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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, September 2, 2005: A bunch of mutual fund apologists took offense at my window dressing remarks yesterday. Several rightly pointed out I screwed up. August 31 is not the end of the quarter. Dumb me. It is, however, the end of the month. And window dressing happens then, -- especially after a period of big sector changes in the stockmarket. One reader summed it all up. He said

There were probably a lot of managers who were buying energy yesterday (i.e. Tuesday) because they were still underweight the benchmark and are trying to cover their a**es. The worst thing that can happen is to not own a hot group - think of what happened to value guys who wouldn't buy tech in '98 and '99 - many of them lost their jobs.

Many readers pointed out that there are "honest" mutual funds like the Vanguard ones which actually do well.

OK. OK. I own two Vanguard funds -- bought recently as a result of my son's research for his own pension plan. My Vanguard funds are doing well, i.e. I'm making a profit. The funds I have are:

+ The Vanguard International Value Fund. (Doing the best so far).
+ The Vanguard Mid-Cap Index Fund.

Today I intend to look at four other Vanguard funds:
+ The U.S. Value Fund (VUVLX).
+ The U.S. Strategic Equity (VSEQX).
+ The Selected Value Fund (VASVX)
+ The Global Equity Fund. (VHGEX).

I got these names from a fellow called Daniel P. Wiener who writes a pricey newsletter on Vanguard Funds. He gave these names away in a "special" free "report" featuring his favorite Vanguard funds. To get the names, I gave him my email address (but not my credit card).

As to whether I'll buy any new funds, I'm dubious. It's hard to see how sky-high gas prices won't hurt the economy and corporate profits. From airlines to delivery companies, from farmers to retailers, from manufacturers to even indoor tennis courts. I can't imagine what it's going to cost to play tennis indoors this winter.

I've got to believe that the major reinsurance companies are going to be hit heavily.

Would you trust this guy with your money?

He's the fellow in charge of wealth management at a consulting company called Capgemini. He's joined with Siebels and Finaplex to run a seminar for people providing advise to MTMs. Here's the description, "The newly defined "mid-tier millionaires (MTMs)" with investable assets between $5-30M are demanding higher levels of service from their primary providers to help them "manage their managers. Join Capgemini and Finaplex to learn how to simplify and improve the service process for this complex customer segment, bringing the family office downstream - affordably. We'll cover data aggregation, collaboration, workflow, wealth management, platform design, and more..." The free web session is on Wednesday, September 14, 2005, 1:00 PM PT / 3:00 PM CT / 4:00 PM ET and runs for one hour. If you're curious, click here. If that doesn't work, click here. If you watch the web cast, make sure you use Internet Explorer. Firefox doesn't work. I'll be watching until I get bored.

I don't know if I'm jealous or annoyed:
Now you know why MCI is so eager to sell to Verizon: MCI Inc. President and Chief Executive Michael Capellas is entitled to a payout of $39.2 million if, as expected, he leaves the company after its pending $8.4 billion merger with Verizon Communications.

According to the Wall Street Journal, senior executives at other major companies involved in recent takeover deals also have received large payouts. Former AT&T Wireless Services Inc. chief John Zeglis received about $32 million when that company was acquired by Cingular Wireless, a joint venture between SBC Communications Inc. and BellSouth Corp.

AT&T Corp. Chairman and Chief Executive David Dorman stands to collect at least $32 million when his company is acquired by SBC. Gillette Co. Chairman and Chief Executive James Kilts is in line to collect a $185 million package once the company gets bought by Proctor & Gamble Co.

Mr. Capellas's exit package is "up there, but it's not outrageous," said Robert M. Fields, a New York attorney who specializes in executive compensation. He said deals giving executives $20 million to $50 million have become typical for large companies.

The deal will create a lucrative payday for several other top executives at MCI if they don't stay with Verizon. Chief Financial Officer Robert Blakely is slated to collect nearly $10 million in severance, restricted stock and tax compensation. General Counsel Anastasia Kelly is eligible for $8.5 million, and Wayne Huyard, president of U.S. sales and service, is eligible for nearly $11 million.

The morals of the Bayou hedge fund disaster:
+ What you read about a firm and its results may not be true. No one audits hedge fund promotional literature (nor companies' private placement memoranda).
+ If you invest, you hand your money over and kiss it goodbye. You pray the hedge fund managers are honest. Fortunately most are.

But not all. You need to follow the unfolding Bayou Management disaster. It's fascinating what happens when desperation checks in and honesty checks out. For the latest,
click here.

Hard of hearing
An elderly gentleman had serious hearing problems for a number of years. He went to the doctor and the doctor was able to have him fitted for a set of hearing aids that allowed the gentleman to hear 100%. The elderly gentleman went back in a month to the doctor and the doctor said, "Your hearing is perfect. Your family must be really pleased that you can hear again.."

The gentleman replied, "Oh, I haven't told my family yet. I just sit around and listen to the conversations.
I've changed my will three times!"

Rules and regulations
A true first person story:
Hospital regulations require a wheelchair for patients being discharged. However, while working as a student nurse, I found one elderly gentleman--already dressed and sitting on the bed with a suitcase at his feet--who insisted he didn't need my help to leave the hospital. After a chat about rules being rules, he reluctantly let me wheel him to the elevator. On the way down I asked him if his wife was
meeting him. "I don't know," he said. "She's still upstairs in the bathroom changing out of her hospital gown."

The Preacher
A Texas preacher began with an angry red face, "Someone in this congregation has spread a rumor that I belong to the Ku Klux Klan. This is a horrible lie and one, which a Christian community cannot tolerate. I am embarrassed and do not intend to accept this. Now, I want the party who did this to stand and ask for forgiveness from God and this Christian family."

No one moved. The preacher continued, "Do you have the nerve to face me and admit this is a falsehood? Remember, you will be forgiven and in your heart you will feel glory. Now stand and confess your transgression."

Again all was quiet. Then, slowly, a drop-dead gorgeous blonde with a body that would stop traffic rose from the third pew. Her head was bowed and her voice quivered as she spoke, "Reverend there has been a terrible misunderstanding, I never said you were a member of the Ku Klux Klan. I simply told a couple of my friends that you were a wizard under the sheets."

The preacher fainted.

Great US Open tennis. I spent yesterday at the US Open. The tennis was great. I saw Andre win. The weather was great. If you can't go, the TV schedule is below.

Recent column highlights:
+ US Tennis Open TV Schedule. 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 your 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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