Technology Investor 

Newton's In Search Of The Perfect Investment. Technology Investor. Previous Columns
8:30 AM Thursday, May 19, 2005: Nice pop yesterday. While it lasts I'll enjoy it. More important: The weather is stunning. Too beautiful to sit in front of a screen. Yesterday I explored Central Park on my bicycle. Today I'll tour some more and play tennis. There are roses to smell, balls to hit.

I'm worried by China. Our Administration is reacting like a spoiled child faced with a rival who's working harder and smarter. The Administration has slapped quotas on Chinese trousers, underwear and cotton shirts and it's pressuring China to up the value of its currency. It seems to forget that China is one of the biggest buyers of our treasury notes. Without China, interest rates here would be higher (to entice others to buy those Treasuries) and our underwear would cost more. I hope this doesn't produce a full-blown financial crisis.

An inverse relationship? There is an inverse relationship between the quality of an investment and the effort put into promoting it. Superfund can't spend enough money to get you to invest in that piece of drek. The most phone calls I've ever received have always been for investments I don't want. The hard ones (to get into) are not necessarily the ones I want also. But they tend to be of much better quality. A couple of overly aggressive salesmen badgered me into having breakfast with them this morning. I feel stupid that I said yes. They bribed me with offers of fresh bagels and cream cheese.

Is Whole Foods the next Starbucks?
One of MSN's reporters, Robert Walberg, thinks it is, though he recommends for a pullback of 10% to 15% before buying. I've been waiting also for that pullback to buy more, but have despaired and bought some more yesterday. For Walberg's piece, Click here. WFMI is on a tear. Even Cramer is touting it. Like all of us, he believes it's barely scratched surface on the number of stores it can open.

Cramer's Top Ten:
I do like watching him. He's biased, opinionated, smart and enthusiastic. He comes out with great quotes that may or may not mean anything, but are at least funny. I love his characterization of fickle hedge investors as "clueless rich guys." I like his explanation of momentum investing -- "Buy High. Sell Low." I like his aphorisms: "Don't buy stocks that have spiked. Buy stocks that haven't moved up."

I do like his idea of buying "best of breed." Here's his Top Ten recommendations from last night. Interesting list:

10. Zimmer Holdings (ZMH)
9. Comcast (CMSCA)
8. UnitedHealth Group (UNH)
7. McDonalds (MCD)
6. Automatic Data (ADP)
5. Citigroup (C)
4. Cendant -- travel and leisure (CD)
3. Yahoo! (YHOO)
2. Intel (INTC)
1. UPS (UPS)

I don't own any of Cramer's Top Ten. I'd like to own Zimmer -- but the Fed investigation bothers me.

Is Berkshire a cockroach stock? It's hard to tell. Its reinsuance arm has "iffy" deals with AIG and now I hear (from my friends in Australia) that National Indemnity, the US reinsurer owned by Berkshire, recorded a reinsurance policy sold to Rodney Adler's FAI Insurance in 1998 as a loan. The contract, and others written by General Re, another reinsurer owned by Berkshire, enabled FAI to inflate its profits before its takeover by HIH Insurance. The way the contract was recorded by National Indemnity is of interest to the Australian Prudential Regulation Authority and the Securities and Exchange Commission of the US, which are becoming increasingly concerned that financial reinsurance contracts do not always involve any transfer of risk, and are sometimes being used to boost the profits of the buyer. In the HIH Australian royal commission, APRA concluded that the contract between National Indemnity and FAI Insurance involved "no genuine material risk transfer." Someone has already gone to jail because of the failure of HIH. See below.

Check. Check. Check. Buying a house or an apartment, make sure you check everything. And I mean everything. Better (and cheaper) to have the seller fix all the minor and major problems. We missed a few areas and now they're coming back to haunt us -- including one expensive windows that won't open.

And you thought the U.S. press had some problems with the facts. Several Tehran newspapers, including Kayhan and Jomhuri-ye Eslami newspapers, claim America controls Al-Jazeera, Al Qaida and the Taliban. They are our "servile groups." We control them in order "to present the world with a tarnished image of Islam." America does this to "have an excuse to keep a heavy military presence in the area and continue 'its imperialism and war-mongering policies' -- right on the border of Iran." I don't make this stuff up.

Outrage and Silence.
This is Thomas Friedman's Op-Ed piece from yesterday's New York Times:

It is hard not to notice two contrasting stories that have run side by side during the past week. One is the story about the violent protests in the Muslim world triggered by a report in Newsweek (which the magazine has now retracted) that U.S. interrogators at Guantánamo Bay desecrated a Koran by throwing it into a toilet. In Afghanistan alone, at least 16 people were killed and more than 100 wounded in anti-American rioting that has been linked to that report. I certainly hope that Newsweek story is incorrect, because it would be outrageous if U.S. interrogators behaved that way.

That said, though, in the same newspapers one can read the latest reports from Iraq, where Baathist and jihadist suicide bombers have killed 400 Iraqi Muslims in the past month - most of them Shiite and Kurdish civilians shopping in markets, walking in funerals, going to mosques or volunteering to join the police.

Yet these mass murders - this desecration and dismemberment of real Muslims by other Muslims - have not prompted a single protest march anywhere in the Muslim world. And I have not read of a single fatwa issued by any Muslim cleric outside Iraq condemning these indiscriminate mass murders of Iraqi Shiites and Kurds by these jihadist suicide bombers, many of whom, according to a Washington Post report, are coming from Saudi Arabia.

The Muslim world's silence about the real desecration of Iraqis, coupled with its outrage over the alleged desecration of a Koran, highlights what we are up against in trying to stabilize Iraq - as well as the only workable strategy going forward.

The challenge we face in Iraq is so steep precisely because the power shift the U.S. and its allies are trying to engineer there is so profound - in both religious and political terms.

Religiously, if you want to know how the Sunni Arab world views a Shiite's being elected leader of Iraq, for the first time ever, think about how whites in Alabama would have felt about a black governor's being installed there in 1920. Some Sunnis do not think Shiites are authentic Muslims, and are indifferent to their brutalization.

At the same time, politically speaking, some Arab regimes prefer to see the pot boiling in Iraq so the democratization process can never spread to their countries. That's why their official newspapers rarely describe the murders of civilians in Iraq as a massacre or acts of terror. Such crimes are usually sanitized as "resistance" to occupation.

Salama Na'mat, the Washington bureau chief for the London-based Arabic daily Al Hayat, wrote the other day: "What is the responsibility of the [Arab] regimes and the official and semiofficial media in the countries bordering Iraq in legitimizing the operations that murder Iraqis? ... Isn't their goal to thwart [the emergence of] the newborn democracy in Iraq so that it won't spread in the region?" (Translation by Memri.)

In identifying the problem, though, Mr. Na'mat also identifies the solution. If you want to stop a wave of suicide bombings, the likes of which we are seeing in Iraq, it takes a village. I am a big believer that the greatest restraint on human behavior is not laws and police, but culture and religious authority. It is what the community, what the village, deems shameful. That is what restrains people. So how do we get the Sunni Arab village to delegitimize suicide bombers?

Inside Iraq, obviously, credible Sunnis have to be brought into the political process and constitution-drafting, as long as they do not have blood on their hands from Saddam's days. And outside Iraq, the Bush team needs to be forcefully demanding that Saudi Arabia and other key Arab allies use their media, government and religious systems to denounce and delegitimize the despicable murder of Muslims by Muslims in Iraq.

If the Arab world, its media and its spiritual leaders, came out and forcefully and repeatedly condemned those who mount these suicide attacks, and if credible Sunnis were given their fair share in the Iraqi government, I am certain a lot of this suicide bombing would stop, as happened with the Palestinians. Iraqi Sunnis would pass on the intelligence needed to prevent these attacks, and they would deny the suicide bombers the safe houses they need to succeed.

That is the only way it stops, because we don't know who is who. It takes the village - and right now the Sunni Arab village needs to be pressured and induced to restrain those among them who are engaging in these suicidal murders of innocents.

The best way to honor the Koran is to live by the values of mercy and compassion that it propagates.

The city boy and the donkey
A city boy, Rodney, moved to the country and bought a donkey from an old farmer for $100. The farmer agreed to deliver the donkey the next day.

The next day the farmer drove up and said, "Sorry son, but I have some bad news, the donkey died."

Rodney replied, "Well then, just give me my money back."

The farmer said, "Can't do that. I went and spent it already."

Rodney said, "OK then, at least give me the donkey."

The farmer asked, "What ya gonna do with him?"

Rodney, "I'm going to raffle him off."

Farmer, " You can't raffle off a dead donkey!"

Rodney, "Sure I can. Watch me. I just won't tell anybody he is dead."

A month later the farmer met up with Rodney and asked, "What happened with that dead donkey?"

Rodney, "I raffled him of. I sold 500 tickets at two dollars a piece and made a profit of $900.

Farmer, "Didn't anyone complain?"

Rodney, "Just the guy who won. So I gave him his two dollars back."

Rodney grew up and eventually became the CEO of Enron, WorldCom, AIG.....

This story came from Australia and was originally about Rodney Adler (now in Jail) and Australia's largest insurance collapse, FAI / HIH.

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.
Go back.