Harry Newton's In Search of The Perfect Investment, Technology Investor. Harry Newton
AM ET, Wednesday, December 9, 2009: The biggest
part of investing is saying NO. I get to do it a lot these days. Perhaps
I'm older and wiser. Perhaps more skeptical. Perhaps it's because Warren Buffett
sees all the good deals and I get to see the drecky leftovers. Perhaps it's
because I'm late. It's not March, 2009. Perhaps it's because good deals simply
come along not very often. Patience is a virtue, despite the ultra-low returns
on cash today.
real estate friend didn't buy anything for nearly three years. Now he's working
on his biggest-ever deal. He's achieving a 12.5% unleveraged return on a bunch
of commercial properties he's buying. That figure would have been 4% two years
ago. He's buying at less than half the price the seller paid. Deals like
this are still most unusual. We'll see more of them as the banks loosen up in
coming months -- if they ever do. (See the TARP story below)..
spent much of yesterday looking at a bunch of commercial REITs. What attracted
me was their high yields.
What turned me
off was their volatility. Sample:
Could I personally
live with this volatility? Answer: No. Could I live with the fear that some
of the mortgages they own will turn out to be worthless? Answer: No. Could I
live with the fear that they borrow money to juice up their returns -- especially
given my belief that borrowing is not healthy? No. And finally, could I live
with the fact that I don't really understand their business?
I spent hours
yesterday studying their financials. I even listened to a recent investor conference
call. I didn't like that each call-in question started with, "Congratulations,
guys on the recent great financials..."
So much for that
When in doubt,
Warren is super-smart. She's a Harvard law professor and Congress's
TARP overseer. Her basic point: Our TARP taxpayer money saved the big banks,
and gave them money to gamble (also called trade) with, but basically didn't
help you and I.
But, with unemployment
at 10%, she says TARP has failed to stop (from USA Today):
home foreclosures. Lenders had permanently modified just 10,187 mortgages
through Oct. 31 under a TARP-funded Treasury program to help struggling borrowers
hang on to their homes. "This is a disappointingly small number,"
Warren says. She said that the nation could see as many as 13 million foreclosure
starts up from 5.5 million since mid-2007 and that Treasury
is preparing for only 4 million.
crunch. "The availability of credit, the lifeblood of the economy, remains
low," the report says. Just 5% of TARP money has targeted small-business
and consumer lending.
big banks pose to the financial system. Last year's bailout sent the message
that some banks are so important that the government won't let them fail,
the panel warns. That helps those banks raise money and makes it harder
for small banks to compete with them.
many of the largest banks received unprecedented support, smaller banks have
been allowed to fail," the report says. There have been 130 bank failures
biggest banks have gotten bigger. "As a small number of banks acquire
a larger share of the market and competition decreases, the systemic risk
they pose rises," the panel warns.
Yet another government
program gone awry.
for Christmas: It's tempting to buy your beloved an eBook for Christmas.
But unless they travel every second of their waking lives, I'd hold off. There
are three reasons:
1. The entire
industry is in gigantic flux. For example, Sony is recalling all its readers
for a ten-day overhaul.
2. Most of the
newest books -- i.e. the ones you desperately want to read -- aren't available.
Amazon is screwing publishers and authors, paying them only 35%. It keeps 65%.
Publishers and authors aren't convinced. Would you?
3. You will not
like the first generation of ebook readers. They're slow, cumbersome and kludgy.
They need faster processors and better software.
The best choice
-- for now -- is to pick up the free BN
Reader software. It runs on your laptop. It comes with a couple of free
books. See if you like reading them on screen. Then buy Born
to Run.. Don't buy Barnes and Noble's Nook. It's stupid.
are your own worst enemy. No one can damage
you more than you can damage yourself. It's an old adage. The latest case of
shooting yourself in the foot is our friend Tiger Woods. Excerpted from Bloomberg
Dec. 9 (Bloomberg)
-- Advertisements featuring Tiger Woods have disappeared from prime-time broadcast
television and many cable channels following reports of his extramarital affairs,
according to data from Nielsen Co.
The last prime-time
ad featuring the 33-year-old golfer was a 30-second Gillette Co. spot ran
on Nov. 29, according to New York- based Nielsen. Woods also was absent from
ads on weekend sports programs tracked, including NFL games, Nielsen said.
The No. 1 ranked
golfers standing with the public has plunged in the wake of reports
of infidelity that followed a Nov. 27 car accident outside his home near Orlando,
Florida. Woodss ranking among celebrity endorsers tumbled to 24th from
6th, according to the Davie Brown Index, which is used to gauge the ability
of personalities to influence shoppers. ...
Woods has endorsement
agreements with Accenture Plc, Nike Inc., PepsiCo Inc.s Gatorade, Tag
Heuer International SA watches, Electronic Arts Inc. and Procter & Gamble
Co.s Gillette. None has said theyve changed their marketing.
$110 million in annual income from endorsements and tournaments, as estimated
by Forbes magazine, hinges on his standing with consumers. Woods ranked as
the worlds fourth-highest paid celebrity in the 12 months through June
30, the magazine said. In October, he became the first athlete to top $1 billion
in career earnings.
a statement on his Web site on Dec. 2 saying he let his family down with transgressions
and hasnt been true to his family values. He didnt
address reports of infidelity that appeared in media including US Weekly magazine.
car accident, Woods withdrew from last weekends Chevron World Challenge
on NBC, an event he has hosted since 1999 to benefit his charitable foundation.
Other than an announcement of his absence by TV host Dan Hicks, there was
no other mention and the network didnt air any ads featuring Woods in
two days of coverage, according to the New York Post.
touching visit from Grandma and Grandpa.
Grandpa finds a bottle of Viagra in his son's medicine cabinet. May
he use one?
The son said,
"I don't think you should take one Dad. They're very strong and very expensive."
"$10 a pill,"
Answered the son.
like to try one. Before we leave in the morning, I'll put the money Under the
Later the next
morning, the son finds $110 under the pillow. He called Grandpa, "I told
you each pill was $10, not $110.
said Grandpa. "The hundred is from Grandma!"
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 .
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