Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EST, Friday,
July 10, 2009. Liquidity. Liquidity. Liquidity. It's
the beauty of our 15% Stop Loss rule. You get your cash out. You live
for another day. Stick your money into something illiquid -- like a private
equity fund or a commercial real estate syndicate -- and you suffer the endless
frustrating explanations -- by phone calls, by paper, through meetings.
Harry (that's me) listened to all manner of explanations yesterday on why his
funds are down 40%. There's FASB 157 mark-to-market rule and there are the industries
that have simply gone bust -- from advertising based publishing to pricey retailing
to automobile manufacturing (e.g. Chrysler) to badly positioned financial companies
(e.g. Nuveen). And now there's a new religion on Wall Street -- Wait Five
Years and Pray Values Will Return.
chart says it all.
Sachs makes it hand over fist. From today's Bloomberg:
July 10 (Bloomberg)
-- Goldman Sachs Group Inc. is poised to report the largest profit since it
set earnings records in 2007, marking the return of a business model that
was the envy of Wall Street before the financial crisis devastated competitors
and spurred a government bailout.
Officer Lloyd Blankfein, who helped make Goldman Sachs the highest-paying
securities firm by wagering capital and fueling the bets with borrowed money,
may report the most second-quarter profit per share among the 15 biggest U.S.
banks, analysts estimate. While rivals have pared risks, New York-based Goldman
Sachs has ratcheted up trading gains and reaped more fees from stock and bond
sales, according to Barclays Capital analyst Roger Freeman. ...
a spokesman at Goldman Sachs, declined to comment. The vast majority
of all our risk-taking is on behalf of clients, Lucas van Praag, another
company spokesman, said in April after the first-quarter results.
As a Goldman client,
I can vouch this is simply not true.
Giving your money
to an investment bank to manage may be another of those No-No lessons we are
learning. When it comes to managing their money or managing your money, guess
which one gets preference?
From the same
$27.9 billion of global equity and equity- linked offerings in the quarter,
up from $1.5 billion in the first quarter, and $3.98 billion of high-yield
debt sales, compared with $798 million in the first quarter, according to
data compiled by Bloomberg.
didn't get offered any participation in any of these offerings. And Goldman
has told me, in no uncertain terms, I never will. Participation is reserved
For Banks, Wads of Cash and Loads of Trouble. Ambitious banks pay
brokers to send them "hot" money. They get oodles of money to invest.
They lend it to dubious construction projects, which go broke, leaving the American
taxpayer with the bill. The practice exploded in recent years, and continues,
since the regulators have a difficult time reigning the practice in -- in the
face of heavy lobbying by the banks in Washington. My brain was blown away as
I read a piece in the New
York Times on the practice.
buy the latest Vanity Fair.
There's a piece by Michael Lewis on what really happened at AIG -- "the
man who crashed the world." How Harvard became a financial disaster --
"If Harvard is so smart, how come its record $36.9 billion endowment has
collapsed?" And, of course, the article on Sarah Palin, which many think
caused her to resign. "Sarah Palins disastrous ride on the Republican
ticket didnt faze her at all. Talking to top McCain advisers, Todd S.
Purdum finds that the freshest face in the G.O.P. has some of the sharpest teeth."
for the weekend.
the rich could hire other people to die for them, the poor could make a wonderful
living. Yiddish Proverb
The wise man,
even when he holds his tongue, says more than the fool when he speaks . Yiddish
One old friend
is better than two new ones. Yiddish Proverb
One of life's
greatest mysteries is how the boy who wasn't good enough to marry your daughter
can be the father of the smartest grandchild in the world. Yiddish Proverb
Pessimism is a
luxury that a Jew can never allow himself. Golda Meir
fool can make things bigger and more complex. It takes a touch of genius - and
a lot of courage to move in the opposite direction.
Life is like riding
a bicycle. To keep your balance you must keep moving. -- Albert Einstein
You can't control
the wind, but you can adjust your sails. Yiddish proverb
more important than knowledge. -- Sign hanging in Einstein's office at Princeton
We can't solve
problems by using the same kind of thinking we used when we created them . Albert
Tennis. Exercise. Tests. Eat less. Exercise
more. Get your blood tests. Have a colonoscopy and a chest X-ray. Downsize your
expenses. Worry less. Relax a little more. Stop trying to predict the future.
I'm not Goldman Sachs. I can't do what they do -- even if I knew exactly what
going out to play tennis early this morning. The sun is shining. There are blue
skies. It's 61°F in New York City this morning. Gorgeous. Stay healthy and
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.