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8:30 AM EST, Friday, September 7, 2007: We have two economies. One that's doing well. It is export, health care and technology. One that is not doing well. It is finance and housing. The booming economy doesn't employ as many people as the depressed economy, so economic statistics will look ugly for the next couple of months and possibly hurt the price of stocks. Statistics likely to look ugly -- employment (not strong), housing (cratering), and consumer credit (skyrocketing -- consumers are putting their spending on their credit cards).

Every Fed interest tightening of the past 50 years has led to some form of financial crisis -- this one, too. But we've also recovered handsomely from each one. And stocks have gone higher.

Fed policy has switched from tightening to neutral. Soon it will be dropping interest rates, which will be good for stocks. There is some hope the loosening may happen at the next Fed meeting on September 18. Bernanke recently said:

It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.

It's only a matter of time before the Fed eases. When this happens stocks will boom -- irrespective of the underlying economy. Meantime your job (and mine) is to find solid stocks that have been beaten down a little too much. I do like two oil trusts -- PWE and ERF. Both have huge dividend yields -- 13.30% and 10.9% respectively. I like Dril-Quip but it's bounced back strongly. I'm still looking. It's hard to focus on this when the tennis is so engrossing. I don't feel a huge urgency to put all my cash to work.

The financial media -- heed it or ignore it? There are sound arguments for reading it and ignoring it, i.e. not panicking. That's the discipline you need when reading The Wall Street Journal, The New York Times, or watching BubbleVision (CNBC). We all need to understand that driving the financial press is the urgency of filling space or filling time. Happy stories don't appeal to financial reporters, most of whom are poorly-paid and have few investments. Their envy of others' riches orients them to "disaster" stories. The classic Forbes magazine story ends, "The company has had 28 quarters of increasing sales and earnings, but can they keep it up?"

Lately the press has run several disaster stories on commercial real estate. "The next shoe to drop is the value of commercial real estate," etc. I sent the latest disaster story to one of my syndicators. His reply:

We have somewhat of a contrarian view with regard to our ABC (name changed) project. We have forward swapped the rate for the planned acquisitions through November (17 buildings and over half the total program size) at between 4.8% and 4.9%, so at Libor + 160 we are at about 6.5 all in. Also, we expect rates to stabilize later this year.

The current fear in the market has shaken loose some assets we have been chasing at more acceptable pricing, thus we are ahead of schedule and calling for 65% of the total equity. Rents in the portfolio are ahead of pro-forma as well. ABC is a retail sub-market that has traditionally been resilient to market cycles thanks in part to the efforts of you wife and daughter and the predominantly wealthy, international foot traffic that flocks to this shopping district every year. In summary, we think a down spike in investor sentiment is a great time to buy in established markets and the current environment has actually helped us move the program along more quickly.

I agree that the press have been pretty ugly. With regard to the article you sent me we are talking about apples and oranges. The scarcity of the ABC assets will drive the value. We are not overly leveraged so we do not have the problems other guys have. We always thought the flippers, which we are not, would get caught when the music stops. The music has stopped and they are caught. No big deal to us because we never played in that game. We didn't play in condos in the 80's, or telecom hotels in the 90's or any other capital-driven, flavor-of-the-month categories that Wall Street funds and then explodes. We have never had a capital loss because we play the game differently than others. We can't control the market, but we are pretty good at making safe bets with good upside. Hope this helps.

The comedian Mort Sahl joked if the world were to end tomorrow, The New York Times headline would be: "World Ends! Women and Minorities Hit Hardest."

Buy a hedge on the post office: "First class" stamps at the Post Office are good forever -- irrespective of what the new, higher first class rate might be.

Be wary of Motorola phones and gadgetry: Motorola usually makes great hardware, but lousy software. Recently friends have found their Motorola phones breaking, especially the RAZR series. I've always shied from Motorola cell phones.

Bloomingdales "free" money: They give me 10% off for opening a credit card with them. Now I know why. I get my first bill from them. If I don't pay in full by September 28, I get hit with a 22.90% annual finance rate. Heh, that's nice money -- if you can collect it. For me, I'm paying on time, maybe a day early. Just to be sure.

One of life's great pleasures: There am I biking home through New York's Central Park, when I happen on a red tailed hawk sitting on a tree branch eating a pigeon he (or she) had just caught. A birder who was also watching told me it was very rare to be so close -- about 12 feet -- to a feeding hawk. Six breeding pairs live around Central Park. They nest on the buildings. They don't nest on the trees because the squirrels will kill their babies. The squirrels perceive the hawks as their enemy, which they should. The hawks eat squirrels. These pictures are not of my hawk. I picked them off the Internet. But they look like my hawk.

U.S. Tennis Open. It continues today and finishes this weekend.

Rodney Dangerfield's bio:

When I was forty, I was getting divorced, living in a low-class, dirty hotel in New York. My mother was dying of cancer. I owed $20,000. That was about the lowest. I came back to show business, and I couldn't get a job. I was turned down by every small-time agent in New York. I started over again with an image, "Nothing goes right." Then when The Godfather came out, all I heard was, "Show respect." So I changed the image to "I don't get no respect." I tried it out in Greenwich Village. I remember the first joke I told, "Even as a kid, I'd play hide and seek and the other kids wouldn't even look for me." The people laughed. After the show, they started saying to me, "Me, too -- I don't get no respect."

The very first ever blonde guy joke.
An Irishman, a Mexican and a Blonde Guy were doing construction work on scaffolding on the 20th floor of a building.

They were eating lunch and the Irishman said, "Corned beef and cabbage! If I get corned beef and cabbage one more time for lunch, I'm going to jump off this building."

The Mexican opened his lunch box and exclaimed, "Burritos again!

If I get burritos one more time I'm going to jump off, too."

The blond e opened his lunch and said, " Bologna again! If I get a bologna sandwich one more time, I'm jumping too."

The next day, the Irishman opened his lunch box, saw corned beef and cabbage, and jumped to his death.

The Mexican opened his lunch, saw a burrito, and jumped, too.

The blonde guy opened his lunch, saw the bologna and jumped to his death as well.

At the funeral, the Irishman's wife was weeping. She said, "If I'd known how really tired he was of corned beef and cabbage, I never would have given it to him again!"

The Mexican's wife also wept and said, "I could have given him tacos or enchiladas! I didn't realize he hated burritos so much."

Oh this is GOOD!

Everyone turned and stared at the blonde's wife. The blonde's wife said, "Don't look at me. He makes his own lunch ."

Hillbilly Mirror
After living in the remote wilderness of Kentucky all his life, an old hillbilly decided it was time to visit the big city .

In one of the stores he picks up a mirror and looks in it. Not ever having seen one before, he remarked at the image staring back at him, "How about that! Here's a picture of my daddy."

He bought the mirror thinking it was a picture of his daddy, but on the way home he remembered his wife didn't like his father, so he hung it in the barn, and every morning before leaving for the fields, he would go there and look at it.

His wife began to get suspicious of these many trips to the barn. One day after her husband left, she searched the barn and found the mirror.

As she looked into the glass, she fumed, "So that's the ugly bitch he's running' around with."

This weekend
Hug the spouse, the kids and the grandkids. And back up your computer's hard disk.

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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