Harry Newton's In Search of The Perfect Investment, Technology Investor. Harry Newton
AM ET, Thursday, December 3, 2009: Depressing
to come back and look over the disasters that are presently my private equity
investments. Today, their valuation is "down 40%." I put in a dollar.
It's now worth 60%. Citicorp. Goldman and other funds. All the same. Down 40%.
I look at the list of their investments. I don't puke. Most of the companies
appear to be logical -- ones I would have chosen. But they've all been hit by
the recession. And the accountants have forced a major devaluation. Two-to-three
years from now, valuations should be up. And my agita improved. But meantime,
private investments have three characteristics:
You can't sell them. At least not for any reasonable number.
You have no control. You bought the managers. They never consulted you on what
they did with your money. And they never will. The "we don't listen syndrome"
applies in individual private companies -- one of mine just went Chapter 11.
The company's lawyers actually told the CEO not to talk to his shareholders!
You can't work your Stop Loss Rule. You're stuck. Agita is not one of my favorite
After then years
of this, the BIG Lesson is "Stay away from illiquid" investments.
Take your chances with the public stockmarket. Get out when things look awry
(as they do now -- except for gold). And stick to your 15% Stop Loss discipline.
15% is a lot better than 40%.
gold? Richard Russell
of Dow Theory Letters writes:
By now, I believe
most of my subscribers have some sort of a position in gold or gold shares.
Below is an up-dated P&F chart of gold. We see that the latest action
is a "high pole" rise to the 1190 box. Then a correction down to
the 1130 box. The correction halted well above the halfway level of the high
pole. Then most recently, we see a rally and a breakout to the 1200 box. This
breakout to new highs is very bullish. There is no technical resistance above
gold now. My guess is that gold will now work its way up to the 1500 area.
Russell, would you still buy gold here?
Answer -- The
advantage of buying an item that is in a primary bull market is that the bull
trend will tend to bail you out of your mistakes and bad timing. For instance,
I bought Newmont years ago when it was in its 40s. Mistake, the stock then
sank into the low 20s. I believed gold was in a bull market, and I thought
the bull market in gold would eventually bail me out. NEM today is selling
At this time,
if you want to buy into the gold universe my choices would be ABX, NEM, GTU,
CEF, GLD, SGOL.
Headline in today's Financial Times -- "Dubai Concerns Help Lift Gold
to All-Time High." Russell Comment --The media continues to explain why
each move in any item can be connected with a current event. Gold is in a
bull market. "News goes with the trend." With the primary trend
of gold bullish, most news will simply blend in with the overall bull trend
In the big,
basic picture gold is the safe haven alternative to fiat money. Sophisticated
investors are buying gold as an alternative to the "garbage money"
being created by central banks' computers. Sophisticated investors are well
aware of the history of fiat money, money that is backed by nothing. Ultimately,
it is worth nothing, which is why they are swapping their fiat money for real
money -- gold.
As the various
central banks continue to create additional fiat money, the purchasing power
of fiat money will decline. That's the fundamental story behind the bull market
in gold. As more and more people see and understand this picture, they'll
move to the safe haven of gold.
In China and
Asia they've gone through debasements of their currencies before. Thus, they
fully understand the importance of gold in safe-guarding their wealth and
purchasing power. China with its fast-rising wealth will lead the world in
Of course, gold
has gone through boom and busts before. Right now, it looks on a definite roll:
Let's play it
for a while. Be mindful of our inviolate 15% trailing stop lose rull. Get out
when it drops 15% from its most recent high.
+ 22" carry-ons
work like a charm. JetBlue has impressive instructions on how to load five of
them in one overhead bin. Sideways, not longwise. Amazingly, it works.
+ Renting a house
for a day or two or three or more makes huge sense. Often better located and
often much more fun than a hotel. Two web sites do great: Vacation Rentals by
Owner (VBRO.com) and VacationHomeRentals.com.
There are a million others on the Internet. Simple search "vacation
rental by owner."
+ Don't ever take
a Red Eye. Those are flights that leave the West Coast at midnight and arrive
on the east coast in the wee hours. The fatty next to you will wriggle all night.
You won't get any sleep. You'll be wrecked the next day. You won't save any
+ You can travel
with a pet -- up to 18lbs, including its cage. But you can take a Great Dane
on board if you have a doctor's statement -- which more and more people have.
JetBlue has a "Pet Relief Area" outside its JFK terminal.
don't get out enough," says my wife. But
I do get a lot of catalogs. Each tries to outdo each other with fantastical
claims of product virtue. My favorite, so far, is this product in a catalog
And here are the
Manual Typewriter. Compose anywhere, any time-no electricity or batteries!
electronic that automatically "prints" your document as you type!
Write letters and fill out forms with this old stand-by even works
in a power outage. And you never have to worry about a crash!
classic Black Swan event. He looked so squeaky
But he turns out to be "human."
He says "I am not without faults." For more, click here.
Meanwhile, everyone and their uncle have latched on. SmartMoney compiled
a TTI - Tiger Trouble Index. The index lmeasures the stock prices of six companies
associated with Tiger Woods before and after news of the accident broke to see
how theyve fared since the story unfolded.
"our TTI shows that Tiger-related stocks have dropped from the market's
close on Nov. 25 (the last close before the accident) through Dec. 1, while
the Dow Jones Industrial Average posted a modest gain. ... By the end of Monday
trading, the TTI had had gone down 3.2%. On Tuesday, TTI components gained with
the broader markets rise, though it still lagged, posting a 2.1% drop
since the accident."
Intenet is ripe with Tiger Woods one-liners. Samples:
+ Elin found out
hes not a Tiger, hes a Cheetah.
+ Elin Nordegren
got hired today as a consultant. Shes teaching Phil Mickelson how to beat
+ What do baby
seals and Tiger Woods have in common? Both were clubbed by a Scandanavian.
+ Tiger Woods
has been dropped by Gilette after admitting this incident was his closest shave
+ Tiger Woods
crashed into a fire hydrant and a tree. He couldnt decide between a wood
and an iron.
+ Tiger is the
first golfer to hit a water hazard and then a tree in the same drive!
+ If only Tiger
had hit a mailbox and stop sign as well, he could have completed the Grand Slam!
+ I heard Tiger's
wife is now being sponsored by a golf club manufacturer. The tag line: "Get
the club that beats Tiger!"
+ I always said
golf was a dangerous game...all this happened because Tiger picked up another
+ This scandal
shall now be referred to as Puttergate.
+ Why did Tiger
cross the road? 'cuz there was a pissed off Swede on one side.
+ The Chinese
are already making a movie about Tiger Woods' crash. They are calling it, "Scratching
Swede, Lying Tiger."
+ Headline from
a UK paper: "Crouching Tiger, Hidden Hydrant"
+ Tiger, tiger,
In the forests of the night,
What immortal hand or eye
Made you hit a hydrant then a tree
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
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