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

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9:00 AM EST, Tuesday, November 18, 2008: The worst part of this is the uncertainty and unpredictability, and the helplessness they bring. Helplessness turns into inaction. And inaction turns into cash -- which today is the U.S. dollar. I don't see the persuasive bargains out there -- though many do. They spend their lives catching falling knives.

The vast unwashed are not opening their brokerage statements. They should. They should assess what they have, what their stocks' prospects are. They should get rid of the broken companies, hold the rest. They should even consider buying more of the stocks they love.

I believe that generally stock prices will fall more. But there are good companies out there selling cheaply. If this sounds contradictory, it depends whose shoes you're wearning.

I don't see the recovery taking hold, yet. The banks aren't yet selling their foreclosed commercial properties at bargain prices. They're too busy begging for money in Washington or firing people. Citibank is firing an amazing 50,000 employees. Those fifty thousand terminations tell you what Citi's management thinks of the future for banking. More profitable to fire people than to lend money. So much for the TARP.

Professor Nouriel Roubini writes:

Today’s news about October retail sales (-2.8% relative to the previous month and now down in real terms for five months in a row) confirm what this forum (RGE Monitor) has been arguing for a while, i.e. that the U.S. has entered its most severe consumer-led recession in decades. At this rate of free fall in consumption, real GDP growth could be a whopping 5% negative or even worse in Q4 of 2008. And this is not a temporary phenomenon as almost all of the fundamentals driving consumption are heading south on a persistent and structural basis. Consider the many severe negative factors affecting consumption. One can count at least 20 separate or complementary causes that will sharply reduce consumption in the next several years:

Pick a bunch of retailers and short them. It's not too late. Someone sent me a list of retail store closures. The list was two pages long. The stores are empty.

SEC Charges Mark Cuban With Insider Trading: The first rule of breaking the law is not to get caught. The second rule is to have no witnesses, especially those who will be pissed at you because you took advantage of them, or because they think you did. The third rule is to keep your mouth shut.

I suspect Cuban is not guilty of insider trading. He might profitably eye the Martha Stewart case. Martha didn't go to jail because of insider trading. She went because she lied to a Federal official, which is a crime. According to my man, who knows this stuff, she should have just told them, "Yeah, I got a call from my broker telling me Sam (Waksal) was selling and I should sell, so I sold. Go F+*k off." She'd have been in the clear. Lying is dumb.

My friend writes, "I don't know much about Cuban except he's rich as hell, probably something of a lowlife, and has a bad temper. I don't see the fiduciary relationship, I don't see the control, I don't see the duty owed to the company. The SEC wants us to believe that if you know something the market doesn't know, it doesn't matter how you acquired that data, you aren't allowed to use it. I don't think they've ever succeeded in that line of attack, which is why they never brought securities charges against Stewart."

You be the judge. Here's bits of today's Wall Street Journal piece:

SEC Calls a Foul on NBA's Cuban, Alleges Insider Trades in Web Firm

The Securities and Exchange Commission filed civil insider-trading charges against Mark Cuban, saying the Dallas Mavericks owner dumped his stake in an Internet company just after he heard confidentially that the company was about to issue low-priced shares.

Mr. Cuban, known for his tirades against National Basketball Association referees, quickly fired back at the securities cops, saying their claims were false, and that they had a "facts be damned" attitude.

It was the latest and most serious trouble for the flamboyant 50-year-old investor and sports entrepreneur, who has run up nearly $2 million in NBA fines. He once criticized the NBA executive in charge of referees as being so incompetent he couldn't manage a Dairy Queen. To placate offended Dairy Queen personnel, he subsequently spent a day at the fast-food chain, dishing out soft-serve ice cream.

In the SEC complaint against him, a witness described how Mr. Cuban allegedly flew off the handle in June 2004 when he was told about a proposed private offering in, an Internet company in which he had taken a roughly 6% stake earlier that year. Such an offering was likely to trigger a decline in the stock's price.

According to the complaint,'s chief executive emailed Mr. Cuban asking him to call as soon as possible. Mr. Cuban called four minutes later from the arena where the Mavericks play. "Well, now I'm screwed," Mr. Cuban reportedly said.

By the next day he had sold his entire stake -- just before shares started plunging, the complaint says.

Christopher Clark, a lawyer for Mr. Cuban, said, "We're shocked. We find it incredible that given all the important issues that the SEC has to address with regard to today's economy they've sought to bring a $750,000 case relating to a he-said, she-said about one trade against a person whose integrity has never been questioned before with regard to the securities markets."

Guy Faure,'s CEO at the time, couldn't be reached for comment. Mr. Faure, who wasn't named in the complaint, left in 2007. Later that year, the company was renamed Copernic.

Mr. Cuban made billions of dollars in 1999 by selling an Internet company to Yahoo Inc. at the height of the dot-com boom, and remains drawn to the dot-com world. He wrote on his blog last summer: "Is there anything more fun than sitting around, growing your hair, drinking a Bud while listening to Jethro Tull and pondering how to change the balance of power in the search world and unseat Google?"

He also has a longstanding interest in exposing the shadowy world of small-company stocks and alleged chicanery by minor-league stock operators. Last year, he started, a Web site that seeks to expose wrongdoing in that world. In a controversial move, Mr. Cuban discloses on the site that he may short-sell the shares of companies that he knows the site is about to discuss, seeking to profit from the expected decline in their shares.

One question in the case is why the SEC waited more than four years to file charges related to the 2004 share sale. Mr. Cuban had written about the sale of his stock as early as 2005 on his blog. The SEC said, however, that it didn't start pursuing the case until 2007. It isn't unusual for such investigations to last a year or two. ...

Mr. Cuban's involvement with began when he bought 600,000 shares in the company, a 6.3% stake, in March 2004. According to the SEC complaint, in the spring of 2004, the company decided to raise money through an offering known as private investment in public equity, or PIPE. It says's CEO called Mr. Cuban on June 28, 2004, to gauge his interest in taking part.

The SEC said the CEO began the call by telling Mr. Cuban that he would have to keep the information confidential. That's typical in such offerings. But lawyers for Mr. Cuban said he was never given the proviso about confidentiality, and signed no confidentiality agreement.

An email sent shortly after the call seems to back the SEC's contention. According to the complaint, the executive chairman emailed a recap of the CEO conversation with Mr. Cuban to board members, and wrote: "As anticipated he initially 'flew off the handle,' and said he would sell his shares (recognizing that he was not able to do anything until we announce the equity) but then asked to see the terms and conditions."

That night, and the next morning, June 29, Mr. Cuban sold his full stake at about $13 a share. That evening, at 6 p.m., announced the PIPE financing. The following day, June 30, shares opened 9% lower than the prior day's close and continued to fall.

In a blog post on March 2, 2005, Mr. Cuban recalled the events. He called PIPE financing "a huge red flag" and wrote, leaving out some punctuation as he often does: "I dont want to own stock in companies that use this method of financing. Why? Because I dont like the idea of selling in a private placement, stock for less than the market price..."

Surprise. Surprise. Back in the 70s, a friend was in charge of selling telecom equipment to the mideast. He added 10% to his bid to take care of the necessary bribes. It was routine. All his competitors did it. It leveled the playing field. In the beginning only a handful of officials and royalty got the bribes. But over the years, the population grew and the percentage climbed. Baksheesh is a way of life over there. I was amused to read today's New York Times. How could we be so naive?

Premier of Iraq Is Quietly Firing Fraud Monitors

BAGHDAD — The government of Prime Minister Nuri Kamal al-Maliki is systematically dismissing Iraqi oversight officials, who were installed to fight corruption in Iraqi ministries by order of the American occupation administration, which had hoped to bring Western standards of accountability to the notoriously opaque and graft-ridden bureaucracy here.

The dismissals, which were confirmed by senior Iraqi and American government officials on Sunday and Monday, have come as estimates of official Iraqi corruption have soared. One Iraqi former chief investigator recently testified before Congress that $13 billion in reconstruction funds from the United States had been lost to fraud, embezzlement, theft and waste by Iraqi government officials.

The moves have not been publicly announced by Mr. Maliki’s government, but word of them has begun to circulate through the layers of Iraqi bureaucracy as Parliament prepares to vote on a long-awaited security agreement.

That pact sets the terms for continued American presence here after the United Nations mandate expires Dec. 31, but also amounts to a framework for a steady reduction in that presence. Such a change will undoubtedly lessen American oversight of Iraqi institutions.

While some Iraqi officials defended the dismissals, saying there had been no political motivation, others pointed to the secrecy involved as supporting their view that those removed had lost their posts without good cause. Each of Iraq’s 30 cabinet-level ministries has one inspector general. These oversight officials are supported by varying budgets and staffing. ...

The black hole. A totally wonderful, clever video on YouTube. Watch it. Your kids will love it. Everyone needs a black hole.

Quantum of Solace: You can safely skip the latest James Bond movie.

For my taste, the plot was too hard to follow. There were too many silly chases. There was only one Bond wisecrack. I was so bored, I wanted to leave the theater at least three times. Save your money. Go see a Body of Lies. A much better movie.

Mystery meat
A man kills a deer and takes it home to cook for dinner.

Both he and his wife decide that they won't tell the kids what kind of meat it is, but will give them a clue and let them guess.

The kids were eager to know what the meat was on their plates, so they begged their dad for a clue.

The dad said, "Well, it's what mommy calls me sometimes."

The little girl screams to her brother, "Don't eat it! It's an asshole!"

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.