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

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9:00 AM EST, Columbus Day, Monday, October 13, 2008: Australia's stockmarket rose 5.5% today. Its banks have less toxic debt and -- most importantly -- the Australian government just guaranteed every nickel on deposit in every Australian bank. Why we limit ourselves to $250,000 -- giving agita to every business with a bank account -- is beyond my tiny brain.

We're due for a rally. If you still have any equities left --- shame on you -- the rally will give you an opportunity to dump them. Because after that, this quarter is shaping up to be really horrible. Factors, in no particular order, include:

1. The end of the short selling ban.

2. Margin calls. You cannot believe how dumb some executives are, or how much chutzpah they have. Examples from a New York Times piece

On Friday, Aubrey K. McClendon, the chief executive of Chesapeake Energy, issued a statement saying he had been forced to sell all of his 33.5 million shares in Chesapeake because of a margin call.

Sumner M. Redstone, the chairman of Viacom and CBS, disclosed that he would sell $400 million in shares in those companies to pay down a loan. For shareholders, margin calls can be painful, forcing them to liquidate portfolios at exactly the worst moment, as stocks are near panic lows.

For example, in July, with Chesapeake trading above $60 a share, Mr. McClendon’s stake in the company was worth more than $2 billion — the vast majority of his net worth, which was reported at $2.1 billion in last year’s Forbes 400. But to meet last week’s margin call, Mr. McClendon sold his entire stake, at prices ranging from $15 to $22.

The margin calls are flooding investors and hedge funds today.

3. Hedge fund redemptions. Why suffer the pain, the uncertainty? Get out. All the usual reasons for losing faith in your erstwhile high-flying,high risk-taking hedge fund manager. Now all you want is capital preservation.

4. Falling commodities prices. Oil, nickel, iron ore, etc.

5. Business retrenchments. With bank loans effectively shut, businesses will have to survive on the money they generate from sales. This is actually possible. I did it for 27 years. But a lot of businesses are far more capital intensive than mine was and will have great difficulty. See the Sequoia presentation below which it gave to its portfolio companies. Sequoia told its companies to stay lean and lean and to forget raising capital.

6. Municipal governments in crisis. California, noted for its spendthrift ways, asked the Feds for $7 billion bailout. Every other state or town is trying to figure where it stands. The picture isn't pretty. There will be lots of firings and uncleaned streets.

7. Falling profits. The car makers' woes are out. But there are many other industries that haven't reported their woes, yet.

8. Excess production capacity. For more, see the Sequoia presentation below.

I spent the weekend reading the financial press feeling down or playing tennis and feeling up. You can read the usual suspects online, the Wall Street Journal, Bloomberg, the New York Times, the Economist, etc.

You can now watch old TV shows and interviews on the Internet. The technical quality is remarkably good. The interview will often give boredom a whole new meaning. My conclusion: No one has any meaningful answers, though it is fun to watch billionaire George Soros peddling his new book. "Buy my book, please."

Stuff to listen to:

+ Paul Volcker on Charlie Rose.

+ Warren Buffett on Charlie Rose.

Stuff to watch:

+ Sequoia Capital's 56 Slide Presentation of Doom. Here is the first slide.

Stuff to read: New books rushed out. I suspect Smick's is better. Soros tends to push his old, tired theories.

Thoughts for the day. Seen on a church way down south.

If you want to make up your own sign, go to

Bad Australian humor:
Tasmanian couple walking out of the divorce court, the wife is crying her heart out.

Husband says ' Oh for God's sake stop crying, you're still my sister'

Tasmania is an island at the bottom of Australia. On this map, it's in red. I've never been there. I'm told it's pretty.

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.