Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EDT, Wednesday, September 23, 2009: This
is what happened yesterday after Cramer hammered the table for Wynn Resorts
(and I mentioned it). Not unusual trading pattern -- straight up, then down,
then up a little, then down. The day traders are back.
I believe Wynn
could go higher. I'm hoping for a little pullback today.
and Google continue to rise.
the table last night for AT&T because of his obsession with "the mobile
Internet tsunami." He's right on this one, also.
industries everywhere. Spied on the weekend's trip to Boston:
The lady in the middle is wearing a sash, "Bride to Be." The kids
are attending a Bachelorette Party -- a new phenomenon. I offered to do lap
dances for free. They politely turned me down.
For $229 (for
two), you get a a private hour-long cruise, a live accordion player who sings,
a dozen roses, a personal photograph of your tour, nonalcoholic sparkling champagne,
a basket or cheese and crackers, fresh strawberries, "rich" chocolates,
and, at night, votive candles. Says the brochure for BostonGondolas,
"couples, don't forget, a kiss under any bridge brings good luck to all."
There are lots of bridges in Boston.
will give you a one hour "adventure" for $60 or $85 for two hours.
Duck Tours. Tickets are around $30. Unless you're part of a group,
old or young, or whatever.
way. All the rides were booming. The girls had even had to line up to get into
a popular local bar.
-- my overwhelming cynical conclusion. Afghanistan is an "industry"
in Washington. If it were closed down and our troops withdrawn, hundreds of
thousands of military personnel, of consultants, of suppliers would find their
jobs threatened, their incomes disappearing and their egos shattered.
I've been reading some papers on the war. It's amazing how every one recommends
a different strategy -- yet not one recommends closing it down. I guess that
would be the equivalent of cutting off your nose to spite yourself.
From 40 years
in business, I learned one overwhelming lesson -- when it's over, it's over.
Close it down and move on. In business school, we were told to ignore sunk cost
-- the money we've already spent. Look at what extra monies going forward will
be needed to make the project viable.
If the project
would likely never be profitable, then the only conclusion was to close it down
instantly. In my business career I did it several times.
Each time, I brought
the employees together and explained we weren't making and why we weren't making
it. I explained why I was actually doing them a favor -- they could now find
a job in a successful enterprise.
Sadly, you can't
use this logic in Washington.
P.S. Don't forget
to visit my new site, www.StopAfghanistan.org.
what's with the Swensen strategy? From today's
New York Times:
Funds Report Steep Investment Losses
Steep investment losses have caused painful cutbacks at some of the nations
best-known universities over the most recent fiscal year and have prompted
questions about whether their endowments are taking too much risk.
But as the schools,
one by one, disclose their numbers, the managers of these endowments are indicating
their continued support for a diversified portfolio chock full of alternative
investments like hedge funds, private equity and real estate the very
things that have caused so much trouble.
strategy is sometimes called the Swensen model, after David F. Swensen, who
heads the Yale endowment. On Tuesday, Yale disclosed the details of its year,
reporting an investment loss of 24.6 percent, compared with an average drop
of 17.2 percent for large funds, according to the Wilshire Trust Universe
David F. Swensen, Yale Universitys investment chief, had a loss of
24.6 percent, bigger than average for large funds.
The fiscal year
for all major university endowments ended on June 30.
emphasize their long-term results, the chiefs of many big endowments, including
Harvard, Yale and M.I.T., have indicated they are sticking with their models.
Notably, Mr. Swensen did not lay out Yales asset allocation for the
coming year in his statement something he has done in years past.
out that even after its latest loss, it has produced an average annualized
gain of 11.8 percent over the last 10 years. According to Wilshire, the average
return during that period was 4.3 percent for endowments with more than $1
billion in assets. Just how unhappy fiduciaries are with the returns
last year depends on whether they are focusing on one-year returns or 10-year
returns, said one endowment head who did not want to be quoted by name
speaking about investment strategy.
A number of
institutions will be looking for ways to avoid some of last years biggest
headaches, like not having enough cash on hand to meet capital calls, as required
under their contracts with private equity and similar funds. Harvard, which
was down 27.3 percent last year, has acknowledged it suffered a cash squeeze
and has since raised its portion in cash, among other measures.
cases they will make small changes in the allocation to various categories,
said Byron Wien, vice chairman of Blackstone Advisory Services. People
Along with holding
more cash, Mr. Wien says he believes that endowments need to have more funds
in emerging markets and in the credit markets as growth slows in the western
adjustments could lead to broader shifts. I think there are probably
more changes going on than they are publicly announcing, said Dan Jick
of High Vista, which manages money for endowments, families and foundations.
In a couple
of years I would guess that endowments will take less risk prospectively and
have more assets in investments where they can get at the money when they
endowments seem to have stumbled the most in percentage terms last year. Doing
better than either Harvard or Yale, the Massachusetts Institute of Technology
said that its fund fell a more modest 17 percent and that its diversification
strategy of embracing alternative investments had indeed cushioned its portfolio,
a third the size of Harvards, against the market swoon.
Yale said that diversification had failed to protect its asset values. The
biggest drag on its performance was a 34 percent decline in its largest asset
class, known as real assets, which include real estate, commodities and timber.
Over all, the
Yale fund fell to $16.3 billion at the end of June. That decline included
a $5.6 billion loss from investments, $1.2 billion that was applied to the
universitys budget and $200 million in new gifts.
Some big schools
remain skeptical about the push for alternative investments. The University
of Pennsylvania did relatively well in an abysmal year, reporting a drop of
15.7 percent, and did not have a lot invested in private equity, real estate
and natural resources.
endowment chief, Kristin Gilbertson, said that she had been slow to get into
private equity and real estate after she took over in 2004 because she worried
that the size of private equity funds was too large and their fees too high.
Over a five-year
period, Penn had an average annualized return of 3.5 percent. That compares
with 8.7 percent at Yale.
Still, Ms. Gilbertson
says she is in a better position for growth now, partly because the fund has
avoided some of the problems that will continue as a result of private equity
deals struck from 2005 through 2007.
silly. But addictive. Send this link to your friends who spend their
"lives" in front of a computer screen. Click here.
A mother and her 5-year-old son were flying Southwest Airlines.. The son asked
his mother and asked, 'If big dogs have baby dogs and big cats have baby cats,
why don't big planes have baby planes?"
The mother, who
couldn't think of an answer, told her son to ask the flight attendant.
So the little
guy walks up to the galley and asks the flight attendant, 'If big dogs have
baby dogs and big cats have baby cats, why don't big planes have baby planes?"
The flight attendant
responded, "Did your mother tell you to ask me that?"
The boy said,
"Yes, she did...."
please tell your mother that there are no baby planes because Southwest always
pulls out on time. Have her explain that to you."
are there no dead penguins on the Antarctic ice? Where do they go?
Wonder no more!!!
If a penguin is
found dead on the ice surface, other members of the family and social circle
have been known to dig holes in the ice, using their vestigial wings and beaks,
until the hole is deep enough for the dead bird to be rolled into and buried.
The male penguins
then gather in a circle around the fresh grave and as they roll the dead penguin
into the ice hole, they sing:
jolly good fellow."
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
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