Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Thursday, March 24, 2005: The
stock market is wreaking havoc with interest-rate sensitive issues, such as REITs.
Here's the Morgan Stanley REIT index.
Here's an exchange
traded fund with a symbol of RNP. Even the fund's high NAV (Net Asset Value)
of $30.12 and high dividend yield of 9.54% hasn't stemmed its price drop.
Every time I write "Cash is King," someone sends me a copy
of Smith Barney's paper "Municipal Bonds: What is the cost of staying
in cash?" The paper shows how you earn more invested than sitting
in cash -- which you do. Dah! What it fails to point out is that as interest
rates rise -- which they are doing at present -- the value of your bonds
falls. So you get screwed. But then, brokers want to earn commissions selling
you something. Anything. And selling you bonds is especially lucrative because
cut-rate bond brokers don't exist.
upcoming recession? The Fed is obsessed with inflation. Companies
are sticking their prices up and up and up. The New York Times today
writes "In recent years, most companies were forced to absorb the higher
costs of basic expenses like employee health care, raw materials and energy,
focusing instead on squeezing more efficiencies from their workers and machines.
But now, from airlines to manufacturers of advanced plastics, many businesses
are overcoming their fears of losing customers and are starting to pass on cost
increases. After two months of virtually no inflation, the Labor Department
reported yesterday that the Consumer Price Index jumped 0.4 percent in February,
the fastest pace since October."
Here's the inflation chart.
Personally I don't buy the Fed's fear of inflation. It's back to 2001, the time
of the last recession.
I buy what escalating
prices and escalating interest rates will do to the poor consumer who's tapped
out on credit cards, can't squeeze any more money out of his house and is struggling
with two jobs.
My friend, a marketing
consultant and avid consumer watcher emailed me today, "People just
aren't spending money, The baby boomers have been asking for some time: Why
do I need another X? ... There's been a cash crunch for small businesses for
some months now. Even though the entrepreneurs are working hard and being aggressive,
they're also being very careful. They're trying to buy "good" stuff
that will really work and they're trying to avoid stuff that is "less expensive
but doesn't work." But this also means they're taking longer to make decisions.
These are my observations, working with small business owners and talking to
their customers. People seem to be in a serious "re-think, re-prioritize"
trust your lawyer (or anyone else) with numbers: It seems that the
fine art of arithmetic escapes too many people. Everyone here in La Quinta,
California is fighting with the local resort hotel over bad bills. Our propane
gas provider, our car park and our cellphone carrier have screwed up on their
recent bills. I wouldn't object if the bills were equal opportunity bad. They're
not. The mistakes all favor the vendor against me, the poor customer. My motto
remains Check, Check, Check.
Now comes my favorite screwup story. J.P. Morgan Chase's hideously expensive
lawyer messed up and caused the bank to pay $630 million more than necessary
to settle a recent class action suit, according to today's Wall Street Journal.
I can't say I'm
shocked or surprised. When I was young and stupid, I employed a prestigious
Wall Street law firm which seriously messed up on my taxes. I scribbled on their
final bill, "You screwed up. Please insert this bill where the sun doesn't
shine." They did. And I never heard more about that bill. Which proves
1. Lawyers have a heart,
2. Lawyers can be intimidated.
3. My chutzpah has no limits.
friend and his son: My friend runs a successful
real estate business. His son was doing well in real estate for a big hotel
chain. His father approached the son. "Here are your choices. You can
be an employee and earn a high salary with the hotel chain. Or you can earn
a low salary in the family business, but earn some options and ultimately own
the business." It took the son five minutes to quit the hotel company
and join the family business, which he now runs beautifully. The moral of this
story: Your own business is your perfect investment.
Your new password: The email reads,
"Thanks for your registration!
We have received your payment.
For more detailed information, read the attached text."
The attached text
is a zip file and contains a virus.
Please do not read it. Do not open it.
99% of all viruses
come as attachments to beguiling emails. Don't open attachments from sources
you don't know.
Is Easter? (Tomorrow, exchanges are closed.)
Three blondes died and found themselves standing before St. Peter. He told them
before they could enter the kingdom, they had to tell him what Easter was.
The first blonde
said, "Easter is a holiday where they have a big feast and we give thanks
and eat turkey."
St. Peter said,
"Noooooo," and he banished her to hell.
The second blonde
said, "Easter is when we celebrate Jesus' birth and exchange gifts."
St. Peter said,
"Noooooo," and he banished her to hell.
The third blonde
said, "Easter is a Christian holiday that coincides with the Jewish festival
of Passover. Jesus was having Passover feast with his disciples when he was
betrayed by Judas, and the Romans arrested him. The Romans hung him on the cross
and eventually he died. Then they buried him in a tomb behind a very large boulder.
St. Peter said,
The blonde continued,
"Now every year the Jews roll away the boulder and Jesus comes out. If
he sees his shadow, we have six more weeks of basketball."
St. Peter fainted.
is in the air:
True story: My friend, Seth Wernick took his
fiancee on Tuesday night to the Jefferson Memorial in Washington and asked her
to marry him. She accepted and cried. It was all very romantic.
I asked Seth, "Why the Jefferson Memorial?" Inquiring minds
want to know these irrelevancies.
Seth replied, "Well..I was going to go to the Lincoln Memorial cause
it is out on the water and real romantic. But I could not find a parking space,
so we ended up at the Jefferson."
I dedicate the following to Seth:
A young Jewish man excitedly tells his mother he's fallen in love
and that he is going to get married. He says, "Just for fun, Ma, I'm going
to bring over three women and you guess which one I'm going to marry."
The mother agrees.
The next day,
he brings three beautiful women into the house and sits them down on the couch
and they chat for a while. He then says, "Okay, Ma, which one am I'm going
She replies, "The
one on the right."
You're right. How did you know?"
The Jewish mother
replies, "I don't like her."
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. Thus I cannot endorse any, though some look
mighty interesting. If you click on a link, Google may send me money. That money
will help pay Claire's law school tuition. Read more about Google AdSense,
here and here.