Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EST, Thursday,
June 18, 2009. It's horrendous out there, my friends
tell me. This economy truly sucks. Their sales are way down. 70% of our economy
is consumer spending. Right now, the consumer isn't spending.
can see that in all those vacant retail stores. You can read about increasing
vacancies in my real estate syndications, with many failing to meet their
budgeted NOI (net operating income).
can see it in all the "Sale" signs gracing retailer windows. In
one place, "buy one suit, get two for free." Yesterday, Eddie Bauer
went Chapter 11.
this spells misery for the manufacturers who supply the retailers. The declining
consumer sentiment will seriously hurt the stockmarket. Time to look for shorts.
wrote "I suspect --- for
many reasons -- that the rally which began on March 9 has run its course.
It's time to be out, if you were ever in."
June 18 (Bloomberg)
-- European and emerging-market stocks fell for the fifth day, the longest
losing streak since January, as an unexpected drop in U.K. retail sales
and downgrades of U.S. banks by Standard & Poors fanned concern
the global economic recovery will falter.
Russell echoed my sentiments. He wrote:
June 17, 2009
-- I continue to grade the primary trend of the stock market and the economy
as bearish. In order for a counter-trend rally in a bear market to be sustained,
it requires steady or rising buying power plus short covering.
I just went
over my figures -- Lowry's Buying Power Index has been declining steadily
since May 8. At yesterday's market close, Lowry's Buying Power Index (demand)
was only 24 points higher than it was at the March 9 lows. Furthermore,
volume is drying up. This is extremely negative action. Whenever buying
power contracts during a rally in a bear market, the prevailing primary
bear market forces immediately take over. For that reason, unless the trend
of declining buying power soon halts and reverses, I believe that the March
9 lows will be attacked and violated.
I advise my subscribers to assume a highly defensive position in their portfolios.
If you are still loaded with stocks, cut back and get ready for the "hard
rain." What we're seeing now is just the early drizzle.
Below we see
a daily chart of the broad NYSE Index. Note how the volume has fallen off
since May. And over the last few days, the NYSE Index has fallen below its
Gold -- is in a corrective mode. I've drawn two trendlines. The longer one
is shallower than the shorter one. Primary bull movements tend to be slow
and dragging, while corrections against the primary bull trend tend to be
rapid and violent. Note that the latest corrective move has erased almost
half the rise that began in May within a period of only seven days.
your fingers for Iran: What's happening today
in Iran is exactly what happened in 1979 when the Shah fell. There are marches.
Some marchers get killed. The next day they hold "mourning" marches.
They're bigger. Then more crackdowns and more deaths. Then bigger marches
the following day. Cracks are appearing among Iran's leaders, as some encourage
the demonstrations and increasingly question the election.
for Iran. We may actually get a regime who hates us less. I worry about their
nukes I worry about Israel's response. I worry about horrible consequences
for yet another Mideast War.
spent time in Iran. The Iranian people are truly wonderful. They want nothing
more than we want -- to work hard, to live a nice lifestyle and to live in
peace. They do not want the insanity of the present regime.
adds major idiocy to technology. What could
be more friendly than a Start button atop your gear shifter? Get in
your car. Push the button and go. Brilliant. Many new Mercedes cars have this
wonderful new feature.
No more fumbling
for keys. Your Mercedes "proximity" key stays in your pocket or
purse and wirelessly tells your car you're kosher to drive it. There's only
one problem. It doesn't work well. And when it doesn't, there's absolutely
nothing you can do. You have to flatbed your new Mercedes to the nearest dealer,
where he will reprogram one of your Mercedes' many unreliable computers. And
hopefully, it will, once again, start.
I got the story
about unreliable Start buttons from our local New York City underground
parking garage. They related (with great mirth) many stories of their customers'
cars being flatbedded to Mercedes. I had asked about Mercedes problems because
my wife's Mercedes had just been flatbedded out of the garage to the dealership.
It had a busted front strut. Mercedes said my wife drove it over a vicious
pothole. When I pointed out that the car had been sitting in the parking lot
for the past week, they shrugged their shoulders, said "Shit happens"
and presented me with a $2,581 bill.
has been on the decline. It is the most unreliable luxury car being produced
today. Our Mercedes has done about 65,000 miles and has already had three
batteries, three sets of tires, one battery control module ($900), a new transmission,
a new cooling system, sundry hoses and God knows what else.
But the worst
aspect is when we go to trade it in on a new one (my wife still loves Mercedes),
we will get virtually nothing. This brings up the one lesson from all this
misery: If you must, buy a secondhand Mercedes. They're ultra-cheap. But check
the service record first.
be careful. I am not ancient nor frail. Nor
are my friends and readers. But many of them have recently fallen over, broken
something, hurt themselves and/or gotten strangely sick. I implore all my
readers -- You are no longer young. Please be careful. Take that extra moment
to be sure. Get sufficient rest. Take naps. Eat well in moderation. Get plenty
of exercise. And stay out of the woods. Lyme Disease sucks.
bubble is bursting. From Bloomberg yesterday:
June 17 (Bloomberg)
-- Rallies in commodity prices and mining-company shares stem from a bubble
of belief in Chinas economy that is likely to burst, according
to Albert Edwards, a strategist at Societe Generale.
we will look back on the Chinese economic miracle as the sickest joke yet
played on investors, Edwards wrote yesterday in a report. To support
his argument, he cited falling earnings at the countrys industrial
On reading Bloomberg,
my friend Chris Wyser-Pratte wrote me:
China is a
Potemkin Village. The water is foul, the air is foul, anything that swims
or flies in or breathes either is foul. There is virtually no unused arable
land, no clean water to irrigate it with if there were. The food products
are poisoned and so are the toys. There are empty office buildings at the
end of highways to nowhere because huge infrastructure development is unsustainable,
they have to import rice, and if you make a very large bad loan not to a
company controlled by a member of the Politburo, you disappear. Make bad
currency trades and you disappear. Get convicted of a commercial crime (easy
to do) and you get hanged. Protest in the square and you get shot.
When it implodes, it's going to be with a vengeance, and will take trillions
of Western investors' money with it.
+ Any ship can be a minesweeper. Once.
+ If the enemy
is in range, so are you. - Infantry Journal
+ It is generally
inadvisable to eject directly over the area you just bombed. - U.S. Air Force
+ Whoever said
the pen is mightier than the sword obviously never encountered automatic weapons.
- General MacArthur
+ Tracers work
both ways.- U.S. Army Ordnance
+ Never tell
the Platoon Sergeant you have nothing to do. - Unknown Marine Recruit
+ If you see
a bomb technician running, Keep up with him. - USAF Ammo Troop
+ The only time
you have too much fuel is when you're on fire.
+ When one engine
fails on a twin-engine airplane you always have enough power left to get you
to the scene of the crash.
+ The three
most famous last words in aviation are:
"Why is it doing that?"
"Where are we?"
And, "Oh Shit!"
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
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