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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 Thursday, June 16, 2005: Many investors, including me, have been sitting in cash and short-term securities because we believe interest rates are rising. We'll get more interest if we wait. The cost of doing this is the higher interest payments we're losing in the meantime. It might be time to re-think this.

I recommended you listen to yesterday's conference call with George Friedlander, Smith Barney's noted (competent and honest) fixed income analyst. Says George, t he world is awash in savings -- even in emerging countries, like India, China, and the oil producers. China and the U.S. have growing economies -- a good place to stash money. The rest of the world's economies are not growing much. China's capital market is not mature. Bingo, it's the U.S. as the banker of last resort. George believes short-term rates will rise, but long-term rates will stay flat. He figures the ten-year Treasury will be around 4 1/4% for the next four years.

Here's his chart on what you and I have lost by staying short-term.

In municipals, George likes maturities of 5-13 years. In taxables, he prefers "a somewhat shorter maturity" because yields tell to be flatter and "price volatility in a rising rate environment tends to be greater."

Today I'm looking at my portfolio. I'll publish my allocation tomorrow. Email me thoughts, please.

Good times ahead for the U.S. economy: More and more observers believe that two factors -- globalization and technology -- now mean that the U.S. economy can happily grow at 3.5% a year without inflation. (This is up from 2.5%.) This new belief (which Greenspan also believes) will keep interest rates low.

The real estate boom will continue.

Microsoft's new Windows Desktop Search: You don't want it. It's too limited. It's too clumsy. And it will drive you nuts as it takes over your PC for day-long indexing. The Wall Street Journal's Walt Mossberg has a piece today on it. He's too kind to Microsoft. A better choice is dtSearch. Click here. An even better choice is to spend an hour or two and re-organize your hard disk into folders that more closely correspond to what you do every day.

Keep saying NO: It's the hardest word in the English language.

Getting back 100% loss with 8% annual gains will take you nine years. At 4.73% it will take you 15 years.

+ When in doubt, say NO.
+ When it seems too good to be true, say NO.
+ When it seems too hard to happen, say NO.
+ When it's out of their sphere of competence, say NO.
+ When it will be completely out of your control, say NO.
+ When you haven't done a thorough background search on the CEO (or can't do one), say NO.
+ When the choice is playing tennis and smelling the tuberoses, say NO.

Chasing a bad investment is a usually bad investment. Throwing good money (and time) after bad money is not good.

I spent yesterday with the management of one of the funds I have money in. In 20 years, they made one major blunder. They fell in love with an oil deal and put too much money into it. They lost 100% of their money. Was the president of the oill company a crook or an incompetent? To this day -- three years later -- no one knows. And no one knows where all the money went.

What we do know is when you give money to someone, it's now theirs. With or without controls (legal and otherwise), they can do what they like with your money.

Despite this, it's amazing how much of it works. That's the good news. You'll always make more money saying YES.

Brutal...just brutal...
In a recent news broadcast, it was announced that Lorena Bobbitt's sister, Louella, was arrested for an alleged attempt to perform the same act on her husband as her famous sister had done several years ago. Sources reveal the sister was not as accurate as Lorena.

She allegedly missed the target and stabbed her husband in the upper thigh causing severe muscle and tendon damage. The husband is reported to be in serious, but stable condition. Louella has been charged with...

Wait, here it comes...

A Misdewiener!

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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