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Harry Newton's In Search of The Perfect Investment Technology Investor. Harry Newton Previous Columns
9:00 AM EST, Friday, July 10, 2009. Liquidity. Liquidity. Liquidity. It's the beauty of our 15% Stop Loss rule. You get your cash out. You live for another day. Stick your money into something illiquid -- like a private equity fund or a commercial real estate syndicate -- and you suffer the endless frustrating explanations -- by phone calls, by paper, through meetings.

Obviously Harry (that's me) listened to all manner of explanations yesterday on why his funds are down 40%. There's FASB 157 mark-to-market rule and there are the industries that have simply gone bust -- from advertising based publishing to pricey retailing to automobile manufacturing (e.g. Chrysler) to badly positioned financial companies (e.g. Nuveen). And now there's a new religion on Wall Street -- Wait Five Years and Pray Values Will Return.

This chart says it all.

Goldman Sachs makes it hand over fist. From today's Bloomberg:

July 10 (Bloomberg) -- Goldman Sachs Group Inc. is poised to report the largest profit since it set earnings records in 2007, marking the return of a business model that was the envy of Wall Street before the financial crisis devastated competitors and spurred a government bailout.

Chief Executive Officer Lloyd Blankfein, who helped make Goldman Sachs the highest-paying securities firm by wagering capital and fueling the bets with borrowed money, may report the most second-quarter profit per share among the 15 biggest U.S. banks, analysts estimate. While rivals have pared risks, New York-based Goldman Sachs has ratcheted up trading gains and reaped more fees from stock and bond sales, according to Barclays Capital analyst Roger Freeman. ...

Michael DuVally, a spokesman at Goldman Sachs, declined to comment. “The vast majority of all our risk-taking is on behalf of clients,” Lucas van Praag, another company spokesman, said in April after the first-quarter results.

As a Goldman client, I can vouch this is simply not true.

Giving your money to an investment bank to manage may be another of those No-No lessons we are learning. When it comes to managing their money or managing your money, guess which one gets preference?

From the same Bloomberg article:

Goldman managed $27.9 billion of global equity and equity- linked offerings in the quarter, up from $1.5 billion in the first quarter, and $3.98 billion of high-yield debt sales, compared with $798 million in the first quarter, according to data compiled by Bloomberg.

I didn't get offered any participation in any of these offerings. And Goldman has told me, in no uncertain terms, I never will. Participation is reserved for institutions.

For Banks, Wads of Cash and Loads of Trouble.
Ambitious banks pay brokers to send them "hot" money. They get oodles of money to invest. They lend it to dubious construction projects, which go broke, leaving the American taxpayer with the bill. The practice exploded in recent years, and continues, since the regulators have a difficult time reigning the practice in -- in the face of heavy lobbying by the banks in Washington. My brain was blown away as I read a piece in the New York Times on the practice.

Please buy the latest Vanity Fair.

There's a piece by Michael Lewis on what really happened at AIG -- "the man who crashed the world." How Harvard became a financial disaster -- "If Harvard is so smart, how come its record $36.9 billion endowment has collapsed?" And, of course, the article on Sarah Palin, which many think caused her to resign. "Sarah Palin’s disastrous ride on the Republican ticket didn’t faze her at all. Talking to top McCain advisers, Todd S. Purdum finds that the freshest face in the G.O.P. has some of the sharpest teeth."

Thoughts for the weekend.
If the rich could hire other people to die for them, the poor could make a wonderful living. Yiddish Proverb

The wise man, even when he holds his tongue, says more than the fool when he speaks . Yiddish Proverb

One old friend is better than two new ones. Yiddish Proverb

One of life's greatest mysteries is how the boy who wasn't good enough to marry your daughter can be the father of the smartest grandchild in the world. Yiddish Proverb

Pessimism is a luxury that a Jew can never allow himself. Golda Meir

Any intelligent fool can make things bigger and more complex. It takes a touch of genius - and a lot of courage to move in the opposite direction.
Albert Einstein

Life is like riding a bicycle. To keep your balance you must keep moving. -- Albert Einstein

You can't control the wind, but you can adjust your sails. Yiddish proverb

Imagination is more important than knowledge. -- Sign hanging in Einstein's office at Princeton .

We can't solve problems by using the same kind of thinking we used when we created them . Albert Einstein

Health. Tennis. Exercise. Tests. Eat less. Exercise more. Get your blood tests. Have a colonoscopy and a chest X-ray. Downsize your expenses. Worry less. Relax a little more. Stop trying to predict the future. I'm not Goldman Sachs. I can't do what they do -- even if I knew exactly what it was.

I'm going out to play tennis early this morning. The sun is shining. There are blue skies. It's 61°F in New York City this morning. Gorgeous. Stay healthy and calm.

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.