Harry Newton's In Search of The Perfect Investment
9:00 AM EST, Monday, January 12, 2009:
Fees. If they have your money, they take fees. And lots of them. One
LBO fund of mine couldn't sell off its properties in its promised time, so
it simply voted itself an extension, and more fees. A credit card company
hit me with $29 late charges on a $50 bill. I wasn't late. My bank hits me
for incoming wire fees. One broker often often adds a zero to his fees, jumping
from $150 to $1500. My mantra remains CHECK. CHECK. CHECK. But checking and
bitching to get them removed is so boring.
This email is
typical of the ongoing mess in Auction Rate Securities.
Dear Mr. Newton,
My grandfather is almost 92 y/o and can't really handle his current ARPS
situation. He has an account with TD Ameritrade and from what he can remember,
he never agreed to putting $225k of his cash into Nuveen ARPS. When he asked
his broker (at the time) why it was in these new Nuveen shares, the guy
on the other end of the phone said it was 7-day paper, with a higher interest
rate than his money market account. Since February 2008, TD Ameritrade has
only redeemed $25k leaving him with $200,000 in Nuveen ARPS. I've emailed
girrardgibbs, but have not heard from them as of yet. What should I do?
Guess why his
broker put this guy's money into ARPS and not a safer money market fund? You
got it. Fees. Brokers get no fees on money market funds. They
used to get fees on ARPS -- initial and ongoing.
ratsnest on Wall Street for fees is muni bonds. Friends tell me of fees as
high as 1% to buy and 1% to sell a muni bond. "Fair"
brokers charge 1/4 of 1%. Frankly, I think a flat fee, akin to what the discount
brokerage companies charge would be fair. Shop your muni bond purchases and
sales. You'll be staggered at the differences.
The U.S. lost
more jobs in 2008 than any year since 1945. With part-time jobs lost and illegal
Latin Americans fleeing because they can't find work, the unemployment rate
here is closer to 15% -- double the government's official number. Since the
U.S. economy is 65% to 70% consumer, this augurs awfully. The Dow's low was
on November 20 at 7552. Last week it closed at 8559, up 13%. Some people believe
the horrible job losses have been fully discounted. I'm dubious. When in doubt
This chart is
from Bloomberg. It reflects Friday's market. What's interesting to me is it
reminds me which companies make up the Dow:
is a new limo service. Sitting outside our
building at 8:00 AM this morning was this darling little Toyota Prius.
itself as "New York's first hybrid luxury car service that won't compromise
your conscience because in an OZOcar, luxury and responsibility co-exist."
OZOcar only has hybrids -- this one and a bigger Lexus hybrid. I have no idea
if you can make money with this quirky idea. But I'm signing up for an account.
new boom industry. They put the first one up outside
Is this New
York's subtle way of telling me not to walk Winnie, the dog, in my pajamas?
bad Wall Street humor.
Q: What's the difference between a guy who just lost everything in Vegas and
an investment banker?
A: A tie.
Q: How many
stock brokers does it take to change a light bulb?
A: Two . one to change the bulb, the other to sell off the old one at the
highest price possible before CNBC reports it's burned out.
Q: How many
commodities traders does it take to change a light bulb?
A: None, they don't change bulbs; but the trading price of darkness plummets
due to oversupply.
Q: How many
real-estate agents does it take to change a light bulb?
A: Just one . but she now raises the asking-price of the house due to "recent
Q: What's the
difference between a large bag of manure and an investment banker?
A: One's a lying sack of shit and the other is fertilizer.
Q: What's the
difference between a bond and a bond trader?
A: A bond matures.
is the difference between a dead cat and a bad investment?"
A: When you throw both out the window, you get a bounce from the dead cat.
and Florida. I see Florida's charms. I spent half the weekend shoveling
snow. God decided, in his infinite wisdom, to punish me with tons and tons
of the white stuff. My back is killing me.
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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