Harry Newton's In Search of The Perfect Investment
Technology Investor. Auction Rate Securities. Auction Rate Preferreds.
8:30 AM EST Thursday, May 8, 2008: I'm
on a list. Random brokers call me randomly with hot tips. They have great pitches.
"We're making a move on..." They're always so solicitous. "How
are you Mr. Newton today?" In the old days, I'd hang up on them. These
days, I listen. I squeeze their hottest tips out of them, and put them in my
little spreadsheet. I follow their "progress."
the results of my "research?" ... Drumroll. Not one tip of
the past six months has gone up. Yup. I would have lost money on every
also applied the same research to my friends' hot tips. Guess what? Their hot
tips do even worse. Some of my friends have The Reverse Midas Touch in
spades. Everything they touch (and recommend to me) turns instantly into shit.
think I should write a book, "Which Garden Path Would You Like to Led
Down? And other great investment strategies."
most useful investment tool. It's Google alerts.
Sign up for free at www.google.com/alerts.
The alerts won't be comprehensive. Think of
them as a newspaper tailored for you with just the information you're interested
in -- not what some left-wing or right-wing, pinko or commie, of a child editor
feeds you in your local newspaper. Did I say the newspaper industry was dead?
mess with it. There's an old rule in the computer industry: If
it works, don't mess with it. Microsoft has just released something called
SP3 (Service Pack 3) for Windows XP. Microsoft recommends you install SP3 because
it provides more protection and 1,174 patches and hotfixes. I didn't make that
number up. I have not installed it. But reading ComputerWorld makes me
fearful. There are potential problems -- from your computer may simply not work
after you've installed SP3 to a host of incompatible driver problems. If your
XP is working fine -- and mine are (I have several machines with XP on it them)
-- don't tempt fate by installing SP3.
Most importantly, turn off the software that's called "Automatic
Updates." You don't want Microsoft messing up your machine while you're
at lunch. What blew me away: the XP SP3 stand-alone installer weighs in at an
incredible 316 megabytes. That's a lot of code. To me, that looks like a brand-new
replacement operating system. That's not a gamble I want to make. For more,
Pacific is a love story, with a twist. The
war is on. US Navy nurse Nellie Forbush falls in love with local plantation
owner, French émigré (and murderer), Emile De Becque. Meanwhile,
Lt. Joe Cable has fallen in love with young Liat, daughter of the irrepressible
Bloody Mary, played by a lady from Hawaii (and voice of PBS Hawaii). Both couples'
happiness is threatened by the war and by their own racial prejudices. Yes,
South Pacific is a story of racial prejudices. Fortunately there are dozens
of talented U.S. Navy recruits who break into glorious song and dance at just
the right moments.
This is the first Broadway revival since its premiere in 1949. See it if you
can. We saw it last night. One place to get tickets is Broadway.com.
latest on ARPS: As everyone knows, I have $3.5 million stuck in
"cash-like" auction rate preferreds. When I reached new heights of
boredom with incessant ARPS raving, a kindly reader suggested I move my ARPS
ravings to another site. I did. It's now on www.AuctionRatePreferreds.org,
which now has a four times larger readership than this site. In misery,
there is comfort.
The idea of that
site was simple: Help other investors. Coordinate their strategies -- namely
harass the issuers. And there is some good news in today's Wall Street Journal.
-- Merrill Lynch & Co. Chief Executive John Thain said he expects auction-rate
securities held by the investment bank's clients to be fully refinanced within
one year by the issuers, giving customers access to their cash. ...
the securities held by customers in our system, about 23% of the total has
already been refinanced, and so I expect, over the next 12 months or so, we
will see the securities get [fully] refinanced by the issuers and the customers
get their money back," Mr. Thain said at a news conference in Mumbai
(the new name for Bombay).
In the past few
days, I've added a huge amount of information to my ARPS site. If you're in
this mess, you should read it. www.AuctionRatePreferreds.org.
Meantime, my ego
has no bounds. I must share with you, my friends, a piece Dow Jones Newswires
did on the site
Angry Auction Investors Voice
By IAN SALISBURY
A DOW JONES NEWSWIRES COLUMN
NEW YORK --
Frustrated brokerage customers have been around as long as Wall Street, but
in the era of blog-enabled personal expression, they've gotten new ways to
Among the results:
Nuveen Investments executive Bill Adams now has his phone number posted on
the Web along with the entreaty, "Tell him to redeem your ARPS or you'll
never ever do business with Nuveen again. And ditto for your friends."
to comment on the posting or to make Adams available. Adams didn't return
a phone message left with his assistant.
When the market
for auction-rate preferred shares, or ARPS, collapsed in February much about
the story resembled past Wall Street blow-ups. A supposedly blue-chip investment
hit trouble, small investors felt they had been duped, while brokerage and
money management firms, fearing lawsuits, issued public blandishments as they
worked to clean up the mess.
In the past,
disgruntled investors called regulators or signed on to class-action lawsuits.
Now that blogs, or Web blogs, have become a facet of everyday life, some are
also putting themselves onto the front lines.
is on www.auctionratepreferreds.org, a site run by Harry Newton, who himself
has $3.5 million locked up in auction-rate securities. Newton's site has become
a clearing house for auction-rate information, including media articles, links
to firms that help investors sell their holdings on the secondary market,
and 10 different lawsuits against various securities firms.
Newton, a retired
founder of several telecommunications trade magazines who works out of his
home office on Manhattan's Central Park West, says he started the auction-rate
site after sensing that wall-to-wall coverage of the auction-rate market was
tiring readers of his other Web page, "Harry Newton's In Search of the
It's not difficult
to find information about auction-securities in the blogosphere. New York-law
firm Levi & Korsinsky LLP, which has filed several suits on behalf of
investors, set up its own site, www.auctionratehelp.com, linking to news articles
and other resources. Countless general interest investing blogs have also
opined on the issue.
blog is an unusual example of single-minded investor advocacy. On it, he openly
debates which tactics investors should use to cajole closed-end fund firms
that issued auction-rate preferred shares, into redeeming their securities.
will eventually redeem our ARPs -- if and only IF we bring sufficient pressure
on them," he writes. "Pressure on the issuers needs to come from
the brokers, from you and I, from the regulatory authorities, from the courts
and from the press."
While what effect,
if any, Newton's effort will ultimately have on the outcome of the crisis,
is still unclear, he does appear to have won fans among some other investors
looking for company in their misery. Not only does the site chronicle his
own travails, it also includes testimonials from others.
as Thomas J McCormick, explains how he "bit the bullet" and sold
at an 11% discount.
as Lori Nielsen, describes her efforts at "'badgering'" a contact
at Merrill Lynch. "I've been sending e-mails and making phone calls (even
to his personal cell) the last few weeks and have even mentioned "the
"L" word" (lawyer)," she explains.
he spends several hours a day on the phone speaking to frustrated auction-rate
investors, including some who have been in tears and others who say they hadn't
known brokers bought them auction securities until their money was stuck.
dozens of investors who share his predicament, Newton, like other bloggers
who aim to influence the media and Wall Street, at times seems impatient with
extent to which his efforts have shaped the public debate.
When one article
by Pulitzer-prize winning New York Times reporter Gretchen Morgenson skipped
aspects of the crisis he considered important, he didn't mince words, dubbing
the article "sloppy financial journalism."
Among his complaints:
"She certainly never called me and clearly has never bothered to read
Given a chance
to revisit his comment, Newton explained it was, "tongue-in-cheek."
His only goal: to get his money out of auction-rate securities.
TALK BACK: We
invite readers to send us comments on this or other financial news topics.
Please email us at TalkbackAmericas@dowjones.com
is one of five Getting Personal columnists who write about personal finance;
he covers topics including exchange traded funds and separately managed accounts.)
---By Ian Salisbury,
Dow Jones Newswires; 201-938-5219; ian.salisbury
I'm obsessed with Lyme Disease. My friend told
me yesterday his wife has had Lyme Disease for 20 years and can't shake it.
She's now on a low dose of antidepressants. What's it like? "She's not
the woman I married." It's really sad.
Connie Strasheim, author of the book,
Disease Survival Manual, which I mentioned
in yesterday's column:
If you notice
you have been bitten and see the characteristic bull's-eye rash, you should
go to a doctor and go on antibiotics immediately. Your physician should prescribe
six weeks of antibiotics, and no less. If your doctor says that two
weeks, or even a month, is sufficient, find another doctor! Four weeks, in
many cases, has failed to eradicate the infection, and if you don't get rid
of it in the early stages, then you will need to take years of antibiotics,
and the infection will be extremely difficult (if not impossible) to get rid
It's tasteless, but funny (and
wholly appropriate for today's world)
rules, from Bill Maher
New Rule : Stop
giving me that pop-up ad for classmates.com! There's a reason you don't talk
to people for 25 years. Because you don't particularly like them!? Besides,
I already know what the captain of the football team is doing these days - -mowing
New Rule: Ladies,
leave your eyebrows alone. Here's how much men care about your eyebrows: do
you have two of them? Okay, we're done.
New Rule : Just
because your tattoo has Chinese characters in it doesn't make you spiritual.
It's right above the crack of your ass. And it translates to 'beef with broccoli.'
The last time you did anything spiritual, you were praying to God you weren't
pregnant. You're not spiritual. You're just high.
New Rule : Competitive
eating isn't a sport . It's one of the seven deadly sins. ESPN recently televised
the U.S . Open of Competitive Eating, because watching those athletes at the
poker table was just too damned exciting. What's next, competitive farting?
Oh wait!? They're already doing that. It's called 'The Howard Stern Show.'
New Rule: No more
gift registries. You know, it used to be just for weddings. Now it's for babies
and new homes and graduations from rehab. Picking out the stuff you want and
having other people buy it for you isn't gift giving, it's the white people
version of looting..
New Rule : When
I ask how old your toddler is, I don't need to know in months. '27 Months.'
'He's two,' will do just fine. He's not a cheese. And I didn't really care in
the first place.
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 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, click
here and here.