Sensible investors have written off the online media sector - which is why it offers good opportunities now, especially in private equity.
It 's the great dilemma of the deflation-era investor: what to do with the money. Prices for prime real estate in London and New York are down more than 10% and rental income is falling even faster: the latest New York Times survey showed declines up to 20%.
The stock market is directionless: a double-dip recession is still a likelihood, and company valuations still assume a return to earnings growth.
Corporate debt is increasingly risky, as even blue-chips flirt with bankruptcy.
Money market returns in the US and Europe are at their lowest rate in decades.
So where to invest? Here are some ideas, based on a rough-and-ready technique: look at technology trends and tease out the long-term implications. The market usually focuses on the sectors in the path of change, whereas the real beneficiaries are often elsewhere.
The classic example: the invention of the car created unexpected opportunities in out-of-town shopping malls. There are modern equivalents: flat-screen technology, the pervasive internet, cheap computer graphics ...
Take outdoor advertising. LCD manufacturing is increasingly efficient.
Within a decade, it will be cost-effective to replace billboards with moving displays - more attractive to advertisers. In Steven Spielberg's Minority Report, Tom Cruise runs a gauntlet of personalised video pitches; that is less science fiction than an extrapolation of the present. Already, high-traffic locations such as Times Square are plastered with dynamic advertising.
The opportunities: outdoor display businesses like Viacom Outdoor and JC Decaux; public transport systems, extracting greater value out of captive commuter audiences; and some well-sited real estate.
Next: pretty places. Discount airlines such as JetBlue and easyJet have put smaller destinations within easy reach of big cities. And the spread of high-speed internet access makes it ever easier to tap corporate information systems and communicate with the office. If location no longer matters, why not spend the winter in Marrakech?
My picks: Essaouira, in Morocco, if they can get an airport built; the resorts outside Tunis; Dubrovnik on the Adriatic; the Buda hills of Budapest; and Havana. Just three hours' flight from New York, Havana beats Miami Beach hands down for allure and excitement, Castro is getting old, and you can buy an Art Deco apartment by the promenade for dollars 20,000.
Another real estate thought: old skyscrapers. Their value as office space fell in the late 20th century because low ceilings offered insufficient wiring space, among other things.
Wi-Fi high-speed wireless connections will give them new life. Local wireless networks can carry both data and phone traffic. Time to rip out the false ceilings and raise the rent.
Online media. Since 1999, sensible investors have written off the sector - which is why it is such a good investment now. Valuations are sensible.
As broadband access spreads, consumption of online media is growing. For a range of categories, from travel to books, the internet is now the primary means of purchase or research. Online advertising is booming: web search alone will generate revenues of dollars 1.4 billion in 2002, up from dollars 400 million in 2000.
And the costs are way down. No longer is it necessary to hire an army in the anticipation of hypergrowth and a stock market flotation. The software is vastly cheaper, as are marketing costs.
The only problem is that there are few public companies standing in which to invest. AOL TimeWarner is too much of a mess; Yahoo is a pure-play online media investment, but its premium services strategy is unproven; and Google will be extravagantly priced when it comes to market. Better opportunities are in private equity, buying under-valued assets such as Slashdot, or in online media startups.
Telecoms. One short recommendation: incumbent telecom companies. Their stock prices are corrected, and they seem reasonably priced on a price-earnings basis. But the market does not sufficiently appreciate that competition is about to intrude on the last bastion of the telecom giants, the local phone business.
I've just installed a box by Vonage that plugs into my cable internet connection and provides normal phone service - and unlimited national and local calls in the US - for dollars 39.99 per month. Voice over the internet is now good enough.
With high-speed wireless networks - often free to access - springing up across major US cities, I wouldn't be surprised if regional phone companies such as Verizon go out of business over the next decade.
A final suggestion: cash. Preservation of capital, rather than reliably high returns, should be the goal. Were you an investor in Japan over the past decade, better to have stayed in cash. After all, if you buy into the prediction of deflation, the assets will only get cheaper.