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8:30 AM Wednesday, August 24, 2005: I'm putting some money today into real estate trust deed loan on property in Henderson, Nevada just outside Las Vegas. It is an 18-month duration, second TDs paying 17%, which seems excessively high, but isn't. It's the equivalent of an equity participation in a real estate construction project -- except that my upside is limited and the principals, the land and various insurance policies guarantee the project will happen and I'll get my money back and my interest paid. Many Wall Street types, despairing of recent returns on listed securities, have been channeling funds to TDs -- hoping that the real estate boom will continue just a little longer.

Personally I believe parts of it will and parts of it won't. Those parts financed by interest-only loans and other extremely low-cost loans won't. The Wall Street Journal has a piece today on foreigners dumping money into U.S. mortgages, "allowing American lenders to make more loans -- and riskier ones -- in a way that is helping prolong the boom in U.S. house prices." For the Journal's piece, click here.

I'm reading two books at present: They couldn't be more different. The first -- a classic -- preaches value investing. It is Warren Buffet's "bible." Buffet writes, "when I was nineteen, I thought then it was by far the best book about investing ever written. I still think it is." It gives hope to investors. I'm rereading it to refresh my tired gray cells.

The second, just out, is by Yale University's incredibly successful chief investment officer. Yale University earned 19.1% on its endowment in 2004, bringing its 10-year return to 16.8% a year, net of fees (i.e. after paying the fees). This placed it in the top 1% of institutional investors. An amazing performance. See more on Yale's results: click here and click here. In his book, Swensen tears shreds off the mutual fund industry and concludes "Nearly insurmountable hurdles confront ordinary investors."

+ A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.

+ The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.

+ The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be.

+ No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. One by insisting on what Graham called the "margin of safety" -- never overpaying, no matter how exciting an investment seems to be -- can you minimize your odds of errors.

+ The secret to you financial success is inside yourself. If you become a critical thinker who takes no Wall Street "fact" on faith, and you invest with patient confidence, you can take steady advantage of even the worst bear markets. By developing your discipline and courage, you can refuse to let other people's mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.

Hayfever season starts today in the Northeast. It will end with the first decent frost. If you suffer from hay fever, there are four solutions:
1. Wash your face constantly with cold water.
2. Run your air conditioning colder.
3. Pop pills, e.g. Claritin.
4. Suffer.

I've been waiting for the price of the Nikon D50 to come down: Now I can recommend it. This is the SLR (single lens reflex) digital camera every reviewer has gone nuts over. It's PC Magazine's editors choice. The magazine writes: "For photographers yearning to get their hands on an entry-level D-SLR, the D50 is the best choice. It's simply a delightful camera to shoot with."

DPReview.com writes: "I'm quite happy to give the D50 our highest rating, Highly Recommended, there's little to dislike and for anyone looking for an affordable digital SLR it has to be seriously considered. My only advice would be to research lenses and decide if you want to go with the Kit or spend a little more on a slightly better lens." DPReview gave the D50 a 26-page review. Click here.


You can get the camera (without lens) for $570. List is $750. Nikon has two new AF-S DX lenses. The 18-55 mm zoom will become the 'Kit lens' (adding $100 to the price of the camera) and the 55-200 mm offers a lightweight and affordable 'big zoom' addition.

You can use your old Nikon lenses on the camera, but you'll lose automatic focussing and through the lens metering. Note the little metal connectors on the bottom of lens. They are the contacts for focussing and metering. You don't have them on older lenses.

This is the back of the camera. You can view the pictures you took. You can zoom in on them. You can erase them. But you can't take a picture by looking at the screen. You must look through the finder, which you can easily adjust for your eyes.

I have the older and more expensive D100. If I were buying today, I'd buy the D50 and the Nikon SB-800 flash for around $295. Though expensive, it allows bounce flash. That does a much better job with people pictures -- especially children.

Not all ISPs' SMTPs work remotely: Yesterday I wrote "how to travel with your laptop" and recommended that you use "my server requires authentication." A reader emailed me:

It works for SOME ISPs, but not all such as mine (www.cloud9.net). I even called them from Tahoe because I thought the "My server requires authentication" should work. They do not allow anyone to SEND email from their servers unless you are directly connected (dial-up, dsl) into their system. I was able to RECEIVE emails just fine of course. They told me it was an anti-spam measure, as people would buy a cheap dial-up account and then bang out 100,000 or so emails from computers all over the place that would log into their servers. I had to get the mail server address from the cable company where I was staying.

A man appeared before St. Peter at the pearly gates.
"Have you ever done anything of particular merit?" St. Peter asked,

"Well, I can think of one thing," the man offered. "Once, on a trip to the Black Hills out in South Dakota, I came upon a gang of high-powered bikers who were threatening a young woman. I directed them to leave her alone, but they wouldn't listen. So I approached the largest and most heavily-tattooed biker and smacked him on the head, kicked his bike over, ripped out his nose ring, and threw it on the ground." I yelled, "Now, back off!! Or you will answer to me!"

St. Peter was impressed.

"When did this happen?"

"Just a couple of minutes ago."

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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