Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Thursday, September 13, 2007: I
got 3.8% on triple-tax-free New York muni bond floaters yesterday. That's
the equivalent of 6.3% pre-tax money. That's good for cash, sitting around,
waiting for it "to be put to work."
Group Inc.'s Global Alpha hedge fund fell 22.5 percent in August, its
biggest monthly decline, on losses from currency and stock trades (also called
gambling). The fund has dropped by a third in 2007 and 44 percent
from its peak in March 2006. Goldman Alpha's biggest loss in the month stemmed
from the managers' decision to sell Japanese yen and buy Australian dollars.
The so-called carry trade unraveled when the Australian dollar fell 6 percent
against the yen in August. The managers' investment in equities, including stocks
in the U.S., Norway and Finland, declined 4.7 percent.
Australian dollar is up strongly against the U.S. dollar.
1. Goldman itself thinks its Alpha Fund losses are fine and expected. The Fund
has big gains some months and big losses. That's its nature. That's how it was
(theoretically) sold to its investors.
2. Not all hedge
funds are alike. Few are like the Alpha Fund. Before you give money to a hedge
fund, ask questions like "What do you invest in?" "How much borrowing
do you do?" "How do you make buying and selling decisions?" And
"how quickly can I get my money back?"
is Jewish New Year, a holiday for Jews worldwide.
Jewish stockmarket saying.
Buy Rosh Hashanah,
sell Yom Kippur (ten days from now).
I have no idea
if this works.
three essences of a Jewish holiday
1. They tried
to kill us.
2. They failed.
3. So, let's
New Credit Austerity To Help Set Economy's Path. This well-done piece
by David Wesel is from today's Wall Street Journal:
for the U.S. economy turns on two factors: One is how much worse the nation's
housing market gets. That may be hard to predict, but it's easy to understand.
The other is
how much of the continuing disturbance in financial markets infects the rest
of the economy. That's neither easy to predict nor easy to understand.
The key is what
banks will do and how much impact it will have. There's irony in that because
a salient feature of 21st-century finance is that banks have become increasingly
less important players.
In the old days, banks made loans carefully -- because they got burned if
the borrower didn't repay. Think of this as wooden-baseball-bat finance.
make loans, turn many of them into securities, and sell them to investors,
pocketing the fees. Someone else gets burned if the borrower defaults. Think
of this as composite-metal-baseball-bat finance. The game is quicker, the
ball goes farther.
But, it turns
out, banks may not have unloaded as much of the risk as they thought. And
that's the rub.
firms and commercial banks, according to Citigroup estimates, hold about $250
billion in bridge loans made to finance acquisitions -- loans they intended
to lay off in markets that are no longer quite so interested in them. The
banks may be stuck with those merger loans.
demand for loans and bonds to finance highly leverage transactions has increased
some banks' concerns that they may have to bring significant quantities of
these instruments onto their balance sheets," Fed Chairman Ben Bernanke
said a couple of weeks ago at the Kansas City Fed's symposium in Jackson Hole,
the mushrooming problem -- one hardly anyone saw coming -- of entities called
structured investment vehicles and conduits. Many of them hold subprime mortgages
and related securities, and counted on selling more than $1 trillion in short-term
IOUs called commercial paper to finance their holdings. Investors no longer
want that commercial paper.
So what do these
entities do now? They turn to U.S. and European banks, some of which sponsored
the conduits, and remind them of the commitments the banks made to provide
credit if the commercial-paper market dried up. Goodbye metal bats. Hello,
old-fashioned wooden-bat-style banking.
find themselves with all sorts of unanticipated loans on their books. So what?
In the antiseptic language of central bankers, Mr. Bernanke explained, "These
banks" -- the ones stuck with merger loans they didn't intend to hold
and those providing backup lines of credit to conduits -- "have become
more protective of their liquidity and balance-sheet capacity." They
are hoarding cash or buying short-term Treasurys, and that means making
fewer new loans.
as Citigroup's Steven Wieting puts it more bluntly: "Higher debt costs
and reduced access to credit for borrowers."
loans to finance mergers or back-stop conduits that can't sell commercial
paper, banks are likely to be less willing to lend to ordinary consumers and
businesses or, at the very least, will be charging more for those loans. So,
consumers and businesses are likely to borrow a little less -- and spend a
little less -- and a financial disturbance could be transmitted through the
banking system to the rest of the economy.
there's growing worry the U.S. is going to slide into recession.
In short, even
though banks are financially sturdy compared with past bouts of turmoil, there
are constraints on how much unwanted lending they will do without curtailing
ordinary lending. Some of those constraints are due to the intricacies of
minimum capital standards and liquidity ratios and others involve the general
tendency to be cautious during times of uncertainty.
As if that wasn't
enough, there's another layer: Everyone knows banks have a lot of loans on
their books that they'd like to sell, but can't -- or won't at today's prices.
So some deep-pocketed speculators, the ones who buy when prices plummet and
then help bring them back up, are waiting for prices to fall further.
And that increases the risk of a prolonged period of financial market turmoil
which, in turn, increases the risks to the rest of the economy which, in turn,
makes bankers -- understandably -- a little more wary about lending.
The issue isn't
whether all this is happening. It is. The issue is how big an impact banks'
behavior will have on the economy. Some analysts say it's a sideshow compared
with the housing slump. Others say it's the most important factor in whether
the markets and the economy bounce back as quickly as they did in 1987, 1998
No doubt it
will be one of the big issues on the table when Mr. Bernanke and his colleagues
meet next week to ponder how much to cut interest rates to offset the markets'
tightening of the credit spigot.
praise of daily exercise: I am in my best physical
condition ever. Yesterday I played 1 1/2 hours of singles tennis and biked effortlessly
six miles to dinner. Serious daily exercise -- with sweating -- makes a major
difference to your health.
best health insurance is from AARP: This advice
is from my lawyer friend who specializes in health insurance cases. Does anyone
have any experience with them?
I sold my Qwest shares: This abuse of shareholder
monies disgusts me. From the September 4 New York Times "DealBook":
Some high school
students will be making their way back to school this week on a bus, or, if
they are lucky, in their very own car. But the stepdaughter of Edward Mueller,
the new chief executive of Qwest Communications, has a much fancier option.
filing made Friday, on the eve of the holiday weekend, disclosed that Qwest
has authorized Mr. Muellers wife and her daughter to use Qwests
corporate jet to travel between Denver, where the telecommunications company
is based, and California, where Mr. Muellers stepdaughter is finishing
the filing by the Rocky Mountain News, a Qwest spokesman said the agreement
reflects an appreciation for his family situation as his daughter wraps
up her current schooling in California.
a senior research associate for the Corporate Library, which studies corporate
governance issues, called the arrangement ridiculous. Of 215 public
companies that the Corporate Library examined in a recent report, he said,
only 28 allowed a chief executives family and friends to use the corporate
and Exchange Commission recently changed the rules surrounding executive compensation,
requiring greater disclosure of the perks that top management receives. The
changes came amid widespread concern that shareholders of public companies
were not fully aware of the size and scope of the benefits that corporate
chiefs were getting.
Qwest chose Mr. Mueller, a telecommunications industry veteran and a former
chief executive of the retailer Williams-Sonoma, to succeed Richard Notebaert
as its chief executive. The move required Mr. Mueller to relocate from California
which looks for interesting nuggets among corporate filings, estimated that
the corporate-jet perk could be costing Qwest as much as $600,000, based on
normal charter rates for the Falcon 2000. As for me, it certainly beats
the B-64 bus that I used to take to high school, Michelle Leder wrote.
life is like in Zimbabwe. President Robert
Mugabe was popularly elected in 1980. He was a pro-independence campaigner who
wrested control from a small white community and became the country's first
black leader. Now he presides over a nation whose economy is in tatters,
where poverty and unemployment are endemic and political strife and repression
A friend of a
friend who lives there emailed:
Eight of us
went to lunch at Mama Mias (Harare, the capital) on 10 August 2007. We thought
you would like see what Z$6-million looks like in Z$1,000 notes. This was
the manager taking the money away to pay for our lunch. The lunch consisted
of two courses each -- eating the 'last' fillet steak left in the restaurant,
and even getting some beers - also running out.
You don't choose
what's on the menu - you first ask "What is left on on the menu?"
If this doesn't make ANY sense to you, its because you are out of touch with
Zim and the price controls and hence lack of products in the shops.
We really had
a great lunch. Life in Zim!
dogs bite people:
is the first day of Rosh Hashanah: The
traditional greeting is "lShana
Tova." The modern greeting is:
May your hair,
your teeth, your face-lift, your abs, and your stocks not fall
And may your blood pressure, your triglycerides, your cholesterol, your white
blood count and your mortgage interest not rise.
May you get a clean bill of health from your dentist, your cardiologist, your
gastroenterologist,your urologist, your proctologist, your podiatrist,your
psychiatrist, your plumber, and the IRS.
May you find a way to travel from anywhere to anywhere during rush hour in
less than an hour, and when you get there may you find a parking space.
May this Yom Tov, find you seated around the dinner table, together with your
beloved family and cherished friends, ushering in the Jewish New Year ahead.
May what you see in the mirror delight you, and what others see in you delight
May the telemarketers wait to make their sales calls until you finish dinner,
may your checkbook and your budget balance, and may they include generous
amounts for charity.
May you remember to say "I love you" at least once a day to your
partner, your child, and your parent(s). You can say it to your secretary,
your nurse, your butcher, your photographer, your masseuse, your seamstress,
your hairdresser or your gym instructor, but not with a "twinkle"
in your eye.
May we live as intended, in a world at peace with the awareness of the beauty
in every sunset,every flower's unfolding petals, every baby's smile and every
wonderful, astonishing, miraculous part of ourselves.
Bless you and those you love with every happiness, great health,peace and
much love during the next year and all those that follow.
A pair of Irish ditch diggers (Navvies), were repairing some road
damage directly across the street from a house of prostitution.
a Protestant Minister lurking about, then duck into the house.
look at that, Darby!" said Pat. "What a shameful disgrace, those Protestant
Reverends sinning in a house the likes of that place!"
They both shook
their heads and continued working. A short time later they watched as a Rabbi
looked around cautiously and then darted into the house when he was satisfied
no one was looking.
"Did ya see
that, Darby?" Pat asked in shock and disbelief, "Is nothing holy to
those Jewish Rabbis? I just can't under-stand what the world is coming to these
days. A man of the cloth indulging himself in sins of the flesh. T'is a shame,
I tell ya!"
Not much later
a third man, a Catholic Priest, was seen lurking about the house, looking around
to see if anyone was watching, then quietly sneaked in.
"Oh no, Darby,
look!" said Pat, removing his cap and crossing himself, "One of the
poor girls musta died!
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 .
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