Harry Newton's In Search of The Perfect Investment
Technology Investor. Auction Rate Securities. Auction Rate Preferreds.
8:30 AM EST Thursday, July 31, 2008: The
end of a month all of us will want to forget. Your
portfolio probably lost money in July. Mine did. My hedgies (hedge fund managers)
found, to their despair, that none of their strategies worked. I had this little
email conversation with one hedgie who's down 5% for July:
Harry: Being a
long-term investor is a good thing, but why dont you short some obvious
cockroach stocks and make a little short-term money?
list coming shortly.
up 9% today? MBIA up 15%? XLE up 5.5%?
T. Boone Pickens
figures it's "obvious" to ride along Carl Icahn's shirt tails and
buy Yahoo. He figures Yahoo management is savvy enough to take Microsoft's $32+
per share bid. But T. Boone just gave up and sold his 10 million Yahoo shares
for $50 million to $70 million loss.
In an interview
with the SF Chronicle, Pickens called Yahoo management pathetic"
-- which seems a perfectly appropriate word to describe how efficiently they
just lost their shareholders a third of their value... and I'm betting a lot
more in coming weeks. (Yes, an "obvious" short. Yahoo is now on its
down way to $!5.)
to find a bottom? File under "Everyone has a theory." The
Vick/Cho Group out of Smith Barney's Santa Rosa, CA office recently wrote:
The market is
trying to find a bottom. It continues to lurch back and forth giving investors
a whiplash as it goes from zero to hero and back again. The media runs with
every tick up or down. Yesterday (July 27) the 2% decline was triggered according
to a Bloomberg report that the IMF (International Monetary Fund) said that
there is "no end in sight" to the American real estate debacle.
By the way, the IMF did not report the debacle arriving, but once pointed
in the right direction, can anticipate the future. The IMF is an international
organization of 185 member countries that promotes international monetary
cooperation, exchange stability and orderly exchange arrangements.
A closer look
at "boots on the ground" from an Executive Summary from a Florida
realtor reported this month stated:
1. Sales in
the Naples area rose 13% in the second quarter compared to the same quarter
2. Unit sales in the $300,000 and under market were up a robust 56%.
3. Pending sales were up 53% versus June of 2007, well above last quarter's
4. Median home prices in Naples are now down 28% since the market peak, declining
5 points since last quarter.
5. On balance, the modest positive evidence in the prior two quarters suggesting
a bottom was a forming in the Naples real estate market was buttressed this
quarter by its best relative performance since the downturn began almost 3
year ago. ...
the US Dept. of Labor said the US workforce will lose 46 million college-educated
baby boomers over the next 20 years. They are not being replaced by the incoming
workforce population. We are on the cusp of a shortage of workers. Roughly
the math begins to rollover in 2010
within two years. So when the Wall
Street Journal reports that unemployment is "soaring" (the word
they used to describe the unemployment increase of 32,000 or .0002% of the
145,000,000 employed workers) perhaps some perspective might be in order.
Do some people really only have the attention span of a remote TV click? ...
We believe persistent
problems in the housing and credit markets and their potential impact on U.S.
economic growth will continue to cause volatility in the equity markets over
the near term. We note that many of the issues plaguing risky assets at present
may take some time to work their way through the system. Near term, our analysis
suggests that bottoms-up analyst EPS forecasts, which call for growth in excess
of 4% for 2008 and nearly 20% in 2009, are still too optimistic and will be
revised lower over time, particularly if Citi economists profit growth
forecasts of 1.6% in 2008 and 5.3% in 2009 are to be met.
In our view, this process will be healthy but potentially disruptive for the
market and could exacerbate an already-volatile equity market environment.
Longer term, however, we believe the equity market is reasonably well positioned
to contend with these concerns; we point to attractive valuations, solid corporate
balance sheets (excluding financials), and strong free cash flow generation
as drivers for equities going forward. Risks to a sustained market rally include
a continued deterioration in credit markets, persistently high oil prices,
and meaningfully slower global economic growth. Given our longer-term positive
view, we would use periods of market weakness to upgrade portfolios and build
positions in high-quality companies that generate strong free cash flow and
possess above-average prospects for growth.
point? As intelligent human being, your attention span (and hence panic level)
should be longer than a gnat. Sadly, mine often isn't.
hits today's Wall Street Journal: Xobni is a search engine for Outlook.
I tried it and didn't like it. You won't, either, despite what Walt Mossberg
says today. Lookeen is a much better
in new businesses: Judging by my phone calls,
everybody and their uncle is starting a new business and wants me to give them
my money. Lessons I've learned:
They have the checkbook. So they're in control.
Paper reports you get can be less than accurate. I met a money manager in Australia
when I was there a couple of years ago. He showed me the impressive results
his clients were getting. Turns out he made up the numbers. Now he's spending
two and a half years in a fine Australian jail. He had a serious gambling problem.
I didn't give him any money. I gave him some "tasklets." He failed
to deliver. I smelled a rat and went elsewhere. I didn't realize he was a crook,
3. All the fancy
paperwork protects no one, including you. See point 1. Character is what counts.
See point 2.
4. Most people
are honest, but not competent enough to make good money with your money.
5. You don't need
to pass an IQ test to buy an Armani suit, rent a corner office, employ a lawyer
or buy stocks.
is better than Weather.com. This tip from my
genius son, who hasn't had my bike stolen since he bought more chains than Houdini
Harry Houdini chained up. Michael has more chains on my bike. They're a lot
thicker and heavier, too.
hide rows or columns in Excel. Group them.
Grouping is an option you find under "data." You don't want to hide
things in Excel because it confuses someone who might look at your spreadsheet.
They won't see you've hidden stuff and their typing will screw up your pristine
perfect work. With grouping, you select rows or columns, then do Alt DG. Grouped
stuff shows a plus symbol in the margin. Hiding shows nothing. Hence, hiding
is confusing. Grouping isn't. This tip from our favorite kickass Excel maven,
Ms. Anne Himpens.
my new desk? It contains my new Samsung 22 inch monitor, which I
was touting. All my readers were impressed -- except for the bunch who berated
me for the big glass CRT TV. Wrote one, "You should get a cheap LCD TV
from Costco and use it as a spare monitor when there is nothing worth watching."
Good idea. I tried that. The quality of ordinary (non-HD) TV on an flat-screen
TV is terrible. Glass is better for non-HD. Flat screen is better with HD.
Mildred, the church gossip and self-appointed monitor of the church's
morals, kept sticking her nose into other people's business.
did not approve of her activities, but feared her enough to maintain their silence.
She made a mistake, however, when she accused George, a new church member, of
being an alcoholic after she saw his old pickup parked in front of the town's
only bar one afternoon.
told George (and several others) that everyone who saw it parked there would
know exactly what he was doing.
George, a man
of few words, stared at her for a moment and then just turned and walked away.
He didn't explain, defend, or deny... He said nothing.
Later that evening,
George quietly parked his pickup in front of Mildred's house... Walked home..
And left it there all night.
+ The journey of a thousand miles begins
with a broken fan belt and a leaky tire,
+ If you think
nobody cares if you're alive, try missing a couple of your mortgage payments.
+ If at first
you don't succeed, skydiving is not for you.
+ Give a man a
fish and he will eat for a day. Teach him how to fish, and he will sit in a
boat and drink beer all day.
+ If you lend
someone $20 and never see that person again, it was probably worth it.
+ Some days you're
the bug; some days you're the windshield.
+ Everyone seems
normal until you get to know them.
+ Never, under
any circumstances, take a sleeping pill and a laxative on the same night.
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.