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

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8:30 AM Wednesday, November 2, 2005: Predictably (click here) the Fed raised rates, again. This is their entire mumbo jumbo. They seem to be saying that this is probably the end of the rate hikes that has taken rates from 1% to yesterday's 4%.

Elevated energy prices and hurricane-related disruptions in economic activity have temporarily depressed output and employment. However, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricane-affected areas. The cumulative rise in energy and other costs has the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

InSite Vision (ISV) is bouncing higher. It will be $1 by Christmas. They have a decent solution for common eye diseases. Market cap is still low -- at $62 million. I've been pumping for this one since it was under 60 cents. It hit 81 yesterday, closing at 79.

Bush puts aside $7.1 billion for the flu.
Until we know more, Bush's plan sounds a little screwy. For example, the plan calls for spending $1.2 billion to acquire enough egg-based vaccine by 2009 to protect 20 million people against the deadly H5N1 strain of avian flu. I wonder which 20 million? I hope it's only for New York City, i.e. my family and I. The rest of you can catch the flu and croak? Of course, by the time the Feds get the vaccine to me, the avian flu virus will have mutated and what I get injected with will do me zero good. And the rest of the country will have a good laugh. It's time to stay away from flu stocks. This is getting sillier and sillier.

How commercial real estate yields are tightening: Today one of my real estate syndicators offered me participation in a leveraged shopping center yielding 7.5% to 9.4% over the next ten years, with an average annual return of 8.4%. That's based on rents. Assuming we sold the building at the end of year 10, the IRR would only be 9.4%. That may be conservative. And it's possible that in ten years the building will be worth a lot more. But, in the old days, we felt comfortable projecting 10-year IRRs of 15% to 18% and we realized over 20%. But now .... prices of commercial properties are so high. The outlook for the stockmarket looks yuchy. This deal will be snapped up by investors, happy for a regular dividend check -- any check.

Microsoft has lost its major brains to Google. Most of my friends have left Microsoft, frustrated with it slowness. Today I emailed my long-time friend at Microsoft (one of the few still here):

Windows Live? Office Live? Who cares?
Meanwhile Office 12 (the long-awaited new version) languishes and languishes and languishes. I can’t even get a beta.
Google pays me money every month.
Microsoft gives me frustration.
No wonder your stock is in the tank.

Want to see how half-baked Microsoft's latest ideas are? Go here:

Another reason to stay right away from telecom, in all its forms: Germany's Deutsche Telekom AG yesterday said 32,000 workers will leave the company over three years as part of a restructuring program that will cost 3.3 billion euros due to "massive changes in the industry." In particular, Deutsche Telekom cited the tough competitive environment in the fixed-network and broadband sector in Germany, where all the job cuts will take place. The operator said there would be no compulsory redundancies until 2008. .... I love that "compulsory redundancies" They can't even call a spade a spade. They're firing the workers. Face it.

What you can and can't do with a digital camera: You can take great photos with a $8 disposable camera, or a $100 digital camera. As you pay more for a digital camera, you get two features:

1. Instantaneous shutter release. You hit the button and the shutter goes off. That lets you catch fleeting smiles.
2. The ability to use bounce flash. Here are two examples. This is a photo of me by a tiny Canon D-450 point and shoot digital camera. (For more on this camera, click here.) Look carefully. The photo is fine. But the lighting is clearly unnatural. It's lit by the strobe on the camera. Had I been closer you would have seen my red eyes.

I took this one of Brendan's gorgeous kid with my pricey Nikon D-100, using an external strobe, DB-800, is bounce mode. I bounced the strobe off the ceiling. Note: no red eyes and the look of natural light.

Life at the Patent Office
I went to the US Patent Office yesterday trying to register some of my inventions. I went to the main desk to sign in and the lady at the desk had a form that had to be filled out. She wrote down my personal info and then asked me what I had invented?

I said, "A folding bottle." She said, "Okay, what do you call it?"

"A Fottle", I replied.

"What else do you have?"

"A folding carton."

"And what do you call it?" "A Farton." I replied.

She snickered and said, "Those are silly names for products and one of them sounds kind of crude."

I was so upset by her comment that I grabbed the form and left the office without telling her about my folding bucket.

Recent column highlights:
+ Dumb reasons we hold losing stocks. Click here.
+ How my private equity fund is doing. Click here.
+ Blackstone private equity funds. Click here.
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell stocks. Click here.

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.
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