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Harry Newton's In Search of The Perfect Investment Newton's In Search Of The Perfect Investment. Technology Investor.

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8:30 AM Tuesday, August 9, 2005: August is traditionally a dreary month in the stockmarket. That's bad. What is good is that a number of my syndicators are finding new properties. The bad news is that most are in second and third tier markets -- away from the east and west coasts. The real estate boom continues to be bi-coastal.

Office space in the Midwest.Two years ago my friend bought an empty office building near Dayton. A Fortune 500 company built it for $60 million. My friend bought it for $5 million, a "bargain" at $25 a square foot. Two years later, the building is still empty, awaiting its first tenant. My friend told me last night: "Real estate can be a very hard business. Many of the Mid-Western states remain in serious recession."

Credit cards and ATM machines are tacking on heavy surcharges if you use them overseas. Visa, MasterCard, American Express and others are tacking an extra 2% to 5% fee on international transactions. This is not a currency-exchange commission, because the Visa/MasterCard clearinghouse has already taken its commission (currently 1%) when converting your transaction from foreign currency into U.S. dollars. My wife learned about this trick when she checked her MasterCard bill after a three-day quick trip Montreal. There was an extra $43 on it.

There's a worse wrinkle. Let's say you've bought an item in Paris and charged it to your Visa or MasterCard. You take it back to the hotel, find that it doesn't fit or doesn't work, and return it to the store. The shopkeeper now issues a credit in euros. Visa or MasterCard converts the credit into dollars (taking their commission) and passes the dollar amount on to your credit-card company. Your credit-card company may then impose a surcharge on the credit. In other words, you're gouged twice: first with the 2% to 5% surcharge on the original purchase, and again with a 2% to 5% surcharge on the store's refund.

Another wrinkle is the "cross-border transaction fee," which applies to foreign transactions in your own currency. For example, if you're an American and you charge $1,000 in onboard charges aboard a cruise ship, the credit-card company may pad the bill by another $20-30 just because the ship was outside of U.S. waters.

How to avoid surcharges:
+ Take cash.
+ Check with your credit card issuer just before you leave. Policies change quickly. Maybe you'll find a lucky one.
+ Don't buy anything in Paris. In fact, don't go there.
+ Stay home.

Beware of hidden ATM fees: Some banks are now charging hidden fees of several percentage points on foreign-currency ATM transactions.

Another ripoff: Merchant fees: The Wall Street Journal reports that some merchants are now charging foreign customers in their home currencies. For example, a hotel in Rome might bill an American customer in U.S. dollars instead of euros and earn a 2% to 5% commission for this unrequested "convenience." To avoid such fees, insist on being billed in local currency. The Journal reports that Visa requires merchants to let customers opt out of conversion, and American Express waives its 2% conversion fee if the merchant has converted the charge to a foreign currency.

Remember (BIDU), the Chinese Google. It came public on Friday at $27 and then went crazy as every day trader and their uncle bought, sold and generally amused themselves. This was the chart I published yesterday. I said don't go near this thing. Far too insane. Small float. Crazy valuation.

Now, look what happened yesterday. It spiked up and then plummeted. I repeat: Don't go near this thing.

This bothers me. But am I surprised?
The commission investigating the UN oil-for-food program in Iraq on Monday accused the program director, Benon Sevan, of accepting money from kickbacks in Iraqi oil sales and a second UN official of soliciting a bribe from a program contractor. The panel, led by Paul Volcker, the former chairman of the U.S. Federal Reserve Board, said that Sevan had accumulated at least $150,000 in his New York accounts from exploiting the program he headed and that Alexander Yakovlev, a procurement officer, had sought money in exchange for confidential bidding information. While the bribe offer was unsuccessful, the committee said it turned up "persuasive evidence" that Yakovlev had gained as much as $1.3 million in payments from contractors in other UN programs and deposited it in an offshore account.

REITs are tumbling because long-term interest rates are rising and because they have have had a great run. The present wisdom is to sell your REITs. I've sold all mine. I cannot predict interest rates. No one can. BUT, this time higher rates do seem to be sticking:

Everyone expects another quarter point rise today from the Fed.

My second best lawyer joke:
One afternoon, a well-to-do lawyer was riding in his shiny limousine when he saw two men along the roadside eating grass.

Disturbed, he ordered his driver to stop and he got out to investigate the situation.

He asked one man, "Why are you eating grass?"

"We don't have any money for food," the poor man replied. "We HAVE TO EAT GRASS!"

The lawyer then said, "Well, then, you can come with me to my house and I'll feed you!"

"But sir, I have a wife and two children with me. They are over there, under that tree."

"Bring them along," the lawyer replied.

Turning to the other poor man he said, "You come with us, too."

The second man said, "But sir, I also have a wife and six children with me!"

"Bring them all!" the lawyer answered. They all jammed into the huge limo.

Once underway, one of the poor fellows turned to the lawyer and said, "Sir, you are too kind. Thank you for taking all of us with you."

Genuinely touched, the lawyer replied, "Glad to do it. You'll really love my place; the grass is almost a foot high!"

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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