Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EST, Monday, August 17,
2009. Dummy money. That's how we used to refer to
dumb investments by doctors and dentists. But there's another side to dummy
money. It's all about entrepreneur and their personality. All successful entrepreneurs
are pig-headed. They know the solution. In fact, they know everything. You'll
rarely find an entrepreneur who listens -- no matter how intelligent or successful
was thinking this way over the weekend as I was eying investment in some startup
and advanced startup situations. The entrepreneurs typically want money for
marketing (their marketing) or buildout (their buidout). Or whatever. But it's
their priorities. Not yours. You can spit blood, jump up and down. But once
you've given them your money, it's gone. They now have the checkbook. They're
convinced they now know what's right for you.
For a select few
brilliant entrepreneurs, they're right. They don't need your brains. But the
rest do. How to convince them? After all these years, I'm convinced that you
basically can't -- unless:
1. You're in
at the very beginning.
2. You define
the rules and they agree.
The rules would
include a board of directors, a finance committee, rules about spending money,
rules about the company's immediate direction (board agreed) and constant communications.
How much an entrepreneur
will listen depends on the respect he has for you. And that's not easy to prove.
Only time produces respect.
On the weekend
I started fiddling around with structuring a deal with a company that wants
$1.5 million or so so for marketing. I thought the deal should be::
+ Ten people each
put in $200,000.
+ The company guarantee an 8% annual cash return on the money. This money is
paid before executive salaries are raised and bonuses paid.
+ The investors are entitled to participate in profits. Definitions needed.
+ There needs to be financial rules including no borrowing without investor
+ Outside investors
should control the board of directors.
+ There should be a finance committee.
worth his salt would agree to these.
The public stockmarket
has a major joy. It's liquid. If you suddenly don't like the CEO and the color
he has chosen for your checkbook, you can sell.
businesses are booming.
All kinds of repair -- like shoe repair, car repair. Few new sales. Lots of
repairs. Second-hand consignment clothing stores. And now I hear the locksmith
business is booming in Australia. Burglaries are on the rise, as the economy
is very sweet of Deutsche Bank this morning:
Buy Price Target USD45.00
Sherri Scribner: Initiate with Buy, tgt $45. STEC is currently the sole provider
of enterprise storage SSDs in a market that has the potential to grow significantly
over the next few years. In the FC market, STEC has no competition and we
do not see a competitive entry until mid-2010 at the earliest. We see further
growth opportunities in servers, a larger market than storage. Over time,
we do expect STEC to face competition in the server market, but we believe
that the company's lead and experience will give it an edge in a market that
could equate to $2B by 2012.
Of course, what
they forgot to tell you was that Deutsche Bank was one of the underwriters on
STEC's recent secondary -- at $31. And the way Wall Street "works"
is their analysts are expected to release a positive recommendation a short
while after the secondary. This helps the clients who bought STEC shares in
daughter is the best. She negotiated hard with
her cable TV provider and got a huge bargain on her new installation in her
new, old house. Her technique was twofold:
First, to highlight all the companies she could buy from, including Verizon
FiOS, Time Warner, DirecTV, Comcast, Dish, the local phone company, etc. She
had a much longer list.
Second, to stand firm, to nudge and to nudge some more.
I can't say that Claire is a chip off the old block when it comes to negotiating.
She's a whole other animal. I'm on the phone this morning using Claire Newton
techniques. They kick serious ass. Yet, you wouldn't know the animal that lurks
below this charming, beautiful smile.
My baby Claire has become an animal.
are not notebooks. Netbooks are slow. They have cramped
keyboards. They won't run several programs simultaneously. And Microsoft is
playing loosey, goosey with how it licenses Windows to the manufacturers. In
short, netbooks are meant for checking email and surfing. They're not meant
for running Microsoft Office, checking your stocks, doing your email, listening
to an Internet radio station, Photoshopping your kids' photos, and watching
porn -- and all simultaneously.
soon, the next boom:
There can be few
fields of human endeavor in which history counts for so little as in the world
of finance. Past experience, to the extent that it is a part of memory at all,
is dismissed as the primitive refuge of those who do not have the insight to
appreciate the incredible wonders of the present. John Kenneth Galbraith
makes changes in his portfolio: From someone called "Ray"
If you follow
Mr. Buffet (BRK.A) then you already know that he made some significant portfolio
changes in his recent SEC filings. Now, I do not recommend following him since
he has billions and he can afford to hold stocks forever because
it is in his corporate account, which means he really isnt risking his
own money. However, his recent moves are very telling, in my opinion.
He sold Carmax
(KMX), Home Depot (HD), ConocoPhillips (COP), Eaton (ETN) and other health
care stocks. First and foremost it tells me that he expects health care reform,
which is not really reform it is a public option, to pass otherwise he would
not have sold those health insurers. He sees through the whole cash for clunkers
nonsense as it is not a long-term solution for auto sales and it also makes
a statement that he feels the consumer is not coming back anytime soon.
of Home Depot is another vote for the consumer to not return in the near-term
and that housing will more than likely stay stagnant for a while. By selling
COP he was simply undoing a bad decision for which he took a lot of criticism
for to begin with. However, if you want to read into it further, I think this
means he thinks the energy trade is dead at the moment and prices are going
to be flat for sometime into the future which is good news for consumers as
fuel costs should remain low in the near-term.
of Becton Dickerson (BDX) and Johnson & Johnson (JNJ) indicates two things
to me. First, it means that he thinks BDX will benefit from the public option
or, in the event it does not pass, that while health insurers are dangerous
to own, health care stocks are not, which he is right on about. Second, JNJ
is a good company that is well diversified and a defensive play, which, again,
is right on for this market.
In short, I
see this report as bearish as he did far more selling than buying and his
buys were defensive stocks. He is buying classic defensive stocks and stocks
that would clearly benefit if the healthcare reform actually passes. While
I do not mimic his moves, and have no positions in any of those holdings,
I think he made some pretty good calls.
bicycle is theft-proof, solar powered and very slick. From Fast
very best lovemaking tips for Seniors:
An Olympic cyclist
puts together some of the coolest bike-tech out there to create a vision for
the next-generation urban two-wheeler.
known for being high-tech when compared with other forms of transportation.
But cyclist Chris Boardman's new bike design prototype takes bikes well beyond
advances in carbon-fiber frames and electric assist technology.
The bike, which relies on existing technology, has a mini-computer attached
to the handlebars to count calories; a purportedly unbreakable locking device
that uses fingerprint identification; and a battery-assisted motor powered
by solar panels. Boardman's design also features a lightweight carbon-fiber
frame, spoke-less wheels that improve aerodynamics, and self inflating, puncture-proof
All told, the contraption could remove many of the barriers that prevent citygoers
from using bikes as their main source of transportation, including concerns
about theft, maintenance, and too much physical exertion.
The one hurdle Boardman's advanced design still needs to work on? Cost. The
Olympic cyclist estimates that it will take 20 years before the bike is cheap
enough for mass-market adoption. But look on the bright side: If you start
riding your current bike instead of driving, you'll save enough money to be
able to afford this thing when Boardman gets it made.
1. Wear your
glasses. This is make sure your partner is actually in the bed.
2. Set your
timer for three minutes, in case you doze off in the middle.
3. Set the mood
with lighting, i.e. turn them ALL OFF!
4. Make sure
you put 911 on your speed dial before you begin.
5. Write your
partner's name on your hand in case you can't remember.
6. Keep the
polygrip close by so your teeth don't end up under the bed.
7. Have Advil
ready in case you actually complete the act.
8. Make all
the noise you want. The neighbors are deaf, too.
9. If it works,
call everyone you know with the good news.
10. Don't even
think about trying it twice.
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
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