Harry Newton's In Search of The Perfect Investment
Technology Investor. Auction Rate Securities. Auction Rate Preferreds.
9:00 AM EST, Tuesday, August 12, 2008: The
speed of change. My best hedgie says he's never seen such volatility. Me neither.
A few weeks ago, we had a commodities boom. A few weeks ago, the dollar was
plummeting. A few weeks ago financials were in the toilet. A few weeks ago,
the stock market was in a heavy bear market. A few weeks ago, oil was climbing
everything is reversed. Now even oil is in a bear market. It has fallen over
favorite stockmarket astrologer called me with bated breath last night. His
indicators are showing we're now in a bull market. His indicators include stocks
that are breaking previous tops, stocks that are moving above their 50 and 200-day
moving and stocks achieving new highs versus new lows.
thing is that the last time he made a call -- back in November last year --
he was right.
and there's one indicator he forgot to mention. I was seriously depressed yesterday,
the worst in months. I felt the only thing I'd accomplished was to be crowned
The King of the Stockmarket Timing Idiots.
now is the time to load up the boat on equities? Frankly, I have no idea.
are two lessons:
Things move faster than ever. Hence you need tighter stops. I once had an
inviolate 15% stop loss rule. I now think 8% is more in order.
You can be right, but still wrong. I cannot believe the 25%+ bounce-backs
in financial stocks in recent days. But as John Maynard Keynes once wisely said,
"The market can stay irrational longer than you can stay solvent."
dumbness of chasing yield: A few weeks back,
I sent $1 million to Australia to get the 8% they were paying at a big, strong
local bank called Westpac. Since then, the American dollar has soared and the
Australian dollar has fallen -- by about 8%. Hence my 8% yield has evaporated.
The only "good" news is that I resisted recommending any of my readers
to Westpac. So you all saved the 8% Australian dollar drop which I didn't. At
some point the Australian dollar will be worth dropping into. But not now. Dumb
commodities boom is over. For
From Bloomberg this morning:
Lead Commodities Into Bear Market on Growth Risk
Aug. 12 (Bloomberg)
-- Gold, platinum and silver plunged to their lowest in more than seven months,
leading commodities into a deeper bear market, on concern that a spreading
global economic slowdown will reduce demand for raw materials.
also slumped as crude-oil prices fell and the dollar gained, reducing their
appeal as an inflation hedge and alternative investment. Gold has tumbled
22 percent from its record $1,032.70 on March 17. Platinum and silver are
down 35 percent and 33 percent from their peaks.
as measured by the Standard & Poor's GSCI index, have lost 22 percent
from a record July 3, descending into a bear market. Crude-oil prices are
down 23 percent from a peak of $147.27 a barrel July 11, on signs a U.S. economic
slump will extend into 2009. Corn, wheat and soybeans are in bear markets
after sliding from highs set this year.
seen heavy liquidation in gold driven by a combination of the dollar strength
and oil prices,'' Suki Cooper, an analyst at Barclays Capital in London, said
by phone. "We're reaching a turning point in prices.''
prices may erode profits at BHP Billiton Ltd., the world's largest mining
company, and Exxon Mobil Corp., the biggest publicly listed oil company. Global
energy and raw-materials stocks, last year's best-performing industries, fell
into bear markets this month.
The GSCI index
surged 41 percent in the first half as equity markets and a declining dollar
prompted a "buying orgy'' by investors, Paul Touradji, founder of the
$3.5 billion hedge fund Touradji Capital Management, said in March.
Gold fell as
much as 2.6 percent to $802.34 an ounce in London and traded at $812.18 as
of 11:24 a.m. local time. Platinum lost as much as 3.7 percent and silver
4.5 percent. The dollar traded close to a 5 1/2-month high against the euro
today and near a seven-month high against the yen.
The U.S. economy,
the world's largest, will grow at an average 0.7 percent annual pace from
July through December, half the gain in the first six months of the year,
according to the median forecast of 50 economists surveyed by Bloomberg News
from Aug. 1 to Aug. 8.
which has grown every quarter since 1992, is projected to stall in the last
three months of the year as the impact of tax rebates fades, wages fail to
keep up with inflation and property values fall, it showed.
still very bearish on the U.S. economy,'' said Philip Newman, an analyst at
London-based metals researcher GFMS Ltd. Slower economic growth in the U.S.
and Europe will trim industrial demand for metals, he said.
Copper for delivery
in three months fell as much as 1.2 percent to $7,275 a ton on the London
Metal Exchange, a six-month low. Nickel lost 1.9 percent to $17,650 a ton.
boom is fading, says Michael Aronstein, chief investment strategist at Oscar
Gruss & Son Inc. in New York.
it's over in terms of the investment hypothesis, at least for the next several
years,'' Aronstein said in an interview Aug. 5. ``I think the demand destruction,
both in the developed world and the developing world, is going to be quite
a bit greater than people assume.''
Rogers, 65, who in April 2006 correctly predicted oil would reach $100 and
gold $1,000, differs. The fundamentals for commodities are "astoundingly''
good and the bull market ``has a long way to go,'' he said Aug. 6.
of gold, the Australian and New Zealand dollars may have spurred today's price
drop in precious metals, said Toshihiko Sakai, head of trading in foreign-exchange
and financial products at Mitsubishi UFJ Trust & Banking Corp.
funds are probably unwinding long positions in commodities and high-yielding
currencies, and short positions in low-yielding currencies,'' said Sakai in
Tokyo. "These position adjustments are likely to continue for now.''
Gold fell $20
an ounce in less than an hour today as the Australian dollar dropped 0.9 percent
against the U.S. dollar, Bloomberg data shows.
been surprised by the strength of the U.S. dollar rally over the past month,''
Goldman Sachs JBWere Pty analysts wrote in a report. "Nevertheless, we
believe the threat of rising inflation and the climate of general economic
uncertainty remains constructive for gold in the medium term.''
you thought we were having a recession. Pity
you (and I) didn't ride this one. (But please don't start now.)
Guess what they
They make jeans selling between $200 and $350. (I don't make this up.)
Recently my wife
and daughter told me my cheap jeans were "ugly" and "not fashionable."
I rushed out and bought a pair of $25 on-sale Gap jeans two sizes too small.
That did the trick. I'm now fashionable, though I can't breath.
is actually profitable. It just announced a record-breaking quarter and is expanding
faster than Wall Street anticipated. The company's year-over-year earnings have
increased 86% and the company is projecting a five-year growth rate of
20%. True Religion shares are heavily shorted -- 47.6% of the public
float, according to Yahoo Finance. There is huge insider selling, however. The
CEO recently offloaded $67 million worth of stock -- but ironically at $21,
much lower than last night's close of $30.89. (I guess he knows jeans,
Hall of ARPS Shame. The most popular feature
on my AuctionRatePreferreds.com site is Harry's Hall of ARPS Shame. It
Oppenheimer (State of Georgia)
Bank of America
Jerry Brown, California Attorney General
Bill MCollum, Florida Attorney General
Wall Street Journal described the auction rate freeze-up as ""one
of the messiest Wall Street scandals in years." UBS, Merrill,
Citigroup and now Morgan Stanley are spending billions to buy the ARPS they
sold their clients. Yesterday's news from MarketWatch:
Stanley said late Monday it plans to buy back about $4.5 billion in auction-rate
securities. Earlier in the day, Morgan Stanley, J.P. Morgan Chase &
Co. and Wachovia Corp. were alerted by New York Attorney General
Andrew Cuomo that he would probe the firms' role in the $330 billion auction-rate
securities market, which collapsed in February. Morgan Stanley said it will
buy back the securities "held by all individuals, all charities and those
small to medium-sized businesses with accounts of $10 million or less"
at par value if they were purchased before Feb. 13. The offer is open until
incredible Olympics. The swimming. The gymnastics.
If you missed any of it, you can watch it on NBCOlympics.com.
You'll have to install a plug-in called Microsoft Silverlight. It's harmless.
good Hassidic family is most concerned that their 30 year old son is unmarried.
So, they call
a marriage broker and ask him to find their son a good wife.
The broker comes
over to their house and spends a long time asking questions of the son and his
parents as to what they want in a wife/daughter-in-law. They give him a long
shopping list of requirements.
The marriage broker
takes a long time looking and finally asks to visit the family again. He then
tells them of a wonderful woman he has found. He says she's just the right age
for the son, she keeps a Glatt Kosher home, she regularly attends synagogue
and knows the prayers by heart...she is a wonderful cook, she loves children
and wants a large family. And, to crown it all off, she's gorgeous.
all this, the family is very impressed and begins to get excited about the prospects
of a wedding in the near future.
But the son pauses
and asks inappropriately: 'Is she also good in bed?'
The marriage broker
answers, 'Some say yes... Some say no.'
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.