Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Thursday, November 1, 2007: The
Fed dropped interest rates. This pleased investors. But it hurt the dollar.
And will continue to hurt the dollar. Which currency is popular, where money
flows, is determined by what that traveling money can earn. Right now money
can earn more abroad. Hence foreign governments prefer currencies like the Euro,
the pound sterling (and even the Aussie dollar) all of which are now at peak).
A cheap dollar is benefiting U.S. exports, but not the dollar. It is wise to
have some of your assets abroad. The Fed Reserve has two goals:
1. Ensure the stability of the banking system.
Keep inflation at bay.
only cares about the dollar and oil insofar as both can impact inflation. This
is what the Fed said yesterday:
Open Market Committee decided today to lower its target for the federal funds
rate 25 basis points to 4-1/2 percent.
was solid in the third quarter, and strains in financial markets have eased
somewhat on balance. However, the pace of economic expansion will likely slow
in the near term, partly reflecting the intensification of the housing correction.
Todays action, combined with the policy action taken in September, should
help forestall some of the adverse effects on the broader economy that might
otherwise arise from the disruptions in financial markets and promote moderate
growth over time.
core inflation have improved modestly this year, but recent increases in energy
and commodity prices, among other factors, may put renewed upward pressure
on inflation. In this context, the Committee judges that some inflation risks
remain, and it will continue to monitor inflation developments carefully.
judges that, after this action, the upside risks to inflation roughly balance
the downside risks to growth. The Committee will continue to assess the effects
of financial and other developments on economic prospects and will act as
needed to foster price stability and sustainable economic growth.
oil is headed (much higher): From my energy
guru Jim Kingsdale:
With all sorts
of dummies speculating on why oil prices are setting new records, here is
a link to a piece I just posted with the best information that I have seen
published on the underlying supply/demand fundamentals. It is an interview
with Chris Skrebowski, an independent analyst who closely tracks the actual
production schedules for all major oil fields in place and underdevelopment.
Chris is commenting about a recently released landmark German study of peak
oil and how those insights compare with his own.
The rather stark
message that came from this, was that oil production has probably peaked now,
and will decline steadily from here on out at about 3% a year, which then
means that we have, looking forward, some pretty dramatic declines. If you
think that in 2006, crude and liquid production was about 81 million barrels
a day, what the report is projecting is that it will fall to about 58 by 2020.
Now this contrasts with the IEA's hope that it'll be at 105 at that point.
So that's a spectacular difference; even more spectacular by 2030 when the
IEA was hoping the world would be fueled with 116 million barrels a day, the
report sees the production down to 39 million barrels a day. It's therefore
not difficult to see the sort of economic stresses and strains that this will
produce in the world economy.
For the full interview,
easiest way to play oil: There are two ETFs:
OIL. "The Fund seeks to replicate the performance of the Goldman Sachs
Crude Oil Total Return Index. The Fund reflects excess returns potentially available
through unleveraged investments in the contracts comprising the Index, plus
Treasury Bill interest possibly earned on funds committed to the trading."
United States Oil Trust. (USO). "The Fund seeks to reflect the performance
of the spot price of West Texas Intermediate light, sweet crude oil delivered
to Cushing, Oklahoma by investing in a mix of Oil Futures Contracts and Other
are weekly charts.
in Turkey: It's new and burgeoning. The wild
west with opportunities (and risk) everywhere. Istanbul (as I mentioned) is
now Europe's largest city. Turkey only opened itself to foreign investment in
2001. It's now among the most liberal, with a free currency, the Lira. There
is property to buy. (That's what I looked at.) But I can't find (at least yet)
a fund that holds Turkish shares. This piece sums up what's happening. The war
with the Kurdish rebels is a downer.
Oct. 29 (Bloomberg)
-- No prime minister in Turkey's modern history has done more to turn the
lira into the strong man of the foreign exchange market than Recep Tayyip
Erdogan. Traders now bet his threat to invade northern Iraq will turn it into
has fallen 0.6 percent since Oct. 9, when Erdogan told the military to prepare
to strike bases of the Kurdistan Workers' Party. The order ended the biggest
rally in Turkey's lira since before the 1970s, breaking the momentum that
made it the best performer this year among 26 emerging markets tracked
by Bloomberg. Trading in options shows the lira is now the riskiest currency
over the next two months.
The lira's 19
percent appreciation this year to a record 1.18 versus the dollar
reflects Erdogan's success in attracting investors and tourists to Turkey,
America's stalwart Islamic ally. The economy more than doubled since
he was elected in 2003, and the benchmark ISE National 100 Index of stocks
has risen five-fold. Now, traders are growing concerned because more
than 80,000 troops are poised near the Iraq border, prepared to hunt down
Kurdish militants after an Oct. 21 firefight killed more than 35 people. ...
see the lira taking quite a beating'' if the conflict escalates, said Lars
Christensen, senior emerging- markets analyst in Copenhagen at Danske Bank
A/S, Denmark's biggest lender. The lira will weaken to 1.28 per dollar by
year- end, according to the median of 23 forecasts from economists and strategists
compiled by Bloomberg. ...
the lira because of Turkey's 16.75 percent benchmark interest rate.
The currency is used for so-called carry trades, where investors buy assets
in countries with high yields financed with loans in low-yielding currencies
such as the yen. The Bank of Japan's base rate is 0.5 percent.
continue to see sell-offs prompted by politics as an opportunity to buy,''
said Caroline Gorman, a fund manager at August Asset Managers Ltd., which
oversees $9 billion of assets in London. ``It would take a lot for me to stop
believing in the lira as a carry play.''
sold U.S. dollars to buy lira in carry trades earned 20 percent in the past
six months, Bloomberg data show. The return for those who sold Japanese yen
to buy lira was more than 17 percent.
PKK, designated a terrorist organization by the U.S. and the European Union,
has fought a two-decade war for independence from Turkey at a cost of almost
40,000 lives. ...
A gain for the
lira against the dollar this year would be the first since the government
changed the denominations on Turkish currency notes in 2005, converting old
lira into new at a rate of 1 million to one. The decision was a key
to improving the economy, Erdogan said.
When the inflation
rate rose above 100 percent in the 1990s, ``we used to have citizens in Turkey
who carried U.S. dollars in their pockets and people who would go to exchange
houses to convert their salaries,'' Erdogan said. ``Now those exchange houses
are almost out of business.''
During the July
election campaign, Erdogan, the leader of the Islamic-leaning Justice and
Development Party, reminded voters how 21 straight quarters of growth had
pushed per capita gross domestic product to $5,500 a year and promised to
increase that to $10,000 in a second five-year term.
investment in Turkey surged to almost $20 billion last year, double the amount
in 2005 and 20 times the annual average in the decade before Erdogan came
to power.... Inflation fell to a 37-year low of 6.9 percent in July from a
peak of 150 percent in 1995. The budget deficit is 0.7 percent of gross domestic
product, lower than that of Germany and France.
arrogance of James Cayne: From
today's Wall Street Journal:
A crisis at
Bear Stearns Cos. this summer came to a head in July. Two Bear hedge funds
were hemorrhaging value. Investors were clamoring to get their money back.
Lenders to the funds were demanding more collateral. Eventually, both funds
During 10 critical
days of this crisis -- one of the worst in the securities firm's 84-year history
-- Bear's chief executive wasn't near his Wall Street office. James Cayne
was playing in a bridge tournament in Nashville, Tenn., without a cellphone
or an email device.
email is a total scam: They're phishing (that's
the technical term) for my information, like my credit card number, my social
security number, etc. Once they have all that information, they go on a spending
spree. I received a similar one from PayPal. Don't bother answering emails like
awakening: I don't make this stuff up. I can't.
Shehadeh Abu Arar with some of his 67 kids in village of Burgata.
JERUSALEM - He has eight wives, 67 children and two more on the way. And Shehadeh
Abu Arar says he couldn't be happier. The Israeli Arab farmer and camel breeder
boasts of knowing all his little ones by name and brushes off questions about
his unusual lifestyle. "I am happy I have kids, this is what God gave us,"
said Abu Arar, 58. "This is what He wants, and I do what He tells me."
Abu Arar has more
children than any man in Israel. He first married in 1967 and had 31 children
from his first two wives. His eldest son is 37 and his youngest child is less
than 1. So far, he has 20 grandchildren. All of them live with him in an extended
family compound in the village of Burgata, where he shuttles from one lovely
I decide which wife to go to," Abu Arar recently told the Yedioth Ahronoth
newspaper. His youngest wife is only 23, a Palestinian from the Jenin refugee
camp in the West Bank.
Abu Arar is not
stopping there - eight wives, apparently, is not enough. "Now I am thinking
about a new wife, No. 9, and I am already preparing for the marriage,"
he said. "There are many women who wish to marry me." Under Israeli
law, Bedouins like Abu Arar may take as many wives as they like without being
best Halloween story.
A couple was invited to a swanky Halloween costume Party. She got a terrible
headache and told her husband to go to the party alone. He being a devoted husband
protested, but she argued and said she was going to take some aspirin and go
to bed, and there was no need of his good time being spoiled by not going.
So he took his costume and away he went. The wife, after sleeping soundly for
about an hour, awakened without pain and, as it was still early, decided to
go the party.
Since her husband
did not know what her costume was, she thought she would have some fun by watching
her husband to see how he acted when she was not with him.
She joined the
party and soon spotted her husband cavorting around on the dance floor, dancing
with every nice chick he could, and copping a little feel here and a little
kiss there. His wife sidled up to him and being a rather seductive babe herself,
he left his current partner high and dry and devoted his time to the new babe
that had just arrived. She let him go as far as he wished , naturally, since
he was her husband. Finally, he whispered a little proposition in her ear and
she agreed, so off they went to one of the cars and made mad passionate love.
Just before unmasking at midnight, she slipped away, went home, put the costume
away and got into bed, wondering what kind of explanation he would make for
She was sitting up reading when he came in, and she asked what kind of a time
he had. He said: "- Oh, the same old thing. You know I never have a good
time when you're not there."
"I'll tell you, I never even danced one dance. When I got there, I met
Pete, Bill Brown and some other guys, so we went into the den and played poker
all evening. But you're not going to believe what happened to the guy I loaned
my costume to......."
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 .
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