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Newton's In Search Of The Perfect Investment. Technology Investor. Previous Columns
8:30 AM Thursday, March 24, 2005: The stock market is wreaking havoc with interest-rate sensitive issues, such as REITs. Here's the Morgan Stanley REIT index.

Here's an exchange traded fund with a symbol of RNP. Even the fund's high NAV (Net Asset Value) of $30.12 and high dividend yield of 9.54% hasn't stemmed its price drop.

Every time I write "Cash is King," someone sends me a copy of Smith Barney's paper "Municipal Bonds: What is the cost of staying in cash?" The paper shows how you earn more invested than sitting in cash -- which you do. Dah! What it fails to point out is that as interest rates rise -- which they are doing at present -- the value of your bonds falls. So you get screwed. But then, brokers want to earn commissions selling you something. Anything. And selling you bonds is especially lucrative because cut-rate bond brokers don't exist.

An upcoming recession? The Fed is obsessed with inflation. Companies are sticking their prices up and up and up. The New York Times today writes "In recent years, most companies were forced to absorb the higher costs of basic expenses like employee health care, raw materials and energy, focusing instead on squeezing more efficiencies from their workers and machines. But now, from airlines to manufacturers of advanced plastics, many businesses are overcoming their fears of losing customers and are starting to pass on cost increases. After two months of virtually no inflation, the Labor Department reported yesterday that the Consumer Price Index jumped 0.4 percent in February, the fastest pace since October."

Here's the inflation chart.

Personally I don't buy the Fed's fear of inflation. It's back to 2001, the time of the last recession.

I buy what escalating prices and escalating interest rates will do to the poor consumer who's tapped out on credit cards, can't squeeze any more money out of his house and is struggling with two jobs.

My friend, a marketing consultant and avid consumer watcher emailed me today, "People just aren't spending money, The baby boomers have been asking for some time: Why do I need another X? ... There's been a cash crunch for small businesses for some months now. Even though the entrepreneurs are working hard and being aggressive, they're also being very careful. They're trying to buy "good" stuff that will really work and they're trying to avoid stuff that is "less expensive but doesn't work." But this also means they're taking longer to make decisions. These are my observations, working with small business owners and talking to their customers. People seem to be in a serious "re-think, re-prioritize" mode."

Don't trust your lawyer (or anyone else) with numbers: It seems that the fine art of arithmetic escapes too many people. Everyone here in La Quinta, California is fighting with the local resort hotel over bad bills. Our propane gas provider, our car park and our cellphone carrier have screwed up on their recent bills. I wouldn't object if the bills were equal opportunity bad. They're not. The mistakes all favor the vendor against me, the poor customer. My motto remains Check, Check, Check.

Now comes my favorite screwup story. J.P. Morgan Chase's hideously expensive lawyer messed up and caused the bank to pay $630 million more than necessary to settle a recent class action suit, according to today's Wall Street Journal.

I can't say I'm shocked or surprised. When I was young and stupid, I employed a prestigious Wall Street law firm which seriously messed up on my taxes. I scribbled on their final bill, "You screwed up. Please insert this bill where the sun doesn't shine." They did. And I never heard more about that bill. Which proves three things:
1. Lawyers have a heart,
2. Lawyers can be intimidated.
3. My chutzpah has no limits.

My friend and his son: My friend runs a successful real estate business. His son was doing well in real estate for a big hotel chain. His father approached the son. "Here are your choices. You can be an employee and earn a high salary with the hotel chain. Or you can earn a low salary in the family business, but earn some options and ultimately own the business." It took the son five minutes to quit the hotel company and join the family business, which he now runs beautifully. The moral of this story: Your own business is your perfect investment.

Your new password:
The email reads,
"Thanks for your registration!
We have received your payment.
For more detailed information, read the attached text.

The attached text is a zip file and contains a virus.
Please do not read it. Do not open it.

99% of all viruses come as attachments to beguiling emails. Don't open attachments from sources you don't know.

What Is Easter? (Tomorrow, exchanges are closed.)
Three blondes died and found themselves standing before St. Peter. He told them before they could enter the kingdom, they had to tell him what Easter was.

The first blonde said, "Easter is a holiday where they have a big feast and we give thanks and eat turkey."

St. Peter said, "Noooooo," and he banished her to hell.

The second blonde said, "Easter is when we celebrate Jesus' birth and exchange gifts."

St. Peter said, "Noooooo," and he banished her to hell.

The third blonde said, "Easter is a Christian holiday that coincides with the Jewish festival of Passover. Jesus was having Passover feast with his disciples when he was betrayed by Judas, and the Romans arrested him. The Romans hung him on the cross and eventually he died. Then they buried him in a tomb behind a very large boulder.

St. Peter said, "verrrrrry good."

The blonde continued, "Now every year the Jews roll away the boulder and Jesus comes out. If he sees his shadow, we have six more weeks of basketball."

St. Peter fainted.

Marriage is in the air:
True story: My friend, Seth Wernick took his fiancee on Tuesday night to the Jefferson Memorial in Washington and asked her to marry him. She accepted and cried. It was all very romantic.

I asked Seth, "Why the Jefferson Memorial?" Inquiring minds want to know these irrelevancies.

Seth replied, "Well..I was going to go to the Lincoln Memorial cause it is out on the water and real romantic. But I could not find a parking space, so we ended up at the Jefferson."

I dedicate the following to Seth:

A young Jewish man excitedly tells his mother he's fallen in love and that he is going to get married. He says, "Just for fun, Ma, I'm going to bring over three women and you guess which one I'm going to marry."

The mother agrees.

The next day, he brings three beautiful women into the house and sits them down on the couch and they chat for a while. He then says, "Okay, Ma, which one am I'm going to marry."

She replies, "The one on the right."

"That's amazing, You're right. How did you know?"

The Jewish mother replies, "I don't like her."

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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