Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EDT, Tuesday, September 15, 2009: Today is the one-year anniversary
of the bankruptcy of Lehman Brothers. The financial system staggered, but did
not collapse A year later there is one overriding conclusion -- Lehman's collapse
will be good for the stockmarket. Let me explain:
was the greatest financial engineer our planet has ever known. It created a
vast array of financial products, which institutions feasted on. Other investment
banks followed Lehamn's lead and created "products" (you've heard
me use that word before) of all varieties. Virtually all these "alternative
investments" turned out bad. (Check out the Harvard and Yale endowments.)
The alternative investments were not just 50% down in value, like the stockmarket
last year. But many were 100% down.
has bounced back. Alternative investments haven't.
You can sell your
stockmarket investments when they fall 15%. You can't sell your alternative
investments. All you can do is to write them to $1. You write them down to $1
so they're still on your net worth statement. This way you remind yourself every
day of what an idiot you were -- and what not to do again.
It doesn't matter
whether the economy is going into a double W recovery. It doesn't matter what
Professor Roubini, Professor Joseph Siegel (click here)
and Bill Gross think about the economy.
What matters is
we're stuck with billions of existing and incoming dollars which institutions
must invest. They can no longer touch treasuries because they pay so
little and the dollar is cratering. They
can no longer touch bonds because they don't pay enough interest to compensate
for their riskiness.
They are left
with two choices:
1. Gold, and
2. Common stocks.
There are two easy ways to invest:
This is a simple
ETF which reflects the price of gold.
There is a fund
which invests primarily in companies engaged in exploration, mining, processing,
or dealing in gold, or to a lesser degree in silver, platinum, diamonds, or
other precious metals and minerals. Its top three holdings are Barrick Gold,
Goldcorp and Newmont Mining.. The theory is that mining companies benefit more
from gold's rise in price. Assume it costs them $600 a produce an ounce of gold
and gold is $800. They make $200. If gold goes to $,1000. They make $400 --
twice as much. But gold has gone up only 25%. Sometimes this maths works.
To common stocks.
You don't want to own stocks with big debts. Their management has to focus on
restructuring, renegotiating, revamping, etc. You want to own technology stocks
that typically have oodles of cash and no debt. The list of virtually or completely
debt-free technology stocks is endless -- from STEC to Intel, from Research
in Motion (RIMM) to Apple, from Google to Cree.
Your job is to
pick ones whose products you like: I like Apple, Google and STEC. I should like
RIMM. Everyone else does. But I dislike their products and am in awe at their
lack of innovation. That hasn't stopped RIMM from doubling since March.
daughter's husband loves Vibram FiveFingers. My
son-in-law, Ted Maloney loves to run. He emailed me.
Born to Run, I changed my running style significantly to be more "barefoot-style,"
but I continued to run in my Asics. While running in that style I was able
to run longer and actually much faster, though I didn't realize the latter
until I did the run of a triathlon at a pace that was much faster than the
pace at which I had previously run races.
I wanted to
ease into the concept of barefoot or near-barefoot running and today was my
first run with the Vibram FiveFingers. After much due diligence and trying
on a number of styles in a number of stores, Michael and I decided on the
Sprints. I went with the gray color and your more adventurous and socially
confident son went with the fire engine red color.
only thing between you and the ground in these Vibram FiveFingers is a sliver
of moulded Vibram -- enough to protect your foot from stones, but not enough
to provide any support whatsoever.
Today was my
first run in the shoes and I chose my favorite run in the world for it, which
is an 8.5 mile run through Woodstock and Pomfret, VT. It is VERY hilly and
on a combo of cement (about 2 miles of it) and hard pack dirt with lots of
loose, sharp rocks. So, it was a good all around test.
I loved them.
But, I have a couple of items to consider. First, my calves are currently
killing me. This is because, despite the fact that I'd changed my stride already,
I felt compelled to run even more on my toes for the first few miles. One
of the good things about doing a longer run is that nothing bad is sustainable,
so I ended up going into a more natural stride where my heals did touch the
ground, but not with much impact and quickly transitioned to my toes. So,
I solved that after about three miles, which was right before a 1.5 mile stretch
strait up hill.
in the VFFs were awesome. There's very little impact on uphill runs, so they
just let you grip the ground and it feels great. And then came the downhills.
This was the biggest problem. Downhills are where the large heel cushions
of standard running shoes really allow you to fly down the hill, but it's
also how people hurt themselves. I remember when I used to have knee problems,
someone told me to do downhills backwards. So, I tried it in my VFFs. Worked
like a charm. This is only necessary for very step downhills. More gradual
downhills are fine.
I loved the
experience overall and by the end of the run it felt totally natural. My calves
are killing me, but I think I've solved that. I have a couple of blisters
starting to form on the balls of my feet, but I actually think this is just
the normal course of events with any new shoes. I highly recommend them.
There's a neat
chart on running barefoot. Click here.
world is changing exponentially. I'm repeating
this because yesterday I got the link wrong. China and India have more bright
people than we do. Alll the skills we used last year at our job will be obsolete
in three years. You get the message. Facebook has more members than most countries.
A video on YouTube explains all. Allegedly some managements play the video for
their boards. Maybe it injects a sense of urgency? Click
needed. "I wish someone would invent something to keep the sun
out of my eyes."
disappoints. Del Potro dominates. Roger was
tired. Del Potro's forehand is probably the fastest in the game. Neat match.
I wish I could play as well as those guys.
logic of children
A salesman goes up to a house and knocks on the front door.
It's opened by
a little twelve year-old boy who has a lighted cigar in one hand, a glass of
whiskey in the other and a Penthouse magazine tucked under his arm.
son. Is your mom or dad home ?"
Little boy: "Who
do you think?"
Obama talks on healthcare
+ "You know, I know the president is black, but this is not
Showtime at the Apollo." --Bill Maher
+ "This is
unprecedented. This does not go on in the halls of Congress when the president
is speaking. Everyone was shocked. Nancy Pelosi was so shocked, she took out
her compact and drew in her eyebrows all furrowed." Bill Maher
+ What's so ironic
is that the health care plan that Mr. (Joe) Wilson so angrily opposes would
get him the prozac he so desperately needs." --Bill Maher
+ "Even though
in his speech, Obama said, 'You lie, I'm not going to kill old people,' the
next day Sarah Palin said on her Facebook page she still believes in death panels.
You know what, Sarah, honey, if we were going to get rid of useless people,
you would be the first to go." --Bill Maher
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.