Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
8:00 AM EST, Monday, January 26, 2009: Our
banks and our financial system are more busted than you can ever imagine,
in spite of the bailout. The depth of bustedness is only now becoming evident.
Rising unemployment will mean huge consumer loan losses -- loans, credit cards,
etc. Latest: Caterpillar announced today it's firing 20,000 workers.
At least $15 trillion of outstanding credit default swaps that could come
due. No one has the capital to pay off these bets.
The recession will cause more bankruptcies.
Hence, the banks
will do more husbanding of their cash and capital reserves.
All this means
that you and I -- in our business and personal lives -- will learn to survive
without borrowing. Or, if we do, it will be very expensive borrowing. Figure
at least 24%.
places to put cash safely. Everyone and their uncle has flocked
into Treasuries. As a result yields are low and prices are high. If you buy
in now, you will lose money when treasuries come down to earth, as they will.
(To bet they will come down, my friend Todd is buying ProShares
UltraShort 20+ Year Treasury, symbol TBT, as a method of shorting treasurys.)
Better deal for cash are FDIC-insured bank CDs. As I mentioned
on Friday, eTrade sells the online, so does Moneyaisle.
But frankly, the best deal is to approach your local bank and beg a
better rate than what they're advertising. Some of the newer, smaller banks
will give you a better deal based on your giving them more money. Some banks
are getting creative, figuring ways to get you more FDIC-insurance by opening
multiple accounts in permutations of your family's names. Personally I'd be
wary of being too creative. If your bank does go bust and does get taken over
by the FDIC, you'll end up dealing with petty bureaucrats who will look askance
at any way to take advantage of their precious rules. I know this for a fact.
I was warned by someone who got stuck in a failed bank and had to deal with
the FDIC numskulls.
Service and More Service. The only way to survive this recession
is to make yourself and your company indispensable to your customers. Service
them to death. To wit: Half the world lives in one year on less than what
I'm paying the Ritz Carlton Key Biscayne per night. I asked the hotel's general
manager for two favors: a normal banquet chair and securing The Tennis Channel
during the U.S. Open. He couldn't or wouldn't do either. I found a banquet
chair with less than five minutes of looking. I know that getting the Tennis
Channel out of DirecTV takes a three minute phone call. And they turn it on
immediately. Do I care? Yes, because at these prices, most everything should
be possible. Curiously, his overpriced hotel seems to be booming -- at least
are directly responsible for this. Swat is a Delaware-size chunk
of territory in Pakistan. It has 1.3 million residents. According to a front
page piece in yesterday'sNew York Times, It has been effectively taken
over by the Taliban. On most nights, a local Taliban leader, Shah Doran, uses
a mobile radio transmitter to outline newly proscribed un-Islamic
activities in Swat, like selling DVDs, watching cable television, singing
and dancing, criticizing the Taliban, shaving beards and allowing girls to
attend school. The Taliban have already destroyed 169 girls schools
in Swat. He also reveals names of people the Taliban have recently killed
for violating their decrees and those they plan to kill.
What the Times
didn't say: We give gigantic amounts of money to Pakistan. We don't insist
they spend any of our money on education. And they don't. In fact, they aggressively
neglect it. Saudi Arabia has stepped into the void and set up thousands of
schools called madrassas in Pakistan. Many of the Taliban were educated in
Saudi-financed madrassas in Pakistan. These madrassas teach Wahhabism, an
austere and rigid form of Islam rooted in Saudi Arabia. Saudi wealth and charities
contributed to an explosive growth of madrassas during the Afghan jihad against
the Soviets. During that war (1979-1989), a new kind of madrassa emerged in
the Pakistan-Afghanistan region -- not so much concerned with scholarship
as making war on infidels. The enemy then was the Soviet Union, today it's
America. We are presently Saudi Arabia's largest customer. The next five,
in order, are Japan, South Korea, Singapore, Holland and France.
Open Tennis continues. The huge time difference
between us and Australia makes this ideal for TiVo.
M = Men, W = Women, D = Doubles. All times EST. The tennis is unbelievably
exciting. Sadly, every one of them is better than I am.
"The total cost of the inauguration was $170 million. They say this is
the most of the expensive celebration since that last AIG retreat on our bailout
money." --Jay Leno
his inaugural address, President Barack Obama said, 'Millions of Americans
have lost their homes and some of us who still have homes have their mother-in-laws
moving in with them.'" --Jay Leno
going to ten inaugural balls last night and dancing more than Cloris Leachman
in nine weeks of 'Dancing With the Stars,' the new president was up and in
the office at 8:35 in the morning and then he was at church at 9:30. Is it
a good sign that after one hour of being president, he decided the best thing
he could do for the country is pray?" --Jimmy Kimmel
you, it's cold all over the East Coast. And did you see those blizzards all
over the place? The whole country was so white the Republicans thought they
were back in charge again." --Jay Leno
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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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.