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Harry Newton's In Search of The Perfect Investment Technology Investor. Auction Rate Securities. Auction Rate Preferreds.

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9:00 AM EST, Tuesday, August 12, 2008: The speed of change. My best hedgie says he's never seen such volatility. Me neither. A few weeks ago, we had a commodities boom. A few weeks ago, the dollar was plummeting. A few weeks ago financials were in the toilet. A few weeks ago, the stock market was in a heavy bear market. A few weeks ago, oil was climbing through $145.

Now, everything is reversed. Now even oil is in a bear market. It has fallen over 20%.

My favorite stockmarket astrologer called me with bated breath last night. His indicators are showing we're now in a bull market. His indicators include stocks that are breaking previous tops, stocks that are moving above their 50 and 200-day moving and stocks achieving new highs versus new lows.

Funny thing is that the last time he made a call -- back in November last year -- he was right.

Oh, and there's one indicator he forgot to mention. I was seriously depressed yesterday, the worst in months. I felt the only thing I'd accomplished was to be crowned The King of the Stockmarket Timing Idiots.

So now is the time to load up the boat on equities? Frankly, I have no idea.

There are two lessons:

1. Things move faster than ever. Hence you need tighter stops. I once had an inviolate 15% stop loss rule. I now think 8% is more in order.

2. You can be right, but still wrong. I cannot believe the 25%+ bounce-backs in financial stocks in recent days. But as John Maynard Keynes once wisely said, "The market can stay irrational longer than you can stay solvent."

The dumbness of chasing yield: A few weeks back, I sent $1 million to Australia to get the 8% they were paying at a big, strong local bank called Westpac. Since then, the American dollar has soared and the Australian dollar has fallen -- by about 8%. Hence my 8% yield has evaporated. The only "good" news is that I resisted recommending any of my readers to Westpac. So you all saved the 8% Australian dollar drop which I didn't. At some point the Australian dollar will be worth dropping into. But not now. Dumb me.

The commodities boom is over. For now. From Bloomberg this morning:

Gold, Platinum Lead Commodities Into Bear Market on Growth Risk

Aug. 12 (Bloomberg) -- Gold, platinum and silver plunged to their lowest in more than seven months, leading commodities into a deeper bear market, on concern that a spreading global economic slowdown will reduce demand for raw materials.

Precious metals also slumped as crude-oil prices fell and the dollar gained, reducing their appeal as an inflation hedge and alternative investment. Gold has tumbled 22 percent from its record $1,032.70 on March 17. Platinum and silver are down 35 percent and 33 percent from their peaks.

Commodities, as measured by the Standard & Poor's GSCI index, have lost 22 percent from a record July 3, descending into a bear market. Crude-oil prices are down 23 percent from a peak of $147.27 a barrel July 11, on signs a U.S. economic slump will extend into 2009. Corn, wheat and soybeans are in bear markets after sliding from highs set this year.

"We've seen heavy liquidation in gold driven by a combination of the dollar strength and oil prices,'' Suki Cooper, an analyst at Barclays Capital in London, said by phone. "We're reaching a turning point in prices.''

Tumbling raw-material prices may erode profits at BHP Billiton Ltd., the world's largest mining company, and Exxon Mobil Corp., the biggest publicly listed oil company. Global energy and raw-materials stocks, last year's best-performing industries, fell into bear markets this month.

The GSCI index surged 41 percent in the first half as equity markets and a declining dollar prompted a "buying orgy'' by investors, Paul Touradji, founder of the $3.5 billion hedge fund Touradji Capital Management, said in March.

Gold Tumbles

Gold fell as much as 2.6 percent to $802.34 an ounce in London and traded at $812.18 as of 11:24 a.m. local time. Platinum lost as much as 3.7 percent and silver 4.5 percent. The dollar traded close to a 5 1/2-month high against the euro today and near a seven-month high against the yen.

The U.S. economy, the world's largest, will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of 50 economists surveyed by Bloomberg News from Aug. 1 to Aug. 8.

Household spending, which has grown every quarter since 1992, is projected to stall in the last three months of the year as the impact of tax rebates fades, wages fail to keep up with inflation and property values fall, it showed.

"We're still very bearish on the U.S. economy,'' said Philip Newman, an analyst at London-based metals researcher GFMS Ltd. Slower economic growth in the U.S. and Europe will trim industrial demand for metals, he said.

Copper for delivery in three months fell as much as 1.2 percent to $7,275 a ton on the London Metal Exchange, a six-month low. Nickel lost 1.9 percent to $17,650 a ton.

Boom Fading

The commodity boom is fading, says Michael Aronstein, chief investment strategist at Oscar Gruss & Son Inc. in New York.

"I think it's over in terms of the investment hypothesis, at least for the next several years,'' Aronstein said in an interview Aug. 5. ``I think the demand destruction, both in the developed world and the developing world, is going to be quite a bit greater than people assume.''

Investor Jim Rogers, 65, who in April 2006 correctly predicted oil would reach $100 and gold $1,000, differs. The fundamentals for commodities are "astoundingly'' good and the bull market ``has a long way to go,'' he said Aug. 6.

Fund selling of gold, the Australian and New Zealand dollars may have spurred today's price drop in precious metals, said Toshihiko Sakai, head of trading in foreign-exchange and financial products at Mitsubishi UFJ Trust & Banking Corp.

Long Positions

"Hedge funds are probably unwinding long positions in commodities and high-yielding currencies, and short positions in low-yielding currencies,'' said Sakai in Tokyo. "These position adjustments are likely to continue for now.''

Gold fell $20 an ounce in less than an hour today as the Australian dollar dropped 0.9 percent against the U.S. dollar, Bloomberg data shows.

"We've been surprised by the strength of the U.S. dollar rally over the past month,'' Goldman Sachs JBWere Pty analysts wrote in a report. "Nevertheless, we believe the threat of rising inflation and the climate of general economic uncertainty remains constructive for gold in the medium term.''

And you thought we were having a recession. Pity you (and I) didn't ride this one. (But please don't start now.)

Guess what they do?

They make jeans selling between $200 and $350. (I don't make this up.)

Recently my wife and daughter told me my cheap jeans were "ugly" and "not fashionable." I rushed out and bought a pair of $25 on-sale Gap jeans two sizes too small. That did the trick. I'm now fashionable, though I can't breath.

True Religion is actually profitable. It just announced a record-breaking quarter and is expanding faster than Wall Street anticipated. The company's year-over-year earnings have increased 86% and the company is projecting a five-year growth rate of 20%. True Religion shares are heavily shorted -- 47.6% of the public float, according to Yahoo Finance. There is huge insider selling, however. The CEO recently offloaded $67 million worth of stock -- but ironically at $21, much lower than last night's close of $30.89. (I guess he knows jeans, not stocks.)

Harry's Hall of ARPS Shame. The most popular feature on my site is Harry's Hall of ARPS Shame. It now includes.

Merrill Lynch
Allianz/Pimco/Bill Gross
Oppenheimer (State of Georgia)
Bank of America

TD Ameritrade

Jerry Brown, California Attorney General
Bill MCollum, Florida Attorney General

The Wall Street Journal described the auction rate freeze-up as ""one of the messiest Wall Street scandals in years." UBS, Merrill, Citigroup and now Morgan Stanley are spending billions to buy the ARPS they sold their clients. Yesterday's news from MarketWatch:

Morgan Stanley said late Monday it plans to buy back about $4.5 billion in auction-rate securities. Earlier in the day, Morgan Stanley, J.P. Morgan Chase & Co. and Wachovia Corp. were alerted by New York Attorney General Andrew Cuomo that he would probe the firms' role in the $330 billion auction-rate securities market, which collapsed in February. Morgan Stanley said it will buy back the securities "held by all individuals, all charities and those small to medium-sized businesses with accounts of $10 million or less" at par value if they were purchased before Feb. 13. The offer is open until Nov. 30.

The incredible Olympics. The swimming. The gymnastics. If you missed any of it, you can watch it on You'll have to install a plug-in called Microsoft Silverlight. It's harmless.

Marriage Broker
A good Hassidic family is most concerned that their 30 year old son is unmarried.

So, they call a marriage broker and ask him to find their son a good wife.

The broker comes over to their house and spends a long time asking questions of the son and his parents as to what they want in a wife/daughter-in-law. They give him a long shopping list of requirements.

The marriage broker takes a long time looking and finally asks to visit the family again. He then tells them of a wonderful woman he has found. He says she's just the right age for the son, she keeps a Glatt Kosher home, she regularly attends synagogue and knows the prayers by heart...she is a wonderful cook, she loves children and wants a large family. And, to crown it all off, she's gorgeous.

After hearing all this, the family is very impressed and begins to get excited about the prospects of a wedding in the near future.

But the son pauses and asks inappropriately: 'Is she also good in bed?'

The marriage broker answers, 'Some say yes... Some say no.'

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.

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