Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EDT, Wednesday, September 2, 2009: This is the worst month in
the stockmarket. No one knows why. But expect the worst. It started yuchy:
In he context
of a longer view, it doesn't look out of whack.
And in the context
of an even longer view (a monthly chart), it's barely a blip.
I don't know why
STEC fell $4 yesterday. Here's the deal: Its one-year high is $41.75. It closed
last night at $36.53. If it falls to $35.49, we're out. That price is 15% off
the high. Remember our inviolate 15% Stop Loss Rule.
the Administration keep hyping the economy?
Should we run for the hills?. My learned friend Frank Derfler emails me:
It seems evident
to me that Obama and company are going to "talk up" the economy
over the next months. They will spin, spin, spin, any marginally positive
news they can find in order to get healthcare and cap-n-trade passed.
They will create
a "bubble" for their own benefit.
The second half
of the "W" recovery will be long and painful.
The piece below
on China is from the ATCA Group... a private and balanced think tank. They
don't mention that a weak & inflated dollar will help Obama pay back the
monetized debt. He and his friends have all the motive in the world to royally
screw the dollar.
Beware the ride
to our computing systems, China's Shanghai Composite Index has closed down
more than 20% on August 31 from August 4 (years high), the common
definition of a bear market.
It has been the mi2g Intelligence Unit and ATCA Research and Analysis Wings
joint view that the unprecedented $1.2 Trillion lending by Chinas
banks in the first half of this year is unsustainable and it has been lengthening
the colossal asset bubble in property and stocks in China like in the case
of Japan in the late 1980s. Its ramifications are felt in the global commodity
markets from oil to copper to gold. Further, it has acted as a false
prop for the global financial markets by giving the impression of a global
recovery, based on high commodities demand, which in reality is a speculation
bubble based on leverage caused by Chinas easy money policies that
are now coming to an end. No wonder the state owned China enterprises are
preparing the ground for default on commodity derivatives.
What are the consequences of the China markets decline on global financial
to be really depressed? Here's Richard Russell
of Dow Theory Letters. Please note that he's been a skeptic on the market's
huge rise since March. That could be for two reasons. First, he missed calling
it. Second, he really believes this stuff. Anyway, this is not untypical of
the gloom and doom out.
I believe we've
been in a bear market rally since the March lows. When this rally ends, the
decline in the market should be unexpected and precipitous. Stock prices will
melt rapidly and bids will dry up by the hour. All the bearish force of a
primary bear trend that have been "bottled up" will be released.
There's no accurate way of telling when a bear market rally is topping out.
Much depends on the analyst's instincts and experience.
There have been
too many non-confirmations recently for my taste. It's come to the point where
these non-confirmations are being ignored. My own instinct is that we're being
lulled to sleep by this market. I take this series of non-confirmations seriously.
For my own part, I've moved my own account into what I feel is a very conservative
and defensive position. I suggest that my subscribers do the same.
I didn't like yesterday's or today's action, both of which had me wondering
whether this bear market rally is in the process of breaking up. I note that
Bernanke is taking all kinds of bows for what has happened so far (the rally,
of course). If the rally is topping out, my advice to Bernanke is to quit
now while you're way ahead. You should never have accepted another four years
at the Fed. In coming years, a professorship at Princeton is going to feel
a lot more comfortable than being Chairman of the Federal Reserve.
I don't know
whether people realize the significance of a potential top-out of the market
here. If this bear market rally breaks down, it will mean that the Bernanke-Geithner-Obama
efforts to halt the bear market and bring back asset inflation will have failed
and that deflation remains in the dominant position. In that case, bonds should
hold up and gold should stall and possibly break down from its symmetrical
triangle. The Bernanke operation to halt deflation has put the US in an incredible
debt position, one that I can't figure out how we're ever going to get out
of. We won't renege on our debt, we can't possibly pay if off, but we can
resort to "the American way" -- inflate it away. In the meantime,
Bernanke has literally guaranteed that the Fed won't raise interest rates
and his "quantitative easing" (printing Federal Reserve Notes) goes
As long as the
stock market was rising, the US public felt that everything was "all
right" -- a rising market "softens" a lot of sins and anxiety.
Bernanke's nightly prayer: "Please Lord, bring back rising asset prices
-- let it all move higher except for gold."
ask. "Can't you do a little better than
that? Times is tough." And bingo, the price drops. Everyone from our cable
company to the local hairdresser has dropped their price in response to this
whine. If this doesn't work instantly, start mentioning competitors. That'll
clinch it. Your cable company is mortally afraid of Verizon's FiOS or Comcast,
latest brilliant idea: Whoever invented the
flip top on toothpaste should be shot. Our Sunday plane trip caused the top
to pop and to ooze gooey gunky toothpaste everywhere.
My brilliant idea:
Crazy glue the flip top. No more spills. I have not patented this idea. You
can steal it.
all marketing. Part 73: We are a nation obsessed
with cupholders. Or at least I am. Now for my greatest "find." Drumroll,
please. Spied in Boulder, Colorado, a stroller with two cupholders:
U.S. Open Tennis Schedule: TV coverage of the
US Open is around the clock -- presently on ESPN2, ESPN2HD and the Tennis Channel,
and then later on CBS. The full schedule is on
USOpen.org. Here's today:
Watch it on HD.
It's better than being there. And much more fun than watching stock prices.
now here's the deal. When are you a president, you can't do anything. People
always looking for you to make some kind of trouble for you. Did you see the
picture of Barack Obama out bicycling with the kids? He's not wearing a helmet.
And people are all over him now. And I, well, I hope this guy has got some pretty
good health insurance." --David Letterman
the President is the most prominent Democrat to go without protection since
John Edwards." --David Letterman
Sarah Palin announced
that she will make her first trip to Asia in September, where she'll be giving
a speech in Hong Kong. Palin says she's thrilled because Hong Kong and Asia
are two of her favorite places." --Jimmy Fallon
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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