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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 Tuesday, October 4, 2005: Still battling the creation of an energy portfolio. Of all my reader suggestions, one stock stands out -- Energy Conversion Devices (ENER) -- because it just keeps going up and up, like the Energizer battery. Here's the Wall Street Journal's description of it:

Energy Conversion Devices, Inc. (ECD) is a technology, product development and manufacturing company engaged in the invention, engineering, development and commercialization of new materials, products and production technology in the fields of alternative energy technology and information technology. The Company has developed materials that permit them to design and commercialize products, such as thin-film solar cell (photovoltaic) products, nickel metal hydride (NiMH) batteries, and phase-change memory devices. These products have chemical, electrical, mechanical and optical properties and superior performance characteristics. ECD's materials, products and technologies are referred to as Ovonic.

Here's its stock performance -- nothing short of incredible.

There's a huge 19.14% short interest as a percentage of the public float. That may account for some of the recent rise. Sales and earnings, by contrast, have been up and down like a whore's drawers. The last quarter showed a huge loss. Barron's mentioned them in a roundup of "solar" stocks. For Barron's full list, Click here.

More on energy stocks in coming days. Keep your suggestions coming.

The best investment today? Borrow long, invest short. My friend, the billionaire real estate magnate, believes, like many of us, that interest rates are now on their way up. He believes that soon today's rates will look absurdly low. He suggests borrowing long-term like crazy today and investing the monies short-term beginning in the next year or so....

Slowing Is Seen in Housing Prices in Hot Markets. Predictably the real estate boom is slowing down. From today's New York Times:

A real estate slowdown that began in a handful of cities this summer has spread to almost every hot housing market in the country, including New York. More sellers are putting their homes on the market, houses are selling less quickly and prices are no longer increasing as rapidly as they were in the spring, according to local data and interviews with brokers.

In Manhattan, the average sales price fell almost 13 percent in the third quarter from the second quarter, according to a widely followed report to be released today by Miller Samuel, an appraisal firm, and Prudential Douglas Elliman, a real estate firm. The amount of time it took to sell a home was also up 30.4 percent over the same period.

In another sign that the housing market might have reached a peak, executives at big home builders have sold almost $1 billion worth of company stock this year. (Executives and directors at many of the nation's largest development companies sold stock at a record pace this summer. Insiders at the 10 largest home builders by market value, including D. R. Horton, KB Home, Toll Brothers and M.D.C. Holdings, have sold nearly 11 million shares, worth $952 million, so far this year. That is a huge jump from the 6.8 million shares, worth $658 million, that insiders sold during all of last year, according to data compiled by Thomson Financial.)

A builder recently paid $70 million for Casa Apava in Palm Beach, Florida, according to the New York Times.

Outside Washington, in Fairfax County, Va., the number of homes on the market in August rose nearly 50 percent from August 2004. In the Boston suburb of Brookline, Mass., where many three-bedroom houses cost $1 million or more, the inventory of homes for sale has increased in just the last few weeks, said Chobee Hoy, a broker there.

For-sale listings have also swelled throughout California, according to the California Association of Realtors. In the San Francisco Bay area, they have increased 16 percent in the last year, Coldwell Banker Residential Brokerage said. ...

Brokers said that some houses seemed to be on the market longer because sellers priced them too high, assuming that their value was still rising sharply. In other cases, people who otherwise would have waited a year or two to sell their homes -- like empty nesters ready to move into smaller quarters -- had listed them now out of fear that prices would soon fall.

The question remains whether all of this represents a momentary cooling off of some overheated housing markets, or it presages a more pronounced downturn that would end a decade-long boom. Some economists and commentators have for years predicted the bursting of a real estate bubble, and previous slowdowns have turned out to be relatively brief pauses before prices started accelerating again. But with mortgage rates now rising, the cost of gasoline hovering at or near $3 a gallon and house prices in some areas out of reach for many families, brokers and analysts said they thought that this slowdown could be the real thing.

For now, the change remains a far cry from the bursting bubble that some have predicted. In Massachusetts, for example, the median house price remained flat from July to August, and the median condominium price fell only slightly, according to the Realtors' association there. At the start of the year, prices had been rising at an annual rate of more than 15 percent.

If anything, some brokers said, the recent slowdown meant a return to a healthier, more sustainable market. "What we had was abnormal," said Dottie Herman, chief executive of Prudential Douglas Elliman. "People get used to abnormal times and then when they're normal, they think there's something wrong."

Alexander Shakhov, 47, listed his two-bedroom house in Frederick, Md., an outer suburb of Washington, for $529,000 in July, and it remained unsold for the rest of the summer. A month ago, he reduced the price to $499,000 at the suggestion of a broker. A week ago, Mr. Shakhov accepted an offer at the lower price.

The market "is not as hot as the last two years," Mr. Shakhov, a scientist at a biotechnology company, said, "but I'm pretty happy." He bought the house three years ago for $230,000. He now lives in Cleveland, where he has bought a home that is nearly twice as large as his Frederick house for less money. ...

In Manhattan, the average sales price of co-op and condominium apartments fell 12.7 percent, to $1.15 million, in the three months that ended on Sept. 30 compared with the second quarter, according to the Prudential Douglas Elliman report. The median sales price - which means half of homes sold for more and half for less -- fell 3.2 percent, to $750,000. ...

"What will slow this market down, and has slowed certain segments of the market down, is overpricing," said Pamela Liebman, chief executive of the Corcoran Group, a large real estate firm in New York. "Back in the spring, there was such a frenzy that very pedestrian product was drawing multiple bids." Some of today's sellers appear to be pricing their homes as if the frenzy were continuing. ...

Indications of a slowdown have appeared before. Jonathan Miller, president of Miller Samuel, said the last time that average and median sales prices dropped below those the previous quarter at the same time that inventories and sales duration rose in Manhattan was in the fourth quarter of 2002. But by the end of 2003, the market had come back.

An important difference now, though, is that mortgage rates are creeping up, whereas previous comebacks have been fueled by ever-lower rates.

On five-year adjustable-rate mortgages -- a popular loan with a fixed interest rate for the first five years -- the initial rate has risen to 5.59 percent on average, from 5.14 percent in June, according to

What is more, some mortgage lenders have started to tighten credit standards, making it harder for buyers to get loans.

"Low interest rates and easy credit standards are just about over," said Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.

Amazing returns. I didn't make it clear that these investment returns for the year to June 30. Some readers thought it was for the first six months of this year. Most colleges, it seems have fiscal years ending on June 30.

Investment returns for year to June 30, 2005
New York University

Rip-off of the month: Delivered Poland Springs water. We were renting their cooler for $12 a month and paying about ten times per gallon for water what we could buy the identical water in the supermarket.

Wonderful money
"I'm not interested in money," Marilyn Monroe once said, "I just want to be wonderful."

Today is the first full-day of Rosh Hashanah, which began last night night. It's the year, 5766. If you go to Brooklyn this afternoon, you can tashlikh, the symbolic casting away of sins by throwing either stones or bread crumbs into the flowing waters of New York's harbor. Rosh Hashanah meals often include apples and honey, to symbolize a "sweet new year". This morning, a shofar or ram's horn will be blown in synagogue - "a wake up call to the conscience to make Jews think about the things they have done wrong in the past year. After synagogue Jewish families go home to feast. Which now brings me to my favorite joke for this time of year.

Moses and Rastus are outside the synagogue when they hear the Shofar.
Moses: "What's that?"
Rastus: "Why that's the sound of the Jews blowing the shofar."
Moses: "Them's Jews really treat their hired help well."

Recent column highlights:
+ 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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