Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Wednesday, October 10, 2007: This
is great. The more I write about the need to be cautious, the higher the market
goes. Not good to believe a word I write. Despite that, I remain a genius.
Every one of my Australian mining picks are up -- and all up much above
what I paid. The stocks are BHP, RIO, KZL, ZFX, MRE, OXR, AXM, WSA and MEE.
Kagara is my favorite. Its latest September
quarterly report is out, showing record everything. I love this quote,
"Thalanga drilling returns results of up to 14.9 metres at 17.5% zinc,
1.6% copper, 5.1% lead, 121 grams per tonne silver and 0.66 grams per tonne
gold." Thalanga is in Australia somewhere.
best cheap headphones ever. I love my iPod,
but I hate its earphones. I've tried zillions -- expensive and cheap. But they
fall out or off, or are too big for travel. I picked this pair up at
for $19.99. They're small, portable, sound
fine and don't fall off or out. They're perfect.
But Amazon has them cheaper at $15.21. Click
Sony MDR-Q22LP w.Ear Headphones. They come with caps you can change. It makes
sense to have blue on your right ear and silver on your left. That way you know
which ear is which.
Bernanke We Trust: I don't like all his stock
picks (you have to develop selective hearing) and sometimes his histrionics
bore me. But I do like Jim Cramer's writing. He's a reporter at heart. And he
knows Wall Street. Here's his latest piece from the New York Magazine.
There are some really funny bits, including the crack about President Bush's
Talk about pressure!
Talk about crummy timing for a book tour! Two days before the most important
Federal Reserve meeting in a decade, Ben Bernanke, the rookie Fed chairman,
had to listen to the national icon, his predecessor, Alan Greenspan, hawk
his new book, The Age of Turbulence, in virtually every venue on earth, replete
with a main story line about how great he is and how clueless everyone else
is about monetary policy in the United States.
The last thing
Bernankeunder intense pressure to slash interest rates to save the credit
marketsneeded to hear was the Oracular One talking about how reining
in inflation with high interest rates is job number one for whoever sits on
the Fed throne, and how Greenspan deserved immense credit for doing just that.
Maybe Greenspan accomplished what he wanteda spit-polished legacy, the
top spot on Amazon, and a huge boost to his consulting businessbut he
cast an avuncular shadow so gigantic and dark over the new guy that its
a wonder Bernanke could even find his way to the Federal Reserve building
for last Tuesdays meeting.
Could it be
that Bernanke had the former Fed chiefs 60 Minutes interview on mute?
Or maybe Bernanke realized the true gravity of what was shaping up to be the
worst credit crisis since Citigroup almost went belly-up in 1990 and chose
not to heed the long-term advice of the sainted one. Whatever the reason,
the rookie shook off the Greenspan shroud and hit the ball out of the park
with a fat half-point cut in the federal funds rate. Because of Bernankes
bold movethe half-point cut was twice as deep as most Fed followers,
including yours truly, who had been a vocal critic of the Feds stewardship,
had expectedIm now confident that what would have been a given
in 2008, a brutal recession that started with housing but was spreading, Ebola-like,
to the rest of the economy, will now be avoided and prosperity assured. What
What was Bernanke
saving us from? What caused the mess that forced him to take drastic action,
not one of those itty-bitty quarter-point interest-rate jobs? How about a
chaotic, frozen, dysfunctional economy fueled by defaulting mortgages based
on irresponsible teaser rates that his predecessor pushed hard and often for
every prospective home buyer to take, including those who could ill afford
them? Wheres that in the book? And then, after hooking millions of unqualified
buyers to take low-interest teasers that would reset in two years, Greenspan
gaffed the borrowers with fourteen straight interest-rate hikes that put the
reset mortgage rates out of reach for all but the wealthiest. Those vicious
and, I believe, foreseeable resetsforeseeable if you are going to set
the rates, as Greenspan didare causing a national wave of defaults the
likes of which havent been seen since the Great Depression. And why
did Mr. Prudent champion these reckless teasers almost as heavily as the endless
Ditech and Countrywide television pitchmen who buried us in these adjustable-rate
nooses did? Because he needed to work his way out of the dot-com crash by
stoking the housing market. And what had caused the dot-com bubble? That would
be the low margin rates that fueled ridiculous speculation in junk stocksrates
controlled by, you guessed it, our lovable hero, Alan Greenspan. At any given
time the author of The Age of Turbulence could have prevented, well, the Age
of Turbulence, by simply raising margin rates, by discouraging the use of
exotic teaser mortgages, and by encouraging regulations that would have ended
the travesty of giving money to speculators to flip houses. But Greenspan,
an acolyte of libertarian Ayn Rand, disdains regulations. Instead, he seemed
to like the power and mystery of endlessly taking rates up and down, disrupting
the whole economy instead of managing discrete stock-market or house-speculation
bubbles. Just a little regulation could have avoided both of those bubbles,
with no need to overstimulate and then wreck the overall economy with crushing
rate increases like the ones with which Greenspan stuck Bernanke.
just up against Greenspans blinding halo last week. He was also up against
President Bush and the man in charge of Bushs management of the economy,
Hank Paulson. Despite the record mortgage defaults, despite more than 100
mortgage brokers going under, despite multiple bailouts of the largest
lender in the country, Countrywide, and despite an actual loss of jobs in
August, Bush and Paulson on virtually every occasion trumpeted that the fundamentals
are sound. That bullish claptrap put Bernanke in the incredibly awkward
position of having to cut rates even as the president and his Treasury secretary
proclaimed boom times. Blessedly, Bernanke, after a slow start during which
he hiked rates himself only to have to flip-flop when he saw the possibility
of runs on banks in this country and no credit to buy almost anything larger
than a shanty, managed to shake off the Hoover-like assurances of the president
and the Treasury secretary and recognize that the fundamentals were anything
surprised by President Bushs sunny economic outlookthis president
would praise the Weimar Republics hyperinflation as great for Home Depot
and the wheelbarrow industry. But Hank Paulson? I expected better from the
exGoldman Sachs chief. One of the few honest-to-Betsy revelations in
The Age of Turbulence was Greenspans acknowledgment that the position
of Treasury secretary, once a post for the best and brightest businesspeople
and economists, has under Bush been reduced to nothing more than White House
water boy for the fundamentals are sound mantra. The previous
holders of the position, Paul ONeill and John Snow, were either lightweights
or totally useless housemen, unwilling to speak up beyond the party line on
anything, whether it be ballooning deficits or reckless home lending. I had
hoped that Paulson would be like Bob Rubin and Larry Summers, Treasury secretaries
under Clinton whom Greenspan correctly praises in Turbulence for being anything
but yes-men, for offering creative solutions that solved most of the nineties
economic problems. Paulson had the stature and experience his Bush-administration
predecessors lacked, and for a change could actually think and talk independently
from Bush propaganda. Or so I thought. But the sole sour note I have heard
from his office is from his undersecretary for domestic finance, Robert K.
Steel, who had the horse sense to admit in front of Congress that we have
a real housing-finance problem in this country that wont go away by
itself. Throughout this period of intense turmoil behind the scenes at places
like Bear Stearns, Morgan Stanley, and Goldman Sachs (which Paulson ran),
we never heard a peep out of Paulson that anything was awry. Who would have
ever thought that Paulson, a coldhearted, some would say vicious, realist
at Goldman, would become one more pol in what used to be a distinguished office?
It would have
been terrific had Bernanke been able to break the boom-bust rates cycle that
Greenspan fostered in the past decade. It would have been spectacular if the
fundamentals were sound and Bernanke didnt need to do a thing. Unfortunately,
Bernankes got to clean up the turbulence left by his predecessor. With
any luck, this time the Fed chief wont have to cut too much further
and we can get what is ultimately desired: a Fed that does no widespread tinkering
and just suggests limited regulationor regulateswhen a market
gets out of line.
me about George Bush: I have a secret. I voted
for George Bush the first time. So did my very good friend and successful investor/businessman,
Dan Good. Dan is also ultra-conservative, disdainful of left-wing causes and
an unbeliever in climate change. He and I disagree on many things. Yesterday,
he emailed me (and his 1,000 closest email buddies), his latest analysis of
Bush. I keep away from politics. But Dan's piece is good analysis:
Bush is a good
man, sincere and smart. But he has a dominating naive dimension and is more
black and white than gray. He can't deal with nuance and sees the world through
a benevolent Christian lens. He lacks a deep understanding of vicissitudes
and varieties of human nature and cultures which has led to a misreading of
the Iraq situation and probably of the entire Middle East. A case in point,
is the late revelation about the importance of tribes and sheiks in Iraq.
It wasn't so much that Bush and his advisors weren't prepared for the War's
aftermath, it was that they naively prepared for the wrong outcome.
The Neocons ( not meaning only conservative Jews but more broadly speaking,
including Rumsfeld) published their now famous paper in the late nineties
about how to deal with the growing threat of terrorism and Bush took this
as gospel. It was in response to what the group perceived ( and rightly so)
that the Clinton Administration was ineffective in dealing with the current
and present terrorist danger and was actually reducing our capability to confront
it effectively (witness severe reductions in funding for the military and
intelligence communities during his terms). Their policy manifesto was really
more an outline for war, than a roadmap on how to realistically deal with
the consequences of action. Bush was intrigued with these ideas and when he
won in 2000, they were recruited and went into action. They probably could
have been contained had 911 not occurred, but they were unleashed when it
did. In deference to them, a mighty war machine, technology based, was created
and put to work. We know the outcome and its successes but the aftermath it
created has been a disaster. We are only now starting to understand the cultural
problem and complications and luckily, perhaps, some insightful people are
now emerging as influential.
Bush has no
choice but to pay attention to them and relegate his basic instincts to the
second chair. It might make good copy in the liberal media to conjure up all
kinds of reasons for past mistakes (Chalabi being one), but the fact remains
that we've got to realize that good intentions notwithstanding, we cannot
forcefully impose our views of freedom and democracy on the world, particularly
in a condensed time frame ( an eight year term) as the world is a kaleidoscope
of cultural attitudes towards life (and death) and will chart its own future
course. We can be helpful and hopefully persuasive directionally with regard
to human rights, and to also carry a big war stick so as to mitigate future
human disasters, but we need an enlightened policy group and new faces to
lead the Government as well as the world.
Now, print his
out, take it to Starbucks and they will give you a free coffee (after you
also give them five bucks).
Great quips from the old Hollywood Squares
Q. As you grow older, do you tend to gesture more or less with your
hands while talking?
A. Rose Marie: You ask me one more growing-old question Peter, and I'll give
you a gesture you' ll never forget.
Q. Charley, you've
just decided to grow strawberries. Are you going to get any during the first
A. Charley Weaver: Of course not, I'm too busy growing strawberries.
Q. It is considered
in bad taste to discuss two subjects at nudist camps. One is politics, what
is the other?
A. Paul Lynde: Tape measures.
Q. During a tornado,
are you safer in the bedroom or in the closet?
A. Rose Marie: Unfortunately Peter, I'm always safe in the bedroom.
Q. According to
Ann Landers, is there anything wrong with getting into the habit of kissing
a lot of people?
A. Charley Weaver: It got me out of the army.
Q. Back in the
old days, when Great Grandpa put horseradish on his head, what was he trying
A. George Gobel: Get it in his mouth.
news. Only the Goyim are affected:
Two Jewish ladies meet on the street. Ruth
says to Golda, "Such news I got for you, Golda!
is finally getting married. He is engaged to this wonderful Jewish girl, but
the poor darling has some strange illness called herpes."
do you have any idea what is this herpes. Can our Irving catch it?"
"God forbid! It's
past time he's settled with a nice Jewish girl. As for herpes, who knows?"
Golda says, "I have a fine medical dictionary. I'll run home and call you
Golda goes home,
looks it up, and calls Ruth excitedly, "Ruth! Ruth! Thank goodness. Not
to worry! It says herpes is a disease only affecting the gentiles."
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
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