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Harry Newton's In Search of The Perfect Investment Technology Investor. Auction Rate Securities. Auction Rate Preferreds.

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8:30 AM EST Wednesday, June 18, 2008: The summer is shaping up gruesomely. I ran some lines on a chart of the Dow. See below. The trends don't look exactly positive. Remember the old adage, "Sell in May and go away." I wrote about this phenomenon on May 14. It's coming true this summer.

The economy is being hit hard by higher fuel costs, lower housing values and defaulting credit lines (like credit cards and mortgages). The big "hit" will be on the financials, like Capital One, Merrill Lynch, Bank of America, Wells Fargo and of course, my unfavorite, Lehman Brothers. I can't find anything cockroachy to say about them today. Shucks. The only good news on Lehman was it fell $2.06 yesterday.

From Bloomberg this morning:

June 18 (Bloomberg) -- John Paulson, founder of hedge fund Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate.

"We're only about a third of the way through the writedowns,'' Paulson said, speaking at a hedge fund conference in Monaco today. "There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.''

Paulson, 52, whose company Paulson & Co. manages about $33 billion, returned 12 percent in his Advantage Plus Fund through May, according to investors. Last year, Paulson's Credit Opportunities Fund climbed almost sixfold. He has been betting on an increase in corporate defaults and a slowdown in the U.S. economy as home prices and consumer-spending to decline.

Firefox 3.0 is released. It's new. It's faster. It's more stable. And it has the same old neat features, like allowing you to customize it with a huge raft of "add-ons." (My favorite add-on is Showcase.) Firefox 3.0 leaves Microsoft's Internet Explorer in the dust. Get yourself a free copy of Firefox 3.0 in your language and your operating system (Windows, Mac OS X or Linux). Use it it instead of Internet Explorer.

Skype 4.0 Beta for Windows is out: Everyone uses Skype for cheap international phone calls. But the cognoscenti use it for great video calls, especially to their family and their grandchildren. There's nothing more exciting for the kids than crowding around the web cam and talking to grandma and grandpa in Timbuktu, or wherever. Download the free Skype 4.0 on

IcyHot is a true miracle. My tennis partner cricked his back. He said he could only play on Monday night because of these things. My son and wife have various and sundry aches and pains. They tried these things last night and reported success. The patches stay on and work for up to eight hours. They're about $8 a box.

How to say No. I receive several proposals a week for ventures to invest in. Most are awful on two grounds. First, the entrepreneur is far too greedy, wanting too much of the deal for himself. One even told me that he would pay his investors a gigantic 8%. The investors would be happy since that was more than they were earning on the bank CDs.

Second, the assumptions of future sales are way too high. I checked the comparables (aka comps) on one real estate deal. The entrepreneur was guessing he'd rent the place at more than twice what others were getting.

Over the years I've learned if you say "No," the entrepreneur will ask you "Why?" If you answer, you'll be sucked into an endless discussion -- which you will lose. Simplest is this email, which works.

Apologies, I'm tapped out at present as regards new investments.
I don't even want to think about the opportunities I'm missing.

How stupid we all are. But how greedy Wall Street is.: A reader of my site emails his story:

I went to Bank of America 1-23-08 to pay off my home loan. Instead I ended up with $ 1,000,000 worth of Student loans. Ten days later in February the problems surfaced. My Premier banker from BOA as well as Banc of America investment advisor recommended the Student bonds. they said I would make more than my mortgage payment and could liquidate it at any time "very safe". I should have never listened to a couple of young kid bankers. They now have me upside down in my mortgage payment.

How to use your stock screener. My friend Gene Towba turns up this on his stockscreener.

National Presto Industries (NYSE: NPK) is a small company with sales of $400 million and a market capitalization of $450 million. National Presto, founded in 1905 in Eau Claire, Wisconsin, manufactures a wide range of household cooking appliances including pressure cookers, deep fryers and roasting pots.

In addition, National Presto produces fondue pots, woks and hamburger cookers-all with NPK's removable heat control devices. The company also sells ammunition and cartridge cases to the U.S. military and sells disposable diapers for babies and adults. The ammunition and diaper businesses are ancillary but quite profitable.

National Presto's sales and earnings increased dramatically in 2007, buoyed by higher sales and profits from its ammunition business. Sales in the first quarter of 2008 slowed because of delayed payments from the military, a temporary setback. But EPS jumped 25% thanks to a highly successful cost reduction program. We forecast 15% EPS growth for 2008 as defense payments normalize and new appliances are introduced. The balance sheet is very strong with no debt and a whopping $21 per share cash balance.

National Presto's price has increased noticeably during the past few weeks, and I believe the price will rise further as more investors discover this little-known company. The dividend yield of 6.4% is extraordinary. NPK shares will likely climb to my minimum sell target price within one to two years.

I email back: "You can't be serious?" He emails back:

With aging boomers, adult diapers are the future! With China in pursuit of more oil, ammo is the future. With Gay weddings now legal in California, fondue pots are the future.

It is a wonder why some hedge fund does not scoop me up as an analyst.

It has a high yield, a lot of cash on hand, no debt and growing ammo business. I think demand for the fondue pots will decrease, but they can keep afloat on their ammo and diapers which are growing.

If you wish, I can call you up, say I am a broker and you can short it.

My favorite puns:
+ Police were called to a day care where a three year-old was resisting a rest.

+ To write with a broken pencil is pointless.

+ A thief fell into wet cement. He became a hardened criminal.

+ Dead batteries are given out free of charge.

+ If you don't pay your exorcist you can get repossessed.

+ A boiled egg is hard to beat.

+ When you've seen one shopping center, you've seen a mall.

+ Bakers trade bread recipes on a knead to know basis.

+ Acupuncture: a jab well done

+ 2:30. When it's time for Chinese people to go to the dentist.

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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