Short conversation yesterday between me and Dan Good, financial guru:

Harry:
Why do I think keeping interest rates low is screwing up the economy?
It’s encouraging speculation.
It’s discouraging saving.
It's not encouraging businesses to lend because the banks are hoarding their money for fear of being closed.
It’s screwing people on a fixed income.
Am I wrong?

Dan:
Partially wrong. You are correct to point out these problems but the other side of the equation is low rates are helping business, which after all is the real Fed target and should help stimulate job creation, at least in theory. However, Obama's crazy spending and socialist policies are a turnoff for business people and everyone is holding back on expansion plans. Until he reigns in spending ( it won't happen) and abandons his redistribution of wealth policies, the economy will go nowhere.

Investing in coins. I bet you can make a fortune in gold, palladium, silver and other coins -- if you know what you're doing. I don't. I smell a world full of scheisters, crooks and semi-honest dealers preying on investor desperation.. I figure a several year learning curve. It seems there are two types of coins -- bullion coins where their value is the metal -- and numismatic coins which get their value from their rarity. South African Nelson Mandela coins are popular, says coin dealer Bruce Tupholme because "Mandela will be remembered as a notable statesman ad is old now at 91. Also these coins are the official South African issued ones."

My friend Steve Littlejohn emails, "Bullion coins are pure or nearly pure gold coins minted by governments and they generally have no numeristic (value for being a rare coin), but are recognized world over for what they are and what they are worth, hence no need for grading or assaying. I am personally most familiar with Krugerrands (made in South Africa) or Canadian Maple leaves. You are paying just a small bit above the price of spot gold prices (spot is the current price for gold right now and the bullion coins cost about $40.00 over spot from my source) and the spread between bid and ask is small and they are highly liquid (hence the advantage is you can sell them anytime and won't get hit with a large cost as the bid ask prices are very tight with the bid still being higher than spot). You might also be interested in American coins - which are the American Eagles or the American buffaloes...

The rare coins have a wide spread between bid ask (today you wrote about a 15% difference in the bid ask from a robber) and sometime aren't easy to sell (in a down market for example). But someone will always buy a bullion coin right now for a price linked to spot. I personally prefer the Maple Leaves. Also I think Palladium coins are a compelling buy at $359.40 for a Palladium Maple Leaf. Last year Palladium hit $165/oz and was a screaming buy. It was over $1,000/ oz at the highs about a decade ago and spot was north of $600 last year."

In short, not for the casual investor.

How STEC lied to me and ripped their shareholders off. First the lessons:

1. Don't believe anything management tells you. Or, at least, discount it heavily.

2. When a stock is hyped as well as STEC was, you need to play it very very short-term. As I ascends fast, take your profits fast. Something smells rotten in the state of Denmark. And it was.

3. Secondary offerings often signal the top of the market. If the secondary is selling oodles of management shares (as in STEC's case), then it's all over.

4. To make it in semiconductors you need a serious competitive edge, and a very large efficient factory -- like Intel and Samsung. Few semiconductor companies have this edge.

5. Any technology edge will eventually be eaten by the competition -- unless there's a huge, patentable edge. A good assumption: the edge doesn't exist.

6. Don't fall in love with the product. I fell in love with STEC's product -- solid state hard drives for servers. But I forgot point 4.

7. Our inviolate 15% Stop-Loss rule will always save your tushy. With volatile stocks, like STEC, you should drop to 10%.

STEC's secondary was done at $31 on August 7, 2009. The day before it was $35. After it was priced, the stock went down to $28.35. The secondary sold nine million shares owned by Manouch Moshayedi, its chairman and chief executive officer, and Mark Moshayedi, its president, chief operating officer, chief technical officer, secretary and a director. The company didn't get a nickel from the secondary. That nine million sale gave them $279 million. Last night those nine million shares were worth $127,260,000. That means those two insiders saved themselves $151,740,000.

On November 3, STEC announced a miserable third quarter 2009 result -- in which it indicated that its largest customer had taken STEC stuff into inventory and that will screw up STEC sales for 2010. The stock crashed. There are rumors (and an analyst report) that STEC, which is heavily shorted, will fall to $5. Its 52-week low was $3.42.

I believe there will be calls for an investigation of insider trading.

"Harry, you're an idiot."
Want a free credit report, go to annualcreditreport.com. You'll get your credit report from each of the big three -- Equifax, TransUnion and Experian. And you won't have to give them your credit card and sign up for anything. It's totally free.

"Do not use www.freecreditreport.com. Those guys are not free. They're crooks."

Going overseas:
1. Take along an unlocked GSM phone. That way you an buy prepaid GSM SIM cards in the countries you visit. Making calls with them is 90% or so cheaper than using your U.S. provider. There are two U.S. GSM carriers whose phones will work in most places overseas -- AT&T and T-Mobile. You can unlock your U.S. phone with instructions on the Internet. PCWorld has a piece on unlocking the old iPhone -- How to unlock an iPhone. Here's how to unlock the newest iPhone. Click here. Most cell phone retailers will also sell you an unlocked iPhone. You can use it happily on AT&T. They won't know. But you can slip the SIM card out and replace it with a different card. And AT&T will never know. See yesterday's column. Years ago, I bought an unlocked Nokia cellphone on eBay. I take that with me and buy cheap SIM cards along the way.

2. Don't use your credit card to take money out of an ATM machine. This is what Visa told me it would charge me: 3% for using the ATM machine, 3% for using the ATM machine overseas and 21.99% annual interest on any outstanding balance. The interest would start to accrue from the instant I took the money out. A better tip: Take a debit card, travelers checks or U.S. dollars.

Frankly, with the Euro at $1.50 it's cheaper to vacation in Maine.

Take your AAA card along.
Priceline can be really cheap for hotels and car rentals, if you're willing to play their game. Your AAA card will actually give you discounts on everything in the travel world -- from Amtrak to hotels to car rentals. I think it's brilliant. AAA encourages us to use the train by getting us a discount. This way they never had to come to the aid of our busted car. It's sitting home in a nice warm garage.

Favorite email exchange of the week. Part 2

Hello Mr. Newton,
I am looking for a buyer for an a very unique estate in Israel. I believe buyer should be foreign jew with zionist ideas. can you help or guide as to where I would find a descreet aristorcrat wealthy buyer?
DS

Dear DS,
How much?

$4 million.

Do you have any photos?

It doesn't photograph well. Estate belonged to my rich zionist Anglo Saxon grandfather. It used to be a remarkable place. Today I would define is as close to a wreck, but special features are still there.

Why is it worth $4 million?

A good question ofcourse. well, I would start by telling you I own only 25% after I lost my inheritence to my father's third wife. majority, wife and aunt, decided this is the price they are interested to sell for, immediately. land is unzoned, but when zoned will be priced somewhere in the 15 million dollars plus. entire surrounding enjoys immense development, high rise, tech, new roads. estates in a nearby neighbourhood located 100 meters away are priced in this price range. majority lawyer insists this is the price, which encorporates both future and the option to put money in the place and transform it back to its glory, which would then bring profit of about 100% and more when re-sold. my partners are wealthy women while I am in debts and am also interested in selling my share alone for less then 1 mill. partners have no problem with me selling out.

If any reader would like more information on this magnificent wreck in an undisclosed location somewhere in Israel, send me an email. I don't make this stuff up.

More stuff I don't make up. I can't. From The Week Magazine 11/6/2009

A Florida man has failed to win compensation for a "defective" pair of underwear. Albert Freed, 62, claims that over a two-week vacation in Hawaii, the fly flap of his briefs rubbed his genitals like "sandpaper belts." Asked by the judge why he didn't notice it sooner, the 285-pound Freed said he cannot see his own genitals, and he didn't ask his wife to look because it might "ruin her vacation."

The Yankees won the World Series.

Their win made Susan my wife very happy. She's a diehard Yankees fan. I don't know what they're doing in this photo. They're having lots of fun doing it.

Late night humor.
+ The White House has approved a new plan to pay — they're going to pay members of the Taliban to change sides and support the U.S. And if it works there, they're going to try it with Fox News." –Jay Leno

+ "The government says this swine flu vaccine shortage could last through December. Through December. Great. Now I'll go to the mall and see Santa sitting there with a big, red nose, probably from the flu instead of the usual alcoholism." –Jay Leno

+ "Now, why is there a swine flu vaccine shortage? You ever notice in this country, we never seem to run out of illegal drugs. You know, we should pay the guys who make crystal meth to start making this stuff." –Jay Leno

_ "Do you believe it's been a year since Barack Obama was elected president? Amazing, huh? Well, actually, there's been some changes. His new slogan is now, 'Yes, we can, but don't hold your breath.'" –Jay Leno

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 any, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. Read more about Google AdSense, click here and here.