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8:30 AM Monday, February 14, 2005: There it was in its majestic glory. Acres and acres of wonderful apartments. All rented up. All clean as a whistle. I'd like to live there. Nine feet ceilings. Spacious apartments. In-house garage. You drive into your apartment, walk inside. Nice wooded views.

There's nothing like a site inspection. Look at the property. Talk to the brokers. Check out the management. Look at the rents. Check out the comps (real estate talk for comparables). Tour around the neighborhood. I'm not telling you which town for fear you'll outbid us. I'm definitely in on this one. Even in its present form, it makes nice handsome money. I see some small ways to boost profits. Site visits are useful. Even though it took most of Friday, it was worth it.

"Buy land," Mark Twain once said. "They've stopped making it."

In contrast, the stockmarket remains "iffy. This weekend's Fortune Magazine has a piece called "Trouble Ahead for Stocks." Words from Fortune:

"One of the few things you can usually count on in the markets is that, like lions after a slumber, stocks rise at the start of the year. Spurred by resolutions, investors often kick off the new year by funding their retirement accounts. And among those folks lucky enough to work for companies that award year-end bonuses, many choose to go shopping for equities (rather than at the new-car lots). The flood of new money into the market tends to push share prices higher. Not this year. Although the merger wave helped buoy stock prices in January's final days, all the major U.S. equity indexes finished the month in negative territory. Both the S&P 500 and the Dow dropped nearly 3%; the Nasdaq fell more than 5%. If history is any guide, that's a bad omen. Since 1938, the direction the S&P 500 takes in January has predicted its overall direction for the year fully 80% of the time. ...

One worrisome development that's received surprisingly little attention is that the Federal Reserve is raising interest rates just as profit growth is slowing. Typically it's the reverse: The Fed raises rates when profits are accelerating and lowers them when they're slowing. This process creates a "buffer" system for investors, cushioning the blow of either higher rates or falling profits. But right now the buffer is out of whack. ...

At least one longtime market observer is alarmed by the trend. Richard Bernstein, chief U.S. strategist at Merrill Lynch, says the combination of a rising Fed funds rate and slowing profit growth has occurred only three times during Greenspan's 18-year tenure. In each case stocks initially rose. But within a year or so they tumbled by at least 15% each time — in 1990, 1998, and 2001. Although Bernstein says the combination of rising rates and slowing profit growth was never the sole cause of the subsequent selloff, he maintains that it played a big role—particularly from 1999 to 2001. "History shows it hasn't been a good combination," he says.

Given his cautious outlook, Bernstein suggests that investors lighten up on U.S. equities. ...

The assumption is that Greenspan is correct in not raising interest rates more quickly, because inflation is under control. Indeed, the consensus forecast among economists is for the U.S. consumer price index to continue growing at a moderate 2.5% annual clip But several top investors, including Pimco bond guru Bill Gross, believe the CPI dramatically understates inflation. Among other things, they argue that the government's "hedonic" adjustments — meant to account for quality improvements in an array of products, from computers to cars — tend to lowball inflation. And given rising commodity prices and the falling dollar, they expect inflationary pressures to pick up. That's bad news for stocks. History shows that P/E multiples tumble as inflation rises. And with the S&P 500 trading at 20 times the previous 12 months' earnings, or 25% higher than its average P/E of 15 since 1926, stocks could have a long way to fall.

Finally, bulls and bears agree on at least one red flag: The current bull market is getting old. Ned Davis Research marks the start of this bull market as Oct. 9, 2002, which means it had run for 847 days through Feb. 4, 2005. That's far longer than the 614 days the median cyclical bull has lasted since 1900. Moreover, this market is following the classic bull pattern, rising sharply in the first couple of years and then trailing off, suggesting that it will be closer to average length than to the long run of the 1990s. Meanwhile, down days this year have seen heavy volume while rallies have lacked strong demand, indicating that enthusiasm for equities is waning. And although many see the recent merger wave as a sign of a healthy economy, others point out that bull markets tend to peak with a flurry of deals."

Truly wonderful cellphone headset: I tried a Bluetooth headset. It's fantastic. Everyone who has a Bluetooth-enabled cell phone should buy a Bluetooth headset. It's a total joy to speak on and not have to hold the stupid cell phone to your ear. The Bluetooth headset is so light you barely know you have it on. Lots of people make them, from Motorola to Nokia. To use it, you must have a Bluetooth cellphone. Here's what a typical Bluetooth headset looks like. It weighs a couple of ounces. You answer an incoming call and hang up the call by pushing the button in the headset. You never have to touch your phone, except to dial numbers.

If you don't have a Bluetooth cellphone, you can Bluetooth-enable your phone by adding a transmitter to the bottom of your phone, like this.

And if all that doesn't appeal, you can also get the $25 corded, lightweight headset I just bought for my Nokia. This thing works perfectly fine even with the wire. In fact it's a pleasure to be able to talk with the phone itself in your pocket or on your desk.

Verizon buys MCI. As Fortune writes, the stockmarket peaks with a flurry of mergers. Here's another stupid one. I can think of 6.75 billion other things Verizon ought to invest its money -- like improving my phone, like offering me a thousand new "value-added" phone services that I'd be preferred to pay money for, like offering Verizon cellphone service in New York City's subway -- only a million or so potential Verizon customers ride it every day.

Carly's final take: Carly's total take in cash and stock for 5 1/2 years running Silicon Valley's biggest company into the ground: $188.6 million, according to Bloomberg News. HP's stock is now roughly half it was when she took over.

Two great blind man stories:
Story One:
My favorite New Yorker cartoon had a man carrying a tin cup and a white cane. He wore a sandwich board on which was written:

"I am blind and I think I may also be black."

Story Two:

A blind man makes his way to a bar stool and orders a drink. After sitting there for awhile, he yells to the bartender,

"Hey, you wanna hear a blonde joke?"

The bar immediately falls absolutely quiet. In a very deep, husky voice, the woman next to him says, before you tell that joke, sir, I think it is only fair ...given that you are blind, that you should know five things:

1. The bartender is a blonde girl with a baseball bat.
2. The bouncer is a blonde girl.
3. I'm a 6 foot tall, 175 lb. blonde woman with a black belt in karate.
4. The woman sitting next to me is blonde and a professional weightlifter.
5. The lady to your right is blonde and a professional wrestler.

Now, think about it seriously, Mister. Do you still wanna tell that joke?"

The blind man thinks for a second, shakes his head, and mutters, "Nah...not if I'm gonna have to explain it five times."

The Gates in New York's Central Park: The city is bubbly with excitement about its new 7,500 saffron gates. Please come visit. You now have l fewer than two weeks.

Today is Valentine's Day: Better think of something fancy today. Flowers. Chocolates. Dinner. Flattery. Today has been marketed more than long distance mergers. The ordinary flowers-by-Internet will no longer cut it. I'm stuck.

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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