Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EST, Monday, August 24, 2009: I'm ultra-virtuous. I'm showing
my 93-year old father-in-law the Rockies. It was his lifelong wish. I've have
been collecting Great Thoughts on Travel, along with some great photos.
They'll wait until tomorrow.
market continues strong and the dollar weak. Oodles of publicity that the bankers
think the recession is over. And increasing evidence that investors are taking
some of their cash sitting forlorn in savings accounts and bank CDs and moving
their money into the stockmarket.
If you haven't
yet figured that the market works against little fish like you and I, two stories
out of Goldman Sachs will drive the point home. First, there's the story of
all those billions being made on high-frequency trading (which includes front-running)
and second there's the story of how Goldman's trading tips reward its biggest
clients (i.e. not you or me). You could also add in the weird and wonderful
Goldman (and others) allocate shares in IPOs to their best clients, which doesn't
obviously include you and I. (As I've mentioned several times, Goldman is losing
me money in all my accounts with them, while paying themselves billions in bonuses.)
Anyway, you should
read the two big Goldman stories today. The first is from the New York Times
Software Illuminates Wall St. Secret
Flying home to New Jersey from Chicago after the first two days at his new
job, Sergey Aleynikov was prepared for the usual inconveniences: a bumpy ride,
a late arrival.
He was not expecting
Special Agent Michael G. McSwain of the F.B.I.
At 9:20 p.m.
on July 3, Mr. McSwain arrested Mr. Aleynikov, 39, at Newark Liberty Airport,
accusing him of stealing software code from Goldman Sachs, his old employer.
At a bail hearing three days later, a federal prosecutor asked that Mr. Aleynikov
be held without bond because the code could be used to unfairly manipulate
For the full NYTimes
story, click here.
The second story
is from the Wall Street Journal and starts:
Trading Tips Reward Its Biggest Clients
Goldman Sachs Group Inc. research analyst Marc Irizarry's published rating
on mutual-fund manager Janus Capital Group Inc. was a lackluster "neutral"
in early April 2008. But at an internal meeting that month, the analyst told
dozens of Goldman's traders the stock was likely to head higher, company documents
The next day,
research-department employees at Goldman called about 50 favored clients of
the big securities firm with the same tip, including hedge-fund companies
Citadel Investment Group and SAC Capital Advisors, the documents indicate.
Readers of Mr. Irizarry's research didn't find out he was bullish until his
written report was issued six days later, after Janus shares had jumped 5.8%.
Goldman analysts offer stock tips at a gathering the firm calls a "trading
huddle." But few of the thousands of clients who receive Goldman's written
research reports ever hear about the recommendations.
At the meetings,
Goldman analysts identify stocks they think are likely to rise or fall due
to earnings announcements, the direction of the overall market or other short-term
developments. Some of their recommendations differ from ratings printed in
Goldman's widely circulated research reports. Some Goldman traders who make
bets with the firm's own money attend the meetings.
that Goldman's distribution of the trading ideas only to its own traders and
key clients hurts other customers who aren't given the opportunity to trade
on the information.
You should read
the entire article, which contains charts. It's here.
wife thinks I'm a genius. Every time her BlackBerry
refuses to send her email, I remove the battery, count to ten, insert it back
and wait an eternity while it starts up. In five minutes, it works again. I
don't know why it locks up. But all computers do and the BlackBerry is a computer.
I rue the day when I will have to unplug the battery in my car, count to ten
and plug it back in.
how goes healthcare "reform"? From an insightful reader:
Let me get this
care plan is being written by a committee whose head says he doesn't understand
it, passed by a Congress that hasn't read it, by Congressmen and women who
won't be subject to it, signed by a President who smokes, funded by a treasury
chief who did not pay his taxes, advised behind closed doors by an ex-Senator
(Daschle) who also didn't pay his taxes and is now paid by hospital, drug
and pharmaceutical companies, overseen by a surgeon general who is obese ...
and financed by a country that is broke.
What could possibly
very sound reasons
One Shabbat morning, a mother went into the bedroom to wake her son
and tell him it was time to get ready to go to the Shul, to which he replied:
you two good reasons," he said.
don't like me", and "two, I don't like them."
His mother replied:
YOU two good reasons why you MUST go to the Shul.
54 years old", and
This column is about my personal search for the perfect
investment. I don't give investment advice. For that you have to be registered
with regulatory authorities, which I am not. I am a reporter and an investor.
I make my daily column -- Monday through Friday -- freely available for three
reasons: Writing is good for sorting things out in my brain. Second, the column
is research for a book I'm writing called "In Search of the Perfect
Investment." Third, I encourage my readers to send me their ideas,
concerns and experiences. That way we can all learn together. My email address
is . You can't
click on my email address. You have to re-type it . This protects me from software
scanning the Internet for email addresses to spam. I have no role in choosing
the Google ads on this site. Thus I cannot endorse, though some look interesting.
If you click on a link, Google may send me money. Please note I'm not suggesting
you do. That money, if there is any, may help pay Michael's business school
tuition. Read more about Google AdSense, click
here and here.