Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
9:00 AM EST, Monday, February 23, 2009. "Trust.
We had it. He stole it. ..." So reads the cover of the latest Portfolio.
has it half right. The loss of trust is pervasive. Start with plummeting bank
shares. Then there are the banks who no longer trust their customers (and
won't lend to them). Move on to institutions who are hoarding their monies,
afraid to invest. Move on to you and I who no longer trust anyone on Wall
Street and certainly not our government regulators, whose salaries we pay.
All of us investors are deer in the headlights, frozen -- awaiting the next
meltdown, the next "Madoff." Frozen is not good for the economy.
Madoff is not
the biggest fraud. Auction rate preferreds securities (ARPS) are. About $360
billion of them "froze" a year ago. Some have been redeemed.
But $176 billion of them (more than three times Madoff) are still frozen.
These things were sold to investors as "cash equivalents." Investors
can't get to their money. Mostly, they're being paid less than 1% a year.
There is widespread
belief that the big Wall Street firms who peddled them and participated in
the ARPS auctions knew the securities were toxic. Several of the states' attorneys-general
have already uncovered internal emails showing the auctions were likely to
fail. We've seen Wall Street execs bailing out of the ARPS, while simultaneously
peddling the toxic ARPS securities to an unsuspecting public. Wall Street
has been hit with fines and orders to redeem ARPS. But things are likely to
get far more messy -- further destroying investor confidence and trust in
I was stuck
in ARPS also. But Deutsche Bank, who sold them to me, bailed me out of them
at par. Thank you. Meantime, I've been writing a web site called
I'm the central place on the Internet for news and
views on ARPS. I also receive emails from investors still stuck in ARPS. Sample:
I just wanted to let you know that I appreciate your efforts. I look at
your website often to check for news. I've got $900,000.00 stolen from me
by Charles Schwab.
my information to a long list of government officials, some are very helpful,
some seem lost. I've spoken to the NY Atty generals office several times
and while they seem to be working on it they haven't made much progress.
I'm now filing
for mediation with FINRA, I'm not sure how many people have found this helpful
-- but it looks like I'm about to find out first hand.
to stonewall me for quite some time after I learned that they had put me
into an ARS -- I only found out after a tried to liquidate a small portion
of my holdings in mid 2008 that my money was frozen. -- Raymond S. Wach.
Many ARPS investors
are -- amazingly -- just waking up to their predicament. They are moving into
heavy legal and political action, seeking each and every way to get their
money out. Many say they're unearthing serious naughtinesses. Here's an email
from a reader of my ARPS site, who doesn't want his name published (I know
who he is). Until we see his evidence, we have to treat his allegations against
Oppenheimer with a grain of salt.
What's happening with Oppenheimer is unacceptable. I have good reason to
believe from speaking to regulators and my personal experience that Openheimer
brokers and execs are lying vociferously. I also believe they may be submitting
fabricated emails and documents purportedly showing they warned clients.
Numerous Oppenheimer clients have told me of receiving calls from regulators
in different states saying, "Oppenheimer told us they warned you about
auction rates" when no such warning was ever issued. One problem is
that auction rate investors are generally nice people, who would never embellish
anything, and the lawyers for the downstreams, at least Opco, are fighting
like crazy lying bastards.
clients going to arbitration may be receiving surprises in the form of falsified
documents and emails and recollections of phone calls that are utter fiction.
Two more things
we've learned most recently about Madoff:
1. He got to
Hollywood money through Hollywood business managers. They gave him the money.
Not the actors, directors, producers -- many of whom hadn't heard of the word
Madoff. For more , read the Portfolio article, Madoff's
2. Madoff did
not buy any of the blue-chip stocks and Treasury bills listed on their account
statements over the last 13 years. For more, read the New York Times' Madoff
never made supposed investments.
reading in pictures:
Birthday to Ted and Claire:
Friday was my daughter's and her husband Ted's
birthday. Ted is a buy-side analyst and a damn good one.
him Happy Birthday.
"It certainly was. People will talk about the (stockmarket) bottom
being on our birthday!"
country's stockmarket did worst?
If you had put $100 into the stocks in the leading market
indexes of major countries at the end of 2007, where would you be? In
the United States, you would now have about $53. That fact coupled
with the reality that more Americans than ever are depending on the stock
market to pay for their retirement has severely depressed sentiment
merits one of the top grades in this world. Among major markets, only
Japan, at $59, has done better. In Britain, France, Spain and Germany,
the figure would be around $45. In Italy, it would be $37. About a quarter
of the money would still be there in countries like Ireland, Greece
and Poland. Remember the BRIC countries, where growth possibilities
seemed limitless not long ago? The stars there are Brazil and China,
where about $46 or $47 remains. In India, the figure is $35, and in
Russia it is $23. At least they have all done a lot better than Iceland,
where you would have just $3 left of your hypothetical $100. -- New
York Times, 2/19/2009
and Doom's big benefit:
University of Florida shark researcher George Burgess says
the number of reported shark attacks worldwide dipped to a five year
low last year. In 2008, 59 attacks by sharks were reported compared
to 71 a year earlier.
said the sagging economy may have played a role. "... contributing
to that reduction may have been the reticence of some people to take
holidays and go to the beach for economic reasons," Burgess said.
"We noticed similar declines during the recession that followed
the events of 2001."
Prices to Fall further.
Double Trouble By ALAN ABELSON, Barrons, excerpted:
charts provide eloquent and graphic descriptions of why housing still
isn't able to get out of its own way and why there's still plenty of
room on the downside for prices. The charts came from ISI Group. At
a glance, they both relate the same message: House prices are still
too high, and not by a modest amount, either. Nor, ISI reckons, will
reducing the number of foreclosures, desirable as that may be, halt
the erosion in prices. While fewer foreclosures are likely to slow the
rate of decline, they won't reverse the downtrend or determine "where
homes prices end up."
the sharp contraction in residential construction of new houses is obviously
a plus, the homebuilders, at last report, were still building appreciably
more houses than they were selling, and inventories of unsold houses
are huge. But
given the remorseless rise in unemployment, which, if anything, is destined
to accelerate in the months ahead, the simple fact that so many people
are too strapped to afford to buy a home is the most formidable barrier
to even a tepid housing recovery.
prices have another 20% or so to fall before hitting bottom and, at
the earliest, we're talking sometime next year. And, possibly more important,
a meaningful brightening of the current, profoundly bleak jobs picture,
isn't in the cards for certainly as long, if not longer. What
we see, then, for housing to achieve a decent recovery, is a long road
ahead with more than a few bumps -- not the least of the reasons why
we're not exactly ecstatic about the outlook for either the economy
or the stock market.
Los Angeles developer is asking $85 million, one of the highest prices
in the U.S., for a 48,000-square-foot mansion in the city's Bel-Air neighborhood.
The seller is Mohamed Hadid, who says he paid roughly $7.5 million for
the land about six years ago and spent another $59 million to build the
house for his own use. I've
never seen a house this big. I do like the trees. I'm guessing they're
pencil pines. My wife says they're "Italian funeral trees."
She doesn't like them. We're not getting any.
a music room, a library, a ballroom seating over 200 people, a Turkish
hammam and a gym. e 2.2-acre property also features a pool, a tennis
court, a 20-car motor court and seven fountains. I'm guessing this is
the media room. How do you concentrate on the movie? Notice there are
no plastic protector coverings on the couches. Susan, my wife. would
of wisdom to begin the week.
+ In my many years I have come to a conclusion that one useless
man is a shame, two is a law firm and three or more is a congress. -- John
+ I contend
that for a nation to try to tax itself into prosperity is like a man standing
in a bucket and trying to lift himself up by the handle. -- Winston Churchill
+ A government
which robs Peter to pay Paul can always depend on the support of Paul. --
George Bernard Shaw
view of the economy could be summed up in a few short phrases: If it moves,
tax it. If it keeps moving, regulate it. And, if it stops moving, subsidize
it. -- Ronald Reagan (1986)
+ The only difference
between a tax man and a taxidermist is that the taxidermist leaves the skin.
-- Mark Twain
+ A government
big enough to give you everything you want, is strong enough to take everything
you have. -- Thomas Jefferson
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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