Harry Newton's In Search of The Perfect Investment
Technology Investor. Auction Rate Securities. Auction Rate Preferreds.
8:30 AM EST, Thursday, August 14, 2008: There
are no places to hide from the contagion. The "logical" moves don't
work. For example, when stocks fall, money flocks to gold and silver. Wrong:
And, of course,
oil has fallen through the floor.
like nickel and zinc -- have also fallen heavily as a result of thinking that
a global economic slowdown and the continuing credit squeeze will hurt demand.
The reason that
these price moves are so dramatic and occur within such a short period of time
is that they're basically speculator driven. Hedge funds now speculate on anything
and everything. And they do it from minute to minute, from day to day. Add "everything
and anything" to the trading desks at Wall Street's investment bankers
and you have a desperation willing to throw billions at "bets. -- many
of which pay off spectacularly, if you can read the tea leaves and sharply limit
your losses if the market moves against you and watch it hawklike. This is a
game that most of us simply don't have the time, patience or stomach for. But
we're the victims of it, as we see our long-term "logical' ideas get crushed.
I doubt that this
situation will change. I suspect that with limited investment banking fees and
rich clients soured on their brokerage houses (because of the auction rate securities
freeze-up), the big Wall Street houses will spend more of their time gambling
(also called trading). And markets will become even more volatile.
Look at the charts.
No one can time when markets change direction. But you could. When it's going
up, stay long. The minute you get a one or two percent pullback, sell and go
short. Stay short until the market moves against you. Meantime, make sure you
get on CNBC and argue "logically" that Gold or Silver or Oil is dead
(or alive) for the following reasons. You can always find reasons. And
you can always find lazy CNBC reporters who need someone with a shtick and a
point of view on how to make their viewers their next bundle. CNBC is only interested
in the next bundle. That's why viewers watch and hence, advertisers buy ads.
It's getting super
hard to be a long term investor. In the old days, you could pick some "logical"
positions, stay with them and eye your monthly brokerage statements with satisfaction.
I don't have a
simple solution this morning. My wife's "solution" looks increasingly
enticing, "If we have it, let's spend it. That way we get something for
dollar rose a little yesterday after a steady decline that began the day I shipped
$1 million to Australia, attracted as I was by the 8% interest Westpac was paying.
The Australian dollar's subsequent fall has whipped out all my interest rate
gains, and then some. Maybe we'll spend the money on a bang-up vacation there?
Given a choice between brilliance and dumb luck, I'll take dumb luck any day.
True story: A friend put $180,000 into an oil exploration
company. It went bust. When the bankruptcy sale took place, oil was over $140
(it's now $114). He got back his entire $180,000 plus a 25% profit.
fantastic Prius taxi. I asked a Prius taxi yesterday for his mileage
in the city (New York). His answer -- an incredible 47 miles per gallon.
Our Mayor, Mike Bloomberg, has mandated that all New York taxis will be hybrids
by 2012. Meanwhile in Australia, a Cairns-based Toyota Prius taxi has recently
clocked up 550,000 kilometers, the highest kilometers recorded for an Australia
delivered Prius to date. According to Black and White taxis (the cars
owner), in its three years of service the Prius has cost half the fuel
and maintenance outlay compared to other conventionally-powered taxis in the
fleet. So far there are 32 Prius taxis in Cairns with another eight on order.
Each Prius averages around 200,000 km a year.
Backup. Backup. You can now buy a 500 gigabyte
external USB hard disk drive for under $100. There is no excuse any longer for
not backing up your work.
There was an old priest who got sick of all the people in his parish
confessing to adultery.
One Sunday, in
the pulpit, he said, "If I hear one more person confess to adultery, I'll
liked him, so they came up with a code word. Someone who had committed adultery
would say instead that they had 'fallen.'
This seemed to
satisfy the old priest and things went well until the priest passed away at
a ripe old age.
A few days after
the new priest arrived, he visited the mayor of the town and seemed very concerned.
have to do something about the sidewalks in town. When people come into the
confessional, they keep telling me they've fallen."
The mayor started
to laugh, realizing that no one had told the new priest about the code word.
But, before he could explain,
The priest shook
an accusing finger at him and shouted, "I don't know what you're laughing
about, because your wife has fallen three times this week!"
health coverage? No!
A doctor was leading a tour through the hospital. One of the woman
on the tour noticed that a man was masturbating in a hospital room with the
door wide open.
"Oh my God!
screamed the woman, "That disgraceful! Why is he doing that?"
The doctor that
was leading the tour explained, " I am very sorry...but this man has a
serious condition where the testicles rapidly fill with semen. If he doesn't
do that five times a day,they'll explode and he'll die within minutes."
in that case, I guess it's OK, " commented the woman.
In the very next
room they could see that a nurse was performing oral sex on a different male
patient. Again the woman screamed "Oh my God! How can that be justified?"
The doctor replied..."
same illness, better health plan."
hedge fund letter.
If you missed yesterday's column with the hedge
fund letter, you must read it. It's hysterical. Click
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.
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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
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