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Harry Newton's In Search of The Perfect Investment Technology Investor.

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9:00 AM EST, Friday, September 19, 2008: Acting irresponsibly doesn't work. But acting irresponsibly big-time works. I get rich by taking outrageous risks. And the government bails me out. The Government bailed out Fannie, Freddie and AIG. Now it's bailing out lousy loans made by financial institutions. And, the latest, it's establishing a "temporary" guaranty program for U.S. money market funds. This morning, the U.S Treasury announced that for the next year, it will insure holdings of any publicly offered money market mutual fund, retail and institutional. Treasury has set aside a mere up to $50 billion to bail these short-term money market funds, many of whom juiced up their funds with paper they knew was risky. But, what the heck, their higher yield would attract higher deposits. Hence, pay themselves higher management fees. As Mae West said, "I've been rich and poor. Rich is better."

Short-term there is euphoria. A big "up" day yesterday. Another one coming today. But long-term (and who thinks of that any longer), who's going to bail out the Federal Government? There are two choices. And I don't like either one.

1. You and I with higher taxes. The next administration will deal with this minor problem.

2. The government's printing press. Think Zimbabwe.

Meantime, let's gorge today. And let's gorge big-time. None of this makes any sense. Only Warren Buffett is emerging out of this smelling like a rose. (See below.) Typical of the new "thinking" is a report that Morgan Stanley analysts issued this morning:

We are going from bearish to bullish equities. Our upside for the S&P 500 is 1300 (it closed last night at 1206) by end 08 at a minimum, with scope to trade higher depending on the strength of policy action to stabilize the financial system. This is not a call that the bear market is over, or even that we have seen the lows in the current cycle, but for the rest of the year we believe the improvement in risk tolerance will outweigh the downgrade cycle in earnings.

We believe the risk/reward profile of the market has changed due to the following factors:

+ Global policy makers have woken up to the severity of the financial crisis and are expected to continue to respond aggressively as growth and systemic risks dominate inflation concerns.

+ ·The last strands of complacency have disappeared with severe declines in emerging and non-US equities, representing a capitulation on the unrealistic decoupling theme. This has also been reflected in the change in loss leadership within the US market, with global cyclicals underperforming.

+ Risk tolerance is at extremely low levels as reflected in collapsed Treasury yields, elevated VIX, and considerable widening in corporate and LIBOR spreads. Aggressive and concerted global policy action, especially specific to financials, could provoke a sizeable improvement in risk tolerance.

+ On our fair P/E for the S&P 500 of 15.2, the implied earnings for 2009 is $79. We see this as realistic, with moderate rather than substantial downside risk.

+ The speed of global consolidation (i.e., BAC/MER) within the financial sector, together with regulatory intervention, will help put a floor under solvency risk even though asset quality deterioration and deleveraging will take time to work through.

We are moving overweight Financials from neutral while reducing our Healthcare overweight. We are buying NOK, COH, GS and HIG and selling SGP, DIS, MSFT and AIG.

Personally, I don't like this "new" thinking. I don't think it will last. The reality of declining economies worldwide will soon rear their ugly head. And Wall Street will be back to gloom and doom.

The funny thing is that we're making money on our Washington Mutual (WaMu) shares. Remember all those columns last week telling you of my ultra-capable friend who just took over WaMu as CEO? My first WaMu buys were at $1.99. Today it looks like it will be trade over $4.80.

Today's "joke" on Wall Street is that the next step for the U.S. Treasury is that it will shortly ban all selling.

Remember Constellation Energy: A super energy company which ran into financial problems by getting into a business -- energy trading -- it did not understand. (Think AIG. Read yesterday's column.)

Read today's Wall Street Journal:

Wall Street might be disappearing into a black hole, but the stars are aligning for Warren Buffett.

The veteran value investor has swooped in on Constellation Energy Group, the natural-gas and power company that lost more than half its value this week. MidAmerican Energy Holdings, part of Berkshire Hathaway, has thrown Constellation a lifeline in the form of a tentative $26.50-a-share takeover offer.

Constellation, which started the year with its stock price over $100, is the sort of victim Mr. Buffett loves.

Alarm bells rang last month when Constellation admitted it had miscalculated its collateral requirements in the event its credit ratings were cut to "junk" levels. Constellation was still trying to address the knock to confidence about its internal controls and liquidity when the credit storm reached hurricane force this week.

It had $2 billion of liquidity on hand. But Standard & Poor's was threatening a potential downgrade that would have left Constellation needing to post another $3.3 billion of collateral for its energy-trading operations. Time to bring in a well-capitalized buyer.

MidAmerican is paying $4.7 billion for the common equity, taking a $1 billion preferred interest and assuming $4.8 billion of net debt. For that, it gets nearly 9,000 megawatts of electricity plants, 1.7 million customers, natural-gas reserves and the energy-trading book.

The cost to unwind that book is anyone's guess. Dan Eggers, an analyst at Credit Suisse, posits a preliminary figure of $2 billion. Even then, Mr. Buffett is getting Constellation at a phenomenally good price.

Property, plant and equipment were valued at a net $10.4 billion at the end of June. Replacement cost would be much higher and almost half the generation fleet consists of very desirable, low-emissions nuclear and hydroelectric plants.

Credit Suisse forecasts the two biggest "hard" assets, the generation and utility businesses, to generate combined earnings before interest, tax, depreciation and amortization of $2 billion in 2009. Put a conservative multiple of six times on that and they are valued at $12 billion.

Indeed, the one potential drawback of such a sweet deal is that it tempts in rival bidders.

More broadly, investors hope this move from Mr. Buffett, with a war chest put at $35 billion back in May, signals a market bottom.

Don't count on it. Constellation, long on hard assets but short on liquidity, represents a perfect opportunity. Bombed-out bank valuations, on the other hand, look less tempting, given the root cause of their problems: opaque, potentially toxic balance sheets.

With the ripples emanating from Wall Street potentially set to claim more victims in the weeks and months ahead, further industrial opportunities may well present themselves. But not every sector can bank on a "Buffett put."

If you can buy Constellation for under $26.50, it seems like the perfect buy. Buffett will buy you out, or someone else will come along and offer a few shekels more.

What happens if your brokerage firm goes bust?
Finra issued a statement yesterday. Here's the Finra paper.

Hitler gets a margin call and gets wiped out: For this funny YouTube video, click here.

Google's bruiser of a browser: Chrome is Google's new browser. The world doesn't need a new browser. Firefox is just perfect. But... Chrome has allegedly one big plus: It's called task management. According to BusinessWeek,

Google has taken a different tack. It didn't expend much effort on what traditionally has been the heart of a browser, the rendering engine, which creates viewable pages from the text, images, and instructions supplied by Web servers. Google just adapted the open-source WebKit browser engine used by Safari.

So where did Google engineers really hunker down? The browser's Task Manager, which is hidden inside the Developer menu, reveals Google's priorities. Click on Task Manager, and you get a window that lists each page you have opened and how much memory and processor time it's using. There's even a button, End Process, that forces a misbehaving page to close—something you often cannot do with Internet Explorer or Firefox without closing the browser and all your other Web applications. (There goes that hour of work you just put into your blog.)

If this kill function sounds familiar, that's because the concept of task management is a core component of operating systems, such as Windows or Mac OS X. And that's my point: Chrome offers many of the features of an operating system. It loads Web-based applications, manages their memory and processor use, and keeps them from interfering with one another. This is the kind of secure operation you want, if you use a computer mainly to run Web-based programs. Clearly, Chrome aims to make traditional operating systems less relevant.

Google's Chrome is in beta, which means it's locked up on me already. (Nothing's perfect.) But I do like some of its features. You can pick up a free copy at Google's Chrome site.

Russian business
The city was accepting oral bids for a new project in the city. The deputy supervisor in charge of bids has three contractors that want to bid, Stanislaus, Guido and Ivan.

He calls up Stanislaus for his bid. Stanislaus says he needs $30,000 -- $10,000 Labor, $10,000 Material, $10,000 Profit.

He then calls up Guido for his bid. Guido says he needs $60,000 -- $20,000 Labor, $20,000 Material, $20,000 Profit.

Finally, he calls up Ivan. Ivan tells the deputy supervisor "I bid $90,000 -- $30,000 for me, $30,000 for you and we get the Stanislaus to do it!!"

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 on this site. Thus I cannot endorse, though some look 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 Michael's business school tuition. Read more about Google AdSense, click here and here.