Featuring Lutts’ Logic:
A Bright Future
A Bright Investment
Last Monday I published what I feared was a relatively unfocused column, touching on medical insurance, health care in Massachusetts, obesity and swimming … and tried to wrap it all up in the mantle of “personal responsibility.” I wasn’t especially proud of the organization of the whole, but I was proud of some of the ideas.
And I was happy to see that you liked them, too. The quantity and quality of your feedback was impressive. Below are some of the most notable responses.
“Your comments on the current Health Care bill are right on!
“It totally ignores actions that could be taken to save billions–tort reform, buying insurance across state lines, health savings accounts–actions that would cost little or nothing, yet would reduce costs significantly.
“The Wall Street Journal says this is the worst piece of legislation they have ever seen. Nothing in the bill reduces costs, but it does create an enormous new set of government boards and bureaus, leading eventually to shortages and rationing. Obviously, the Democrats in charge want to force a single payer system onto us, and the end game will be socialized medicine on the Canadian and British models.
“Down here in Austin, the Whole Foods CEO, John Mackey, wrote an op-ed for the WSJ, outlining a number of steps they had taken to improve their employees’ choices for health care. The liberals went ballistic, and tried to implement a boycott, which fizzled. You might want to look at the article, and the follow-on interview–I think you can find some useful ideas that you might be able to use for your people.
“Keep up the good work. We need more people speaking up against the stream of really bad and harmful ideas coming out of Washington.”
[Note: I have previously commented favorably on both John Mackey’s achievements and his stance on insurance.]
“I feel a strong need to respond to your support of Medifast (MED) in connection with improving the health of our nation. I am a licensed naturopathic doctor and therefore make it my business to find ways to TRULY help people live healthier lives. I think the fundamental issue is that we as a nation have lost the habit of eating a “whole foods diet” that is plentiful in fruits, vegetables, legumes and whole grains. Then to add insult to injury, we drive around in our metal boxes every day and only a small fraction of us take the time to stop at the gym for some exercise. It is no wonder that most patients when they first meet with me simply want an “herb or supplement” to help them with whatever is ailing them … a quick fix to go along with their fast-paced lives. Like the fast-food industry, the health-food industry is FULL of fancy theories and expensive products to be sold on the basis of such theories. There is BIG MONEY in this industry and it is leaving our nation overdrawn in our bank accounts and costing us our health.
“Research shows that the BEST way to prevent chronic disease (cancer, diabetes, heart disease, etc.) is by eating a plant-based diet rich in fruits and vegetables and getting regular exercise, such as taking a 30-60 minute walk five to six days a week. It is amazing that something so simple seems to be so out of reach for so many. While I can understand the appeal of Medifast for someone who wishes to lose weight, I would be very concerned about the real benefit of living off of the shakes, stews, soups, oatmeal, chili, eggs, bars and puddings that are obviously highly processed and likely devoid of the nutrients one can obtain by eating a low-fat, whole foods, plant-based diet.
“What this nation needs is a major paradigm shift in how we view nutrition and that view needs to be free (is that possible?) of the influence of the dairy industry, the beef and poultry industry and most importantly, the health food and weight loss industry. The secret to health is ridiculously simple and notoriously difficult to maintain, but if I’ve learned anything by being in the profession I have chosen for myself, there is NO REAL SHORTCUT. I just wish I could find a way MARKET this and beat out the current “health food” industry and substitute it with a “REAL FOOD” industry.”
[Note: Yes, eating your fruits and vegetables, keeping portion sizes sensible and taking regular walks is a surer route to health and weight loss than Medifast … or any other packaged meal plan. Yet the stock (MED) had a great week!]
“Long but a very good letter. Several of the health issues you mentioned were addressed by JFK when he was president and I was in high school. Some of the economic problems we are now having were turned around by JFK also. We have short memories.
“When I was young (12), I swam on a swimming team and was a lifeguard until I finished school and had to get a real job. A fear of water is one of the biggest causes of drowning, even by people that can swim. I have pulled people from water that they could stand up in. Really just stood them up.”
“Wow this was an interesting letter ! … I’ve personally gone from totally for to totally against the health bill, because I don’t see it as a true reform and I resent all the sloganeering without real details. … As long as Congress listens to the insurance lobby, there will be NO improvement.
“The larger issue is whether it is even Constitutionally legal for the government to tell us that we HAVE to buy something and how much we have to spend on it. Doesn’t sound like Democracy to me. 8%-10% of income for people earning over $88,000? Are they crazed? As a single woman I was spending about $3,000 a year for Blue Cross Blue Shield until I went on Medicare about 5 years ago. It was about 1.5% of my gross salary. THERE IS NEVER A MENTION OF GROSS OR NET SALARIES AND NEVER A MENTION OF THE POSSIBILITY OF LARGE GROUPS TO JOIN FOR INSURANCE.
“I love your idea of taxing junk food. NO company should be too big to fail anymore. Everyone has had plenty of warning. If food companies don’t get the message to go healthy, they should somehow be penalized. … The public is mostly an idiot and will buy whatever is advertised well enough. It’s up to the food companies to take some responsibility for what they feed and sell us. … Our children become sugar addicts in infancy in the US and that’s where all the health problems start.”
Fort Lauderdale, Florida
“If you think Massachusetts is a mess, move your family to Utah and see how you like the low taxes, cheap home prices and freedom. Oh, did I fail to mention the worst school system in the U.S.? Or how about medical establishment light years behind the East Coast?
“Cheap shots at the extreme left and right are partially what’s gotten us into this mess. Vitriolic musings have replaced intelligence. Don’t like the system, then RUN for office and do something about it!
“Don’t want to? Then how about a compromise? Try focusing each newsletter on something in this country that is working. Show us the positive, e.g. the charter schools in south Los Angeles that are graduating students who go on to college or the Mayo clinic approach to healthcare.”
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With that excellent suggestion in mind, I now move on to some positive ideas.
There’s great progress being made in three large American industries, but to see this progress, you’ve got to look beyond the whining of the people who are being hurt by the changes.
Exhibit one is the newspaper industry, which has suffered from the migration of advertising from the printed page to the Internet.
This is a centuries-old industry, which we all know and understand, and for many people, the mere thought of losing their daily paper is traumatic. But that’s only because they can’t see a better alternative.
Supplying the vision for us, in last Thursday’s Wall Street Journal, was Eric Schmidt, chairman of Google, who wrote the following.
“It’s the year 2015. The compact device in my hand delivers me the world, one news story at a time. I flip through my favorite papers and magazines, the images as crisp as in print, without a maddening wait for each page to load.
“Even better, the device knows who I am, what I like, and what I have already read. So while I get all the news and comment, I also see stories tailored for my interests. I zip through a health story in the Wall Street Journal and a piece about Iraq from Egypt’s Al Gomhuria, translated automatically from Arabic to English. I tap my finger on the screen, telling the computer brains underneath it got this suggestion right.
“Some of these stories are part of a monthly subscription package. Some, where the free preview sucks me in, cost a few pennies billed to my account. Others are available at no charge, paid for by advertising. But these ads are not static pitches for products I’d never use. Like the news I am reading, the ads are tailored just for me. Advertisers are willing to shell out a lot of money for this targeting.”
To me, this sounds pretty wonderful. For decades I’ve flipped quickly through pages of ads that have no attraction for me at all, and I’m ready to move beyond it. I’m hungry for a device that knows what I like and knows what is wasted on me. The only thing missing from Mr. Schmidt’s vision is the ability to do the crossword and Sudoku … but I have faith they’ll come. Today, Amazon.com’s Kindle leads the pack of e-readers, but these are early days, and it will be exciting to watch the industry evolve.
Exhibit two is the automobile industry, which has been hit by the bursting of the credit bubble, a global recession and a dramatic shift in demand toward more fuel-efficient cars. The good old days are gone, and everyone in Michigan knows it.
But what few can see are the good days ahead, in which cars are far more fuel-efficient, not to mention smarter in every way. The obvious winners will include companies that make batteries, ultracapacitors, charging stations, control systems and the other new technologies in these cars. The less obvious winners will be everyone who benefits from cleaner air, cleaner water, and less dependence on oil imported from nations who are not our friends … and the upside from that can be huge!
Eventually, when all cars are equipped with GPS systems and sensors that monitor the local environment, it will be possible for all cars to drive themselves … so you can read your e-newspaper on the drive to work. But I’m not holding my breath for that; changing learned human behavior (and getting old cars off the road), might be the hardest part of achieving that future.
Exhibit three is the energy industry, characterized by coal-burning plants and a jerry-rigged electric grid that is just plain stupid. What’s coming are non-polluting power plants (solar, wind, water, nuclear and more) and a smart grid that will communicate with your appliances (including your car) so that more energy is used when the grid’s excess capacity is higher, smoothing out demand, stabilizing prices and reducing the need for excess capacity.
The winners will be all companies that produce and deliver power at lower cost, as well as the companies that make the appliances that consume less electricity (there’s one below). The losers will be the old oil companies that fail to embrace the future.
Skeptics, and they abound in every generation, say we won’t be able to change fast enough. Newspapers will disappear and we’ll be left with a mob-ruled Internet where no one is trusted. Oil supplies will dwindle, gasoline prices will soar and the economy will stumble, as the costs of moving goods and people outweigh our ability to pay for them. As our energy supply fails to keep up with demand, the electric grid will fail in the U.S. Meanwhile, the Chinese will keep polluting, the oceans will rise, the Maldives will disappear, and eventually, New York, Miami, Houston and Los Angeles will be underwater … not to mention Shanghai, London, Venice and New Orleans … and many more.
The truth, of course, is not written. Anything is possible, because the future depends partially on what we all do … embrace the future or try to hold on to the past. I’m betting on the future.
Today’s investment idea is all about lighting. No, it’s not those curly compact fluorescents that are filled with MERCURY and require you to evacuate the room if you break one. The main reason we’ve got those today is that the energy savings sounded good to the folks in Washington and the profits sounded good to the manufacturers.
No, my idea is about the NEXT stage of the lighting revolution, the era of Light Emitting Diodes (LEDs), which are basically silicon chips.
The leader in the industry is Cree (CREE), of Durham, North Carolina, the market leader in the industry. Though its products still cost substantially more than incandescent bulbs or compact fluorescents, prices are coming down fast as commercial success in niche markets like aviation and automotive enable more research and result in greater technological progress.
The stock has earned an appearance in Cabot Top Ten Report four times this year (while trading at 24, 27, 37 and 420, and last Wednesday, Cabot Market Letter editor Michael Cintolo had this to say about the stock.
“The kinds of stories that feature Cree tend to be pretty dry. On Tuesday, the company announced that it had squeezed 186 lumens per watt out of one of its high-power LEDs (light emitting diodes). It’s a little more dramatic when you know that a standard incandescent bulb yields about 13.8 lumens per watt and a standard fluorescent only hits a maximum 72 lumens. Watts cost money, and Cree is pushing LEDs into uncharted territory; LEDs could be just starting a huge growth wave as cities in the U.S. and elsewhere look to save on energy costs. We featured Cree here on November 4 when its stock was trading at 43. Now, after spending two weeks under resistance at 48, CREE has broken out to near 50. We like it. BUY.”
Yours in pursuit of wisdom and wealth,
Cabot Wealth Advisory
Editor’s Note: If you want more of Mike’s expert investing advice, I recommend a no-risk trial subscription to Cabot Market Letter, our flagship publication now embarking on its 40th year of publication (having handily negotiated the transition from paper to the Internet). Cabot Market Letter’s mission is to find the best growth stocks in the world, and it succeeds by following the time-tested Cabot system, looking for technical strength and great fundamentals. Cabot Market Letter is currently the only investment advisory ranked in the top five for market timing over the past six months, one-year and two-years, according to Timer Digest. We’re proud of that, especially the two-year figure, which encompassed the historic bear and bull markets. Click below to get started today!