Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Thursday, March 31, 2005:
That was a nice bounce yesterday. All the trend-following hedge funds who thought
the market was going down got crushed yesterday. And it couldn't have happened
to nicer people.
I'm increasingly out of small, speculative, thinly-traded stocks. That area is
flagging. For now. I'm more interested in boring solid stocks like General
Electric (GE), Whole Foods (WFMI), Zimmer Holdings (ZMH), Stryker Corp (SYK),
Danaher (DHR) and my little bank, Independence Community Bank (ICBC).
The REITs are turning. RTU and RNP have huge yields and they're
way below their NAVs (Net Asset Values. There are others.
And I thought programmed trading was just over half:
Reader Fred Boness says it's much higher and points to a press release from the
New York Stock Exchange which reads:
YORK, Mar. 24, 2005 -- The New York Stock Exchange today released its weekly
program-trading data submitted by its member firms. The report includes trading
in all markets as reported to the NYSE for Mar. 14-18.
The data indicated
that during Mar. 14-18, program trading amounted to 71.4%
of NYSE average daily volume of 1,835.4 million shares, or 1,309.9 million shares
a day. This included program trading associated with the March 18 quarterly
expiration of stock-index options, futures and options on index futures.
encompasses a wide range of portfolio-trading strategies involving the purchase
or sale of a basket of at least 15 stocks with a total value of $1 million or
more. Program trading is calculated as the sum of the shares bought, sold and
sold short in program trades. The total of these shares is divided by total
So much for the little investor.
If you didn't read yesterday's piece on trend-following hedge funds,
please do. It explains a lot of what's happening to our stockmarkets. Several
readers thought it was "my best column ever." Click
AIG, The Classic Cockroach stock: Kill
one cockroach. Two days later, another appears.
Kill that one, two of them appear. Ditto for Cockroach stocks. A
little bad, unusual news. A little more bad news. Then a little
more. Meantime, the stock skids and skids. Enron and WorldCom were classic Cockroach
Stocks in their time. There are always a handful of cockroach stocks around.
The latest one is AIG, the insurance company. It's already tumbled. I
bet it will tumble even further. I should have highlighted this one earlier.
But being on "vacation" for the month in the paradise of La Quinta,
California has sort of dulled the killer instincts -- except when it comes to
The Wall Street Journal writes, "AIG Accounting Admissions May Hint
at More to Come:"
"American International Group for the first time acknowledged the existence
of serious fissures behind the seemingly rock solid financial colossus presented
by its façade. As federal and New York investigators continue to comb
through its records and prepare to interview ousted AIG leader Maurice "Hank"
Greenberg, the giant global insurer said several transactions "appear to
have been structured for the sole or primary purpose of accomplishing a desired
accounting result," and that corrections of the improper accounting would
lower its net worth by $1.7 billion, or approximately 2% of its consolidated
shareholders' equity of $82.87 billion. AIG described improper treatment on
its books of deals with offshore businesses it controls, but the focus of its
acknowledgment dealt with a transaction with Berkshire Hathaway unit General
Re. Confirming news reports of recent weeks, AIG admitted the transaction included
no transfer of risk, so that the money it received should have been booked as
deposits rather than income that inflated AIG's reserves.
may not bode well for Mr. Greenberg, the New York Times says, citing people
close to the investigation of AIG who say his legal liability "would rest
on what he understood about the transfer of risk in the General Re deal and
whether he believed the transaction to be questionable." Mr. Greenberg
was forced to quit after investigators discovered that he had initiated that
deal. In response to the news, credit-rating agency Standard & Poor's lowered
AIG's debt rating to AA-plus from AAA, removing it from a list of eight U.S.
firms with perfect ratings from S&P and Moody's, and probably raising the
cost of its financing, Bloomberg reports.
New York Times
columnist Gretchen Morgenson notes that considering the size of the AIG acknowledgment,
the 1.8% decline in AIG's stock price seems paltry. "Yesterday's measured
response to the company's admissions that it not only had manipulated earnings
but had also secretly controlled offshore entities seems to be another example
of investors presuming that the worst revelations about a company will not be
followed by more," she writes. But like the gradually unfolding scandals
of Fannie Mae and others, AIG's problems may signal that more is in the offing.
Bill Fleckenstein, head of money-management firm Fleckenstein Capital, tells
the Times: "A lot of people will try to make the claim, because of the
attitude in the marketplace -- 'don't worry, be happy.' But these things unravel
in slow motion."
you paying AMT (Alternative Minimum Tax) yet? Under Federal tax laws,
each of us is required to figure the tax we'd owe under regular income tax and
compare that to tax we'd owe under AMT and then pay the bigger of the
two. Today's Wall Street Journal says 4% of all taxpayers will be hit
this year and 20% next year. You must avoid AMT. For more, click
up your favorite stock on Google: Search for GE, SUNW, RIMM
or any other stock symbol. You'll be rewarded with a chart and some basic information,
For more on what Google's doing, click
is no longer cheap, nor easy to get on:
In short, it's becoming successful. Check their web site for fares. They're
high. Check out the flights. They're all full. (Believe me, I've been checking.)
This may be the time to pick up some shares.
PC Magazine raves about this monitor: It's
the Samsung SyncMaster 213T-Black 21.3" LCD Monitor. Key facts: Digital
and analog inputs. 1600 x 1200 native resolution. That's high. Much room to
run multiple windows. 500:1 contrast ratio. That's high. 170 degree horizontal
and vertical viewing angles. That's super. Thin bevel. Great tilting, swiveling
and rising. The perfect external monitor for your laptop or a second or replacement
monitor for your desktop. Retail is a bargain $800. But there are zillions on
eBay for less.
How to make Windows XP run faster: One of
the most revered web sites for Windows tweaks is BlackViper. For XP tweaks,
All About Chickens: Part 1
A chicken farmer goes into a local tavern and took a seat at the
bar, next to a woman patron, and orders a glass of champagne.
perks up and says "How about that - I just ordered a glass of champagne
to her and said "what a coincidence. This is a special day for me, I'm
is a special day for me too and I'm also celebrating" says the woman.
a coincidence, says the man. They clink glasses and he asks.
are you celebrating"?
husband and I have been trying to have a child. Today my gynecologist told me
a coincidence" says the man. "I'm a chicken farmer. For years all
my hens were infertile, but today they're finally fertile".
great" says the woman. "How did your chickens become fertile"?
switched cocks" he replied.
a coincidence" she said.
About Chickens: Part 2
A woman walks into her accountant's office
and tells him that she needs to file her taxes.
The accountant says, "Before we begin, I'll need to ask a few questions."
He gets her name, address, social security number, etc., and then asks, "What
is your occupation?"
The woman replies, "I'm a high-priced call girl."
The accountant balks and says, "No, no, no. That will never work. That
is much too crass. Let's try to rephrase that."
The woman says, "OK, I'm a high-end hooker."
"No, that is still too crude. Try again."
think for a minute, the woman says, "I'm a chicken farmer."
asks, "What does chicken farming have to do with being a hooker or a call
I raised over 700 little peckers last year."
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,
here and here.