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8:30 AM Wednesday, November 9, 2005: As more money sloshes around than there are real opportunities, Wall Street responds with more and more new product, creations that often resemble betting on two flies climbing a wall. The stuff that "sophisticated" investors used to buy last year is now available for you and I. My simple rule on this is: If you don't understand it, don't go near it. Item: Yesterday I received a prospectus for a new "structured equity blind pool," which contains such delicious quotes:

+ "Competing mezzanine and structured equity sources have lowered their return hurdles in response to declining yields from alternative investments."

+ The fund "will be opportunistic."

+ And my favorite: "The General Partner is expert in managing opportunity and risk, investing in value-added opportunities and creating value through intensive management."

How goes the economy?
I asked a friend in the wholesale office products supply business "What are your dealers telling you about the economy in general and their businesses in particular?" His answer:

Their business is good with no signs of slowing down. Usually, office products are a leading indicator of a slowdown or pickup. No signs of a slowdown at present.

Newsweek's Robert Samuelson asks why are Americans so confident at the shopping mall and so glum in opinion polls? His answer. We were confident in the 1990s because we were building "The New Economy" -- the Internet, technology, strong tech stock prices, etc. Now, the tech bubble has burst, the housing bubble looks like bursting, we have huge trade and budget deficits, and now inflation... In short, plenty to worry about. But the reality is that we are richer. Gains from homes have more than offset our losses on stocks. And per capita income has grown almost 9% from 1999 to 2004.

As to where the stockmarket is going? Remember it predicts what the economy will do nine to 12 months out. And right now it seems to be saying it's "steady as she blows."

The key is to find an area that is about to be "hot." Ride it and get out quickly. In recent months this happened with flu stocks, i.e.



Now, it's happened with the housing stocks. After Toll Brothers -- the top U.S. luxury-home builder -- yesterday warned of ebbing demand, the listed home builders took another dive. Check how much they're off their year's high:

Don't be a customer of Wall Street. Be an insider:
From the London Observer,

"Even by the standards of hedge fund managers, it's a bonanza. UBS is set to reward employees at its new hedge fund unit with an unprecedented $1 billion in bonuses.

The Swiss banking giant is understood to have guaranteed the huge sum in a bid to recruit and retain star traders and fund managers, and grab a share of the currently booming market in alternative investments.

UBS announced in the summer that it was creating Dillon Read Capital Management, a hedge fund business, which will start work in the new year. Now The Observer has learnt that the new unit, run by former UBS head of investment banking John Costas, will be assigned a $1 billion bonus pool to cover the first three years of its existence.

This means that each of Dillon Read's 120-strong workforce will be in line for an average bonus of nearly $3 million a year. In practice, the average bonus among fund managers and analysts should be even higher, since the 120 employees are understood to include back-office staff. ...

The high-bonus strategy is partly designed to discourage the Swiss bank's best traders from leaving by emulating the famously generous pay structure of independent hedge funds, and comes in spite of poor recent returns at some funds.

Defragmenting To the Finish
From a recent issue of the New York Times:

Q: Ever since installing Norton AntiVirus on my Windows .. computer, I cannot defragment my hard drive because the Disk Defragmenter program never finishes. What can I do?

A. Defragmenting your computer's hard drive, sometimes called ''optimizing'' the hard drive, can help improve your PC's performance because it internally reorganizes the way files are stored on the hard disk so the operating system can find and use them more quickly. (What looks like a single file on the screen may actually be made up of several ''fragments'' stored in different locations on the hard drive, and defragmenting the drive puts everything back together in one place.)

Other programs open, running and writing new data to the hard drive while Disk Defragmenter is working can interfere with its ability to operate, though, and may cause it to run endlessly. Even if you close all your regular programs, like your Web browser and e-mail program, the antivirus program is still probably running in the background...

You might try opening the antivirus program's settings and turning it off manually while you run Disk Defragmenter. Symantec, the company that makes Norton AntiVirus, recommends restarting the computer in Safe Mode before running Disk Defragmenter or ScanDisk, Microsoft's other built-in Windows utility for hard-drive maintenance. ...

One way to get into Safe Mode is to restart the computer and hold down the F8 key until a text menu appears on screen that gives you the option of using Safe Mode.

Safe Mode looks different from your regular Windows desktop, and your monitor resolution may look a bit odd, but you can run Disk Defragmenter and other Windows utility programs. You will need to restart your computer to get out of Safe Mode and back to your normal Windows system.

This amused me: After a year of negative publicity, Tom Cruise has sacked his publicist. In a year that saw the 43-year-old get engaged to girlfriend Katie Holmes and star in the critically-acclaimed War Of The Worlds, 2005 should have been a great 12 months for the actor - but instead he attracted a stream of negative headlines. Amongst other things, he was was criticized for saying Brooke Shields should not take anti-depressant drugs and the Cruise and Holmes engagement was accused of being a publicity stunt -- since both of them had new films to promote.

The man should keep his mouth closed.

Being totally unfair to France:



Q. How do you say hello in French?
A. "I Surrender."

Q. How many French soldiers does it take to defend Paris?
A. Don't know, it's never been tried.

Q: How do you confuse a French Soldier?
A: Give him a rifle and ask him to shoot it.

Q: What's the motto of the French Army?
A: Stop, drop, and run!

Q. What do you call 100,000 Frenchmen with their hands up?
A. Their army.

Q: What do you call a Frenchman advancing on Baghdad?
A: A salesman.

Q: Why do the French call their fighter the *Mirage*?
A: Because it doesn't really exist.

Q: What do you call a man who only needs body armor on his back?
A: Jacques Chirac

Q: What’s the new French flag look like?
A: A white cross emblazoned on a white background!

Ever been in hospital? You'll love this.
A woman called a local hospital. "Hello. Could you connect me to the person who gives information about patients. I'd like to find out if a patient is getting better, doing as expected, or getting worse."

The voice on the other end said, "What is the patient's name and room number?"......"Sarah Finkel, room 302."

"I'll connect you with the nursing station."

"3-A Nursing Station. How can I help You?"

"I'd like to know the condition of Sarah Finkel in room 302."

"Just a moment. Let me look at her records. Mrs. Finkel is doing very well. In fact, she's had two full meals, her blood pressure is fine, to be taken off the heart monitor in a couple of hours and, if she continues this improvement, Dr. Cohen is going to send her home Tuesday at noon."

The woman said, "What a relief! Oh, that's fantastic... that's wonderful news!"

The nurse said, "From your enthusiasm, I take it you are a close family member or a very close friend!"

"Neither! I'm Sarah Finkel in 302! Nobody here tells me diddlelee......."

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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