Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Friday, October 21, 2005: How
goes America? Stockmarkets are slumping and pessimism is high. Merrill Lynch
reported this week that its monthly poll of global money managers found that
only 11% planned to own more American stocks in the next year
than the normal amount they would own, compared with 63% who plan to
own fewer American shares. That difference, of 52%, is the largest
in the six years of the survey. Economy.com is negative on consumer spending
-- that part that's buoyed the economy recently. It says "The consumer
will end up with more cash from wages but less from realized gains on their
real estate assets, and, on net, we expect a net hit to household cashflows
and consumption as this forecast unfolds. Economic logic prohibits the above
two cash sources to co-exist. There is no free lunch."
However, 36 years ago, John Mitchell, a Wall Street bond lawyer who had become
Richard Nixon's attorney general said. "You will be better advised to
watch what we do instead of what we say."
So what are we doing out in the trenches? The simple answer is things are
booming. Writes reader, Kevin Keohane, Sales Development Manager, Hardware
Specialty Co. in Marlborough, MA:
literally sells the nuts/bolts/washers and various electronic components (connectors,
cable ties, heat shrink tubing, fuses, standoffs etc.) to any/all companies
that manufacture products. From the contract manufacturers, defense, technology,
medical, security and so on. So we get a first hand account on how the economy
is growing from the ground floor. Often times quite sooner than most because
from the time customers place their orders with us to the time they finish
building their product is months down the road.
The bottom line right now is that our company's growth over the past 3-6
months has been as strong as it's ever been, even stronger than at the
height of several years ago when the stock market and economy were booming.
We also get insight on when the economy is going into slow periods as customers
will try to push out/cancel many of their orders. This happened months before
the stock market bubble burst several years ago.
So I just wanted to point out that I don't think that at least the manufacturing
sector is slowing down in the least at this point.
I am just writing this as I'm reading a lot of doom and gloom in your column
recently and wanted to show a different side. Take it for what it's worth.
Harry, one more thing. Another
gauge that I am able to see is that when the economy seems to be cooling
off, the lead times from our manufacturers to us goes down quite fast
to around 6-8 weeks in many cases. Right now a lot of the lead times
of these same vendors are at 36 weeks out. Meaning they are as busy
as I've ever seen and I've been monitoring these situations at our company
for many years.
When I asked Kevin
if he minded if I quoted him, he replied, "I would only point out that
the comments wouldn't necessarily correlate to the market going on an upswing
(it may or may not), but it lessens the anxiety for me that the economy is turning
negative for any sustained period of time."
Mortgage rates are rising. Lock yourself in NOW:
Freddie Mac said that long-term rates are at their highest level in 15 months,
and the one-year, Treasury-indexed adjustable rate is at its highest level since
July 2002 in the week ending Thursday. The benchmark 30-year fixed-rate mortgage
average rose to 6.1% from 6.03% a week ago. The mortgage agency
said its weekly survey also showed a rise in the 15-year loan, to 5.65% from
5.62%, and the one-year ARM, which averaged 4.89% vs. 4.85% a week earlier.
The five-year hybrid ARM also rose, to 5.59% from 5.57% a week ago. "Despite
the gradual rise in mortgage rates over the last two months, housing starts
were actually up in September highlighting the resiliency of the housing market,"
said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.
I don't think
the housing market will collapse under the weight of slightly higher mortgage
rates. But all the signs are around: Housing's freneticism is ebbing. It takes
longer to sell property. And property isn't achieiving the astronomic heights
it once did.
see Ater Innocence, the movie: Thousands
of innocent people languish in the nation's prisons. The Innocence Project
has been able to get 160+ innocent people out of jail, mostly using DNA testing.
Many of these people were on Death Row. Now a movie has been made on the detailing
the lives of some of the exonerees. Last night was the opening. Please see the
movie. It's playing at the Quad cinemas in Greenwich Village. I saw it last
night. It's gripping. The Innocence Project, which I support with real money,
is morphing into wholesale, severely needed, reforms on the criminal justice
system. The more you learn, the more you learn how flawed the entire system
is and how you, too, could easily be caught up. Imagine having a woman pick
you out of a lineup, say you were her rapist and get sent away for life -- purely
on her mistaken identify. It happens with rapes 80% of the time. For more on
the Innocence Project, click here.
Choosing the right payment option when traveling overseas.
From MarketWatch: Prices are sky-high in some countries,
thanks to a weak dollar. Choosing the right payment option -- and saving on
everything from exchange rates to car-rental insurance -- becomes downright
critical to getting that pair of Italian boots you're eyeing.
But which to use,
and when? Credit card? Debit Card? ATM? Airport currency exchange desk? Just
one wrong money move could cost you 10%,
If you need cash while you're traveling, use your debit card. While
some banks may charge an ATM usage fee of 50 cents to $1.50, plus a conversion
fee of 1% on the amount withdrawn, many skip the conversion fee altogether.
from your credit card could run you at least triple the cost -- 2% to
3% as a cash advance fee -- plus a currency-transaction fee and ATM fee charged
by both your bank and the ATM you're using.
travelers checks? Experts report that they can be easily counterfeited and come
with high costs.
If you need to
change dollars to the local currency, remember you'll get better exchange rates
the further out you are from the airport. So, if you must, exchange only
what you need at the airport.
Ready to buy those boots? Your best bet is to charge it on your favorite
credit card, but let your issuer know you plan to travel overseas in advance
of your trip to avoid the potential fraud freeze on your card. ...
Watch out for
overly helpful merchants. Some overseas merchants will offer to convert your
bill to your home currency. Don't do it: you're likely to get hit with another
7% to 9% fee based on the price of your purchase, with about 5% to 6% going
to the merchant and the rest to the credit-card issuer. That could tack on another
$45 to a $500 purchase.
forget that some countries, such as France and the rest of the European Union,
provide a refund for a portion of the tax paid on items purchased and then taken
out of the country. The refund usually requires a minimum purchase with a single
merchant ($25 in Sweden and $340 in Switzerland, according to the World Travel
& Tourism Tax Policy Center). You'll need to ask the merchant for the tax-credit
documents as you make your purchase and then turn them into the appropriate
counter at the airport. Be sure to leave yourself enough time when departing.
If you're renting a car abroad, you'll be offered the chance to buy extended
collision insurance. That could make sense and simplify life in the event of
an accident. But you may be able to save a bundle simply by checking with your
credit-card company. "The car rental company was about to charge me $140
for additional insurance for one week," says Tom Houston of his trip to
the Czech Republic. "But by simply activating the car insurance offered
by my credit card, I paid only $5 for the coverage."
that through his American Express card, he could pay for the coverage and then
discontinue it upon his return. Others card issuers, such as MBNA, include it
so long as the full cost of the car rental is charged to the card.
decline of hearing
A man feared his wife was not hearing as well as she used to, and
he thought she might need a hearing aid. Not quite sure how to approach her,
he called the family doctor to discuss the problem.
The doctor told
him there is a simple informal test the husband could perform to give the doctor
a better idea about her hearing loss. "Here's what you do," said the
doctor. "Stand about 40 feet away from her and in a normal conversational
speaking tone see if she hears you. If not, go to 30 feet, then 20 feet, and
so on until you get a response."
the wife was in the kitchen cooking dinner, and he was in the den. He said to
himself, "I'm about 40 feet away. Let's see what happens."
In a normal tone
he asked, "Honey, what's for dinner?" No response. So the husband
moved closer to the kitchen, about 30 feet from his wife, and repeated, "Honey,
what's for dinner?"
Still no response.
Next he moved into the dining room where he was about 20 feet from his wife,and
asked, "Honey, what's for dinner?"
Again, no response.
So, he walked
up to the kitchen door, about 10 feet away.
for dinner?" Again, there was no response.
So he walked right
up behind her. "Honey, what's for dinner?"
(I just love this.)
the 5th time, CHICKEN!"
Friday. Dead Men Don't Weat Plaid (1982). 8
PM. Turner Classic Movies.
Saturday. Arsenic and Old Lace (1944). 8PM. TCM.
Sunday. A Walk on the Moon (1999). 8PM. Encore Drama.
Recent column highlights:
+ Dumb reasons we hold losing stocks. Click
+ How my private equity fund is doing. Click
+ Blackstone private equity funds. Click
+ Manhattan Pharmaceuticals: Click
+ NovaDel Biosciences appeals. Click
+ Hana Biosciences appeals. Click
+ All turned on by biotech. Click
+ Steve Jobs Commencement Address. The text is available:
Click here. The full audio is available. Click
+ The March of the Penguins, an exquisite movie. Click
+ When to sell stocks. Click
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.