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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, Friday, October 12, 2007: Where were you on October 19, 1987, when the market crashed? And what did you do? What did you learn? Send me an email. .

My friend tells me he was in the next cubicle from a fellow who had spent $6,000 on way-out-of-the-money put options/futures contracts on the S&P or the Dow (he doesn't remember which). The fellow had been buying them every month for the past 12 months and letting them expire worthless each month. But this day his $6,000 options were now worth $12 million. The fellow cashed out, quit and retired simultaneously. (He later lost most of the money gambling on gold futures.)

From Jim Kingsale, my oil guru -- read his blog, Energy Investment Strategies:

I was in the office of my cable television company. I owned few stocks and even less cash so the crash made little difference to me. On the other hand, I did stop in after work to see my brother in law who ran a hedge fund at the time and seemed at bit nonplussed. I opined that the crash seemed like a healthy correction of a frothy market (hence the perceived need for "portfolio insurance"), not an event with legs based on some fundamental economic condition.

Could it happen again? I suppose, as you say, that with the quantity of hedge fund money out there and no information as to how their computers are programmed, another technical crash is possible, but I'm more concerned about a potential dollar panic where everyone tries to get out of dollar denominated assets at the same time. I tell myself that a dollar collapse will benefit oil, where a lot of my investments are centered. But I know in my heart that when the stock market crashes everything crashes with it. Do you know any good ways to buy portfolio insurance? Jim

From Brian Buciak:

Harry, Thanks for today’s insight on the 1929 & 1987 crash.

I’m sure at least one Wall Street bull will be pointing out that U.S. stocks only “correct” every 58 years, based on the “statistical data points” and that we have until 2045 until the next “correction.” So, that means, “BUY, BUY, BUY!!!!!”

I have been a long time reader yet I am sadly a “first time e-mailer” to you. From your writings on your website, it seams to me that maybe you have the 15% rule slightly askew. In this rule, you write about leaving investments that have lost 15%, yet I do not recall reading about when to leave investments that are 15% winners. Which leaves the bigger question, for any investors*, “I lost/gained X% in (fill in the blank amount of time) ______. What should I do? Sell, and how much/Buy, and how much?” As you have mentioned in your articles, Wall Street has computer systems that do the “math,” but they do the math on both “bulls” (positive) and “bears” (negative), based on statistical parameters and formulas that can be easily controlled and executed by any modern computer system. I would like to see such sophistication to the small investor. One example I can think of is, more flexibility in online brokerage trading. The online brokerages could provide service that goes beyond stop loss and limit orders, to such things as “market events” and “time-lines”. If you know of any online brokerage that does any service close to such things, PLEASE, let me know.

I look forward to our conversations,

Dear Brian, the question of when to sell is hard. Since the name of this game is stockpicking, not market timing, the "sale" key seems to me when things change for the worse at the company. An illogical earnings decline. A key executive departure. A cockroach event like the SEC asking the company questions, etc.

That said, when the market turns sour, it will probably bring down your favorite stocks. And then it's good to take a little profit off the table. In fact, it seems to me, it's always good to take some off the table and play with the bank's money. Have tech stocks reached their peak for now?

This needs more thought. Possibly over the weekend. Thoughts from readers?

Infineon makes critical semiconductor chips for Apple's iPhone: But Infineon's financial results have, of late, been awful. I wonder if Apple's purchases can help this company?

Stay away from Windows Vista.
I repeat, Do not use Microsoft Windows Vista. If you buy a new PC or laptop, ask that it comes with Windows XP SP2 (that's service pack two). From my techie friend who programs for a living (and is very good at it):

Vista, in my opinion, is really not an option for real users! or any users for that matter. I run WinXP Pro, Max OS X 10.8 and MS Windows server 2003 only. Of those I prefer the MAC OS X.

Bubba, the Mortician
A man who just died is delivered to a Louisiana Mortuary wearing an expensive, expertly tailored black suit. Bubba the Mortician asks the deceased's' wife how she would like the body dressed. He points out that the man does look very good in the black suit he is already wearing.

The widow however, says that she always thought her husband looked his best in blue, and that she wants him in a blue suit. She gives Bubba a blank check and says, "I don't care what it costs, But please have my husband in a blue suit for the viewing."

The woman returns the next day for the viewing. To her delight she Finds her husband dressed in a gorgeous blue suit. The suit fits him perfectly. She says to Bubba, "Whatever the Cost, I'm very satisfied. You did an excellent job And I'm very Grateful. How much did you spend?"

To her astonishment, Bubba presents her with the Blank check. "Dere's no Charge," he says.

"No, really, I must pay you for the cost of that Exquisite blue suit!" She says.

"Honestly, ma'am," Bubba says, "it din't cost me a Ting. You see, a Deceased gentleman of about your husband's size was brought in shortly After you left yestaday, and he was wearing an attractive blue suit. I Asked his missus if she minded him going to his grave wearing a black suit instead, and she said "It make no difference as long as he look nice."

"So, I jus switched da heads."

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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