Technology Investor 

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

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9:00 AM EST, Friday, November 7, 2008: The economy is spiraling into "seriously awful." There is no end of awful news stories (see below). Extreme volatility continues in stockmarkets, with sharp up and down days. But the trend remains down. You should not be in this market. You should not even be holding your "favorite" stocks. You should be as far from the stockmarket as you can -- unless you want to take 5% and short a bundle of stocks in poorly-performing industries. (See below for suggestions.)

Cash is king. I have cash in multiple insured bank accounts. I have cash in one Vanguard fund -- the New York Tax-Exempt Money Market Fund, which is paying a miserable 2.5% a year (but better than a slap in the belly with a cold fish). But as to where else? I am still mulling. Suggestions welcome.

Hunkering down is number one strategy. Cut expenses. Being super nice to customers and bosses is number two strategy. Why do so many firms treat their customers so poorly? Phones don't get answered. Voice mails aren't returned. Emails sit unanswered. All the usual stuff. It's nice to focus on "business strategy" and spend time in endless meetings. In today's world it's better to focus on the customers. Call them. Email them. Meet with them. Maybe you can sell them something?

Do some simple things. Put your phone number on your emails. Send your customers a newsletter with helpful hints and perhaps some "specials."

And stop reading newspapers. They're too depressing. Watch The Daily Show and The Colbert Report on Comedy Central. Watch The Report Man video. Click here. Humor will keep you sane.

Depressing news you don't want to read.

From the Wall Street Journal:

Hedge Fund Selling Puts New Stress on Market
Hedge funds are selling billions of dollars of securities to meet demands for cash from their investors and their lenders, contributing to the stock market's nearly 10% drop over the past two days.

The Dow Jones Industrial Average fell 443.48 points on Thursday, bringing its two-day drop to 929.49 points, its biggest two-day decline since Oct. 20, 1987. Coming amid steep drops in the retail and auto sectors, the decline wiped out a strong rally that ended on Election Day, and now the market is only 6% away from its lowest close of the year.

One of the biggest hedge funds, $16 billion Citadel Investment Group, is being asked by several major banks to post additional collateral to cover big losses on its investments, according to people familiar with the situation.

Citadel, which is run by Kenneth Griffin, was until recently considered a possible savior for troubled Wall Street firms. But his biggest hedge fund has fallen nearly 40% this year, prompting the firm to hold conversations with lenders including Goldman Sachs Group Inc., Deutsche Bank AG and Merrill Lynch & Co. that finance Citadel's trades. ...

Hedge funds have emerged as the latest serious problem in the global financial system. As their losses mount, they're selling off securities to meet demands for cash from lenders and investors. Compounding the problem is a surge in notices from investors indicating they want out. Some hedge funds have been hoarding cash in preparation for these withdrawal requests. Hedge funds are sitting on a record amount of cash, estimated at about $400 billion, money that eventually could make its way into the market. Other managers are hoping that investors have second thoughts and don't go through with the withdrawals, or are telling their investors that they will sell securities over time rather than dump them as the market falls. But either way, the wave of requests is keeping money out of the market as hedge funds figure out their next moves. ...

The recent rush of withdrawal notices to hedge funds comes as investors, including endowments, pension funds and wealthy individuals, see other investments shrink; in some cases these investors need cash to meet their own obligations. It also marks a sharp reversal of sentiment among these big institutional investors, which jumped into hedge funds and similar investments in recent years. The University of Virginia, with an endowment of $4 billion in mid-October, recently said it plans to sell $400 million of its $1.8 billion in hedge funds in the next couple of years to fulfill commitments to other investments. ...

Even the most established hedge funds are being hit by -- or girding for -- withdrawals from investors.

Carl Icahn, the billionaire activist, has received $1 billion of redemption notices from investors in his $7 billion hedge fund after posting losses that are a bit lower than the overall market this year. He's putting $250 million into the fund to help avoid selling shares to meet the requests. ...

Plainfield Asset Management, a $5 billion fund down just 8% through October, has told investors that in just the past few weeks it's received withdrawal requests amounting to as much as one-third of its assets. About one-quarter of the investors in Blue Mountain Capital Management, which has lost less than 3% this year, have asked to yank their money from the fund. Trafalgar Asset Managers, which has seen redemption requests of about 25% of the firm's $3 billion assets despite gains in most funds this year, has moved some assets into a separate vehicle, to sell them over time. "The main pressure on the firm has been redemptions, not performance," said a Trafalgar spokeswoman.

From Bloomberg:

+ Unemployment will climb to 6.3% when it's reported this morning. A five year high.

+ Down and Out in Beverly Hills: Rolexes, Picassos Hit Pawnshops

Nov. 7 (Bloomberg) -- The worse the economy gets, the better it is for Jordan Tabach-Bank. "Business is booming,'' said Tabach-Bank, the chief executive officer of Beverly Loan Co. in Beverly Hills, California.

Beverly Loan is a pawnshop. Not just any pawnshop, but the kind that caters to people who hock Cartiers, Harley- Davidsons and Oscar statuettes when they need cash. They really need it now, Tabach-Bank said from a third-floor office, protected by bulletproof glass, off his showroom in the Bank of America building near Rodeo Drive.

"I've never seen so many bankers, lawyers, doctors and actors'' with valuable things to pawn, he said. He pointed to an 18-carat white gold bracelet with 69 diamonds ($2,900) and an 18-carat yellow gold Rolex Yachtmaster II ("a steal'' at $18,500).

With credit drying up at regular lenders, ``in many cases now, we're not just the bank of last resort,'' Tabach-Bank said. "We're the bank of only resort.''

+ Nov. 7 (Bloomberg) -- Walt Disney Co. shares may fall after the world's biggest theme-park operator said fewer visitors are booking resort vacations in the slowing U.S. economy. Reservations have "fallen off considerably'' in the past month, Chief Executive Officer Robert Iger said on a conference call yesterday, after reporting a 13 percent decline in fiscal fourth-quarter net income.

From the New York Times

+ Retailers Report a Sales Collapse.
Sales at the nation’s largest retailers fell off a cliff in October, casting fresh doubt on the survival of some chains and signaling that this will probably be the weakest Christmas shopping season in decades.

The remarkable slowdown hit luxury chains that sell $5,000 designer dresses as badly as stores that offer $18 packs of underwear, suggesting that consumers at all income levels are snapping their wallets shut.

Sales at Neiman Marcus, the luxury department store, dropped nearly 28 percent in October compared with the same month last year. Sales fell 20 percent at Abercrombie & Fitch, nearly 17 percent at Saks, 16 percent at Gap and nearly that much at Nordstrom.

Of the more than two dozen major retailers that reported on Thursday, most had sales declines at stores open at least a year, the majority of the decreases in double digits. Deep discounters like Wal-Mart and BJ’s Wholesale Club reported gains.

Consumer spending represents two-thirds of the nation’s economic activity, and analysts said the striking sales declines at retailers almost certainly portended an extended, severe recession. The reports highlighted once again the depth of the economic problems confronting President-elect Barack Obama.

Consumers are cutting their spending for many reasons, but high on the list is the weakening employment picture. Even people who still have jobs are pinching pennies as they hear of layoffs among friends and family. Unemployment has hit 6.1 percent, and a new jobs report due Friday is expected to show further deterioration.

“October was every bit as bad we feared,” said John D. Morris, a retailing analyst with Wachovia. “Maybe worse. October’s numbers were so disappointing, particularly in the final week, which had to leave retailers in a state of high anxiety going into the holiday season.”

Indeed, the situation for retailers is so dire that it is creating opportunity for any consumers in a mood to spend money. Seven weeks before Christmas, stores are offering eye-catching bargains as they struggle to move merchandise.

“This is the year the consumer has been given a holiday gift beyond belief,” said Marshal Cohen, chief industry analyst for NPD Group. “You can get anything, anywhere, at any price.”

+ Hospitals See Drop in Paying Patients. In another sign of the economy’s toll on the nation’s health care system, some hospitals say they are seeing fewer paying patients — even as greater numbers of people are showing up at emergency rooms unable to pay their bills.

While the full effects of the downturn are likely to become more evident in coming months as more people lose their jobs and their insurance coverage, some hospitals say they are already experiencing a fall-off in patient admissions.

What does this amuse? On June 28, Bloomberg ran a news story that began:

OPEC Leader Khelil Says Dollar Will Drive Oil to $170 (Update1)

June 28 (Bloomberg) -- OPEC President Chakib Khelil predicted that the price of oil will climb to $170 a barrel before the end of the year, citing the dollar's decline and political conflicts.

"Oil prices are expected to reach $170 as demand for fuel is growing in the U.S. during the summer period and the dollar continues to weaken against the euro,'' Khelil said today in a telephone interview. The leader of the Organization of Petroleum Exporting Countries also serves as Algeria's oil minister.

Political pressure on Iran and the depreciation of the U.S. currency have caused a surge in oil prices, Khelil said. New York- traded crude has more than doubled in a year and touched a record $142.99 a barrel yesterday on the New York Mercantile Exchange.

Excellent Broadway theater.

We just saw it. It's excellent. The story: In 1965 four young soldiers fresh from boot camp wait anxiously, watching the Vietnam conflict escalate. Streamers explores the turmoil and confusion facing young men threatened by forces beyond their control. It's a gruesome indictment of war. The acting is superb. To buy tickets, go to the Streamers web site.

Eatin' Possum
How many rednecks does it take to eat a possum?

Three. One to eat it, and two to watch for cars.

Wonderful pun
One day three old ladies were sitting on a park bench and this guy jumped out of the bushes and flashed them.

The first lady had a stroke, the second one had a stroke, and the third one's arm was too short to reach.

Bad Car Day (and you thought the stockmarket was bad)
A police officer pulled over a driver and informed him that because he was wearing his seat belt, he had just won $5,000 in a safety competition.

"What are you going to do with the prize money?" the officer asked.

The man responded, "I guess I'll go to driving school and get my license."

At that moment, his wife, who was seated next to him, chimed in, "Officer, don't listen to him. He's a smart aleck when he's drunk."

This woke up the guy in the back seat, who, when he saw the cop, blurted out, "I knew we wouldn't get far in this stolen car."

At that moment, there was a knock from the trunk and a voice asked, "Are we over the border yet?"

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.