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8:30 AM Tuesday, August 16, 2005: Conclusions from yesterday's reading:

+ Due diligence is time consuming.
+ Due diligence is not rewarding. It leads to lots of saying No. (Which makes for boring copy.)
+ How you personally feel about the company's ability to innovate and how much attention they pay to sales and marketing is key. See my Tale of Two Banks below.
+ This stuff isn't easy, though my LBO (leveraged buyout) fund made a big payout yesterday and my bank manager was happy.

A tale of two banks. My friend runs Independence Community Bank (ICBC). It had a nice run, warned, then its shares collapsed:

In contrast, another local bank, Commerce Bancorp (CBH) has been exploding:

The difference? CBH innovates with on-line and other services. ICBC doesn't. A reader turned me onto CBH and the great deals it offers. He emailed me:

Harry - Do you bank with Commerce (CBH)? I met with their CEO yesterday and this is truly an amazing story. Last week they rolled out a credit card for their banking customer that charges no fees! No late fees for non-payment, nothing. They, unlike most banks, are happy enough just collecting the massive spread on the rates that a credit card borrower would pay. If any of your readers live in CBH's markets (New Jersey, Pennsylvania, Delaware and New York) they should definitely look into banking with them. The service is phenomenal and they don't nickel and dime you to death.

Here's a sampling of CBH's services from their web site. Most of these services ICBC doesn't provide, despite my constant prodding.


CBH is significantly more profitable. There's a lesson here. A lot of it has to do with marketing and innovation, and most importantly, how the company uses the Internet to spoil its customers. CBH does. ICBC doesn't. I made some money with ICBC and fortunately got out when it started tumbling. I could have made more with CBH. I'm hoping for a pullback and will buy CBH stock.

Cramer made it to Time Magazine: They wrote Jim Cramer up as a media story, not a stock-picking story. How stupid can you get? As a media story:

+ CNBC's ad revenues were $140 million in 2004, compared with $383 million in 2001. They need a "star" like Cramer.
+ Overall ratings remain depressed, even though onetime rival CNNfn closed down last year.
+ Cramer gets about 176,000 viewers a night. Not many. But far more than previous (now cancelled) shows hosted by Dennis Miller, John McEnroe and Tina Brown.

As to Cramer's stock-picking record? Someone called Landmark Associates in Fernandina Beach, Fl is tracking Cramer's performance. Landmark's chart this morning shows 21 successful picks versus 20 unsuccessful ones. That's a so-so record. The site is www.booyahboyaudit.net.

Triple-tax-free floaters. California ones are paying around 2.53% at present. New York ones are paying around 2.6%. If you're paying 35% in total on your federal, state and city taxes, those rates are equivalent to 4% before tax -- which is not shabby for complete safety.

Understanding fuel economy rules and regulations. From today's New York Times:

Roughly speaking, corporate average fuel economy regulations - known as C.A.F.E. standards in the industry - divide each automaker's annual new vehicle production into two categories: passenger cars and light-duty trucks. New cars must average 27.5 miles a gallon and light trucks 21.2 miles a gallon in 2005 models and 22.2 miles by 2007. The figures represent lab-generated mileage and overstate the numbers that can be achieved on the road. Rules for cars are not being changed.

When the current two-category system was created in the 1970's, cars ruled the American road. Since then, automakers have developed new classes of vehicles that qualify as trucks, including S.U.V.s, minivans and family-oriented pickup trucks with two rows of seats. As a result, not only is the number of vehicles on the road increasing, but the average new vehicle is getting lower mileage than it did two decades ago because so many more new vehicles are trucks. An increasing emphasis on horsepower is also a major factor.

Larger sport utility vehicles and pickup trucks weighing more than 8,500 pounds when loaded, like many Hummers and Ford Excursions, have been exempt from the regulations. When the system was created, vehicles of that weight were generally used for commercial purposes, but now hundreds of thousands sold each year are intended for family use.

Automakers have had powerful incentives to produce such vehicles because they are exempt from fuel regulations, have had rich profit margins, and many consumers can claim tax breaks for them. The administration had suggested including larger S.U.V.'s in fuel economy regulations in a first wave of proposals in December 2003, but domestic automakers objected that such a move would harm their fragile bottom lines.

Who says computers can't bring people together? During the father of the bride's toast, he praised the groom's good cheer and helpful nature by recalling the time he called him for help with his computer which had begun spontaneously rebooting every few minutes. The groom figured out the problem, then patiently talked his future father-in-law through removing the Blaster worm. Having thus properly greased the skids, the groom called back a few minutes later to ask for his daughter's hand in marriage. -- from The Washington Post.

Compassion With an Umbrella
A Western Buddhist woman was in India, studying with her teacher. She was riding with another woman friend in a rickshaw-like carriage, when they were attacked by a man on the street. In the end, the attacker only succeeded in frightening the women, but the Buddhist woman was quite upset by the event and told her teacher so. She asked him what she should have done - what would have been the appropriate, Buddhist response?

The teacher said very simply, "You should have very mindfully and with great compassion whacked the attacker over the head with your umbrella."

Need a Haircut, now
A pastor, known for his lengthy sermons, noticed a man get up and leave during the middle of his message. The man returned just before the conclusion of the service.

Afterward the pastor asked the man where he had gone.

"I went to get a haircut," was the reply.

"But," said the pastor, "why didn't you do that before the service started?"

"Because," the gentleman said, "I didn't need one then."

Recent column highlights:
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell your stocks. Click here.

Harry Newton

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. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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