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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 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. 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:

Our company 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.

Please 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%,

Accessing cash
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.

Accessing cash 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.

Wondering about 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.

Making purchases
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.

Finally, don't 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. ...

Car-rental insurance
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."

Houston reports 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.

The 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."

That evening, 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.

"Honey, what's for dinner?" Again, there was no response.

So he walked right up behind her. "Honey, what's for dinner?"

(I just love this.)

"Earl, for the 5th time, CHICKEN!"

Neat upcoming movies:
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 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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