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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 Wednesday, June 29, 2005: Yesterday was one of those great days it pays to be fully invested and not practice "market timing." According to my friends at Lateef (see yesterday's column):

"History has shown stock selection to be vastly more important than timing. In other words, what you buy is far more important than knowing when to be in or out of the market (if that knowledge is available to anyone).

A 1991 study by two professors at Baylor and University of North Texas showed that if the best 50 months of stock performance of the S&P 500 from 1926 to 1987 -- only 6.7% of 61 years -- were deleted, the S&P 500 entire 62 year return, excluding inflation, disappeared. Thus, the importance of being fully invested."

Yesterday was up nicely. As MarketWatch wrote,

U.S. stocks tallied their biggest gains in six weeks Tuesday as a sharp pullback in crude-oil prices from record highs and an upbeat report on consumer confidence emboldened investors. The Dow Jones Industrial Average closed up 114.85 points, or 1.1%, at 10,405.63 while the Nasdaq Composite Index popped 24.69 points, or 1.2%, to 2,069.89 and the S&P 500 added 10.88 points, or 0.9%, to 1,201.57 -- marking the largest point gains for each of the major indexes since May 18.

"There's plenty of news that's upbeat and positive and it starts with the price of oil," said Hugh Johnson, chairman of Johnson Illington Advisors.

In other words, Mr. Johnston had no clue why markets went up yesterday. But he was fortunate (or unfortunate?) enough to be in when MarketWatch's reporter called. As Woody Allen once said, "80% of success is showing up."

Personally I believe in market timing when it comes time to sell. My Simple Selling Rule: When the stock has dropped 15% from its high, it's time to sell. I will make occasional exceptions -- such as when the company is in development, e.g. a biotech company with promising drugs not yet approved for sale. And I will look the reason for the drop -- maybe it's irrational and it's time to buy. But, in the main, when it drops 15%, it's going lower. I've done studies to prove that.

Ah ha, the value of irony: The minute I wrote housing stocks were cratering they all start rising. Interest rates stay low. Housing is booming. Time to revisit housing stocks.

Last 1-Year High 1-Year Low Dividend Yield P/E Ratio
Beazer Homes Usa
Centex Cp
D R Horton
KB Home
Lennar Cp Cl A
M D C Holdings
Pulte Homes
Ryland Group
Toll Brothers

Messed up private lives: When I graduated from Harvard Business School in 1969, half the class went into investment banking. The other half went into management consulting. I didn't. I became an entrepreneur, and for that, was universally derided. By our 20th reunion, I was gaining respect. By our 25th I was being consulted. My classmates' "careers" had hit a wall. They'd been passed over for boss. the younger kids had fresher ideas and worked harder. My classmates had lived beyond their means. They were onto their second and third marriages. They had no savings. They were overweight and out of condition. And now there were no jobs for 50-year plus gray-hairs. What could I recommend? Sadly, little. Could I help their kids? Now, I increasingly do that. I give my standard talk:
+ Learn a new skill every six months. (Samples: negotiation; computers, investing, Excel.)
+ Get involved with business startups. Ultimately being an entrepreneur is what will give you peace of mind in your old age.
+ Save at least 10% of your income every month. Invest it in a wide variety of ventures.
+ Learn how to pick ventures.

+ Stay healthy. Lots of exercise and no over-eating.
+ Give back.

Vanity Fair's Iran is fascinating. "Even under a brutish theocracy, Iranians live as if they are entitled to their heritage of civilization and culture. This month's sham election won't oust the ruling mullahs, though. Even Ayatollah Khomeini's grandson is looking to the U.S. for hope," writes Christopher Hitchens in this month's Vanity Fair (the one with Nicole Kidman on the cover). Hitchens' piece is totally fascinating. Click here or, if that doesn't work, click here.

New Design for Freedom Tower: Officials will unveil today a redesigned tower at Ground Zero whose appearance evokes the Twin Towers. The building will be 82-stories (about 30 shorter than the previous towers). The building will be more resistant to attack, particularly from car and truck bombs.

American philosophy flourishes ... in Canada. I can do what I want, so long as I don't hurt other people. Simple America idea. The House of Commons voted last night to extend marriage rights to gay and lesbian couples throughout Canada.
The vote sealed two years of provincial court decisions that gave same-sex couples the right to marry in 8 of 10 provinces and one of the three northern territories. When the Senate approves the measure, considered a formality, Canada will become the third national government, after the Netherlands and Belgium, to enact such rights. Though the vote was largely symbolic, advocates for gay rights hailed it as a milestone because it was the first time a Canadian legislative body had voted to change the traditional definition of marriage beyond a union of a man and a woman.

I personally like the idea. Families are the cohesive backbone of our society. It's where values of honesty and morality are taught. I pray that one day something like this will happen in the U.S.

Wimbledon today is quarter finals:
Who can work when there's great tennis to watch and play? Federer is playing this morning. He's good. I taught him everything I know. (I wish.) Here's the TV schedule:

Wimbledon Tennis TV Schedule -- all times are Eastern
Date Channel Time Round
Wed - 6-29 --today      
  ESPN2 2 AM - 2:30 AM (Highlights)  
  ESPN2 2:30 AM - 5 AM (Highlights)  
  ESPN2 7 AM - 8 AM (LIVE) Quarter Final
  ESPN2 8 AM - 10 AM (LIVE) Quarter Final
  NBC 10 AM - 1 PM (Delayed) Quarter Final
  ESPN2 1 PM - 5 PM (LIVE) Quarter Final
  ESPN2 7 PM - 7:30 PM (Delayed) Quarter Final
  ESPN2 7:30 PM - 10 PM (Delayed) Quarter Final
  NBC 11:35 PM - 11:50 PM (Delayed) Quarter Final
Thurs - 6-30      
  ESPN2 5 AM - 5:30 AM (Highlights)  
  ESPN2 5:30 AM - 7 AM (Highlights)  
  ESPN2 7 AM - 8 AM (LIVE) Semi Final
  ESPN2 8 AM - 12 PM (LIVE) Semi Final
  NBC 12 PM - 5 PM (Delayed) Semi Final
  ESPN2 8 PM - 8:30 PM (Delayed) Semi Final
  ESPN2 8:30 PM - 10 PM (Delayed) Semi Final
  NBC 11:35 PM - 11:50 (Delayed) Semi Final
Fri - 7-1      
  ESPN2 3 AM - 3:30 AM (Highlights)  
  ESPN2 3:30 AM - 5 AM (Highlights)  
  ESPN2 7 AM - 8 AM (LIVE) Semi Final
  ESPN2 8 AM - 12 PM (LIVE) Semi Final
  NBC 12 PM - 5 PM (Delayed) Semi Final
  ESPN2 8 PM - 8:30 PM (Delayed) Semi Final
  ESPN2 8:30 PM - 10 PM (Delayed) Semi Final
  NBC 11:35 PM - 12:05 AM (Delayed) Semi Final
Sat - 7-2      
  ESPN2 3 AM - 3:30 AM (Highlights)  
  ESPN2 3:30 AM - 5 AM (Highlights)  
  NBC 9 AM - 2 PM (LIVE) Women's Final
  ESPN2 2 PM - 3 PM (LIVE)  
Sun - 7-3      
  NBC 9 AM - 3 PM (LIVE) Men's Final
  ESPN2 3 PM - 4 PM (LIVE)  

Three Jewish sons
Three Jewish sons left home, went out on their own and prospered. Getting back together, they discussed the gifts that they were able to give to their elderly mother.

The first said, "I built a big house for our mother."

The second said, "I sent her a Mercedes with a driver."

The third said, "I've got you both beat. You know how Mom enjoys reading the Torah and you know she can't see very well? I sent her a large brown parrot that can recite the entire Torah. It took twenty rabbis 12 years to teach him. I had to pledge to contribute $1,000,000 a year for twenty years but it was worth it. Mom just has to name the chapter and verse and the parrot will recite it."

Soon thereafter, Mom sent out her letters of thanks.

She wrote to the first son, "Milton, the house you built is so huge. I
live in only one room, but I have to clean the whole house."

She wrote to the second son, "Marvin, I am too old to travel. I stay home all the time, so I never use the Mercedes and the driver is SO rude."

She wrote to the third son, "Dearest Melvin, you were the only son to have the good sense to know what your mother likes. The chicken was delicious."

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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