Andy Grove, the man behind the success of Intel.

On December 4th, Monday, at 6;30pm the following event is planned:

An Evening with Dr. Richard Tedlow, Professor, Harvard Business School and Author of "Andy Grove: The Life and Times of an American" and Andrew S. Grove, Senior Advisor, Intel Corporation In Conversation with Lakshmi Pratury

Venue: Los Altos High School Eagle Theater
201 Almond Ave, Los Altos
Tickets: $50 (Reserved Seating)
$35 (Open seating)

If you want to get the tickets, contact tamarindgrove@gmail.com

Where is Russell 2000 headed?

Everyone in Wall Street says that large cap stocks will turn around this year. They also claim that end of rally for small stock is coming soon. So far, nothing happened like that. Small stocks are going up as they always did. Russell 2000 is up 17.7% for the year to date. However, stocks in the Russell 2000 face big risks from falling housing prices. Financial companies, including many regional banks, now make up more than a third of the index and may see big declines in fourth-quarter profits once those results begin to be released early next year.

For large-cap companies, most analysts expect profit growth to slow but remain solid in the months ahead. Analyst Ashwani Kaul of Reuters Estimates, which tracks Wall Street's earnings expectations, says his data indicate that profits at S&P 500 companies will grow about 10% in the fourth quarter. That would be modest compared with about 20% growth in the third quarter but enough to extend a record streak of double-digit growth to 18 quarters, according to Reuters Estimates.

If you have invested lot of money in small cap stocks, it's time to watch out. Nobody knows what is going to happen in next 6 months, but monitoring your (small cap) investments is the key.

Sunday, November 26, 2006

Mutual Funds for Beginners

If you are just starting investment in stock market you may not want to invest lot of money in the market. There are some good funds with $1,000 minimum, although many good funds need at least $2,500 to start with. Average $1,000-and-under fund has returned an annualized 5.25% over the last five years, compared with 6.34% for the average $1,000-plus fund. Still there are a number of excellent options in the former group.

The funds listed below requires just $1,000 minimum and registered handsome returns over the last few years. All these funds are no-load funds. Do your research before buying any of these funds.

BRUFX – Bruce Fund
EGLRX – Alpine International Real Estate
ICEUX – ICAP International
SSAIX – SsgA International Stock Selection
EGLBX – Elfun International Equity
TMVSX – Small cap value
ICSLX – Large cap value

Thursday, November 23, 2006

A Novel Way to Reduce Home Energy Bills

In the latest bid to trim energy bills, some consumers are harnessing wind power in their own backyards -- as long as their neighbors don't balk.

While wind energy is commonly associated with massive turbines churning in desolate, windy areas, a new generation of smaller systems made for areas with moderate wind is hitting the market. The latest small turbines, which resemble a ship propeller on a pole, have three blades, are up to 24 feet in diameter and are usually perched on stand-alone towers between 35 and 140 feet high. The systems have the potential to save consumers between 30% and 90% on their electric bills, manufacturers say, and promise to make no more noise than an air conditioner. But tapping so-called small wind using a high-tech windmill can be costly, and homeowners may find themselves battling zoning officials and annoyed neighbors who find the towering devices unsightly.

Interest in small wind has jumped recently: the American Wind Energy Association, an industry trade group in Washington, estimates that U.S. sales of small-wind systems totaled $17 million in 2005, up 62% from 2004. At the same time, systems designed for residential use are being supported by a growing host of state incentives to offset the cost.

Southwest Windpower, a company based in Flagstaff, Ariz., last month unveiled the Skystream 3.7, which is more efficient in light wind and less costly and quieter than past turbines. Bergey Windpower Co., based in Norman, Okla., recently employed new airfoil technology in its BWC Excel model to make it more efficient in wind speeds as low as nine miles per hour, and the company Abundant Renewable Energy in Newberg, Ore., this year offers two new small wind turbines, the ARE110 and the more powerful ARE442, designed to be quiet and produce more energy in low-wind areas.

Wind turbines work by collecting energy from the wind and converting it into household power. In most cases, the house is still connected to the local power network and the wind power merely supplements power from the grid. Electricity produced by wind energy is deducted from the homeowner's meter. Utilities in most states offer "net metering," giving customers credit for producing excess power. In some cases, homeowners will actually see their meter spin backward as they generate the excess.

Prices of the latest systems depend on their peak capacity, measured in how many kilowatts they produce under optimal conditions. The Skystream, for example, has a capacity of 1.8 kw and starts at around $8,500 fully installed, whereas a 10 kw ARE442 on the highest tower offered can run up to $80,000 with installation. The higher the kilowatt capacity, the more electricity they produce.

Local zoning rules are thwarting some people who want to put up a small wind system. Many gated communities or neighborhood associations prohibit structures like wind turbines, and most municipal governments restrict building heights and may not grant variances for a wind tower.

Even if a system gains approval, neighbors can protest. When William Targosh applied with his local government to put a wind turbine and tower on his 11-acre property in Lansing, N.Y., he says the installation was delayed for almost a year because of protests from other residents, who worried the device would lower property values and threaten birds. (Manufacturers say collisions with birds are rare.) He reduced the height of his 120-foot turbine tower by 20 feet, sacrificing efficiency, he said. But once it was up, he says it cut his power bills by about 35%.

Despite the focus on large-scale wind farms and other renewable energy sources in recent years, the market has been slower to embrace residential wind power. In the past, wind turbines were seen as unwieldy and impractical for residential use, and researchers and manufacturers instead focused on commercial devices that could be more profitable. In addition, the industry says small-wind systems have been handicapped by a lack of federal incentives. While consumers can get a 30% federal tax credit up to $2,000 for solar electric and water heating systems, no similar program exists for residential wind systems. But some lawmakers trying to change that: Bills proposed in this year in both the U.S. House and Senate would offer a 30% credit for residential wind systems.

"Small wind" is generally defined as noncommercial systems that have a capacity of 100 kilowatts, though systems installed for residential use are usually 10 kw or less. Despite the segment's growth, small wind still makes up just a sliver of overall U.S. wind-energy capacity, which was nearly 10,000 megawatts as of June 1, or enough to serve 2.5 million households, according to the American Wind Energy Association.

The systems aren't for city dwellers or residents of tightly packed suburbs. Those interested in small systems should have at least a half-acre of property, wind speeds of at least 10 mph and electric bills of $60 a month or more to make installing the system worthwhile, manufacturers say. It's helpful if they live in states with programs that can help offset the costs. California, Massachusetts, New Jersey, New York, Pennsylvania, Ohio and Wisconsin are among the states offering incentives. New York started a program in 2003 that gives consumers up to 50% cash back on the costs of a residential wind system and also offers low-interest loans. In California, people who purchase small wind systems can receive rebates based on the system size; for example, a $50,000 10 kw system can be eligible for a rebate of $22,500.

Some homeowners in areas with rising power bills say they will recoup the cost of their system within a few years. Arthur Larrivee, a real-estate appraiser in Dartmouth, Mass., this summer paid around $16,000 for two Bergey wind turbines equipped with solar panels to nearly eliminate the $150 a month it costs him to power his 1,600 square-foot home. Mr. Larrivee says he will receive about $9,000 in tax credits and rebates, and with the local utility's credit program for excess power, combined with what he will save on electric bills, he will earn back the rest of his investment in three to five years.

He asks "The wind is blowing all day long and it's free -- why shouldn't I use it?"

Courtesy: Business Week

Berkshire Hathaway – A Bargain?

At $100,000+ a share, billionaire Warren Buffett's Berkshire Hathaway Inc. could be the cheapest most-expensive stock around. Just before Thanksgiving Berkshire shares closed at $107,700. The stock is up 5,555 times since May 10, 1965, the day Mr. Buffett took control of the former textile company and the stock closed at $18 a share.

By contrast, the Dow Jones Industrials Average is up about 13 times since Mr. Buffett took over Berkshire.

The stock's eye-popping size is by design. Mr. Buffett, Berkshire's chairman, has long opposed a stock split on the theory that the high price tends to discourage buying by short-term traders. Still, Berkshire a decade ago started issuing lower-priced Class B shares, mainly to pre-empt the efforts of an entrepreneur in Philadelphia who planned to launch a fund offering investors fractional exposure to Class A shares. Today the Class B shares, each equivalent to 1/30th of a Class A share, closed at $3,593.

Despite its high price, some analysts say Berkshire, which now owns some 50 businesses ranging from underwear maker Fruit of the Loom to auto insurer Geico, has room to climb. "It's a 75-cent dollar right now," says Justin Fuller, an analyst at Morningstar in Chicago, meaning it is about 25% undervalued. Mr. Fuller, who says he doesn't own any Berkshire stock, values the stock around $129,000 a share.

Berkshire, of Omaha, Neb., trades at a relatively inexpensive 1.6 times its "book value," or its assets minus its liabilities. By comparison, American International Group Inc., the insurance giant, trades at about two times book value, while Citigroup Inc. trades at about 2.2 times book. (Like Berkshire, those two companies have large securities portfolios and sell financial products.)

One probable reason the stock isn't trading higher is that investors are concerned about who will run the business once Mr. Buffett, who is 76 years old, leaves or dies. Mr. Buffett has said he and his board have agreed on a successor, but the candidate could change as time wears on and Mr. Buffett is still alive. The name hasn't been released to the public.

Berkshire is sitting on a huge pile of cash -- about $42 billion as of the end of the second quarter. Even though Mr. Buffett has been aggressive this year about investing that war chest, the pile continues to mount, and that makes for smaller returns than if it were invested in operating companies, rather than short-term bond investments, for example.

Unlike companies that obsess over maintaining smooth earnings, Mr. Buffett is willing to tolerate swings in earnings, so Berkshire generates a higher return on its assets with less financial risk. Ratings firms have rewarded his strategy by giving Berkshire the only triple-A rating in the insurance industry. In contrast, many other companies choose to engage in the potentially risky practice of using borrowed money during periods of lower returns to magnify small investments to maintain earnings.

Berkshire's earnings growth also has momentum, analysts say. The company is expected to deliver strong earnings in the third and fourth quarters of this year and into 2007.

Berkshire's most profitable operating companies are usually its insurance operations. The reinsurance units, which underwrite catastrophe policies for other insurers, are likely to post their biggest profits ever this year. That's because Berkshire has been able to charge much higher premiums since hurricanes Katrina and Rita last year pushed up prices, producing big returns after this year's relatively mild weather resulted in no major losses.

"It'll be a banner year," says Tom Story, a portfolio manager at Chicago investment firm William Blair & Co. Mr. Story personally owns Berkshire shares and manages accounts that own the stock.

Geico is also a big driver of earnings. While the auto insurer accounts for just 7% of the nation's market share, it is signing up customers at a rate three to four times faster than the industry pace. And despite heavy spending on advertising -- it is on track to spend about $600 million on ads this year, much more than its industry peers -- Geico maintains among the highest margins in the industry, thanks to its lower cost structure and higher price.

If you want to save the money in car insurance it’s better not to sign up with Geico! They run catchy ads, but their price is just ridiculous. No wonder, Geico maintains the highest margin in the industry.

Analysts reckon all of Berkshire's insurance units, including Geico, will post underwriting profit of $2.5 to $3 billion for the full year barring any major losses before year end. That would be the group's all-time best performance.

Analyst estimates of Berkshire's full-year net income range from $7 billion to $8 billion, excluding investment gains, compared with about $5 billion last year.

Even Mr. Buffett is optimistic. While he declined to talk about the share price or the outlook for earnings, he did say in a recent interview that "so far, insurance has been quite good and Geico has been doing terrifically."

Happy Thanksgiving Day!

I wish everyone Happy Thanksgiving Day! I am really thankful for the recent market rally, it feels good to have some money on the table with turkey. I hope that this rally continues until Fed screws up sometime next year.

Enjoy your day with the people you care about!

Wednesday, November 22, 2006

Roth 401(k) plans

Roth 401(k) plans and Roth 403(b)s -- which are generally available to employees at colleges and nonprofits -- are tailor-made for younger workers who have the money available to pay taxes now and who may very well wind up in the same, or an even higher, tax bracket in retirement.

With a Roth 401(k), or Roth 403(b), you pay taxes on your retirement-plan contributions when you make them -- but your withdrawals generally are tax-free. And, if you roll over your Roth 401(k) assets to a Roth IRA, you don't have to make any required withdrawals. With a regular 401(k) plan, in contrast, you contribute pretax dollars -- but you have to pay taxes on your withdrawals later. That's why people try to figure out their future tax bracket, and future income-tax rates.

Few people can predict those variables with any certainty. Another complication: Many people, particularly those with traditional pensions, postpone making withdrawals from defined-contribution plans for years and years after starting retirement. That makes it even tougher to predict the future tax situation.

Some people think that enormous federal deficit hanging over us may force the government to change the tax structure in the future. Meaning that you may pay lot more tax when you withdraw the money. The advantage with Roth 401(k) is that you pay the taxes now. Other advantage to opening a Roth 401(k) while you're working is that you can convert it to a Roth IRA when you retire. If you wind up not needing the money in retirement, you could leave a compounding, tax-free legacy to your heirs.

Short Activity on NYSE Takes a Tumble

Short-selling activity fell at the New York Stock Exchange for the first time since February, as the stock market's continued rally to records finally scared off some bearish investors.

For the monthly period ended Nov. 15, the number of short-selling positions not yet closed out at NYSE -- so-called short interest -- declined 1% to 9,648,665,452 shares from 9,744,698,431 shares in mid-October.

Marketwide, the short ratio, or number of days' average volume represented by the outstanding short positions at the exchange, fell to 6.0 from 6.2. Expect this rally to continue for few more weeks. If you are short on market, it's time to rethink your strategy!

Chinese Programmers

China's young programming hotshots are gaining global attention.

Meet "Wishing Bone." That's the online handle of Wu Jiazhi, a student at Zhejiang University who has become a big winner in the programming contests offered by TopCoder Inc., a Glastonbury (Conn.) company that works with the likes of America Online and Merrill Lynch. Topcoder invites programmers around the world to solve software problems over the Net. Within weeks of entering his first contest three years ago, Wu had bagged $2,500. "I bought my first laptop with that money," says the 26-year-old. After earning $200,000-plus from TopCoder since then, he now has enough cash to buy plenty more computers.

With programmers like Wu faring so well, the world is reassessing China's software industry. For years, multinationals such as Microsoft watched almost helplessly as Chinese consumers and corporations alike pirated their software. But the climate is improving as Beijing cracks down on intellectual-property violations. Although piracy remains a severe problem, "we've made a lot of progress," says Ya-Qin Zhang, the Beijing-based head of China research and development for Microsoft.

The Chinese government is hoping better training will also bolster the fledgling industry. In 2002 it launched software colleges at dozens of universities, with a focus on satisfying the needs of businesses. Today, there are 36 such schools in China, which have graduated a total of 60,000 students in the past three years. "Software colleges want to train talent for industry, not for academia," says Jack Wu, deputy dean of the software college at Peking University.

Topcoder is taking advantage of the deepening talent pool. President Robert Hughes says he's impressed by the quality of software engineers in China. Chinese programmers "have been innovative, thinking creatively in solving the problems we put out there," he says. TopCoder is now opening an office in Beijing, its first outside the U.S., to recruit more Chinese.

China is home to more than 40% of the programmers taking part in TopCoder competitions. Overall, China ranks third in TopCoder's software contests, well ahead of India.

This brings a point to discuss. India is the hot destination for all multinationals that want to outsource. But, to stay in the top, Indian software companies and programmers should create more innovative products than just cranking out the code for american companies. Anyone can write programs with little training. Software development is becoming more of a commodity. If India wants to compete with China, it has to innovate more and more. CMM certifications and low-cost advantage are not going to help India in the long-term. Chinese will catch up sooner than later.

With the current cost of salary for Indian software programmers, I am not sure how long India can keep the low-cost advantage. If the multinational companies move software outsourcing from India to China, that will have damaging effect on Indian economy. So, it's time for Indian software companies to start thinking more about innovation. It's also time for Indian programmers to stop asking for pay increases!

Walmart Bank -- Will it ever be possible?

When Wal-Mart Stores Inc. applied 15 months ago to get a banking license, it looked like a slam dunk. The retailing giant applied for an industrial-bank charter in Utah -- the same type of permit the state had already given to many companies including Volkswagen AG, Pitney Bowes Inc. and even another big retailer, Target Corp. The Federal Deposit Insurance Corp., which insures deposits at banks, had blessed similar applications. To allay fears that it would compete with small banks, Wal-Mart promised not to open retail branches, saying it would use its bank to process card transactions.

But, Wal-Mart's banking bid is on life support now. The FDIC in July issued an unprecedented six-month moratorium on all applications for these specialized banks, freezing Wal-Mart's effort. Utah, which also must approve the application, has stayed mum. Powerful members of Congress are lining up to pass laws that would block Wal-Mart, or any nonfinancial company, from getting into the U.S. banking business.

That's bad news for the world's biggest retailer, which is already facing slowing growth in the U.S. and has stumbled in several overseas forays. Wal-Mart's effort to open a bank has galvanized a broad coalition of opponents: large banks, small banks, the Federal Reserve, unions, grocers, real-estate agents and congressmen of both parties. Some in the coalition are mainly interested in dealing a blow to Wal-Mart. Others are worried about the trend of allowing commercial companies into banking, which they fear could undermine the soundness of the financial system. That argument has been around for years, but it generated little political heat until Wal-Mart came along -- illustrating the power of the company's name to transform stalemated policy debates.

This illustrates another point. The power of political lobbying in U.S. I am sure that all the banks in U.S. are scared to death when they heard about Walmart’s intention to open the bank. These banks paid money to politicians to prevent Walmart from opening the bank. If the same thing happened in India, that’s called “Bribe”. Just because it’s happening in U.S., it’s called “Lobbying”.

The Power of Relationships in your career

Jim Citrin wrote an excellent article about the power of relationships. This article doesn’t give you step-by-step procedure to get more relationships. But, it does give some motivation to improve our communication skills and not screw up the existing relationships.

Here is the link to the article.

Thursday, November 16, 2006

ICE is Nice

Quick note: Intercontinental Exchange looks promising. ICE is the symbol, I bought the stock last week. It's doing well. Technical analysis shows that this stock could reach $119. They announced good earnings, there is a very good momentum on this stock. Let us see where this will take us.

Wednesday, November 15, 2006

Options Education

Equity options are little challenging to learn and master. If you want to learn options, Options Industry Council is a good place to start. They offer good tutorials for free. They also have good webcasts that teach options.

http://www.888options.com/seminars/webcasts.jsp listed webcasts that are currently available.

If you are a beginner, start with “Introduction to Options”, otherwise topics like "Equity collars" may interest you.

Tuesday, November 14, 2006

Solution to the contact lens solutions

If you have used any Bausch & Lomb product, I am sure it was very shocking to hear the news about contamination in ReNu contact lens solution. I used Bausch & Lomb on and off for many years. When I went for eye-exam last year, my optometrist told me that ReNu doesn’t fit very well with my eyes. He asked me not to use ReNu anymore. It was Jan 2005, well before any of these contamination news came to the picture. My optometrist suggested to use AoSept.

If you haven’t heard about ReNu mess, here is the brief summary: Bausch & Lomb Inc. recalled its ReNu with MoistureLoc contact-lens solution 7 months ago. This product had been linked to a serious fungal eye infection that can lead to blindness.

After Bausch & Lomb scare, everyone asks optometrists and ophthalmologists for the alternatives. Doctors say that lens wearers can enhance the safety of multipurpose solutions through careful use. They also recommend to use hydrogen-peroxide systems that offer an alternative -- though less convenient -- way to care for lenses. AoSept is the hydrogen-peroxide system. AoSept is also marketed as "Clear Care".

Hydrogen peroxide is regarded as an effective cleanser but must be used carefully, and can burn and sting if it accidentally comes in direct contact with the eye (though small amounts won't cause permanent damage). Believe me, it can really burn. I accidentally poured AoSept in the container meant for OxySept (Copycat Chinese version). AoSept is very discriminating, it doesn’t clean the lenses when it’s poured in competitor’s container. When I casually put the lens back in my eye the next day morning, it was almost like someone putting a fire in my eye. It was really bad. I had to wear the glasses for whole day.

The only safety concern with hyderogen peroxide solution is that they won’t work with some of the newer types of lenses, known as silicon hydrogels, they retain too much peroxide during their overnight soak.

Disposable contacts are another option, but only daily disposables can be used without disinfecting solution..If you are wearing any other contacts, regular checkup with optometrist is a must…To make sure there is no corneal staining, a pattern of spots indicating superficial damage, a common side effect for lens users with dry eyes.

Some optometrists feel that their patients are engaged in an activity called "topping off," that is adding new solution on top of old solution when placing lenses in their case. Instead, optometrists say, users should completely empty and clean their lens case after every use before filling it with entirely new solution. That will decrease some of the microbial content that can cause eye infections. Optometrists recommend frequently replacing lens cases, perhaps as often as every month. The cases, if neglected or used for too long, can become hotbeds for bacteria. Lens-solution manufacturers have caught on to this advice and now more frequently include new cases in packages.

In June, Ciba Vision (maker of AoSept) began including a new lens case with its multipurpose solution, Aquify. The Pro-Guard Lens Case contains silver, meant to help eliminate microbes festering within the container. The company says a clinical trial found that the silver atoms reduce the chance of outside contamination by 40%.

Other tips for contact-lens safety may seem obvious, but optometrists say their patients often fail to follow them: Wash your hands before handling your contacts, don't rinse your lenses in tap water, and try to touch only the outside of the lens when placing it on your eye. Some optometrists also caution against swimming with lenses in. They call the pools as "contaminated area," and recommend that if people don't take out their contacts, they should wear goggles or keep their eyes closed.

Ok, I deviated from my main topic. If you have sensitive eyes, AoSept is the best choice. It’s expensive, it’s not very easy to use. Still, I don’t want to take any chances. Another better alternative may be to undergo laser surgery. I am not comfortable about going thru laser surgery, because of night vision problems associated with lasik whether it is old lasik or custom lasik. I will wait for few more years to see if the researchers come up with better alternatives. Until then, I will safely keep my glasses, just in case.

Friday, November 10, 2006

Worries Mount Over Excessive CAT Scans

When we undergo CT scanning, we don’t normally realize that we expose ourselves to harmful radiation. Some doctors began to observe that excessive CAT scans could create a really harmful situation.

There haven't been any studies that directly examined whether people who had multiple CT scans went on to develop cancer. But as the number of CT scans has climbed, some doctors have started to take notice of individual patients who have received multiple scans that place their total radiation doses at levels near or beyond those of some survivors of the nuclear attacks on Japan in World War II. Residents of Hiroshima and Nagasaki received a mean dosage of 20 millisieverts, a measurement of radiation exposure, although the bomb survivors received all the radiation at once, which is thought to be riskier, and the type of radiation was different from the X-rays used in modern medical scans. According to a managed-care database, one patient received 341 CT scans over an 18-month period, bringing the radiation exposure to 992.24 millisieverts. Several other patients received more than 100 CT scans.

There's been an explosion in CT scanning in recent years. Scans increased by nearly 50% between 2000 and 2003, when they hit 57 million. The rise comes from rapidly advancing CT technology that gives doctors better, more-detailed information to work with, making the scan widely viewed as one of the most valuable diagnostic tools in the field. What's more, the test is noninvasive and typically doesn't cost anything for insured patients. The test has also become popular as a means for patients to get full-body scans as a check-up.

Now, a range of players in the field are moving to prevent runaway CT scanning, including a large managed-care organization and the nation's largest diagnostics-benefits manager. And General Electric Healthcare has come out with a device that reduces radiation during cardiac CT scans by as much as 70%. "Obviously, the concern is the increased risk related to cancer," says Arl Van Moore, chairman of the American College of Radiology, which is also looking at the issue. Dr. Moore recently appointed an ACR task force to examine the issue of radiation exposure from diagnostic imaging. The group's report and position statement based on its findings is expected to come out next year.

Invented in the 1970s, computed axial tomography scans (called CAT or CT scans) use special X-ray machines to take images of the body from multiple angles and can show various types of tissue with detailed precision. But unlike other kinds of advanced images, such as MRIs and ultrasounds, CT scans take pictures using ionizing radiation.

A full-body CT scan measures an estimated 12 millisieverts to 25 millisieverts. A mammogram measures about .84 millisieverts. We get about 3.6 millisieverts a year from natural sources. A 10-millisievert level is associated with an increased risk of cancer, though health experts debate whether a one-time dose carries different risks from those of cumulative exposure.

Children are at the greatest risk for long-term health problems from radiation because of the damage it wreaks on developing cells. In 2001, the Food and Drug Administration put out a notice to health-care professionals emphasizing the need to try to minimize radiation exposure in pediatric patients.

Not everyone in the medical community is embracing the cause. Some feel the risks aren't well-established and that the concern could dissuade patients from getting necessary tests. Reuben Mezrich, professor and chairman at the University of Maryland School of Medicine's Department of Radiology, casts a skeptical eye on the issue, saying there haven't been enough good studies on the risks. He also isn't convinced that radiation accumulates over time, noting that "we're always getting radiated."

Still, the nation's largest diagnostics benefit manager, National Imaging Associates Inc./Magellan Health, is taking steps to rein in CT scanning. In August, NIA started a new procedure with 30 of its clients to flag excessively scanned patients. NIA alerts their doctors and initiates discussions to see if there are other diagnostic options. Also, doctors who call insurance companies for pre-authorizations of patients deemed excessively scanned will need to talk to NIA first.

Company vice president and founder Thomas Dehn, a radiologist, says that the company started developing the program after seeing radiation-exposure levels that were 1,000% higher than medical guidelines, which Dr. Dehn calls "extraordinary, inappropriate and alarming."

At the same time, these Insurance companies won't let patients to undergo MRI because of the cost involved. A move away from CT scans won't necessarily save money. But, a reduction in overall scanning would save payers on insurance costs. Also doctors could instead shift to other technologies such as MRIs, which don't emit ionizing radiation.

Radiation by the numbers:

Type of Procedure and Estimated Dose

Chest X-ray => 0.01-0.1 millisieverts
Mammogram => 0.8 millisieverts
Head CT => 2 millisieverts
Chest CT => 8-10 millisieverts
Abdomen-pelvis => 10 millisieverts
Full body screening => 12-25 millisieverts
World War II Atom Bomb (mean) => 20 millisieverts

Thursday, November 09, 2006

Mutual Funds to Buy

I wrote about attractive mutual funds on December 10, 2005. Two of the three funds I mentioned generated excellent return so far.

It's time for one more list of funds. I invested in the following funds, all of them invest in world markets.

FIGRX - Fidelity Intl Discovery
JAOSX - Janus Overseas
JETAX - Julius Baer Intl Equity Fund
MAKOX - Matthews Korea Fund
LZOEX - Lazard Emerging Markets (Be careful with this one, emerging markets may just screw up your portfolio)

Disclaimer: I am not a financial advisor. I write my opinions in this blog, it's not financial advice. Do your research before trading any stock or options. I own all the funds mentioned in this post.

Commercial Real Estate Peaked in U.S.

The commercial real-estate cycle appears to have reached its peak and will begin pulling back in 2007, according to a new survey of industry executives.

The Urban Land Institute, a Washington-based nonprofit planning and research group, and PricewaterhouseCoopers surveyed more than 600 developers, investors, brokers, consultants and lenders this summer for an annual report on the industry, dubbed Emerging Trends in Real Estate 2007.

The survey suggests commercial real estate is beginning a return to its norm as an income-producing investment rather than the wildly appreciating asset class it has been this decade. The easy lending of the past several years will tighten next year in part because of worries about the economy, surveyed executives said. Investors will have to turn to asset management and operating performance to raise returns as investment inflows slow because of lower return expectations, respondents added.

The report also says real-estate investment trust stock prices "appear to have more downside risk than upside potential over the short term."

Still, those surveyed expect commercial real-estate cash flow to continue to grow as factors such as reduced vacancies and higher rents keep improving across most property types. One reason: High construction costs are putting a damper on new construction.

While the commercial real-estate market has exhibited some signs of a bubble in recent years -- driven by low interest rates and an influx of investment -- it has differed from the residential market. A key difference is that supply and demand have been more tied to vacancies and rents and not as closely linked to the rising interest rates that have cooled the housing market. Another key difference is that there is no "exotic mortgages" in commercial real estate domain!

The report advises investors to sell marginal properties and hold on to well-performing ones, with an eye to improving their performance in advance of a potential economic downturn. It advises developers to "hunker down," saying most property markets don't need much new space.

A pullback in the galloping commercial real-estate market will raise capitalization rates -- the initial return on investment in the first year -- by as much as 0.7 percentage point in some property types and restrain the increase in property values, the report says. Falling cap rates mean investors are willing to take a lower return for their money. Cap rates are already rising in some areas, especially in lower-quality properties, after dropping between 2.5 and three percentage points to record lows over the past five years. Cap rates vary by property type, but high-income apartments, for instance, averaged a 5.66% cap rate in July, while limited-service hotels brought a 7.93% cap rate.

The property sectors with a "buy" in the report are warehouse, which the executives interviewed said will boom on the East and Gulf Coasts because of overflow import traffic from the West Coast, and moderate-income apartments, especially on the coasts. Retail property fared worse, with executives suggesting consumer spending will be "middling" and advising investors to sell weak properties while holding strong ones.

Those surveyed said Seattle is the best office market to invest in right now, with office rents set to rise and supply tight. The city is also sitting in a prime position to benefit from explosive growth in Asia and has the best potential of any American city to become the next "24-hour" hub like New York or San Francisco, according to the report. The report lists five U.S. cities as "global pathways" with bright futures for real-estate investment: New York, Seattle, San Francisco, Los Angeles and Washington.

Philadelphia and Chicago are ranked among the worst markets for investment in all property types in the survey. Chicago is being dragged down by economic problems, the "Midwest malaise," the report says, while investors question Philadelphia's future as a global city since it lies between New York and Washington.

Wednesday, November 01, 2006

RBI raises its main lending rate

Reserve Bank of India did a good thing - It raised short-term lending rate to 7.25% in a cautious move to keep inflation in check.

I personally feel that RBI should boost the rate to atleast 8%. Chidambaram says that there is no inflation, that's a political speech. If you look at the prices in all metro cities, I am not sure how non-IT people afford those kind of sky-high costs. Rental rates in all metro cities are so obscene. I heard about 1000 sq.ft apartment is going for Rs. 25,000/month in Chennai. I am not sure how people can even afford it even if they make one lakh per month. Real estate prices are tripled from last year prices in some areas of Chennai. I can relate this to what happened in Silicon valley just a year ago. Whatever goes up this fast will come down. When it comes down, it's going to be ugly.

Many economists feel that there will be another 0.25% hike in 3 months. If the global situation is stable at that time, RBI may increase the rate to 7.5%. If there is a problem with global economy (Terrorism, Political fallout especially in Thailand, etc.,) RBI may keep the rate untouched.