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8:30 AM Wednesday September 29, 2004: Sit, watch and wait. Good painless strategy. Otherwise? You could be a bond trader and sell bonds shorts, thinking interest rates were rising. Only to watch them fall... then to experience the pain of massive short-covering. And you count your losses. As my father said, there's only one way to make a small fortune. And that's to start with a big one.

So little of what's happening today is "fundamental" and so much of it is rampant speculation -- also calling taking a big bet with your firm's (or your client's) money. . and watch. All this crazy behavior makes predicting this market -- equities or bonds -- very difficult, if not impossible.

It seems lots of people are following my heady advice: "When in doubt, stay out. A broker friend and his partner visited Smith Barney's trading floor yesterday. "Harry," he commented, "The phones weren't ringing. It was dead. I've never seen it that dead. I've been there a hundred times. My chief trader had done two trades by lunchtime. Normally he's done 50. It was depressing."

What's happening? Three things:
1. No institution is using Wall Street's traditional brokers. They're placing their trades with ECNs. Why trade for 6 cents a share with a broker, when you can trade for a penny a share with an ECN?
2. Retail customers are sitting on the sidelines, perplexed by conflicting economic news and seemingly fully priced equities.
3. Retail customers are also forcing their brokers to discount. Virtually all are. But they're still too high. Are you listening Morgan Stanley, Deutsche Bank?

The upshot, my friend claims "All the brokerage firms, from etrade to Schwab, can be shorted to oblivion." Don't act on this advice without doing more research.

Now they're talking of $60 a barrel. And that will seriously hurt the economy. From today's Wall Street Journal.

"OIL PRICES ARE SURGING again, topping $50 a barrel on Nymex despite OPEC's assurance to keep the spigots wide open. After the September contract hit $49.40 on Aug. 20, oil tumbled toward $40 as speculators such as hedge funds withdrew bets. But major concerns -- consumption in China, fading inventories in the U.S., and worries about terror and the stability of Yukos -- are keeping prices juiced. The final jolt came when Hurricane Ivan brushed major oil facilities in the Gulf of Mexico, disrupting production. Next up could be $60 a barrel -- but oil has a ways to go before reaching its inflation-adjusted high: In 1980, after the Iranian revolution, crude averaged about $80 a barrel in today's dollars.

Taking pleasure elsewhere. This is my son, Michael completing the New York Road Runners Half Marathon (13 miles) on August 29 in New York's Central Park. He did the race in 1 hour, 54 minutes and 27 seconds. He says he'll do this weekend's race faster.

Real estate opportunities in ... Where?
I actually received this email yesterday. Note how strongly the prices rise....

"Dear Sir,
We can supply you with the investment opportunities in real estate trading sphere. 12% commission is provided as a reward for each introduced customer by your side. We help finding properties meeting your taste and not damaging your budget. We manage investment return in short period by high lease charges or sale of the acquired properties higher than its estimate within 1-2 years. The administration for international relations concludes a contract for each business offer and gives the necessary warranties.
Also the legislation of Azerbaijan Republic is strong, democratic and steady. The listed properties for sale are located on the cross of Europe and Asia - (West and East) which is one of the most important points of world economy. A lot of famous tourism, treatment and entertainment centers are located here. Many of foreign investors have invested their capitals in this country based on these facts. So the prices of real estates here rise day by day. The detailed information about our company could be obtained from "New York Post" newspaper. You can come and visit our country and witness all the possible business opportunities. If you're interested to know more about the offered projects, then we can provide you with the following:
1. The detailed information about our country and company from "New York Post" newspaper;
2. The listing, details and photos of all types of real estate which are for sale;
3. Our website address;
4. More information about Azerbaijan and its capital - Baku city;
5. Big scale business projects bringing decent profit.

With sincere respect,

Prant Real Estate Group
Marketing and sales manager
Vugar Mamedov
Tel: (+ 994 50) 3933999
Fax: (+994 12) 4997385
Address: 111 Chingiz Mustafayev Str.,
Baku city, Azerbaijan"

That's it. I'm sold. Well sort of. But first a little due diligence (DD). Where the heck is Azerbaijan?

What's this place Naxcivan on the left? Maybe it's got even cheaper real estate? Back to the Web for more DD.

"After Nakhchivan City, Ordubad is the most important town in the Nakhchivan Autonomous Republic, having once been the capital of a semi-independent sultanate, which eventually yielded sovereignty to the Russians tzars in 1828. Situated near the river of the same name -- a tributary of the Araz - Ordubad is nevertheless a mountain town, built at 850m under the imposing presence of the Zangezur range.

Although the area always had an agitated history, several buildings from the 17th and 18th century are well preserved, namely three mosques (Saatabad, Dilbar and Juma), the last one also retains a religious school (madrasa). The history museum is also well worth visiting. The museum provides a glimpse into the past of a town with a rich cultural tradition, having been one of the early printing centres and home to the family of astronomer and mathematician Nasraddin Tusi.

The economy suffered a severe blow in 1988 with the loss of access to both raw materials and markets, due to the Nagorno Karabakh conflict. Due to the Karabakh conflict, trains no longer go to Azerbaijan proper via Megri, but there are train services to Nakhchivan city, notice that the station is almost 4 km south of the town. The rail trip is memorable. The line goes along the Aras river, the border with Iran, providing amazing vistas of the Iranian bank, including of the world's oldest churches -- St. Stephanos, built near the place where the Qotur river joins the Aras.

The only place to stay is the old Soviet style hotel Sahil, near the bridge over the river Ordubad. The compensates its many insufficiencies with a nice view of the river. Around the town there are vast and varied orchards, as well as mulberry plantations, producing the leaves used for breeding silkworms. Azeri and Iranian authorities have agreed to build a new bridge over the river Araz in the border point of Ordubad-Siahrud."

But maybe there's even cheaper real estate? Turns out there's a place called Nagorno-Karabakh which is claimed by Azerbaijan, but is controlled by its ethnic Armenian inhabitants who have tried, for the past 13 years, with Armenia's support, to get independence. This conflict produces such politically-incorrect words as, "If there is a single Armenian left in Karabakh this October, Azeris will hang him in Baku's Central Square ..." (Excerpt from a public address of Abulfaz Elchibey, President of the Republic of Azerbaijan, 1992)

Seems this part of the world has been in constant conflict for eons. ... Now for some really cheap real estate. This picture shows the ruins of the Armenian half of Nagorno Karabakh's former capital of Shushi, obliterated by Azeri armed gangs and Turkish expeditionary troops in March 1920. I couldn't get an up-to-date picture. I suspect it hasn't changed much.

The logic of traveling first class:
A plane is on its way to Melbourne when a blonde in Economy Class Gets up and moves to the First Class and sits down. The flight attendant watches her do this and asks to see her ticket. She then tells the  blonde passenger that she's paid for Economy and that she will have to go and sit in the back. The blonde replies "I'm blonde, I'm beautiful, I'm going to Melbourne and  I'm staying right here!"
 
The flight attendant goes into the cockpit and tells the pilot and  co-pilot that there is some blonde bimbo sitting in First Class that belongs in Economy and won't move back to her seat.

The co-pilot goes back to the blonde and tries to explain that because she only paid for economy she is only entitled to an economy seat and she will  have to leave and return to her original seat.

The blonde replies, "I'm blonde, I'm beautiful, I'm going to Melbourne and I'm staying right here!" Exasperated the co-pilot tells the pilot that it was no use and that he probably should have the police waiting when they land to arrest this  blonde woman.

The pilot says, "You say she's blonde? I'll handle this, I'm married to a  blonde, and I speak blonde!"

He goes back to the blonde, whispers in her  ear, and she says "Oh, I'm sorry - I had no idea," gets up and moves back to her seat in the Economy section.

The flight attendant and co-pilot are amazed and asked him what he said to make her move without any fuss.

The Pilot replied " I simply told her First Class isn't going to Melbourne"

Afghanistan is having elections in a few days: When I was in Kabul in 1966, "toilet paper" was smooth, round pebbles from the local river bed. (I don't make this stuff up.) Which leads to...

An Afghanistan diplomat visiting the US for the first time was being wined and dined by the State Department. The diplomat was not used to the salt in American foods (French fries, cheeses, salami, anchovies, etc..) and was constantly sending his manservant, Abdul, to fetch him a glass of water.

Time and again, Abdul would scamper off and return with a glass of water, but then came the time when he returned empty handed.

"Abdul, you son of an ugly camel, where is my water?" demanded the diplomat.

"A thousand pardons, O Illustrious One," stammered the wretched Abdul, "A man is sitting on the well!"

Harry Newton

I make my daily column -- In Search of the Perfect Investment -- (Monday through Friday) freely available for three reasons:
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