Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EST, Thursday, August 20, 2009: We seriously underestimate the value
of liquidity -- of being able to sell our brilliant investments from one minute
to another. Without liquidity -- e.g. Harry's brilliant investments in private
equity funds (more about them in a minute).
There are two
worlds out there -- the public stockmarket, which came roaring back this year
-- though don't expect it to continue booming for now. September is historically
the worst month.
And then there's
the private, alternative investment market. Take private equity funds. (Please
take mine.) Once upon a time, a long time ago, the idea was to buy companies,
build them up and sell them three to five years later for a huge profit. Wall
Street created huge funds -- some as big as $20 billion. They bought bits and
pieces of many companies, borrowed megabucks to "juice" up the returns
and sat back and waited for the profits to roll in.
screwed that. The excess borrowings didn't help And Wall Street is no good at
managing companies. (Its business is fees.) Meantime the dumb owners of these
funds (like me) sit, suffer, agonize at our plummeting wealth -- but can do
absolutely nothing, except bitch to the management -- which incidentally doesn't
listen. Meantime, management has used my money to employ a bunch of flak catchers
to give me bullshit explanations of why the world's leading investment bankers
have screwed up so mightily for their clients, but not for themselves. (Remember
Tom Wolfe's book Radical
Chic and Mau-Mauing the Flak Catchers.)
Exhibit one is
Goldman Sachs' Vintage IV fund, of which I own a small piece. Several days ago
I received my July 31 statement. It showed a 17% drop (month-to-month), bringing
the total drop in value to 23%. That may not seem too bad when you figure what
the market did last year. But this fund was sold to me on the basis that it
was funds bought cheaply -- like when someone desperately needs the money and
we get to buy their piece ultra-cheaply -- as in distress. It seems the world
of private equity has now gone way below distress. In Goldman's favor, these
July 31, 2009 valuations are really, according to their flak catcher, actually
valuations at December 21, 2008 when things were really crook. Maybe they improved
this year. Who knows? What does it take so long to get the agony documented?
Answer from flak catcher: It just does.
Of course, it
would be a lot worse. Take Citigroup. I have money in a disaster called Citigroup
Capital Partners II Onshore. That miserable thing is down 39%. It got so bad
over at Citigroup that the key person on this fund John Barber -- the major
reason I bought in -- left Citigroup in January, leaving his poor investors
(including me) to wallow in his disaster. I don't know where he went. Presumably
he took all the fees and bonuses he got up front and retired to Australia, or
I could, of course,
sell my holdings. But the market is so thin... You get the picture.
you have a festering sore.
you have our inviolate 15% Stop Loss rule. You're out. And you can get on with
disease revisited. A new book is out: Insights
Into Lyme Disease: Thirteen Lyme-Literate Health Care Practitioners Share Their
Treatment Strategies, available here.
can be treated successfully with antibiotics when - and if - it is caught
early, while the Lyme spirochetes are still in the patient's bloodstream and
can be reached by antibiotics. If the disease goes undiagnosed, the spirochetes,
(which are related to those that cause syphilis), can infiltrate the non-blood
areas of the body, such as the nervous system, brain, heart, joints, and cartilage.
The disease then becomes a multi-symptom, multi-system illness that wreaks
havoc upon nearly all of the patient's tissues and organs.
Once this happens,
Lyme disease becomes chronic and difficult to diagnose. It may masquerade
as a variety of other illnesses. Many physicians do not know how to effectively
treat it. It devastates nearly every aspect of a person's existence. ILADS,
the International Lyme and Associated Diseases Society, estimates that most
chronic Lyme disease sufferers experience a level of disability equivalent
to that of a person who has suffered from a recent heart attack.
useless, but interesting facts:
So far in this recession, 6.6 million jobs have been lost. That wipes out six
out of 10 jobs created in the last, unusually jobless economic upswing. -- Wall
+ About 90% of
U.S. banknotes have traces of cocaine. Over all, $5, $10, $20 and $50 bills
had more cocaine than $1 and $100 bills. University researchers who undertook
this useless study said that you can't get high from snorting U.S. bank notes.
+ If we leave
aside the war-impacted years of 1942 to 1946, the largest annual deficit the
United States has incurred since 1920 was 6 percent of gross domestic product.
This fiscal year, though, the deficit will rise to about 13 percent of G.D.P.,
more than twice the non-wartime record. In dollars, that equates to a staggering
$1.8 trillion. Fiscally, we are in uncharted territory. -- Warren Buffett in
New York Times.
Great summer reads:
can't put this down. Written by a psychiatrist, Stephen Bergman, under the
pseudonym Samuel Shem, M.D., the novel is based on his grueling, often dehumanizing
experiences as an intern at Harvard Medical Schools Beth Israel Hospital
in 1974. More than two million copies have been sold, and the book has been
continuously in print since its 1978 publication. A recent edition (Delta
Trade Paperbacks, 2003) features an introduction by John Updike, who ranks
the book alongside Joseph Hellers famed military satire, Catch-22.
unforgettable characters who go fully against the cultural grain (a mysterious
Mexican tribe of cliff dwellers who run hundreds of miles with ease, a
cerebral former prizefighter who's become a hermit in the Mexican hills,
a vegan ultra-serene ultramarathoner, two Beat-loving young guns who drink
as hard as they run, a hilarious, Kramer-like renegade barefoot runner
with logorrhea), Christopher McDougall's first book, tells the tale of
the seriously socially challenged and self-named Caballo Blanco (White
Horse) and his attempts to put together a 50-mile running race between
the elite members of the dwindling Taruhumara tribe and some of the best
American practitioners of ultrarunning, a sport for those who for some
reason want to go farther than the standard 26.2-mile marathon distance.
and Noble's eBooks appeal. My son's got a Kindle..
He loves it. I find it heavy, clunky and not friendly. There is another way.
Buy eBooks from Barnes and Noble. I just bought my first ebook for $9.99 --
same price as on the Kindle, but much lower than a paperback. I downloaded it
and the BN Reader (free) to my ThinkPad laptop. I'll try reading my first book
today on my trip to Colorado. So far, I've read a few pages. I find the type,
the layout and general viewability better than the Kindle. One huge benefit
over Kindle: you get to read your book on many devices -- including iPhone/iPod
Touch, BlackBerry, PC and Mac. Here's what the top bit of a BN Reader screen
looks like. I clipped this from my laptop this morning:
more, click here.
madness. Beware. Magazines are dying. In desperation, some are sending
out subscription renewal notices a year or so before your subscription
expires. They pocket your money and when they die they give you a subscription
to a magazine you don't want.
bless our present health care system. This
is an actual picture from a doctor's office in Deerfield Beach, Florida.
And why not? You have to conserve your energy for the machines.
media is getting worse and worse. You can't believe anything you
read anywhere. Remember my Canadian health-care "letter" scam from
yesterday? Here's the latest nonsense. From the New York Times:
A growing body
of evidence suggests that doctors at some of the nations top medical
schools have been attaching their names and lending their reputations to scientific
papers that were drafted by ghostwriters working for drug companies
articles that were carefully calibrated to help the manufacturers sell more
Experts in medical
ethics condemn this practice as a breach of the public trust. Yet many universities
have been slow to recognize the extent of the problem, to adopt new ethical
rules or to hold faculty members to account.
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.