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8:30 AM EST, Wednesday, September 5, 2007: I met with two Australian hedge fund managers yesterday, trolling for new monies. They were up a respectable 16.5% for their fiscal year to June 30. They like big caps with a "tailwind" behind them. An example of a tailwind is broadband communications (hence Cisco and Nokia). A headwind is higher commodity prices and the necessity to raise prices, e.g. processed food producers such as Heinz.

Fooled by randomness: Not one learned observer -- not one -- figured David Ferrer would oust Rafael Nadal. Everyone figured it would be a Nadal-Federer final.


David Ferrer

But it happened last night after three hours and 28 minutes when Nadal's volley sailed long at 1:50 AM. If you can't predict something as simple as a tennis game, who can predict a recession, tomorrow's price of corn.... or today's stock market? As my friend Mike O'Rourke, chief market strategist of BTIG wrote last night:

A funny thing happened on the way to the Fed’s anticipated easing next week. The S&P 500 rallied 9% in two weeks, the NASDAQ 100 rallied 12.5%, the August ISM came in essentially in line with expectations, GM posted a 6% gain in August Auto sales verses expectations for a 4% loss, oh yeah GM also said they are not seeing evidence of tightening in the auto loan market. As we stated yesterday it is our belief, the companies who are complaining they don’t have access to credit are the ones who don’t have adequate collateral. A great deal of focus will be upon the numerous economic reports and Fed speaking engagements in the next two weeks for signals of the Fed’s intentions.

As is usual during this time of year the shorts are being squeezed. Today the S&P 500 crossed through two technical resistance levels a 61.8% Fibonacci retracement of the mid-July to mid-August correction (1485.12). The S&P also cleared its 50 Day Moving average (1487.72). This rally off of the low has been notably different than recoveries from the other corrective moves over the past couple of years. While volume is generally heavier on sell offs and lighter on the recovery rally, this rally has been exceptionally light. We used a 61.8% retracement as the definition of recovery rally. For example during the recovery from these sell offs, February-March 2007, May-June 2006 and September-October 2005 the average volume during the recovery rallies were respectively 12.4% lighter, 12.2% lighter and 1.2% heavier than the volume than during the sell off. During this recovery the average volume has been 32% lighter than that of the sell off. This reinforces the belief that a good deal of the activity is short covering and not institutions putting money to work.

The market has again fallen in love with Tech. The group is being touted as impervious to the credit market, once again. In early 2000 it was also touted as impervious to the credit market, and the Fed’s tightening at that time. The argument then was that since so few Tech companies use little or no debt, the tightening would have little effect upon them.

Today the argument is that since they generally don’t seek access the credit markets the recent problems there will not affect them. The fact is they do have exposure to the economy and should growth slow markedly, they will surely be affected as well. Many large cap Tech names have very healthy looking technical patterns, so we would not be looking to pick a fight, our only point is if you are a tech bull please be sure it is for the right reasons. Leadership has been narrow since the August 16th low, two stocks Apple Inc. (AAPL) and Research in Motion (RIMM) contributed 1/3 of the NASDAQ 100’s gain.

The commodity markets had some interesting activity today. Gold started a new move towards the $700 level. The 6 month base creates an excellent foundation for a potential breakout. The other noteworthy move was the limit up move in Wheat. The commodity is up approximately 50% in the past 3 months, and now nations are starting to limit its export.

Australian support for Iraq: Bush is in Australia. Australia is the only country to have its troops fight alongside American troops in every war from 1914-1918 on. Australia, at 20 million people, relies on the much-bigger America for its defense. In 1942 America saved Australia from a Japanese invasion in the Battle of the Coral Sea. Australia is probably now America's strongest ally. Australia has 1,600 troops in Iraq. Their presence is increasingly unpopular in Australia. Polls show Australia's prime minister, John Howard, in office for for the past very-prosperous 11 years, is trailing opposition leader Kevin Rudd, who has promised to pull combat troops out of Iraq if he wins. Mr. Howard has refused to set a deadline.

Mr. Howard is the last leader among the major original "coalition of the willing" partners still serving. Among those who have paid the supreme political price (i.e. lost their jobs) for standing with Mr. Bush on the war are former Prime Ministers Tony Blair of Britain, Silvio Berlusconi of Italy and Jose Maria Aznar of Spain.

A Wall Street Trader Draws Some Subprime Lessons: Michael Lewis is one of our best financial writers. Here's his latest piece.

Sept. 5 (Bloomberg) -- So right after the Bear Stearns funds blew up, I had a thought: This is what happens when you lend money to poor people.

Don't get me wrong: I have nothing personally against the poor. To my knowledge, I have nothing personally to do with the poor at all. It's not personal when a guy cuts your grass: that's business. He does what you say, you pay him. But you don't pay him in advance: That would be finance. And finance is one thing you should never engage in with the poor. (By poor, I mean anyone who the SEC wouldn't allow to invest in my hedge fund.)

That's the biggest lesson I've learned from the subprime crisis. Along the way, as these people have torpedoed my portfolio, I had some other thoughts about the poor. I'll share them with you.

1) They're masters of public relations.

I had no idea how my open-handedness could be made to look, after the fact. At the time I bought the subprime portfolio I thought: This is sort of like my way of giving something back. I didn't expect a profile in Philanthropy Today or anything like that. I mean, I bought at a discount. But I thought people would admire the Wall Street big shot who found a way to help the little guy. Sort of like a money doctor helping a sick person. Then the little guy wheels around and gives me this financial enema. And I'm the one who gets crap in the papers! Everyone feels sorry for the poor, and no one feels sorry for me. Even though it's my money! No good deed goes unpunished.

2) Poor people don't respect other people's money in the way money deserves to be respected.

Call me a romantic: I want everyone to have a shot at the American dream. Even people who haven't earned it. I did everything I could so that these schlubs could at least own their own place. The media is now making my generosity out to be some kind of scandal. Teaser rates weren't a scandal. Teaser rates were a sign of misplaced trust: I trusted these people to get their teams of lawyers to vet anything before they signed it. Turns out, if you're poor, you don't need to pay lawyers. You don't like the deal you just wave your hands in the air and moan about how poor you are. Then you default.

3) I've grown out of touch with "poor culture.''

Hard to say when this happened; it might have been when I stopped flying commercial. Or maybe it was when I gave up the bleacher seats and got the suite. But the first rule in this business is to know the people you're in business with, and I broke it. People complain about the rich getting richer and the poor being left behind. Is it any wonder? Look at them! Did it ever occur to even one of them that they might pay me back by WORKING HARDER? I don't think so.

But as I say, it was my fault, for not studying the poor more closely before I lent them the money. When the only time you've ever seen a lion is in his cage in the zoo, you start thinking of him as a pet cat. You forget that he wants to eat you.

4) Our society is really, really hostile to success. At the same time it's shockingly indulgent of poor people.

A Republican president now wants to bail them out! I have a different solution. Debtors' prison is obviously a little too retro, and besides that it would just use more taxpayers' money. But the poor could work off their debts. All over Greenwich I see lawns to be mowed, houses to be painted, sports cars to be tuned up. Some of these poor people must have skills. The ones that don't could be trained to do some of the less skilled labor -- say, working as clowns at rich kids' birthday parties. They could even have an act: put them in clown suits and see how many can be stuffed into a Maybach. It'd be like the circus, only better.

Transporting entire neighborhoods of poor people to upper Manhattan and lower Connecticut might seem impractical. It's not: Mexico does this sort of thing routinely. And in the long run it might be for the good of poor people. If the consequences were more serious, maybe they wouldn't stay poor.

5) I think it's time we all become more realistic about letting the poor anywhere near Wall Street.

Lending money to poor countries was a bad idea: Does it make any more sense to lend money to poor people? They don't even have mineral rights!

There's a reason the rich aren't getting richer as fast as they should: they keep getting tangled up with the poor. It's unrealistic to say that Wall Street should cut itself off entirely from poor -- or, if you will, ``mainstream'' -- culture. As I say, I'll still do business with the masses. But I'll only engage in their finances if they can clump themselves together into a semblance of a rich person. I'll still accept pension fund money, for example. (Nothing under $50 million, please.) And I'm willing to finance the purchase of entire companies staffed basically with poor people. I did deals with Milken, before they broke him. I own some Blackstone. (Hang tough, Steve!)

But never again will I go one-on-one again with poor people. They're sharks.

The Call That Can Save Your Life in a Heart Attack. This is an important piece:

What do asking for directions and calling 911 have in common?

Men, it seems, don't like to do either. When it comes to a heart attack, reluctance to call 911 could make the difference between life and death.

Gender differences in calling for rescue services emerged in a recent Minnesota study of 1,263 patients who suffered a major heart attack. It found that 37% of men from rural communities arrived at a hospital in an ambulance, compared with 49% of rural women. The rest of both sexes drove themselves or were chauffeured by a relative or friend.

Whatever your gender, the bigger issue is that only about half of people in the throes of a heart attack decide to call 911, and that can have important consequences not only for survival, but also for the long-term health of your heart if you do survive.

Heart experts and public-health officials have long been stymied in efforts to get people to pick up the phone instead of their car keys when experiencing symptoms such as chest pain, sweating and shortness of breath. Indeed, many people fail to take any immediate action, not wanting to bother anyone in case it's a false alarm.

Now there's fresh reason to act quickly by calling 911. Thanks in part to initiatives of the American College of Cardiology and the American Heart Association, hospitals and communities around the U.S. are scrambling to improve heart-attack care. They're improving coordination with emergency squads and adopting measures to speed door-to-treatment time once a patient arrives at the hospital. The faster the heart-attack causing clot is cleared, the quicker blood supply is restored to heart muscle. That minimizes permanent damage that can lead to chronic heart failure.

One big reason to call for an ambulance is the risk of sudden death. Up to 5% of patients go into cardiac arrest en route to the hospital. If you're not revived within two minutes, your odds of survival plummet. "If you go into a lethal arrhythmia while you're driving to the hospital, it's pretty hard to do CPR on you," says Barbara Unger, head of cardiac emergency services at the Minneapolis Heart Institute. An ambulance is typically equipped with gear to spark your heart back into rhythm.

In addition, emergency squads are increasingly able to do an electrocardiogram in the field, enabling a pre-hospital diagnosis that can speed the path to treatment. In Boston, some heart-attack patients are taken from the ambulance directly to the cardiac-catheterization lab for an angioplasty, bypassing a time-consuming workup in the emergency room that would be necessary for patients arriving by car.

Conventional wisdom is that people balk at calling 911 because they're in denial. But embarrassment and loss of control may be more important. Joseph Ornato, chairman of emergency medicine at Virginia Commonwealth University, Richmond, says a Baltimore woman called an ambulance for her first heart attack, but came by car when she had a second a few years later. Her neighbors, drawn by sirens and flashing lights, had come to watch as she was carried from her home on a stretcher, and she vowed she "would never let that happen again," Dr. Ornato says.

Heart attacks are often hard to diagnose, and ambulance services vary in sophistication and training. But the Minnesota study, presented by Minneapolis Heart Institute researchers at a meeting of the Society of Academic Emergency Medicine last May, offers a hint of the advantage in calling 911. Rural patients were treated six minutes sooner if they called 911; patients from urban areas got their arteries opened 18 minutes faster when they called an ambulance. For the record, urban men and women called 911 in equal percentages -- 65%.

If you're at heart risk, learn the capabilities of your local emergency squad, suggests Elliott Antman, director of the coronary-care unit at Brigham and Women's Hospital, Boston. And whether you're male or female, ask your doctor for directions on what to do should symptoms arise.

What a great weekend. There were two big benefits -- oodles of exercise for me playing and watching tennis and oodles of business for the makers of SPF 30 suntan cream, who sold me lots of it.

A note on layout: Some of you may have suffered a horribly laid-out web site yesterday. I apologize. I always check the site. And I did -- in Firefox. But in Internet Explorer it looked horrible. A reader alerted me. But it was after 10 AM when I fixed it. The lesson: If your web site looks weird in one browser, try another. I personally prefer Firefox, which is free, ultra-reliable and open. You can download many free add-ins, which make it more useful. My favorite download is called Showcase.

Keep two years of cash at hand: I repeat from yesterday: When everybody runs for the doors, assets get sold in a panic and their prices plummet. Two years of the cash you need for expenses is now my rule.

U.S. Tennis Open. I do not know how you can hit the ball as hard as Ferrer and Nadal did last night. I don't know how you can get to as many balls as those two did last night. It was awesome and ultra-thrilling to watch. One day I'll get some sleep.

"Are you hungry, Moses?" asks God

"I could eat," Moses replies.

So God opens a can of tuna and reaches for a chunk of rye bread and they share it. While partaking of this humble meal, Moses looks down into Hell and sees the inhabitants devouring huge steaks, briskets, pheasants, pastries and wines. Curious but deeply trusting, he remains quiet.

The next day God again invites Moses to join him for a meal. Again it's tuna and rye bread. And, again, Moses can see those denizens of Hell enjoying salmon, champagne, lamb, truffles, and chocolates Still he says nothing. The following day, mealtime arrives and another can of tuna is opened. He can't contain himself any longer.

Meekly, he says: "God, I am grateful to be here in heaven with You as a reward for the pious, obedient life I led. But here in heaven all I get to eat is tuna and a piece of rye bread, and in that 'other place' they all eat like emperors and kings! I just don't understand."

God sighs. "Let's be honest," He says. "For just two people, it doesn't pay to cook."

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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