A High-Potential “Liquid” Stock

Featuring Lutts’ Logic:

Bill Gates, Richard Feynman and Tuva

Throat Singing?

A High-Potential “Liquid” Stock

Two weeks ago I saw a little news item:  Bill Gates had succeeded in acquiring the rights to the films of some classic lectures on physics by Richard Feynman and was making them available free, for all the world to see.

Who was Richard Feynman? As a child, not so impressive–he didn’t speak a word until he was three.  But he mastered differential calculus when he was 15, earned a bachelor’s degree from MIT and then a doctorate from Princeton.

He was recruited to work on the Manhattan Project, but the bulk of his career was spent in academia, teaching at California Institute of Technology.  He was awarded the Nobel Prize in Physics in 1965 for his work on quantum electrodynamics.

Decades later, during the investigation of the Challenger space shuttle explosion, Feynman won widespread recognition for his demonstration–using a glass of ice water, a rubber O-ring and a C-clamp–that cold O-rings were the primary cause of the disaster.

The seven lectures, which you can find online at the Microsoft Research Web Site under the name “Project Tuva,” were recorded at Cornell University in 1964, and feature Feynman addressing a full lecture hall with insight, clarity and humor, explaining these topics:

-Law of Gravitation: An Example of Physical Law
-The Relation of Mathematics and Physics
-The Great Conservation Principles
-Symmetry in Physical Law
-The Distinction of Past and Future
-Probability and Uncertainty: The Quantum Mechanical View of Nature
-Seeking New Laws

Included with the first lecture (and eventually the others) is rich supplementary material that you can click on to explore specific ideas further.  I think the folks at Microsoft did a great job on the project.

I’ve watched the first two lectures … and I plan to get to the rest, even though physics is not my strongest suit.  Because Feynman was an excellent teacher, the lectures are interesting … which is one reason Bill Gates thought it worth the time and money to make them available to the world.  In addition, Gates is hoping other great lectures in other fields will be made available.  And, of course, he’s hoping to stimulate interest in the sciences; the world (Microsoft included) needs bright scientists and engineers.  As a proponent of education for all people at all stages of life, I applaud the effort.

But why the name “Project Tuva?”

Because in 1977, Feynman and colleague Ralph Leighton, spurred by Feynman’s recollection of the odd triangular and diamond-shaped stamps he’d seen as a youthful stamp collector–from a place named Tannu Tuva–pulled out an atlas and found the little country of Tuva, situated roughly northwest of Mongolia.

And on seeing that Tuva’s capital, Kyzyl, was spelled with no conventional vowels, they resolved to visit the place!

Now the easy (or least difficult) way would have been for Feynman to secure a speaking engagement in Moscow–not difficult for a Nobel Prize winner–and to use that as a steppingstone for a visit to Tuva.  But he abhorred the Soviets and their control of information and restrictions of freedom.

So Feynman, whose hobbies included bongo playing and safe-cracking, and who liked adventure and the untrodden path, determined that he and Leighton would do it on their own.

The story of this project, whose obstacles included language, distance, time, and the global political climate of the time–is related in the book, “Tuva or Bust,” by Ralph Leighton.  It’s an easy read, very entertaining, and I recommend it.  

Today, of course, we have the Internet, so the research that Feynman and Leighton took years to accomplish can be done with a few hundred mouse clicks from the comfort of your home.

A quick trip to the Internet tells me that Tuva, now a Republic of Russia, is notable for being the geographic center of Asia, the place on earth that’s farthest from any ocean.

Physically, it’s a mountain basin, bordered by Mongolia, Altai Republic, Buryat Republic, Irkutsk Oblast, Krasnoyarsk Kra and Republic of Khakassia.  The tallest mountain is Mongun-Tayga, which at 3,970 meters equals the Eiger in Switzerland.

And there are some 9,000 rivers in the republic, fed every spring by lots of melting snow.  Most notable is the upper region of the Yenesei River, the fifth longest river in the world, which flows north through Siberia and empties into the Kara Sea.

With an area the size of Florida (but 80% mountains or hills), Tuva has a population of 305,000, less than Cincinnati.  And that population, like many of the satellite nations/republics that border Russia, has had a long and varied relationship with China, Russia and the Soviet Union … which I won’t get into now.

If you do get an urge to visit Tuva, it’s substantially easier today than when Richard Feynman began his quest.  After acquiring a Russian visa, you simply fly to Russia, then fly 2,620 miles to Abakan (the capital of the Republic of Khakassia) and then drive south 260 miles to Kyzyl.

Finally, here are three facts that I find interesting.

One: The Tuvans are best known to the outside world for their throat singing, in which the resonant cavities of the mouth, larynx and pharynx are shaped to produce an overtone that is different from the main sound produced by the vocal folds.  The result is two (or more) distinct sounds from one mouth.  Other cultures still practice throat singing, but less famously, and in general it is a dying tradition.  The last Japanese practitioner died in 1976, and among the Inuit, it has been reduced to a game.

Two: The Tuvan people, relatively isolated for generations, are the closest genetic relatives to the original inhabitants of North America, who arrived via Siberia via land bridge … which explains the practice of throat singing among the Inuit.

Three: Tuvans have long had a spiritual relationship with nature, not unlike the Inuit and other cultures that were insulated from mainstream religious thought.  The various types of Tuvan throat singing, in fact, attempt to mirror natural sounds like whistling birds, bubbling streams, howling wolves and blowing wind.

By chance, while researching this topic, I found that one of the most accomplished music groups in Tuva, four men performing under the name Alash, was just beginning its fourth consecutive summer tour of the U.S.  So on Sunday afternoon I drove 40 minutes to the Lowell Folk Festival and enjoyed a live performance.  The music was easy to like and the crowd loved it.

And thus I thank Bill Gates for indirectly introducing me to Tuvan throat singing!

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So how can I get an investing idea out of “Bill Gates, Richard Feynman and Tuva?”  

I’m sure as heck not going to recommend Microsoft (MSFT).  Not only has it been 10 years since the stock’s peak, but that whippersnapper Google (GOOG) has been making noises about cutting into Microsoft’s operating system near-monopoly.  And last Friday the stock fell 9%, gapping down on heavy volume after a disappointing earnings report.  Bad sign.  If institutions start selling their beloved Microsoft stock, it can go a lot lower.

And I haven’t got a single idea about companies on the cutting edge of physics.

What I do have is an idea that takes its cue from the hard-to-believe fact that Tuva has 9,000 rivers.  It’s water.  Good old H2O.  Water is a daily requirement of all living things, and the earth has a limited supply.  So as the world’s population increases, proper management of water resources becomes increasingly critical.  And where are both the population and the use of water increasing especially fast?  China.

So my idea today is a very young stock, which came public on June 24 and just earned a spot in Cabot Top Ten Report.  It’s Duoyuan Global Water (DGW), and here’s what editor Michael Cintolo wrote:

“Duoyuan Water is a leading Chinese manufacturer of water treatment equipment and we feel very comfortable predicting that this company, if properly managed, will go far.  And we think it will be properly managed, considering that the company has complied with the ISO9001 Quality Certification since 1996 and the ISO 14001 Environmental Certification since 1999 and also implemented Six Sigma methodologies.  The company’s products run the gamut from grit-removing sewage treatment systems to municipal drinking water systems to corrosion-inhibiting processors for industrial use to water purification systems for use by the medical and pharmaceutical industries.  In addition, Duoyuan owns and operates a postdoctoral scientific research center, five professional research institutions and several comprehensive R&D laboratories.  It’s the only company in the industry to own a thallophytic laboratory, which boasts the most advanced dynamic simulation laboratory equipment available.  Finally, Duoyuan owns dozens of patents with proprietary intellectual property rights in the fields of sludge concentration, sludge dewatering and sludge drying.  The company’s revenues grew 55% in 2007 and 49% in 2008, and growth appears to be slowing this year as well, not surprising because of the global economy.  But the future is bright, and as this one-month-old stock becomes better known we expect to see institutional sponsorship grow.”

When that was written a week ago, the stock was trading at 27, and we gave the stock a recommended buy range of 25 to 27.  It spent the next three days treading water at 27, and then burst out to new highs on Friday, topping 31 before pulling back a bit.  So short-term, it’s a bit extended, but long-term it has a bright future.  I suggest you watch it a while and try to buy after the next pause or pullback.

Yours in pursuit of wisdom and wealth,

Timothy Lutts
Publisher
Cabot Wealth Advisory

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