Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
9:00 AM EST, Friday, February 27, 2009. The
Itch Factor. It's my new term for that itch "to put your money to
work." Heck, you're earning basically nothing on your cash. You see huge
yields of 20% and more on stocks and bonds. And you figure you just got to,
and can earn a few shekels more. Resist
the temptation, please.
yields are a measure of risk. Anything yielding more than a a U.S. Treasury
tells you ...
The dividend will be cut, and/or
The stock or bond will fall even further. (That's how it got to where it is.)
This world of
investing is the worst I've ever seen. And undoubtedly the worst in our lifetimes.
You cannot make money in today's stockmarket. You may fluke a winner.
But your losers will far outnumber your winners. You can not invest in real
estate because prices are still falling. Further, real estate with income
is likely to lose its tenants in coming months -- as more shops and factories
In this world
you have to focus your brain on something else. Set yourself a goal to learn
or improve a skill. Tennis works. Volunteering works. Vacationing works --
cruises, hotels and airlines are on sale. Even gas is cheap. Now is a good
time to catch up on all the books you always to read. Go back to school. There
are some great courses -- full and part time. My friends tell me there are
many free concerts.
The key is to
resist the temptation to be annoyed at how little your remaining cash is earning
and to resist the temptation to put your meager remaining money to work. Turn
off CNBC. Stop reading the Wall Street Journal. Don't even think about looking
at Barrons. Work hard at your job, if you still have one.
signs of the times:
Cramer's best (and only) recommendation last night was buy gold bullion, coins
or EGO (a gold miner). But he said, don't put all your money to work now because
gold is going down in price! Go figure.
My friend is a brilliant chartist. He sends me charts with lines, arrows and
chicken scratching. I'm not bright enough to figure what it all means. I ask
Looks like its still going down??
It wants to go up but the resistance is strong, so the breakout may not be
successful. The up move is for traders only as we are still in a bear market.
3. The FDIC
says the number of "Troubled Banks" it's watching rose 47% in the
fourth quarter, as one in three U.S. banks reported losses in the period.
Collectively, U.S. banks reported a $26 billion loss for the fourth quarter,
the first quarterly loss for the industry in 19 years. Federal Deposit Insurance
Corp. Chairman Sheila Bair called the current state of affairs one of the
"most difficult" crises in the agency's 75 years and warned Thursday
that bank failures would continue to rise and that there will be more challenges
ahead because the quality of bank assets continues to deteriorate.
The FDIC says it's tracking 252 "problem" banks, which it doesn't
name, up from 171 in the third quarter and just 76 in the fourth quarter of
2007, when the credit crisis was just erupting. Assets held by troubled banks
total $159 billion.
There were 25 bank failures in 2008 and 14 so far this year. Analysts from
RBC Capital estimate 1,000 banks could fail over the next few years. That
would wipe out one-sixth of the industry.The problems are stressing the FDIC
deposit insurance fund, which fell almost by half to $18.9 billion, with reserves
now at their lowest since 1993.
The FDIC isn't
revealing the names of the 252 problem banks. I guess if it did, that would
nail their coffins.
go near the Ultra-Short ETFs. These things are meant to move up
at twice the rate that whatever it's measuring is going down. That's the theory.
But it doesn't work that way. And I don't know why. And apparently no one
else does, either. Cramer has warned about them. I have warned about them.
Now an excellent money manager, Frank Williams, writes in his latest letter
to his investors:
by far was SRS, an exchange traded fund which is supposed to move twice
the inverse of the weighted average of a batch of real estate investment
companies: if they do down -- which is what I thought would happen -- say,
20%, it should go up 40%. The batch didn't go up 21.5%, but for some reason
our ETF went down 43%. I scratched my head and we took our lumps.
to gauge the recession. Reader Steve Sleeper emails:
They are changing how America liquidates their stuff. Prices are collapsing.
Ive been watching Boston / Cape Cod furniture. I saw a $10,000 dining
room set for $900.
Kindle 2. Anne gave my son Michael one as
a birthday present.
At $359 it's not cheap. Books are $9.99 each. You download them in minutes
via WiFi. You don't need a PC. The Kindle holds 1,500 books. That will keep
you gong on any beach.
likes it, as do all the press reviews I've read. I asked Michael for his top
1. The screen
really is amazing. You forget youre not reading paper.
2. The device itself (flipping pages, navigating, etc.) is very easy.
3. Buying books and getting content is excellent. The wireless is great as
is integration to your Amazon account
and presentation of DOCs, PDFs, JPGs, etc. works well. Frees these from your
5. It enables
you read more in more places -- except where it's dim. You need light.
His five dislikes:
1. It's too
heavy. You notice the weight when reading in bed. Its 10 ounces.
2. Conversion of your own files (PDF, DOC, etc) is expensive. 10 cents per
file is too much (you can do it for free but the service takes too long)
3. The New York
Times should not be $13.99 a month. The Wall Street Journal is $9.99 a month.
The Economist, unfortunately, isnt available.
4. Very little
customization possible. Simply easy features not available (like folders for
5. Taking notes and highlighting is essentially unusable. The keyboard and
mouse are poor, at best.
"I havent played with it much, but I was disappointed with its
weight. My wrists got tired from holding it up to read. Were also just
not used to seeing any type of new technology in black and white,
so the product doesnt feel as high tech as I thought it would. The mouse
is a square button, which can be a bit tricky to maneuver with. That being
said, I read part of a (business school) case on the Kindle and it fulfills
its promise - easy on the eyes and has a good highlighting and notes
I prefer paper magazines and books, though these days I read mostly on my
ThinkPad X61 laptop, which has black blacks and nice vibrant colors. The Kindle
is only in shades of gray. I do recognize the world is changing. The Kindle
is at Amazon.
on your money:
The Executive Safe-T Bed from Hollandia International has a heavy-duty
safe built right into the mattress so paranoid investors can sleep on their
cash. At $20,400, Safe-T doesnt come cheap, but CEO Avi Barseessat told
the New York Times in an interview last year that its not just the benefit
of knowing where your money is, you also get a good quality sleep.
Oh, and it has
a flat-screen TV built into the foot of the bed, so theoretically, you could
ride out the entire recession
twins are made:
best lines from Hollywood Squares:
Q. If your are
going to make a parachute jump, at least how high should you be?
A. Charley Weaver: Three days of steady drinking should do it.
Q You've been
having trouble going to sleep. Are you probably a man or a woman?
A. Don Knotts: That's what's been keeping me awake.
Q. Which of
your five senses tends to diminish as you get older?
A. Charley Weaver: My sense of decency.
Q. In Hawaiian,
does it take more than three words to say 'I Love You'?
A. Vincent Price: No, you can say it with a pineapple and a twenty.
Q. It is considered
in bad taste to discuss two subjects at nudist camps. One is politics, what
is the other?
A. Paul Lynde: Tape measures.
Q. Back in the
old days, when Great Grandpa put horseradish on his head, what was he trying
A. George Gobel: Get it in his mouth.
Q. Who stays
pregnant for a longer period of time, your wife or your elephant?
A. Paul Lynde: Who told you about my elephant?
Q. Jackie Gleason
recently revealed that he firmly believes in them and has actually seen them
on at least two occasions. What are they?
A. Charley Weaver: His feet.
to Ann Landers, what are the two things you should never do in bed?
A. Paul Lynde: Point and laugh.
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,
here and here.