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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 EST Monday, November 27, 2006: A couple of my hedge funds and one of my money managers are under water for 2006. Their managers get paid vast amounts of money to beat the market, but haven't been able to this year. Is it really worth trying? My son, Michael, has just read A Random Walk Down Wall Street.

As I was bemoaning my 2006's losers last night, Michael pointed out:

1. Losers are more painful than gainers are pleasurable.
2. Losers suck time from pleasurable activities like tennis.
3. Few beat the market long-term.
4. Why not put Daddy's investments on auto pilot and save all the aggravation?

The best "auto pilot" around is a broad-based equity fund -- most likely an index fund -- from a low-cost, low-fee provider, like Vanguard. I've sung Vanguard's praises before. I'm up 13.48% on my Vanguard -- basically in the last 15 months. These are the Vanguard funds I own:
One year return
Five year return
International Value Fund
Total International Stock Index
Pacific Stock Index Admiral Shares
Emerging Markets Stock Index Admiral Shares
Mid-Cap Index Fund Admiral Shares

The returns are not fully up-to-date (Vanguard's web site sucks), but they're close.

Vanguard itself is touting a WatchList of its own funds. The returns are more up to date:

Vanguard Watchlist   Price as of 11/24/2006 Yield YTD returns to 11/24/2006
500 Index Fund Inv VFINX
LifeStrategy Growth Fund VASGX
Total Stock Mkt Idx Inv VTSMX
Wellington Fund Inv VWELX
Windsor II Fund Inv VWNFX

The dollar is dropping. But Asia is booming.
The dollar dropped sharply last week against a broad range of major currencies, with the euro breaking through $1.30 for the first time in a year and a half. The British pound rose to its strongest value against the dollar in two years. No one knows why the dollar is ailing at this precise moment -- except the usual suspects -- the huge trade imbalance with China, a slowing domestic housing market in the US, booming Asia and improving Europe.

Thus the imperative is to find more investments outside the US. I like Australia because of its limitless minerals and the huge demand for those minerals from booming Asia. My favorite Kagara Zinc (KZL.AU) had its annual meeting last week. The executive chairman, Kim Robinson, said, inter alia:

It has been an exhilarating year for our Company. We have brought two new orebodies into production, one of which is a very profitable underground operation, and commissioned a new copper treatment plant at Mt Garnet. We are now in the process of commissioning our third treatment plant at Thalanga which will treat copper ore now being mined from Balcooma. You can see from the flitch plan showing detailed results of the ore zone currently being mined at Balcooma and which contains 72,102 tonnes grading 4.18% copper that when Thalanga commences full production we are in for a good ride. Due to a few minor commissioning issues the time frame for full production has now drifted out to early December.

You will have followed with great interest our recent acquisition for $25 million of the nickel interests at Forrestania. This is part of a deliberate strategy to complete our diversification into zinc, copper and nickel. Our fourth leg, gold, encompassing the gold assets at Red Dome and Mungana, is more by accident than design, but we are more than happy to have it in our exploration portfolio. A near production opportunity such as the extensions to the T5 nickel deposit at Flying Fox gives us the opportunity to get into the nickel business very cheaply and quickly without having to purchase nickel production at elevated prices, and we can look forward to exploration commencing early in the new year. In the meantime we have the advanced Mungana project and the very large Admiral Bay zinc project in the development pipeline. Joe Treacy will have more about all of these talk the meeting.

The other pleasing aspect of the years performance has been the strong cash flows and profits that we are now producing. After tax profits have grown from $14.4 million for the year ending June 2005, to $35.6 million for the year ending June 2006, with a further substantial increase expected for the current year.

For more on the Chairman's remarks and Kagara's annual meeting, click here and click here.

Christmas/Chanukah presents -- part 2:
The two magazines I most enjoy are the Economist and Best Life. Give subscriptions to your friends:

One year $79. Click here.

10 issues for $19.97. Click here.

Yet another plug for my iPod: There is nothing more enjoyable than falling asleep listening to music with your iPod ear buds plugged in and your head coddled in a down pillow. You have to buy the latest iPod. It's smaller. It's really small. The controls are better. The screen is phenomenal. And you don't have to carry around a heavy, clunky power supply. It charges via USB port on your laptop.

The 30 gig unit is totally wonderful -- much smaller than the 80. And only $249, the same price as the much smaller Nano. Click here.

Tip: When downloading iTunes 7 -- the latest version of Apple's free software -- turn off pop-up blocking on your browser.

A good Family
In a small town in the old country the Rabbi died. His widow, the rebbetzin, was so disconsolate that the people of the town decided that she ought to get married again. But the town was so small that the only eligible bachelor was the town butcher. The poor rebbetzin was somewhat dismayed because she had been wed to a scholar, and the butcher had no great formal education.

However, she agreed and they were married.

After the marriage, Friday came. They went to the Mikva. Then home to prepare to light the candles. The butcher leaned over to her and said, "My mother told me that after the Mikva and before lighting the candles, it's a mitzvah to have sex." So they did.

She lit the candles. He leaned over again and said, "My father told me that after lighting the candles it's good to have sex." So they did.

They went to bed after prayers to get ready for Shabbos. When they awoke he said to her, "My grandmother said that before you go to the synagogue it's a mitzvah to have sex." So they did

After praying all day, they came home to rest, and again he whispers in her ear, "My grandfather says after praying it's a mitzvah to have sex." So they did.

On Sunday she goes out to shop for food and meets a friend who asks, "So, how is the new husband?"

She replies. "Well, he is no scholar but he comes from a wonderful family."

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. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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