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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 Friday, December 9, 2005: Travel. Ask questions. People are overjoyed to talk about their investment successes and (if you push them) their failures. This week's trip brought highlights:

+ 1031 tax-free exchanges are beyond wonderful. Buy a piece of property. Fix it. Sell for more. Buy another bigger piece. Sell it for more. Never pay taxes -- so long as you follow the IRS's 1031 rules. And when you're through and want to retire, sell everything and put the proceeds in a real estate investment trust. You'll never pay taxes. With every other asset you mess with -- stocks, bonds, paintings -- the only question is long-term or short-term taxes. But you pay taxes. With 1031 real estate changes, you may never pay taxes -- or pay them so far out that you'll never notice them.

+ IRAs can hold far more than stocks and bonds. They can hold real estate. They can lend on mortgages and trust deeds. They can own bits of limited liability companies (i.e. normal private companies). The reason all our IRAs today hold only stocks and bonds is that our stockbroker set them up. And guess what he doesn't sell?

+ Expensive real estate is easing. Now is a good time to buy that 10,000 square foot house you always wanted. There are bargains. (No kidding about the 10,000 square feet. I stayed in one in Rancho Santa Fe. It's as close to Paradise as anyone deserves to be.) As a reflection of high-end easing, Toll Brothers warned. They make McMansions.

+ Entry-level remains in high demand, what with babies and immigration.
But you got to move to newer, cheaper places like Arizona and Nevada. That's our latest home building playground. We're looking at selling house between $225,000 and $250,000. A family earning $50,000 to $60,000 a year can afford that. They'll also accept the longer commute -- for a while, until the jobs move to them.

+ No one on the west coast talks about the stockmarket. They don't like it. And they'll tell you how real estate has always done better for them.

+ Bird-dogs are the greatest animals ever invented. Typically they're ex-Wall Street types who got jack of Wall Street and went looking for something better. Often they found it in real estate, which is far larger than the the stockmarket, but gets far less media attention. Your Search for the Perfect Investment should be to find bird-dogs. The best way to find them is to ask everyone you meet and then go major due diligence. More about this important subject another time.

Trust your own instincts. When Kirk Kerkorian bought shares in GM, I thought I was an idiot recommending shorting the stock. I thought he saw something I didn't. And maybe he did. But for now, the company is oozing nothing but bad news and the stock is cratering. It remains a great short. Try Harry's New Game: Spot the GM car. On your way out today, try to spot a GM car. There are very few of them on the road.

TiVo is probably a good short, also.
My friend Seth just got a TiVo-like DVR from his cable company (RCN) for $8.95 a month. Says Seth, "Thus far it has been great, although I cannot type in a key word like "tennis" and have it record everything, I can record just about anything else I program." In contrast, TiVo charges as much as $12.95 a month. Admittedly, today TiVo can do more than a cable TV DVR box. But that's today. Sadly, TiVo lacks the money and the management mindset to perceive the threats and to leap ahead.

JetBlue is phenomenal: New York to San Diego and return. Left on time. Arrived on time. Turned the plane around in San Diego in an incredible 45 minutes. Professional. Courteous. Full plane, as usual. I wish I could recommend the stock. But, with high fuel costs....

How can you afford NOT to travel?
NY to San Diego round-trip on JetBlue for $225. Delta' s Song has Florida, California and Vegas JetBlue prices. Airline pricing makes zero sense, given fuel costs....

Why am I not excited this morning about living in New York? In San Diego this week, I awoke to blue skies and 70 degree temperatures. This morning in New York, I awake to fist-size snowflakes falling out of a dark gray sky. So much for biking to tennis.

Silly Thoughts to Ponder:
Number 9 - Life is sexually transmitted.
Number 8- Good health is merely the slowest possible rate at which one can die.
Number 7- Men have two emotions: Hungry and Horny. If you see him without an erection, make him a sandwich.
Number 6- Give a person a fish and you feed them for a day; teach a person to use the Internet and they won't bother you for weeks.
Number 5- Some people are like a Slinky.....not really good for anything, but you still can't help but smile when you see one tumble down the stairs.
Number 4- Health nuts are going to feel stupid someday, lying in hospitals dying of nothing.
Number 3- All of us could take a lesson from the weather. It pays no attention to criticism .
Number 2- Why does a slight tax increase cost you two hundred dollars and a substantial tax cut saves you thirty cents?
Number 1- In the 60's, people took acid to make the world weird. Now the world is weird and people take Prozac to make it normal.

Recent column highlights:
+ Dumb reasons we hold losing stocks. Click here.
+ How my private equity fund is doing. Click here.
+ Blackstone private equity funds. Click here.
+ 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 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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