Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
9:00 AM EST, Wednesday, February 4, 2009. After
a long hiatus, the frenzied broker calls have started up. "Trust me."
"This is it." "Go with me." "Punch it up on your
screen. " "I'll buy you a thousand for $50." And the excitement?
does stem cell stuff and is helping a handful of people it's been tested on.
Epiq Systems (EPIQ) sells bankruptcy software to lawyers. What could be better
than these two?
tennis partner wants five stocks. My best. I tell him I don't like anything.
Prices are still too high. Check the P/Es, I say. I want numbers in the single
digits, and not financials. And if the market is going at present, it's just
another bear rally (or whatever they're called).
amazing thing to my tiny brain is just how lousy "professional"
money managers have been doing. Many years ago, a broker I respect did a long
study to find the five best money managers. And years ago I gave four of them
some money. They did OK. When I made my call to get out of the market in November
2007, I got out of them as well. Yesterday I wondered: How did these "professional"
money managers do in 2008? In a word -- miserably. They all "beat"
the indexes on the wrong side. Check out their numbers:
happened in the 1930s? A few days ago the
New York Times did a review on a fascinating new book.
FDRs Inner Circle and the Hundred Days That Created Modern America
By Adam Cohen
has fascinating information about the Great Depression:
Back on Its Feet, the 1933 Version
By JOHN STEELE GORDON
By the time Franklin D. Roosevelt was inaugurated as president on March
4, 1933, banks were closed in 38 states, and withdrawals were limited in
the other 10. The stock exchange had announced that it wouldnt open
that morning and wouldnt say when it would reopen.
was, officially, over 25 percent and actually far higher as many of those
counted as employed were working only part time. Farms were being foreclosed
at the rate of 20,000 a month. Hundreds of thousands were living in Hoovervilles
and eating at soup kitchens or scavenging food from garbage cans. Farmers
could not find a market for their crops. Many thought the end of the American
experiment was near. Adam Cohens new book, Nothing to Fear,
shows why it was not.
and its political and economic assumptions would change profoundly in the
first few months of the new administration. From March 4 to June 16, 1933,
the new president signed no fewer than 14 major acts of legislation, an
astonishing pace of more than one a week. By the end of the so-called 100
days, the banking and financial system had been remade. Sweeping federal
relief for homeowners, farmers and the unemployed was in place. The country
was off the gold standard. Though the Great Depression was hardly over (it
would take World War II to finally end it), recovery had at least begun.
When the stock
exchange reopened on March 15, the mood of the country had changed so much
that the Dow Jones industrial average shot up 15 percent that day on heavy
period, Roosevelt functioned in a way similar to a dictator in the ancient
sense of the Constitution of the Roman Republic: an official given total
power for a brief time to handle a grave national emergency.
Banking Relief Act, for instance, which hadnt even been written on
March 4, was sent to Congress on March 9. The chairman of the House banking
committee, who had the only copy, with penciled additions, walked down the
aisle waving it over his head and shouting, Heres the bill;
lets pass it.
House leader admitted to not having read the bill but said Congress needed
to give the President what he demands and says is necessary to meet
the situation. The bill passed 40 minutes later by voice vote and
passed the Senate later that day, 73 to 7. Roosevelt signed it into law
nine hours after he had sent it to the Hill.
a member of the editorial board of The New York Times, brings this brief
but extraordinary period in American history to vivid life. An excellent
writer and storyteller, he does so by concentrating not on its central figure,
Roosevelt, but on a handful of his aides. Household names in their day,
they are largely forgotten now except by historians. As Mr. Cohen makes
clear, they should not be. We live in the world they did so much to create.
Perkins, Rexford Tugwell, Lewis Douglas, Henry Wallace, Raymond Moley, William
Woodin, Harry Hopkins and others, the New Deal could not have come into
being so quickly or changed the country so profoundly. The mini-biographies
that Mr. Cohen gives the reader do much both to illuminate the actors in
the story he tells and to show the world in which they developed their ideas
about how to make it a better one. They are sure-footed and convincing.
Far less so,
however, is his portrait of Herbert Hoover. Hoover, to be sure, was the
wrong man at the wrong time. Dour, diffident and beaten down by four years
of ever-growing economic disaster, he was the opposite of the ebullient,
charming and naturally optimistic Roosevelt. Many early historians of the
New Deal presented Hoover as uncaring and devoted to laissez-faire principles
and balanced budgets to set the economy right.
a handy foil to set off the glories of the New Deal. But as more modern
scholarship has shown see David M. Kennedys Pulitzer-winning
history of the era, Freedom From Fear (Oxford University Press,
1999) it is at best a caricature. Mr. Cohen accepts this earlier
partisan view of Hoover.
that the Hoover administration ordered the destruction of the main encampment
of the Bonus Marchers, who had come to Washington to demand early payment
of a veterans bonus. In fact, it was Gen. Douglas MacArthur, then
the Army chief of staff, who attacked in flagrant violation of Hoovers
direct orders. He says that Hoover did little to help struggling homeowners
keep their homes. In fact, Hoover proposed the Home Loan Bank Board in December
1931. Congress took seven months to pass the legislation and limited Hoovers
proposal, making many homeowners ineligible.
Tugwell said in an interview years later that practically the whole
New Deal was extrapolated from programs Hoover started. He added,
Hoover had wanted and had said clearly enough that he wanted
nearly all the changes now brought under the New Deal label.
Mr. Cohen presents a fair and balanced history. His research is prodigious,
making it all the more unfortunate that the endnotes are only by paragraph.
This makes it hard to know which source contains which fact or quote. Further,
the bibliographical information is incorporated into the notes, forcing
the interested reader to hunt back through earlier notes to find the first
to Fear is a fascinating account of an extraordinary moment in the
life of the United States, indeed a page-turner. His subject is no less
than the moment when Roosevelt and the people he wisely chose to help him
turned retreat into advance and began the process of creating
the country we know today.
Gordon is the author of An Empire of Wealth: The Epic History of American
Economic Power (HarperCollins, 2004).
Jews telling jokes. Sort of cute. Click
here. Scroll down. Amazing what you find on the Internet.
love my insurance broker.
I know he's having a tough time. But does he really need to send me a flyer
telling me that dog bites (no less) accounted for 30%+ of all homeowners insurance
liability claims in 2007, up 10.5% from 2006? The average cost of a claim
in 2007, he tells me, was an astounding $24,511.
experts advise that pet owners are usually liable for injuries caused by dog
bites. There are two solutions:
Preferred. Buy more insurance, or
Quicker and cheaper. Shoot the dog.
Jersey Boys is great: I saw it last night.
If you're between 50 and death, you'll love it. All the old songs.
formatting this column. All browsers are
not alike. They show the same web page differently. Yesterday my column looked
hugely wide in Internet Explorer, but normal in Firefox. I prefer Firefox.
It "feels" better. And there are useful free add-ons. But a lot
of people use Microsoft's Internet Explorer. You can get Firefox for free
An elderly couple were having dinner one evening when the husband reached
across the table, took his wife's hand in his and said, 'Martha, soon we will
be married 50 years, and there's something I have to know. In all of these
50 years, have you ever been unfaithful to me?'
'Well Henry, I have to be honest with you. Yes, I've been unfaithful to you
three times during these 50 years, but always for a good reason.
Henry was obviously
hurt by his wife's confession, but said, 'I never suspected. Can you tell
me what you mean by 'good reasons?''
'The first time was shortly after we were married, and we were about to lose
our little house because we couldn't pay the mortgage. Do you remember that
one evening I went to see the banker and the next day he notified you that
the loan would be extended?'
the visit to the banker and said, 'I can forgive you for that. You saved our
home, but the second time?'
'Do you remember when you were so sick, but we didn't have the money to pay
for the heart surgery you needed? Well, I went to see your doctor one night
and, if you recall, he did the surgery at no charge.'
'I recall that,'
said Henry. 'And you did it to save my life, so of course I can forgive you
for that. Now tell me about the third time.'
Martha said. 'Do you remember when you ran for president of your golf club,
and you needed 73 more votes?"
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
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here and here.