Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EDT, Wednesday, October 7, 2009: It's time
to sell some of your big winners -- especially those not backed by fundamental
serious earnings improvements. This is a bubble, featuring a flight away from
the dollar and bonds to equities and gold. This bubble will not last.
Tech Ticker yesterday featured an interview with a principal of IRA, entitled
"Real" Economy Is Dying: Q4 "Going to Be a Bloodbath,"
Whalen Says," in which he expressed views that were in marked contrast
to those of the gang that couldn't rate straight.
to start the week thanks to a better-than-expected ISM services sector report
and a Goldman Sachs upgrade of big banks, including Wells Fargo, Comerica and
But all is not
right in either the economy or the banking sector, according to Christopher
Whalen, managing director at Institutional Risk Analytics. In fact, Whalen says
most observers are drawing the wrong economic conclusions from the stock market's
"Why is liquidity
going into the financial sector? It's because the real economy is dying [and]
everyone is fleeing into the stocks and bonds because they're liquid at the
moment," Whalen says. "That's not a good sign."
The banking sector's
assets shrunk by about $300 billion per quarter in the first half of 2009, a
sign of banks hoarding cash in anticipation of additional future losses, according
to Whalen. "The real economy is shrinking because of a lack of credit."
will continue into 2010, Whalen predicts, suggesting the banking sector hasn't
yet seen the peak in loan losses. Institutional Risk Analytics forecasts the
FDIC will ultimately need $300 billion to $400 billion to recoup losses to its
bank insurance fund. (In other words, the $45 billion the FDIC sought to raise
last week by asking banks to prepay fees is just a drop in the bucket.)
should think about this because the fourth quarter in the banking industry is
going to be a bloodbath," says Whalen, who believes smaller and regional
banks like Hudson City Bancorp may come into favor vs. larger peers, which have
dramatically outperformed since the March lows.
see the markets rallying when the real economy is shrinking that tells you this
[recovery] is not going to be very enduring," Whalen says.
In this regard,
Whalen finds himself in philosophical agreement with Nouriel Roubini, George
Soros and Meredith Whitney, among other "prophets of the apocalypse"
who've once again been raising red flags in recent days.
column was not Monday's. I labeled it Monday, but it really was Tuesday's.
It had some lessons I learned from my horrible investments in private equity
funds and a big article on how a private equity firm called Thomas H. Lee Partners
drove one of its investments -- Simmons Bedding Company into bankruptcy -- yet
profited enormously itself. The article, from the New York Times, is eye-opening.
Here's the link to yesterday's column -- click here.
got a virus. I was dumb. I was fiddling around installing software
on a new, clean disk. (It's better to install software without virus checking
software running in the background). But I connected -- without thinking --
to the Internet. And bingo, I got a virus. I then loaded Symantec/Norton. It
found the virus. But it couldn't rid my machine of the offending file. I don't
know why. So I simply swapped the offending hard disk for a previously-cloned
Always keep clone your hard disk, and keep the clone handy.
drags on, and on and on. There are few people
skilled in closing things down. There are many, many people whose careers are
tied to the continuation of a disaster -- especially if someone else is paying
for that disaster. I spent two hours last night attending a debate on Afghanistan.
Topic: "America cannot and will not succeed in Afghanistan."
You'll hear it re-broadcast on NPR and Bloomberg.
No one has defined "success." America went to Afghanistan in 2001
to crush Al Qaeda for 9/11. Eight years later, Al Qaeda is now stronger or weaker
than it was then -- depending on which side you believe. No one knows what we're
The Afghan army is key. But we can't get them to show up. If the afghans are
fighting, why are we sending 40,000 more troops?
We are spending more in Afghanistan each year ($65 billion) than the entire
GDP of that country. It would be cheaper to buy the country, quipped one debater.
are dying for the Karzai administration, which is corrupt and unpopular, and
just stole the latest election.
+ You cannot
nation build where there is no nation to build.
+ The U.S. is
living in a dream world. (Huge applause for that statement.)
+ The Taliban
do a better job than we do in delivering security, property rights, and economic
+ American has
vital security interests in both Afghanistan and Pakistan. We need to be there
to make sure the insurgents/terrorists don't get their hands on Pakistan's
+ We'll have
to be there forever.
Sadly, no one
could answer the one question that resonated in my brain: Tell me how this
stupid is your child?
Alleged comments made on student report cards by New York City teachers:
+ Since my last
report, your child has reached rock bottom and has started to dig.
+ I would not
allow this student to breed.
+ Your child has
delusions of adequacy.
+ Your son is
depriving a village somewhere of an idiot..
+ Your son sets
low personal standards and then consistently fails to achieve them.
+ The student
has a 'full six-pack' but lacks the plastic thingie to hold it all together.
+ This child has
been working with glue too much.
+ When your daughter's
IQ reaches 50, she should sell.
+ The gates are
down, the lights are flashing, but the train isn't coming.
+ If this student
were any more stupid, he'd have to be watered twice a week.
+ It's impossible
to believe the sperm that created this child beat out 1,000,000 others.
+ The wheel is
turning but the hamster is definitely dead.
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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