Harry Newton's In Search of The Perfect Investment
Sunday morning: Tennis rain update:
The completion of
the Rafael Nadal vs. Andy Murray Mens Semifinal match will take place
Sunday beginning at 4:00 p.m.
is the full revised Sunday/Monday Match and Broadcast Schedule:
of Men's Semifinals
Sports (at conclusion of NFL)
AM EST, Friday, September 5, 2008: There are two theories:
Jim Cramer's. Things are getting better. Six reasons: 1. Improvement in
housing. Bottom in housing stocks. 2. We have a plan to fix the banks. 3. Both
candidates for president are eyeing tax cuts for the individual. 4. Commodities
have crashed. That's good for companies making things from commodities. 5. Gasoline
is coming down. 6. The consumer is still spending. Reflecting that, Wal-Mart
is up 27% this year.
Pimco's Bill Gross. There's a possible "destructive financial tsunami"
coming. From Gross's September
observed systematic debt liquidation is what confronts the U.S. and perhaps
even the global financial system at the current time. Unchecked, it can turn
a campfire into a forest fire, a mild asset bear market into a destructive
financial tsunami. Central bankers, of course, adopting the cloak and demeanor
of firefighters or perhaps lifeguards, have been hard at work over the past
12 months to contain the damage. And the private market, in its attempt to
anticipate a bear market bottom and snap up bargains, has been
constructive as well. Over $400 billion in bank- and finance-related capital
has been raised during the past year, a decent amount of it, by the way, having
been bought by yours truly and my associates at PIMCO. Too bad for us and
for everyone else who bought too soon. There are few of these deals now priced
at par or above, which is bondspeak for they are all underwater.
We, as well as our SWF and central bank counterparts, are reluctant to make
Step 2 on our
delevering blackboard therefore has stalled and is inevitably morphing towards
Step 3. Assets are still being liquidated but there is an increasing reluctance
on the part of the private market to risk any more of its own capital. Liquidity
is drying up; risk appetites are anorexic; asset prices, despite a temporarily
resurgent stock market, are mainly going down; now even oil and commodity
prices are drowning. There may be a Jim Cramer bull market somewhere, but
its primarily a mirage unless and until we get the entrance of new balance
sheets, and a new source of liquidity willing to support asset prices.
My own view? It's
too early to jump back in. It's too hard to find Cramer's bull market. Cash
remains king. There remains huge problems facing financials. Hence short
the ones I mentioned yesterday -- Merrill Lynch, Bank of America, Citigroup
and Wachovia, which were all down strongly yesterday and which are headed lower.
Key to remember:
This market is not only a bear market; it's also a volatile market.
timing virtually impossible. Pimco screwed up. (See above.) The sovereign wealth
funds bought into the banks too early and lost big. An me? I'm stupid, too.
I sent $1 million to Australia. I bought Australian dollars at 96 cents. They're
now 81 cents. That's a huge 16% drop, and a $160,000 loss on paper. If I think
Australia remains solid, I should send more. The classic dollar averaging. But
I'm not. I am reminded of John Maynard Keynes' profound statement: The stockmarket
can stay irrational longer than I can stay solvent. And solvent is what I want
How bad are things?
Look what happened yesterday:
September 4, 2008
August unemployment report released at 8:30 AM this morning was just plain
awful. There were 84,000 fewer jobs in August. The unemployment rate is
now up to 6.1% -- the highest it's been in five years. We're in a recession
-- whether we call it that or not.
How do we improve
this? There are two ways to help: First, the Fed cuts rates again. That won't
work now. They're already very low. Second, fix housing and the financial sector.
The Fed has done much of the fixing.
To sum up: we're
going to have to wait this out. Meantime, more bear markets.
fascinating to look at the indexes:
I continue to
favor Cash is King. Remember my graphic from July 15?
wind turbines make little sense. I looked at
buying a wind turbine for my house. It made no sense then. According to a New
York Times piece, they still make no sense. Says the Times, "These
tiny turbines generate so little electricity that some energy experts are not
sure the economics will ever make sense."
aerial photos of London. Go here to the Big
Picture. Shows what God could do if only He had digital camera, a helicopter
and lots and lots of money.
yourself against viruses: Reader Charlie McChesney
You do not need
to open an email attachment to activate some new viruses, they can run as
You should configure your anti-virus to automatically update every day at
a time when you are not at your computer.
You should configure your AV program to run a scan every night when you are
Most AV programs can automatically check emails for virus problems too.
I use AVG Free 8.0.169 from Grisoft
or AntiVir from Avira, the first
is Czech and the second is German. Both work flawlessly for our home computers,
don't forget that you can only have one anti-virus program running at a time.
AntiVir is free for non-commercial use.. A few times when we have had a virus,
they have caught it.
quotes for the weekend.
There cannot be a crisis next week. My schedule is already full. -- Henry
The candidate had been talking on and on. Finally, he asked: "Are there
"Yes," said a voice from the floor, "Who else is running?"
For every problem, there is a solution which is simple, neat and wrong. --
H. L. Mencken.
Too much of a good thing is wonderful. -- Mae West.
I have my faults. But being wrong is not one of them. -- Jimmy Hoffa.
Moses to God; "Let me get this straight. They get the oil and we get
to cut off half our penises?"
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
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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,
here and here.