Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Thursday, April 26: The
Dow is exploding. But so are the ideas. I'm currently overwhelmed with new "perfect"
investments. They range from real estate projects to high-tech, from distress
debt to new consumer products. All investment portfolios should have
stuff which is not mature, i.e. early on. That's where the big rewards are.
That's also where the BIG risks are. Limit your exposure to perhaps 5%. Here
are quick thoughts on assessing new ideas:
Watch out for fantasy numbers. These came in yesterday:
Financial Results (000's)
happen. Most likely, they won't.
2. Who's the
guy? Has he been successful before? Is he honest? Do you trust him? Once
he's got your money, he's got it. (Da!) Getting it back is not easy. The word
"impossible" is appropriate.
3. Has he got
skin in the game? My new rule of thumb: He should
have at least 20 times his own money in than what you invest. If not, he's probably
looking to bloat the deal / fund and make his money off fees, not off returns.
What's the structure of the deal? I've seen deals where the boss makes out,
though you lose money.
What's the leverage? Borrowing money can enhance returns -- for example,
in real estate. But it can also dramatically increase the riskiness, giving
you no room to maneuver when things go awry.
5. What's the valuation you're getting in at? I've seen startups without
patents valued at $25 million.
6. What are the financial growth assumptions? Do they make a modicum
of sense? (See above.) In real estate, we look at cap rates going in and assumptions
of cap rates going out. They shouldn't be markedly different.
on hedge funds. Twenty years after Bonfire of the Vanities,
Tom Wolfe checks in on the new masters of the universe and finds them even coarser
and ruder than their predecessors could have ever imagined. The
Pirate Pose is in the first issue of Portfolio Magazine. It's
a fun, free read.
been hurtful. I've run
a zillion bad lawyer jokes, thinking they were funny. Last night I'm catching
up on some reading. I read a Wall Street Journal piece by a professor
of law at Georgetown University. The piece called, "Three
Cheers for Lawyers," hits me hard. It argues that, without decent
lawyers, the three Duke lacrosse players accused of rape would be today be in
big trouble. I had seen the kids on "60 Minutes." I was convinced
that they were innocent. But between my belief and getting them off was a major
chasm, whose width I had grossly underestimated. The piece made one significant
For better or
worse, we have an adversary legal system that relies for its proper operation
on having competent lawyers on both sides. In every case I knew about where
an innocent person had been convicted, there had been an incompetent defense
lawyer at the pretrial and trial stages.
thought back to all those Innocence
Project exonerees I'd met and how they all told me they'd been assigned
defense lawyers by the state, and how many of their lawyers had slept through
their trial, thus guaranteeing their conviction. The article continued:
criminal justice system does not rely solely on the fairness of the police
and prosecutors to get things right. In every criminal case, there is a professional
whose only obligation is to scrutinize what the police and prosecutor have
done. This "professional" is a lawyer. The next time you hear a
lawyer joke, maybe you'll think of the lawyers who represented these three
boys and it won't seem so funny. You probably can't picture their faces and
don't know their names. (They include Joe Cheshire, Jim Cooney, Michael Cornacchia,
Bill Cotter, Wade Smith and the late Kirk Osborn.) That's because they put
their zealous representation of their clients ahead of their own egos and
fame. Without their lawyering skills, we would not today be speaking so confidently
of their clients' innocence.
held the prosecutor's feet to the fire. Their skillful questioning at pre-trial
hearings revealed the prosecutor's misconduct that eventually forced him to
give up control of the case and now threatens his law license. They uncovered
compelling exculpatory evidence and made it available to the press; they let
their clients and their families air their story in the national media.
There is no
rule book for what prosecutors call "heater" cases like this one.
Navigating the law, politics and publicity in such case is an art not a science.
These fine lawyers displayed all the skills and tenacity that made me want
to be a criminal trial lawyer after watching the television series, "The
Defenders," when I was 10 years old.
daughter, Claire, will graduate from law school on May 25. I'll be there, glowing
with pride. Sorry, Claire, about all those hurtful, bad lawyer jokes. No more,
to zap the crap on that brand-new PC: The computer trade press has
taken up the cudgel of computer crap. Walt Mossberg's written about it. I've
written about it. Now comes:
25, 2007 (Computerworld) -- When you take a brand-new Windows PC out of the
box, it's shiny and scratch-free, but on the PC's hard disk, it's a different
story entirely. Most major hardware makers clutter their systems with preinstalled
applications, browser toolbars, search settings and utilities -- not to mention
self-launching advertisements enticing you to try out even more software.
they have sold your PC to the highest bidder long before you take it out of
the box. Instead of having Windows defaults or your own preferences, the system
is set up to maximize the profits of the computer maker and its business partners
at the expense of your convenience.
All this extra
unwanted software takes its toll on system performance and reliability. Each
time the system starts, many of the applications run in the background. While
running, they may access the Internet to find updates or change the behavior
of standard Windows functions. These freeloaders also take up system resources
such as processor, memory and disk space, resulting in longer start-up and
know if you have a problem by looking at the taskbar on the bottom right of
your screen. If it's cluttered, you've got crap. I'm
running XP. I have the time and only icons:
One shows I'm not on wireless. The other shows I'm connected on a landline network
(in this case via cable modem). The easiest way to get rid of crap is to:
1. Uninstall software you don't want.
2. Run MSCONFIG and unclick stuff you don't want. (You can always turn it, if
you find later you need it.)
should also read the Computerworld piece, How
to zap the crap on that brand-new PC.
More fallout from Imus
There will only be 49 contestants in the Miss Black America Contest
this year because no one wants to wear the banner that says, IDAHO.
entertainment night at the Senior Center and the assembly room was packed because
none other than The Amazing Claude, the world's greatest hypnotist, was heading
the evening's entertainment. The lights dimmed, the spotlight lit the stage
as The Amazing Claude came out.
to put you into a trance," said the Amazing Claude. "I intend to hypnotize
each and every member of the audience."
was almost electric as The Amazing Claude withdrew a beautiful antique pocket
watch from his coat. "I want each of you to keep your eye on this antique
watch. It's a very special watch. It has been in my family for six generations,"
said The Amazing Claude, and then began to swing the watch gently back and forth
while quietly chanting, "Watch the watch, watch the watch, and watch the
The crowd became
mesmerized as the watch swayed back and forth, light gleaming off its polished
surface. Hundreds of pairs of eyes followed the swaying watch, until, suddenly,
it slipped from the hypnotist's fingers and fell to the floor, shattering into
a hundred pieces.
said The Amazing Claude ...
... It took three
days to clean up the Senior Center.
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. Thus I cannot endorse any, though some look
mighty 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 Claire's
law school tuition. Read more about Google AdSense, click
here and here.