Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Monday, March 6, 2006: Momentum
plays. Technologies that rock. Hot stocks in play. The key is to read the news
and figure what's about to be hot, and then play the hottest ones for a week
or two. In recent months I've highlighted alternative energy stocks, China stocks
and now ... drum roll (courtesy Dan Luskin)... Bird Flu Pandemic Plays:
not new to this. I've mentioned Novavax (NVAX) as a buy (and later a
sell) on a couple of occasions. Played short-term, you'd have made some nice
money. If you think the bird flu pandemic obsession will heat up again (and
I think it will), pick a few of the smaller market cap stocks. Most of these
have some way to run -- judging by the fact that all are now well below their
It's sort of useful
to think in terms of "hype." Which news will cause which group of
stocks to bounce up next? I started playing with some concepts. Think news:
+ Port security.
+ Voice over IP.
+ Outsourcing to India and China.
+ Cancer drugs.
+ Water stocks.
keys in playing this short-term momentum game are:
1. Have your list ready.
2. Have your favorite stocks ready to buy the moment the news heats up.
3. Set tight stops down. Move those stops up as the stock rises.
4. The minute it starts dropping, get out. The game, for that moment, is over.
5. Watch it all eagle-eyed while game is in play.
favor of bidding low: My friend bid $800,000 on a house the
owner wanted $2.1 million. My friend didn't care if he got the house
or not. Hence he could bid low comfortably. Falling in love with a "buy"
-- especially real estate -- is the worst possible mistake. My friend got the
house after several deals fell through and the seller needed to sell -- fast.
My friend eventually more than tripled his money on the $800,000 purchase even
after investing nearly two million in the project.
The flip side to selling real estate is to figure out if the buyer (or his spouse)
has fallen in love with the house. If so, it's time to raise your price.
AT&T Deal to buy BellSouth: The "genius" behind AT&T's
deal to buy BellSouth is Edward Whiteacre, chairman and CEO. Last July, Mr.
Whiteacre sold $10.2 million of his own AT&T stock at $24.01. It
closed on Friday at $27.99, 16.6% higher. The only "logic"
for this transaction is that a bunch of investment bankers and senior telephone
company executives will get rich from the fees and the management sellout incentives.
Executives always make more money from M&A (mergers and acquisitions) than
from running the business day-to-day.
GM short is paying off: It will go lower. The
company is increasingly desperate. Consumer Reports once again failed to include
a single GM car in its best vehicle for $25,000 or less.
Buffett screws up: Berkshire Hathaway's annual report, released Saturday,
shows Buffett growing more optimistic about the stock market in 2005, as Berkshire's
holdings of common stocks rose sharply. Berkshire bought at least $12 billion
in equities last year, including large new holdings of Wal-Mart and Anheuser-Busch.
Both of these ended 2005 worth less than Berkshire paid and have declined
further this year, with Anheuser-Busch down about 15 percent from the purchase
price, and Wal-Mart off about 4 percent. Buffett indicated that many of the
stocks he bought were from overseas, as part of his bet that the dollar would
decline. That bet, through currency positions, cost Berkshire $955 million
in 2005 and has been reduced, he said. The dollar is up 12% against the
Euro in the past 12 months.
personally don't like the idea of big-caps -- a la Wal-Mart, Microsoft,
Verizon, Cisco, Intel and General Electric. They're great companies
but they're too big and too klunky to give Wall Street the growth it craves
for "hot" stocks
to the Coachella Valley for a month: Once again
we've escaped New York's long, miserable winter by renting a house in the tennis
resort of La Quinta.
The valley is surrounded by gorgeous mountains.
Many of the mountains are snow capped:
story of the prostitute
The Irish daughter had not been to the house for over 5 years. On
her return, her father asked her; "Where have you been all this time!"
The girl, crying,
replied, "Sniff, sniff ... Dad ... I became a prostitute ..."
Out of here, you shameless harlot! Sinner! You're a disgrace to this family
- I don't ever want to see you again!"
- as you wish. I just came back to give Mom this luxury fur coat, title deeds
to a ten bed-roomed mansion, plus a savings account certificate for £5
million. For my little brother, this gold Rolex, and for you, Daddy, the spanking
new Mercedes limited edition convertible that's parked outside, plus a lifetime
membership to the Country Club ... (takes a breath) ... and an invitation for
you all to spend New Year's Eve on board my new yacht in the Riviera, and ...."
The Father interrupts,
"Now, what was it you said you had become?"
Girl, crying again,
Sniff, sniff ... "A prostitute, Dad ..."
"Oh! Be Jesus!
- You scared me half to death, girl! Come here and give your old man a hug.
I thought you said a Protestant""
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. Please note I'm not suggesting
you do. That money, if there is any, may help pay Claire's law school tuition.
Read more about Google AdSense, click
here and here.