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8:30 AM Tuesday, November 29, 2005: I caught a cold. It's miserable. Is it a warning? It's not easy out there in investment-land. I'm playing very conservative. Cash is king. Short-term is where it's at.

Housing bubble is bursting: Prices of New York apartments are tumbling, my friends in the business tell me. It's not a rout (defined as a state of wild confusion or disorderly retreat). But prices are definitely falling. Apartments are taking much longer to sell. Nationally, things are tapering off. The National Association of Realtors reported Monday that sales of existing homes fell 2.7% in October. The decline might have been even steeper were it not for residents displaced by Hurricanes Katrina and Rita relocating to nearby cities.

If you wanted to be truly pessimistic, you could argue that housing bursting might have dire consequences for the economy next year. Gretchen Morgenson of The New York Times asked this question on Sunday:

DOES a financial train wreck lie dead ahead for American consumers and investors? Paul Kasriel, chief economist at the Northern Trust Company in Chicago fears as much. He reckons that even a mild recession next year could spiral into something ugly, given the combination of rising interest rates, off-the-charts consumer debt and a cooling housing market. "We have a very accident-prone economy," Mr. Kasriel said. "We have the most highly leveraged economy in the postwar period, and the Fed is increasing rates. In the past 30 years or so, whenever the Fed has raised interest rates, we've quite frequently had financial accidents."

Gretchen backed her argument up with four charts and their caption: On Shaky Ground: In the last five years, consumers' spending fueled by home-equity cash-outs, has exceeded their earnings. But greater leverage exposes them to risks if real estate values fall. Banks, meanwhile, have increased their mortgage holdings, making them more susceptible to a declining real estate market as well.

* Include regular mortgages, mortgaged-backed securities and the liabilities issued by government agencies like Fannie Mae and Freddie Mac.

Only in California: Reader Fred Bonness reports a listing in California:

One bedroom, one bath, 144 sq. ft. Bass Lake, California. Asking price: $115,000. Click here. I suspect this is someone's idea of a joke.

How can you be so stupid, and so greedy: From The Wall Street Journal:

Randall "Duke" Cunningham, who was an ace pilot in the Vietnam War before serving eight terms in the House of Representatives, admitted (before a federal judge in San Diego) that he had accepted $2.4 million in bribes from several conspirators in a variety of forms, including cash, rugs, antiques, furniture, yacht-club fees and vacations. The case centered on Mr. Cunningham's $1,675,000 sale of his Del Mar, Calif., home to defense contractor Mitchell Wade, who then quickly sold the home at a $700,000 loss in the midst of a San Diego housing-market boom. Prosecutors said that Mr. Cunningham received an inflated price for his home in exchange for helping Mr. Wade's company, MZM Inc., secure Pentagon contracts. Late Monday morning, Mr. Cunningham, 63 years old, resigned his seat in Congress. "I can't undo what I have done but I can atone," he said at a news conference.

There is no truth to the rumor that Mr. Cunningham will now be writing a web site called "In Search of the Perfect Bribe."

Cyber Monday boomed: Americans spent 22% more online Friday. Web traffic was up 29%. Individual retailers report strong sales for yesterday, Cyber Monday. Electronics is where Christmas will be this year. I continue to like Microsoft, Dell, Intel, Texas Instruments and Best Buy.

How to make PDFs (part 2): From two readers:

Harry, I've long used PDFactory and FinePrint when printing to paper or creating PDF documents. Saves a lot of paper and more importantly it reduces the amount of ink/toner used. FinePrint does a great job of allowing you to control the way you print and the amount of paper you use. You can print two up, four up, booklet format, etc. pdfFactory allows you to create PDF documents from anything that can print to your printer. You can see both at www.fineprint.com. You can try them out free.
Carl A. Wright

Hi Harry, PDFCreator is a free PDF printer driver: Click here. Also, I prefer FoxIt PDF reader to Adobe, a much smaller and faster alternative: Click here. Enjoy reading your column,
Erik Larsen

Impeccable husband logic:
A man and woman were married for many years, even though they hated each other. When they had a confrontation, screaming and yelling could be heard deep into the night The woman would shout, "When I die, I will dig my way up and out of the grave and come back and haunt you for the rest of your life!"

Neighbors feared her. They believed she practiced black magic, because of the many strange occurrences that took place in their neighborhood.

The woman liked the fact that she was feared. To everyone's relief, she died of a heart attack when she was 68. Her husband had a closed casket at the wake. After the burial, he went straight to the local bar and began to party, as if there was no tomorrow.

His neighbors, concerned for his safety, asked, "Aren't you afraid that she may indeed be able to dig her way up and out of the grave and come back to haunt you for the rest of your life?"

The man put down his drink and said, "Let her dig. I had her buried upside down......."

Birthday: Happy birthday, Todd. Older, but wiser. Yes. Older, but richer. No.

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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