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9:00 AM EST Thursday, July 23, 2008: This market is difficult. Sentiment rises and falls daily, like a whore's drawers. (That's an Australian expression.) Financials are up 30% in the past few days. Wachovia is up 100%. Happy days? I agree with David Ellison in today's Wall Street Journal

Spend an hour with him nowadays, and one will come away convinced the financial-service industry's glass isn't just half empty -- it is being shattered. He can cite dozens of facts about record foreclosures, nonperforming assets, uninsured liabilities and loan losses.

While he is heartened by the industry's recent upturn, he remains wary of chronic woes such as weak loan demand at banks.

The timing of a sector turnaround is impossible to predict, said Mr. Ellison. His downbeat themes: No one has any idea how much worse things will get amid poisonous debt lurking inside financial outfits, and this is just the beginning of a complete regulatory overhaul needed to eventually fix the problems.

He likes that Wachovia Corp. has cut its dividend, but thinks too many financial executives remain in denial. Half an alcoholic's problem, Mr. Ellison said, "is admitting he's an alcoholic."

Perhaps one of the worst offenses: the dearth of share repurchases by managers who "are so positive they have all this capital. Their words are saying one thing, but their actions are saying it isn't true."

The BIG underpinning for stocks is, according to contemporary wisdom, a high dividend yield.. Bank of America's is 7.66%. That's ultra-high. Management has recently said the dividend was safe. But, if you were a director, would you pay a high dividend when you probably need capital? Nice bounce. You trust the price to hold?

Eyeing Australia for interest income: Big, stable Australian banks are paying 8% for on demand money. You pay Australian income tax, but not U.S. income tax. Worst case: On $500,000 you get left with 5.67%. There are two benefits to doing this: First, the interest rate is far better than here. Second, owning Australian dollars is a good hedge against the U.S. dollar and what idiocies Washington might do to our dollar -- what with saving Fannie and Freddie and the banks and the economy, etc. Washington believes printing money is the panacea to our every problem.

Australia forces its people to save 9% of their salaries for retirement. What you can invest in is very broad. The program reduces the government's burden to provide for people's old age. The program is hugely popular. It ensures an influx of new monies each year into Australian stockmarkets. And it encourages saving. Here we charge 15% income tax on dividends, but full ordinary income tax on interest from bank savings accounts. Go figure.

Due diligence: A friend is eyeing buying a gun wholesale distribution business. He's met with the seller. He's examined the seller's books. Everything looks wonderful -- until he asks me for advice. I ask him to explain the nature of the business. Turns out it's simple. The business buys 80% of its guns from one importer and sells them via credit cards to a handful of retailers. The business contributes little of value.

I ask, "Have you visited the importer? Have you visited your biggest customers?" The answer sadly is No.

I explain "There's a gotcha here somewhere. The man is selling the business for less than two times pre-tax earnings -- a bargain." The seller says "there's no gotcha." I say "There is. Your job is to find it. It may be small, and hence irrelevant not . It may be large, and very relevant. But it's there."

The Tour de France. I love bicycling.I know how hard it is to climb those hills. Yet they do it an unimaginable speeds. It's fascinating. Presently on the Versus TV channel (formerly Outdoor Life). Ends this weekend. Amazing stuff.

I've never like HP's "service." I sent my favorite, but now busted calculator to HP's president's office. I get a sweet phone call from a nice lady telling me they didn't repair HP calculators in that office and they'd be sending my busted HP calculator back to me.

I said, "Don't do that. Throw the calculator in the garbage and tell your president I'll never buy another HP product again."

She assured me so sweetly that she would.

Ticking time bombs. Car tires dry out as they age and become really dangerous. Their tread peels off while you're driving. The car becomes impossible to handle. You crash. You die. There have been many deaths. The drying is not visible. As they age older than six years, types become downright dangerous. England recommends no tire older than six years be driven. Here, our industry has resisted rules. You can find tires older than six years on sale as "new" at your local tire dealer.

There is a way to check your tire's age. Each tire has a long list of numbers. The last three or four digits will tell you the tire's age. Here's the code. 414 equals the tire was made in the 41st week of 1994. 4202 means the tire was made in the 42nd week of 2002.

Please check your tires this weekend. ABC News had a piece on this.

Yet Another scam:

From:
United Parcel Service <tein63@corphq.utc.com>

Subject:
UPS Tracking Number 2855422479

Text:
Unfortunately we were not able to deliver postal package you sent on July the 1st in time
because the recipient’s address is not correct.
Please print out the invoice copy attached and collect the package at our office.

The zipped attachment contains a virus. Do NOT open it. For more, check Snopes.

The ultimate twins
Siamese twins walk into a pub in Ontario and park themselves on a bar stool. One of them says to the barkeeper, 'Don't mind us, we're joined at the hip. I'm John, he's Jim. Two Molson Canadian draft please'.

The barkeeper, feeling slightly awkward, tries to make polite conversation while pouring the beers. 'Been on holiday yet, lads?'

'Off to England next month,' says John. 'We go to England every year and hire a car and drive for miles, don't we, Jim?'

Jim agrees.

'Ah, England!' says the barkeeper. 'Wonderful country... the history, the beer, the culture...'

'Nah, we don't like that British crap,' says John. ' Hamburgers & Molsons beer, yuch. And we can't stand the English - they're so arrogant and rude.'

'So why keep going to England ?' asks the bar keeper.

'It's the only chance Jim gets to drive.'

Making an ass out of your customers
Young Chuck moved to Texas and bought a donkey from a farmer for $100.

The farmer agreed to deliver the donkey the next day. The next day he drove up and said, "Sorry, son, but I have some bad news: the donkey died."

Chuck replied, "Well, then, just give me my money back."

The farmer said, "Can't do that. I went and spent it already."

Chuck said, "Ok, then, just bring me the dead donkey."

The farmer asked, "What ya gonna do with him?"

Chuck said, "I'm going to raffle him off."

The farmer said, "You can't raffle off a dead donkey!"

Chuck said, "Sure I can. Watch me. I just won't tell anybody he's dead."

A month later, the farmer met up with Chuck and asked, "Whatever happened with that dead donkey?"

Chuck said, "I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $898.00."

The farmer said, "Didn't anyone complain?"

Chuck said, "Just the guy who won. So I gave him his two dollars back."

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 on this site. Thus I cannot endorse, though some look 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 Michael's business school tuition. Read more about Google AdSense, click here and here.
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