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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 Thursday, May 1, 2008:

Most people don’t know what they’re doing, and a lot of them are really good at it. – George Carlin

The Carlin quote is a perfect start to today's column.

The Fed dropped interest rates by a quarter of a point yesterday. It won't make credit more available. We're still in the Mother of All Credit Crunches. The lenders are keeping their checkbooks closed. But the rate cut will annoy all of us who are living on interest from savings accounts, short term money market funds, etc. Thank you for nothing, Mr. Bernanke. By the way, I thought your mandate was to address inflation. Hello, have you visited a gas pump or a supermarket recently? I am not pleased.

My friend called. He was crying. His life was falling apart. All those years of building a business had come to this. Last year my friend, a successful entrepreneur involved in financing real estate out west, had an income of many millions. This year he'll lose many millions as he dumps what little personal money he has into his business desperately to keep it afloat. He's put his office building up for sale. The pressures on him from his investors are immense. Many of his borrowers have gone Chapter 11.

This credit crunch is wreaking havoc with marriages. There's a new phenomenon: It's called Sudden Divorce Syndrome. The headline from a recent BestLife magazine piece reads:

One in four men who will get divorced this year don't have any clue that it's coming. Here's how to avoid that surprise.

Housing was the Big Boom after the Dotcom bust. Now housing is the Big Bust, and busting more daily. From Bloomberg comes this depressing story:

April 29 (Bloomberg) -- Home prices in 20 U.S. metropolitan areas fell in February by the most on record, pointing to an imbalance between supply and demand that shows no sign of ending.

The S&P/Case-Shiller home-price index (the best method of measuring housing prices -- my comment) dropped 12.7 percent from a year earlier, more than forecast and the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.

Prices will probably keep sliding as foreclosures push even more properties onto the market just as stricter lending rules limit the number of qualified buyers. Shrinking home values have contributed to a slowdown in consumer spending that may already have tipped the economy into a recession. ...

Nineteen of the 20 cities in the index showed a year-over- year decrease in prices for February, led by a 23 percent slump in Las Vegas and a 22 percent decline in Miami. Charlotte was the only area showing a gain with a 1.5 percent increase.

Compared with January, homes in all 20 areas covered dropped in value.

"We're going to continue in this abyss for a while,'' said Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. "Inventories are getting worked off but it's a slow process. Sales and prices will go down.'' ...

The declines have yet to stir buyers. The total number of houses sold in March dropped to a 5.456 million annual pace, the fewest since comparable records began in 1999.

Lenders are trying to devise ways to reduce foreclosures. Bank of America Corp., seeking approval of its Countrywide Financial Corp. takeover, yesterday said it will modify at least $40 billion in troubled mortgage loans over the next two years to keep customers in their homes. The move would help as many as 265,000 homeowners, company officials said.

GMAC LLC, the auto and home lender that General Motors Corp. sold to a private equity group, reported today it lost $589 million in the first quarter as more borrowers fell behind on mortgage payments.

Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s. ...

Eli Broad, a philanthropist and co-founder of KB Home, the fifth-largest U.S. homebuilder by revenue, yesterday said he expects home prices to drop another 20 percent.

"I don't think we're anywhere near a bottom in housing,'' Broad told Bloomberg TV yesterday at the Milken Institute Conference in Beverly Hills, California. "We're going to have a big inventory of unsold, unoccupied homes that's going to take three or four years to clear out.''

Earnings at homebuilders are suffering as demand falters. Ryland Group Inc., the U.S. builder that targets first-time buyers in 15 states, last week reported a first-quarter loss as sales dropped.

"Business conditions have not improved,'' Chief Executive Officer Chad Dreier said in an April 24 conference call with analysts. Closings in the quarter dropped by almost a third from the same time last year and the average price fell by 14 percent, the company said.

iPhone to drop in price? Computerworld magazine says AT&T will drop the price of iPhones by $200 this summer. If you buy one, make sure it's the new iPhone and supports AT&T's new 3G network -- which is much faster than the 2G (also called EDGE) network it's working on today. Apple's goal is to sell 10 million iPhones during 2008 -- far more than BlackBerries by Research in Motion (RIMM). Apple is doing everything to make sure that its iPhone works in the corporate world, which RIMM presently dominates. And from what I've seen, Apple will prevail. The trade still is buy Apple (P/E of 36) and sell RIMM (P/E of 54).

Visa and MasterCard to fall? Visa and MasterCard have been Wall Street darlings of late. Today consumers are reducing their credit card use. It's hard to believe these two will stay up so high. These two don't assume credit risks. Those they happily hand off to the banks. They are simply giant data processing machines. Still...

How to prevent diabetes. Eight Ways to Control Your Blood Sugar. (From Men's Health Magazine). I don't have this problem, but a lot of my friends do.

1. Exercise like it's a prescription. That means at least 20 to 30 minutes every day. It takes a only a few days of missed workouts and poor eating to worsen a person's insulin resistance, says Barry Braun, Ph.D., an associate professor of kinesiology at the University of Massachusetts at Amherst. To make sure you stick with it, choose the exercise that you enjoy the most.

2. Sprinkle cinnamon on everything you can stand. Studies show it can improve insulin sensitivity. This means your body needs less of the hormone insulin to keep your blood-sugar levels in check. "The cheap supermarket stuff works just as well as expensive supplement versions," says Jonny Bowden, Ph.D., C.N.S., author of The Most Effective Natural Cures on Earth.

3. If you already have high blood glucose, take alpha lipoic acid. "This supplement is unexcelled as a blood-sugar nutrient and is a prescription item in Europe," says Bowden. He recommends taking 300 milligrams twice a day. Puritan's Pride Alpha Lipoic Acid is reasonably priced and passed purity tests at

4. Skip the sugary sports drinks. University of Massachusetts scientists recently discovered that exercising improved insulin sensitivity by 40 percent when a 500-calorie deficit was created, but produced no improvement when the burned energy was immediately replaced with mostly carbohydrates.

5. Invest in a glucose monitor. It'll allow you to find out how specific meals, foods, and beverages affect your blood sugar. One option is the TrueTrack Smart System brand ($13 for the monitor, $35 for the strips, Simply prick your finger 2 hours after a meal. The number shouldn't be above 139 mg/dl, and it shouldn't be below 100 or your fasting number -- whichever is lower," says Keith W. Berkowitz, M.D. If you fall out of that range, you need an oral glucose-tolerance test.

6. Snack on pumpkin seeds or sunflower seeds. A small handful won't impact blood sugar, and they're rich in magnesium, a mineral that fights insulin resistance, according to a 2006 study from Tufts University researchers.

7. Eat every 2 to 3 hours. Eating this often helps prevent drops in blood sugar, which can lead to sugar binges, says Dr. Berkowitz.

8. Check your meds. If you're taking a thiazide diuretic for hypertension, ask your doctor about switching to an ACE inhibitor. A 2006 Hypertension review of 59 drug trials found a "strong relationship" between low potassium levels caused by diuretics and increased blood glucose.

Network Solutions screwed up. They registered, the original name of this site and the way most people get to it. Then it expired. Network Solutions forgot to tell me it was expiring. I was on the phone with them in India (!!) for over three hours. They really are hopeless. Never ever do business with Network Solutions. If you're registering a web site, use a company called 1and1.

The Big Lesson. If you have a web site, do a WhoIs search today and check that your contact information is up to date. Mine wasn't.

From my son Michael:

Hi Everyone –

Had a bit of a crazy day. I was studying when I heard a shout for someone to call 9-11. Ran around the corner to see a guy on the ground having a massive seizure – blood everywhere, foaming at the mouth, the whole nine yards. A sectionmate called 9-11, I ran for security, and another person made sure the guy didn’t hurt himself further. The whole thing worked out fine in the end (despite the fact that it took Boston paramedics about 40 minutes to arrive. Had it been a heart attack, he would have been dead) but it was scary.

The key lesson was that guy didn’t have any obvious phone numbers in his cell phone. Nothing was labeled “Mom”, “Home”, “Emergency”, etc. We couldn’t get any history on him or reach anyone to help. The paramedics said this was one of the more common problems they face daily and one of the easiest ways to help yourself if anything were to go wrong.

Please take the time to program a few obvious numbers into your phone. Or label your cell phone with an Emergency number. Or wear a dog tag. Or something. We ain't getting any younger.

Three favorite recent New Yorker cartoons:

What experience for the new job?
The woman applying for a job in a Florida lemon grove seemed way too qualified for the job.

'Look Miss,' said the foreman, 'have you any actual experience in picking lemons?'

'Well, as a matter if fact, yes!' she replied .

'I've been divorced three times.'

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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