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8:30 AM EST, Thursday, August 9, 2007: Today's two overarching lessons from the sub-prime mortgage mess:

1. Financial institutions -- banks, I-bankers, etc. -- today have little interest in your (or anyone else's) long-term interest. Every borrowing is bundled (also called securitization) and sold. The seller has far less interest in the long-term quality of what he's selling as against the short-term consideration of "Can he sell it NOW?" The vetting of securities has now moved from the originating institution (bank, i-bank) to the ratings agencies (Moodys, Standard and Poors, and Fitch. etc.). These agencies have no first hand knowledge of the borrower, reduce every loan to statistics and are horribly overworked, i.e. don't have the staff to do a proper job.. The last person in the chain holds the bag and lives with its inadequacies. The last person in line gets hit with the mess.

2. David Kotok Chairman, Cumberland Advisors, said it best on CNBC this morning. He said "this is an unfolding process with more time and more damage ahead. ... We haven't even reached the consumer sector -- there's another couple of trillion dollars of securitized consumer debt instruments coming due. These are the same consumers who are defaulting on their mortgages."

Kotok figures this stockmarket will go lower. I agree with him. How lower? Neither he nor I know. Cumberland, he says, has sold all its financials (you should too) and is sitting with its highest cash reserves in years. He says there are "desirable" sectors -- technology, health care, etc. But he doesn't believe that now is the right time to be "nibbling." Not yet, anyway. Will this mortgage contagion move over into the broader U.S. economy? I've talked about recession in this column. It's a tough call. Housing is slumping. Consumer spending has to be tightening... And consumer spending is 70% of our GDP.

Day-to-day news will continue to buffett the market. Look at the volatility of the last ten days:

What's happening with bonds? Citigroup's SmithBarney division is a big bond house. One of their brightest is George D. Friedlander, who carries the delicious title"Fixed Income Strategist." I like listening to him. Today he's speaking at 1 PM EST on an investor conference call. The number to call is (888) 756-2805. The pass code is 6058974.

If you miss the call, there'll be a replay. The phone number is (888) 203-1112. The pass code is 6058974
The replay will be available until August 16, 2007 at 1:59 PM EST .

The falling cost of land. I am looking at a report on a piece of vacant development land out west. In January 2006, the property was appraised at $70.4 million, based on completion of the mapping process. In December 2006, the same appraiser re-valued the property at $37.3 million mapped. (Mapping means getting regulatory approval to develop the property into roads, home sites, shops, etc.) According to the report, "the 47.2% reduction during this 12-month period was caused by national home builders deciding abruptly to cease land purchases for future development and to clear existing inventory."

Things couldn't be worse in the housing business. Toll Brothers Inc., a builder of luxury homes, said its home-building revenue fell 21% in the fiscal third quarter ended July 31, as cancellations rose from the previous quarter and buyer traffic in some of its communities fell to the lowest levels the company has seen. DR Horton CEO Donald Tomnitz said recently, "It is now clear that the selling season did not materialize this year."

Home builders stocks are, curiously, not at their one-year lows:

Buy when things are bleakest? On Tuesday my guru wrote:

The good ones, D.R. Horton (DHI), Toll Brothers (TOL) etc.) trade at under 1x tangible book value. This is largely land purchased over the last five years. The value of that land has declined somewhat from the peak, but the value of the blended amount on the balance sheet should not be much below the levels on the book. Buying homebuilders (that don’t go bankrupt) has always paid at these levels over time, though there is certainly going to be a heck of a lot of volatility.

Your call. It's not one I'm making, yet.

Not excited about Bluetooth. I must be the last person in America to buy a Bluetooth headset for their cell phone. Today I succumbed. I bought it not to look geeky. I wanted to hear my BlackBerry ring. I figured I'd hear the Bluetooth headset ring. After all, it was sitting in my ear. Wrong! It doesn't ring. It beeps. It beeps quietly and infrequently. Background noise -- specially noisy New York -- overwhelms its little beeps. Worse, you can't increase the beeps' volume.

If you do eventually get to answer the call, you'll be pleased with how well it actually does work. It's as good (or as crappy) to speak on as your own cell phone. I have no idea if other Bluetooth headsets work better. I was assured by the Radio Shack salesman that all Bluetooth headset sounded the same. And my $49.97 (on sale) Motorola Motostart HS850 was the among the better designed ones (for the money). He liked that the extension microphone boom also shut off the headset when you folded the boom.

Here are three views of the Motorola Motostart Bluetooth HS850. Dumb me. I just checked the Internet. You can buy this thing for only $19.99 on ShopCell.com. It's absolutely worth that tiny price.

Nothing can make you feel as good as being healthy. Playing tennis 7 days a week and biking five days a week has its benefits. I'm at my lowest weight in years. My blood pressure at 105/65 is the lowest it's ever been. I feel strong and most alive. Better than a 300 point Dow day jump.

Too much sugar. Yuch. A bottle of Gatorade has 130 calories, most of it from various forms of sugar. A can of Coca Cola regular has 140 calories, most of it from various forms of sugar. No one needs all this sugar. It'll make you diabetic.

Great (?) dentist jokes
A woman and her husband interrupted their vacation to go to the dentist.

The woman said, "I want a tooth pulled, and I don't want Novocain because I'm in a big hurry. Just extract the tooth as quickly as possible, and we'll be on our way."

The dentist was impressed. "You're certainly a courageous woman," he said. "Which tooth is it?"

The woman turned to her husband and said, "Darling, Show him your tooth."

How to kill the pain at the dentist
A man walks into the dentist's office and after the dentist examines him, he says, "that tooth has to come out. I'm going to give you a shot of Novocain."

The man grabs the dentist's arm, "No way. I hate needles I'm not having any shot!"

The dentist says, "okay, we'll go with gas."

The man replies, "Absolutely not. It makes me very sick for a couple of days. I'm not having gas."

So the dentist steps out and comes back with a glass of water, "here," he says. "Take this pill."

The man asks "What is it?"

The doc replies, "Viagra."

The man looks surprised, "Will that kill the pain?" he asks.

"No," replies the dentist, "but it will give you something to hang on to while I pull your tooth!"

What time do Chinese people go the dentist?
Why, obviously, when it's 2:30.

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. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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