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Harry Newton's In Search of The Perfect Investment Technology Investor. Harry Newton

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9:00 AM EST, Monday, March 30, 2009. Last Monday I reported that a hummingbird had built her nest just outside our rented house in La Quinta, California. This is the mother sitting on her two tiny white eggs.

Over the weekend, the eggs hatched and last night, there were two, new baby hummingbirds.

Though I haven't seen the mother recently, she must be around since the neighborhood is suddenly swimming in hummingbird droppings. Our hummingbirds have become our mantra for "Life goes on," despite today's 5% drop in Asian stockmarkets.

This morning looks bleak. Todd emails me. "Futures getting wacked---Dow down 170. S&P down 18. Nasdaq down 23. Europe down 1% to 2% Oil down $1.50+. End of stockmarket rally."

Of course, Blind Freddie could have predicted today. On Friday, yours truly wrote, "No one knows if this rally (up 21% since early March) is the beginning of a bull market or another bear trap. I'm thinking it has some legs and deserves a little of your monies." Fortunately, I didn't take my own dumb advice on Friday and instead played tennis.

They're blaming today's mess on the firing of GM Rick Wagoner, a singularly unimpressive man. As Wikipedia wrote this morning, "During Wagoner's tenure as CEO of GM, the market capitalization of GM has gone down by more than 90%." He joined GM in 1961 as an analyst in the treasurer's office and hasn't worked anywhere else.

Will Obama's "Save The Banks" plan work? One of my favorite financial reporters, James Surowiecki wrote the following in this week's New Yorker:

Not long ago, many of American's biggest banks made terrible bets on overpriced real estate and suffered huge losses. While the banks insisted that they were fundamentally healthy, economists and politicians declare many of them to be insolvent. Government regulators, though, allowed the banks to stay in business. The banks hunkered down and cut back sharply on new lending the resulting credit crunch made an already weak economy worse.

That sounds like the story of what just happened to to the U.S. economy, but actually it's the story of what happened at the beginning of the nineteen eighties, after banks found themselves sitting on billions of worthless loans to Sun Belt developers and other commercial builders. And, if you tweak the details a bit, it's also the story of what happened in the early eighties; at that time, it was loans to developing countries that got the banks in trouble. In other words, while the current banking crisis is exceptionally severe, it's not exactly new. It's the third major banking crisis in the past thirty years, which is at least a couple of crises too many. And that's forcing the Obama Administration to confront two huge tasks at once: rescuing the economy from the current meltdown, and figuring how to prevent the next one.

The rescue effort, surprisingly, may be the easier of those tasks; though recurrent financial turmoil is hardly a confidence-booster, the fact that the U.S. economy -- unlike say Japan's -- has recovered well from previous banking disasters offers hope that the government's strategy will work. ...

Today's crisis is, to be sure far bigger. But so, too, has been the government's response, including a plethora of new initiatives -- the stimulus package, the mortgage-relief program, the Geithner plan -- and unprecedented activity by the Fed, which has been buying up commercial paper, intervening in the securities market and purchasing Treasury bonds with the goal of driving down loan rates. ...

One danger of this approach is that it may fail, forcing us to take over the banks after all. There's another danger, though: that it will succeed. The U.S. financial system is fundamentally unhealthy, too big and volatile for anyone's good. ... We've been like people living on a floodplain who during the deluge talk about moving or making the levees higher, but end up rebuilding in the same sport. But it should be possible to insure that when bankers go careering off the road they don't take the rest us with them. ...

In solving the current crisis, (the government) is partnering with Wall Street, using the existing system to try to stabilize the economy. But in thinking about about the future, it's trying to use hostility to Wall Street to bring out serious changes to the system. This is quite a balancing act; Let's hope the Administration can pull it off.

The full article is in the April 6, 2009 issue of the New Yorker. Click here.

Hussman Funds Weekly commentary: It includes:

The advance of the past few weeks has cleared the prior oversold condition and the market is now overbought in a generally negative Climate. As should be clear from last year's decline, the market can be severely oversold and only become more oversold, so an oversold condition is not a timing tool. That said, oversold conditions in clearly favorable Market Climates are often followed by strong advances, and overbought conditions in clearly unfavorable Market Climates are often followed by spectacular declines. At the recent market low, the Market Climate could certainly not be characterized as favorable, but at the present overbought level, there is considerable risk of a fresh plunge.

Thus far, the recent advance has been focused on low-quality and distressed sectors such as financials, insurance and homebuilders. If the current advance is durable, we would expect to observe stronger market internals, greater participation among higher quality sectors, and a clear easing of credit spreads, which remain near their highs despite the advance in equities. On sufficient improvement in market internals, we would be inclined to establish call option positions that would gradually take us to a significantly less hedged position on persistent market strength, but we do not expect to eliminate our put option defenses until the combination of valuations and market action becomes clearly favorable, or until it is reasonable to expect a sustained economic recovery within a quarter or two. Nothing in our analysis of valuations, market action, or economic conditions compels us that removing downside protection is reasonable at present.

In bonds, the Market Climate last week was characterized by unfavorable yield levels and relatively neutral yield pressures. The yields on Treasury Inflation Protected Securities have declined further in recent sessions, with inflation-adjusted yields on some issues dropping below 1%. I expect that a further decline in real yields would prompt us to reduce our holdings modestly, as it is doubtful that persistent inflation surprises will be a near-term outcome. I continue to view the U.S. dollar as vulnerable to depreciation given the rapid expansion in government liabilities, so the Strategic Total Return Fund continues to hold about 20% of assets in precious metals shares and foreign currencies, with a few percent in utility shares on the basis of longer-term total return prospects.

For the full commentary, click here.

60 Minutes freaked out on malware last night. It talked about a piece of software that wends its way into your computer and can do mean and horrible things over time. The main interviewee was a man from Symantec anti-virus software. Of course, the threat is real. And of course, Symantec has an interest is freaking everyone out. There are four things you can (and should) do:

1. Keep your anti-virus software up to date.

2. Don't open email attachments.

3. Don't visit dubious web sites. When in doubt, stay away.

4. Don't freak out. If your PC does get infected, you'll want to replace its hard disk with a clean clone you made and the backups of your daily work. And then reformat the infected drive.

The Civil Heretic. The cover story on this weekend's New York Times Magazine profiled the eminent physicist Freeman Dyson, who has a different take on global warming -- different from Al Gore. Read the piece. Click here.

Sarah Palin is a hoot. Sort of. You need to read the cover story "Pipe Dreams" in this month's issue of Portfolio magazine. Excerpt:

At the start (of her governorship), everybody loved Sarah. Even the state’s largest newspaper, the Anchorage Daily News, which she’d denounced as a “yellow liberal rag,” hailed her as the “Joan of Arc of Alaskan politics.” Few noticed that her political skills were not matched by an interest in, or grasp of, policy. Or that her concept of truth was, shall we say, rather elastic.

“Facts to her are like Silly Putty,” said Larry Persily, former deputy commissioner of Alaska’s Department of Revenue, who later worked for Palin in the state’s office in Washington. “She shapes them into whatever people want to hear.”

What Alaskans wanted to hear as Palin assumed office at the start of 2007—what they’d been wanting to hear, in fact, ever since the Exxon Valdez oil spill in 1989—was that Big Oil, especially Exxon Mobil, was evil. Looking back over their 40-year partnership with the oil multinationals, most Alaskans concluded that no matter how many tens of billions of dollars in revenue the state had received as a result of North Slope production, it should have gotten more. And it would have, according to popular sentiment, if the greedy, crafty, amoral, conniving, duplicitous, and nefarious oil companies hadn’t robbed Alaska blind—in many cases, with the illicitly bought-and-paid-for cooperation of the state’s elected and appointed officials.

To read the full piece, click here.

Son Michael visited us for a couple of days. He brought his school work. You can see it at his feet. That's his mother doing her work.

How bad is the economy?
CEOs are now playing miniature golf.

+ Even people who have nothing to do with the Obama administration aren't paying their taxes.

+ Obama met with small businesses (GE, Pfizer and Citigroup) to discuss the Stimulus Package.

+ PETA new serves chicken wings at their meetings.

+ People in Beverly Hills have fired their nannies and learned their children's names. Ouch!

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.