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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 EST Tuesday, September 5, 2006: How can I not feel optimistic ...

... after a great weekend with my children?
... a new seasonal low on the price of oil?
... when I see the latest inflation numbers as benign -- signaling the likelihood the Fed won't raise rates at its next meeting later this month? No more "fighting the Fed" should be good for stocks.
But I remain cautious. Cash remains king -- until I find the next "sure thing."

I've always loved GE, the company -- not the stock, which has, sadly,floundered...

But I do love Jeff Immelt, GE's boss. Here are excerpts from a fascinating Q&A BusinessWeek just did with him:

What's the downside of the public company experience these days?
The pendulum [on regulation] has gone too far one way and needs to come back some. My job is to play by the rules of the day. I tell people in GE, "You're not allowed to complain about the referee, at least not in public." We keep our mouths shut and just keep going. But money flows are just not coming to the New York Stock Exchange. You can say what you want about the GE stock, but the S&P 500 is lower today than it was in 2000. That's not good. Companies' earnings have doubled, tripled, or quadrupled. Money flows to the NYSE have a lot to do with how people view the U.S. economy. The U.S. economy over the past few years has been, in many ways, better than in the late 1990s. It's more sustainable. Even though interest rates will go up, I still think the economy is pretty gosh darn good. GE is half outside the U.S., and that's growing twice as fast as our business in the U.S. This is going to be a profoundly global company.

Vice-Chairman David Calhoun just left GE for a potential payout of $100 million to run [private media outfit] VNU. Has private equity changed the game?
A lot of dollars go to alternative investments now—hedge funds and private equity—dollars that used to go to the New York Stock Exchange, GE stock, and things like that. It's a very different job from what we do. We get to see ideas come together. That's what makes GE fun in a way that the private-equity experience isn't. I remember the day when our sales in China were zero. Now, they're $6 billion. In private equity, you buy, fix, and sell. Here, you buy, invest, and build…

How do you get investors excited about the stock again?
My job is to figure out how to grow and manage risk and volatility at the same time. We're in better shape than we were in 2001. GE is 65% bigger, and earnings have doubled. We're going to outperform the S&P 500 in revenues, earnings, and return on total capital. I'll keep drumming that home.

There's a lot of attention on GE and others going green. Why now?
In 2004, we were going through our summer strategic plan, and about two-thirds of the business reviews included new products in energy efficiency, water conservation, environmental technologies, and things like that. So we turned it into a growth campaign.

The non-performer right now is NBC.
We've developed more shows for the fall. Studio 60 is just phenomenal—edgy, funny, and shocking. And the Tina Fey show is great. Alec Baldwin plays the thug from GE, and he's hilarious.

What's next?
I think about the intensification of globalization a lot, and preparing the company for that. We sell MRI scanners that cost about $1.5 million in the U.S. Now it's about designing a scanner that can be sold for $500,000 in China. We need to do that 10 or 15 times.

How much vacation do you take?
A couple of weeks, I guess, but there's probably not a day where I disengage from the company. But that's not a burden. I love work. I have an exceptionally close relationship with my wife and daughter. We've all grown up that way. If I'm home four straight nights for dinner, they start to ask: "Don't you have something to do?"

Junk mail explodes. I received 370 spam emails in the last 24 hours, a record. Fortunately Outlook's Junk E-Mail filter catches 95% of them and I then permanently delete them. Still, it's a pain. I have no solution, other than to control my own exchange server. That's too costly.

Why Stocks May Climb “Wall of Worry”: Sometimes Jeremy Siegel Ph.D. he gets it right. Here are excerpts from his piece yesterday::

I believe that odds are about five to one against the U.S. falling into a recession over the next year. There is no doubt plenty to worry about, and pessimists point to two major risks in the economy: soaring oil prices and a severe housing slowdown.

Oil prices would soar if the Mideast melts down into open warfare or if an effective terrorist attack struck oil supplies. In this hurricane season, there is also the possibility that another Katrina-like storm could disrupt oil and gas production in the Gulf.

The housing sector is a risk because if house prices decline severely and the consumer responds by sharply curtailing his spending, this would greatly harm the economy. A lot of consumption has been spurred by funds generated through second mortgages and home equity loans. If homeowners see capital gains on their homes turn to losses, it could spell trouble for the consumer sector.

But I think both of these risks are unlikely to occur. Oil producing countries are as addicted to their revenue from oil as we are to using it. They also know if they set the price of oil too high, determined conservation will hurt their long term prospects. Embargoes against specific countries (such as Iran against the U.S.) don’t work because oil is a transferable commodity from a world-wide supply. The total oil pumped, not who sells what to whom, is the critical factor determining the price.

Furthermore, the energy markets have built these risks into prices. Seventy dollar oil already contains a $10 to $20 dollar premium for the grim possibilities mentioned above. That does mean that a disaster won’t send the price of oil soaring. But it means that in the absence of these disrupting events, oil prices will fall (note the sharp decline in such prices when Ernesto veered away from the Western Gulf).

Similarly a housing bust will set into motion events that will limit the impact of reduced housing expenditures on the rest of the economy. Housing is a big user of borrowed funds and a downshift in that sector will reduce loan demand and lower interest rates. A housing decline will also takes pressure off of sensitive commodity prices such as lumber, copper, and other materials used in construction. This will allow the Fed to ease monetary policy if necessary.

And it is very unlikely that a moderate fall is housing prices will send homeowners into shock. Only wide-eyed optimists felt the housing prices would continue their rise (see my article “Is Real Estate a House of Cards” on Yahoo! Finance from last December) and most level-headed homeowners at the peak of the bubble assumed prices would eventually stabilize or even decline. Even if housing starts in 2006 fall 20% below the 2005 level, that would still be well above the average of the last 20 years.

It’s a well-known (and true) Wall Street aphorism that markets hate uncertainty. Investors do not like to make commitments when there are major risks ahead. Anxious investors claim they will put money in the stock market only when major sources of uncertainty are resolved.

But there has always been uncertainty in our economy. If investors waited until all uncertainties worked themselves out, they will never have bought stocks.

Professionals call the ever present risk facing investors the “Wall of Worry.” History shows that stocks have often climbed this “wall of worry,” amply rewarding investors who stay with equities. Uncertainty is one of the reasons why the stock market has over the long run been such a good investment and why stock returns have sported such a hefty premium return over fixed income assets.

No one knows what the future will bring. There will always be risks in buying stocks and if worst-case scenarios materialize, stock will no doubt fall. But I think the odds favor continued economic expansion and if this turns out to be the case, stocks will no doubt be your best investment.

Donald Rumsfeld's dance with the Nazis. I supported the war in Iraq. I voted for Mr. Bush the first and second time. But this investment in Middle East democracy-building is simply not working. We are wasting our money and our boys' lives. And we're souring much of the world on us. This November's elections loom. The balance of power in Congress needs to shift to those politicians with a more balanced view of the Iraqi war's efficacy. Thus, with trepidation, I reprint a September 3 piece by Frank Rich from The New York Times. I think the piece is important:

NEW YORK President George W. Bush came to Washington vowing to be a uniter, not a divider. Well, you win some and you lose some. But there is one member of his administration who has not broken that promise: Donald Rumsfeld. With indefatigable brio, he has long since united Democrats, Republicans, generals and civilians alike in calling for his scalp.

Last week the man who gave us "stuff happens" and "you go to war with the army you have" outdid himself. In an instantly infamous address to the American Legion, he likened critics of the Iraq debacle to those who "ridiculed or ignored" the rise of the Nazis in the 1930s and tried to appease Hitler. Such Americans, he said, suffer from a "moral or intellectual confusion" and fail to recognize the "new type of fascism" represented by terrorists. Presumably he was not only describing the usual array of "Defeatocrats" but also the first President Bush, who had already been implicitly tarred as an appeaser by Tony Snow last month for failing to knock out Saddam Hussein in 1991.

What made Rumsfeld's speech noteworthy wasn't its toxic effort to impugn the patriotism of administration critics by conflating dissent on Iraq with cut- and-run surrender and incipient treason. That's old news. No, what made Rumsfeld's performance special was the preview it offered of the ambitious propaganda campaign planned between now and Election Day. An on-the- ropes White House plans to stop at nothing when rewriting its record of defeat (not to be confused with defeatism) in a war that has now lasted longer than America's fight against the actual Nazis in World War II.

Here's how brazen Rumsfeld was when he invoked Hitler's appeasers to score his cheap points: Since Hitler was photographed warmly shaking Neville Chamberlain's hand at Munich in 1938, the only image that comes close to matching it in epochal obsequiousness is the December 1983 photograph of Rumsfeld himself in Baghdad, warmly shaking the hand of Saddam in full fascist regalia. Is the defense secretary so self-deluded that he thought no one would remember a picture so easily Googled on the Web? Or worse, is he just too shameless to care?

Rumsfeld didn't go to Baghdad in 1983 to tour the museum. Then a private citizen, he had been dispatched as an emissary by the Reagan administration, which sought to align itself with Iraq in the Iran-Iraq war. Saddam was already a notorious thug. Well before Rumsfeld's trip, Amnesty International had reported the dictator's use of torture -- "beating, burning, sexual abuse and the infliction of electric shocks" -- on hundreds of political prisoners. Dozens more had been summarily executed or had "disappeared." American intelligence agencies knew that Saddam had used chemical weapons to gas both Iraqi Kurds and Iranians.

According to declassified State Department memos detailing Rumsfeld's Baghdad meetings, the American visitor never raised the subject of these crimes with his host. Within a year of his visit, the American mission was accomplished: Iraq and the United States resumed diplomatic relations for the first time since Iraq had severed them in 1967 in protest of American backing of Israel in the Six-Day War.

In his speech last week, Rumsfeld paraphrased Winston Churchill: Appeasing tyrants is "a bit like feeding a crocodile, hoping it would eat you last." He can quote Churchill all he wants, but if he wants to self-righteously use that argument to smear others, the record shows that Rumsfeld cozied up to the crocodile of Baghdad as smarmily as anyone. To borrow the defense secretary's own formulation, he suffers from moral confusion about Saddam.

Rumsfeld also suffers from intellectual confusion about terrorism. He might not have appeased Al Qaeda but he certainly enabled it. Like Chamberlain, he didn't recognize the severity of the looming threat until it was too late. Had he done so, maybe his boss would not have blown off intelligence about imminent Qaeda attacks while on siesta in Crawford.

For further proof, read the address Rumsfeld gave to Pentagon workers on Sept. 10, 2001 - a policy manifesto he regarded as sufficiently important, James Bamford reminds us in his book "A Pretext to War," that it was disseminated to the press. "The topic today is an adversary that poses a threat, a serious threat, to the security of the United States of America" is how the defense secretary began. He then went on to explain that this adversary "crushes new ideas" with "brutal consistency" and "disrupts the defense of the United States." It is a foe "more subtle and implacable" than the former Soviet Union, he continued, stronger and larger and "closer to home" than "the last decrepit dictators of the world."

And who might this ominous enemy be? Of that, Rumsfeld was as certain as he would later be about troop strength in Iraq: "the Pentagon bureaucracy." In love with the sound of his own voice, he blathered on for almost 4,000 words while Mohamed Atta and the 18 other hijackers fanned out to American airports.

Three months later, Rumsfeld would still be asleep at the switch, as his war command refused to heed the urgent request by American officers on the ground for the additional troops needed to capture Osama bin Laden when he was cornered in Tora Bora. What would follow in Iraq was also more Chamberlain than Churchill. By failing to secure and rebuild the country after the invasion, he created a terrorist haven where none had been before.

That last story is seeping out in ever more incriminating detail, thanks to well-sourced chronicles like "Fiasco," "Cobra II" and "Blood Money," T. Christian Miller's new account of the billions of dollars squandered and stolen in Iraq reconstruction. Still, Americans have notoriously short memories. The White House hopes that by Election Day it can induce amnesia about its failures in the Middle East as deftly as Rumsfeld (with an assist from John Mark Karr) helped upstage first-anniversary remembrances of Katrina.

One obstacle is that White House allies, not just Democrats, are sounding the alarm about Iraq. In recent weeks, prominent conservatives, some still war supporters and some not, have steadily broached the dread word Vietnam: Chuck Hagel, William Buckley Jr. and the columnists Rich Lowry and Max Boot. A George Will column critical of the war so rattled the White House that it had a flunky release a public 2,400-word response notable for its incoherence.

If even some conservatives are making accurate analogies between Vietnam and Iraq, one way for the administration to drown them out is to step up false historical analogies of its own, like Rumsfeld's. In the past the administration has been big on comparisons between Iraq and the American Revolution - the defense secretary once likened "the snows of Valley Forge" to "the sandstorms of central Iraq" - but lately the White House vogue has been for "Islamo-fascism," which it sees as another rhetorical means to retrofit Iraq to the more salable template of World War II.

"Islamo-fascism" certainly sounds more impressive than such tired buzzwords as "Plan for Victory" or "Stay the Course." And it serves as a handy substitute for "As the Iraqis stand up, we'll stand down." That slogan had to be retired abruptly last month after The New York Times reported that violence in Baghdad has statistically increased rather than decreased as American troops handed over responsibilities to Iraqis. Yet the term "Islamo-fascists," like the bygone "evildoers," is less telling as a description of the enemy than as a window into the administration's continued confusion about exactly who the enemy is. As the writer Katha Pollitt asks in The Nation, "Who are the 'Islamo-fascists' in Saudi Arabia - the current regime or its religious- fanatical opponents?"

Next up is the parade of presidential speeches culminating in what The Washington Post describes as "a whirlwind tour of the Sept. 11 attack sites": All Fascism All the Time. In his opening salvo, delivered on Thursday to the same American Legion convention that cheered Rumsfeld, Bush worked in the Nazis and Communists and compared battles in Iraq to Omaha Beach and Guadalcanal. He once more interchanged the terrorists who struck the World Trade Center with car bombers in Baghdad, calling them all part of the same epic "ideological struggle of the 21st century." One more drop in the polls, and he may yet rebrand this mess War of the Worlds.

"Iraq is not overwhelmed by foreign terrorists," said the congressman John Murtha in succinct rebuttal to the president's speech. "It is overwhelmed by Iraqis fighting Iraqis." And with Americans caught in the middle. If we owe anything to those who died on 9/11, it is that we not forget how the administration diverted American blood and treasure from the battle against bin Laden and other stateless Islamic terrorists, fascist or whatever, to this quagmire in a country that did not attack the United States on 9/11. The number of American dead in Iraq - now more than 2,600 - is inexorably approaching the death toll of that Tuesday morning five years ago.

The US Tennis Open is on. Here is the TV schedule -- only it varies, depending on the length of the matches. Late last night it moved from USA to CNBC. For today's Schedule of Play, i.e. who's playing, click here.
US Tennis Open 2006 -- TV Schedule for August
All times are Eastern Standard
 Tuesday, September 5
 11:00 a.m. - 6:00 p.m.
 Men's 4th / Women's Quarter Final USA
 Tuesday, September 5
 7:00 p.m. - 11:00 p.m.
 Men's 4th / Women's Quarter Final USA
 Tuesday, September 5
 12:37 a.m. - 1:07 a.m.
 Highlights CBS
 Wednesday, September 6
 2:00 a.m. - 4:00 a.m.
 (Tape) Match of the Day USA
 Wednesday, September 6
 11:00 a.m. - 6:00 p.m.
 Quarter Final USA
 Wednesday, September 6
 7:00 p.m. - 11:00 p.m.
 Quarter Final USA
 Wednesday, September 6
 12:37 a.m. - 1:07 a.m.
 Highlights CBS
 Thursday, September 7
 2:00 a.m. - 4:00 a.m.
 (Tape) Match of the Day USA
 Thursday, September 7
 11:00 a.m. - 4:00 p.m.
 Men's Quarter Final & Mixed Doubles Final USA
 Thursday, September 7
 7:00 p.m. - 11:00 p.m.
 Men's Quarter Final & Women's Doubles Semifinal USA
 Thursday, September 7
 12:37 a.m. - 1:07 a.m.
 Highlights CBS
 Friday, September 8
 11:00 a.m. - 6:00 p.m.
 Men's Doubles Final, Women's SF CBS
 Friday, September 8
 12:37 a.m. - 1:07 a.m.
 Highlights CBS
 Saturday, September 9
 12:00 p.m. - 6:00 p.m.
 Men's SemiFinal CBS
 Saturday, September 9
 8:00 p.m. - 10:00 p.m.
 Women's Final CBS
 Sunday, September 10
 1:00 p.m. - 2:30 p.m.
 Women's Doubles Final USA
 Sunday, September 10
 4:00 p.m. - 7:00 p.m.
 Men's Final CBS

Male fantasy

Children's Science Exam

Q: Name the four seasons.
A: Salt, pepper, mustard and vinegar.

Q: How is dew formed?
A: The sun shines down on the leaves and makes them perspire.

Q: How can you delay milk turning sour?
A: Keep it in the cow.

Q: What causes the tides in the oceans?
A: The tides are a fight between the Earth and the Moon. All water tends to flow towards the moon, because there is no water on the moon, and nature hates a vacuum. I forget where the sun joins in this fight.

Q: What are steroids?
A: Things for keeping carpets still on the stairs.

Q: What happens to your body as you age?
A: When you get old, so do your bowels and you get intercontinental.

Q: What happens to a boy when he reaches puberty?
A: He says good-bye to his boyhood and looks forward to his adultery.

Q: Name a major disease associated with cigarettes.
A: Premature death.

Q: What is the fibula?
A: A small lie.

Q: Give the meaning of the term "Caesarian Section"
A: The Caesarian Section is a district in Rome .

Q: What does the word "benign" mean?'
A: Benign is what you will be after you be eight.

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. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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