Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Tuesday, August 14, 2007: Cash
is king in today's markets. Cash is useful because soon there'll be great bargains.
Already yields on some beaten-down equities are over 10%. There are interesting
bonds also. We're searching.
Goldman Sachs' credit they rescued their suffering quant, leveraged (six times)
hedge fund called Global Equities with a $3 billion injection of new money (their
own and outside investors). Goldman said it was not a rescue but a good investment.
After the good $3 billion investment, the leverage in the fund will drop to
3.5 times. Bear Stearns didn't rescue its funds. I'm guessing they were too
far gone. Yesterday Goldman had a dial-in conference call to explain. Here's
a transcript. One comment by Goldman from
of the last few days have been unprecedented and characterized by remarkable
speed and intensity across global markets. But markets by their nature are
cyclical. We have seen market dislocations in the past and, as painful as
they may be at the time, know they present important opportunities in the
Tuck Business Bridge course at Dartmouth. As
a parent, I am obsessed my kids get the skills they need. Note I said
skills, not education. There's a big difference. Learning about money
and business is a key skill. Most colleges don't teach that. They teach liberal
arts. The best place to learn business skills is a one-month course called The
Tuck Business Bridge Program, which happens in June and July each year.
Their web site describes the course:
are valuable, no matter what you do with your life. The Tuck Business Bridge
Program® is an intensive, career-focused program for juniors, seniors,
and recent graduates of arts and sciences colleges. Give us four weeks, and
we will give you the basics of accounting, marketing, finance, and leadership.
I now have three
Bridge graduates -- my son, Michael, my future son-in-law, Ted and Michael
Biblowit, son of dear friends. All three rave about the course. My son got
into private equity with it. Ted got into stock analysis at a big institution
with it. I asked Ted for some words this morning:
It was an excellent
program. I did it after my junior year of college, which I'd highly recommend,
but I'd also recommend it for liberal arts graduates looking to start a business
The most "applicable"
instruction for my career was the accounting, but I also found that there's
no way to really learn accounting in a short classroom experience. What it
did for me, however, was give me a taste for the language, so I was better
prepared to jump in head first when I started really working with the concepts
in an actual business environment.
arts students have never been exposed to a serious business environment. I
had worked internships at large corporations, but this was different in that
I was expected to operate at a professional level from day one with fellow
professionals. The breadth of experience in the short time period was also
extremely valuable. I knew I wanted to be a stock investor, but it was great
to get a chance to be exposed to the marketing and business strategy stuff
from such an expert vantage point. It would be particularly great for someone
who hasn't yet decided on a definite career path.
best part was the exposure to the people. The top companies in the world across
a number of different businesses send their new undergrad hires to Tuck for
this program. It's great to learn from these people and it's an unbelievably
valuable networking opportunity. I was already in the interview process at
Fidelity when I went to Tuck, but my ability to pick the brains of the new
hires and continue to work with them through my interview process very likely
was the difference between getting my dream job (which I did) and not.
just graduated. I asked Michael Biblowit for his impressions on the course.
Here are his unedited (and very enthusiastic) words:
completed the Tuck Business Bridge Program at the Tuck School of Business
at Dartmouth College. It is an intense, four-week, summer program that provides
coursework in accounting, corporate finance, spreadsheet modeling, marketing,
economics, strategy, business ethics, management communication and organizational
behavior. To top it off, everyone also completes a group project, which for
my session was a company valuation. My group chose to analyze the American
leather goods manufacturer Coach Inc. and assess the possibility of it being
acquired by the French giant Moët Hennessy Louis Vuitton (unrealistic
in actuality, but it made for a good enough project that we were selected
as the best in our section). We then gave a 30-minute presentation to Tuck
faculty and representatives from JPMorgan summarizing our findings.
I worked as hard as I ever have in my life during that time, but it was well
worth the effort. After all, where else could I have had the opportunity to
squeeze a semester of business school into less than a month? As the program
directors told us on the first day, we would "drink from the fire hose"
and somehow at the end manage to swallow most of it. Bridge taught me a range
of skills that I'll keep with me the rest of my life. I am better prepared
to do whatever it is I end up doing for a career. I first learned about the
program from Harry's son, Michael, who afterwards worked for a private equity
firm for a couple years and is now headed to Harvard Business School. But
Michael is surely one of the most prolific recruiters for Bridge because he
also convinced our friends Callie Siegal and Alex Fiorello to participate.
Callie went on to help manage a non-profit providing educational services
for at-risk youth while Alex did microfinance work in Latin America. While
I was at Tuck, I met yet another Newton recruit, Jay Tansey, who plans to
go to work for a lobbying firm in DC. I myself, though still undecided, am
leaning towards Wall Street. That is a lot of different people with wide-ranging
interests and career goals, all of whom felt that they were much more capable
of achieving their goals for having participated in the Bridge Program. And
Michael clearly paid attention in marketing class.
The experiences of Michael, Callie and Alex mirror what I saw in my own classmates.
The students at Bridge ranged in age from 19 to 30, came from New York, California,
Bulgaria and Japan and majored in everything from economics to theatre. Everyone
sought different careers and many of the students were there precisely because
they did not know what they wanted to do. The common denominators were their
high levels of intelligence and motivation and belief that Bridge was a great
program. If you need further proof of the worth of what is learned there,
consider that many of the students are sponsored by their employers, who pay
the hefty tuition, and that while I was there, Tuck was also running an Executive
Education Program that easily fills up annually despite offering essentially
the same material as Bridge for about three times the price.
gained a lot of valuable knowledge. Spreadsheet modeling is an essential skill
for me. I spent last summer working in Mortgage Finance at Bear Stearns (I
swear, I'm not responsible for the turmoil in the subprime market). There,
I learned first hand that Wall Street revolves around spreadsheets and that
they are an incredibly powerful tool for data analysis. Most of the work I
did was done in Excel. The class taught me a lot more about the subject than
I knew before. Most importantly, the professor taught a method for creating
spreadsheets that would result in fewer errors and how to best check for the
errors that get through. This is huge, considering that surveys show 80% of
people believe their spreadsheets to be error-free, while only 20% of spreadsheets
actually are and such flaws can cost companies millions of dollars and lots
of bad press.
I found particularly useful was corporate finance. I have a great interest
in investing and already had a basic knowledge of certain aspects. In the
course though, I gained a formal education in how to assess risk, rates of
return, overall market trends and even what is technically the best possible
portfolio. This will help me to better manage my own money and to be more
fluent in the language needed to converse on Wall Street.
Accountants are often a modern synonym for boring people, but not so with
my professor, Phillip Stocken, a brilliant man with a wonderful South African
accent. He managed to make the class incredibly fun and interesting by cracking
jokes and effectively connecting the material we studied to the accounting
scandals at Enron, WorldCom and other corporations. I never thought I would
so enjoy learning how to both create and analyze income statements, balance
sheets and cash flow statements.
Even though certain classes were not as directly applicable to what I hope
to do, they were all useful, and other students of course had their own views
as what was the most important. For example, in the time spent in marketing,
we learned about the four P's (product, price, placement and promotion), three
C's (customer, competitor, and company) and STP (segmentation, targeting and
positioning). This alphabet soup lays out the core of any marketing strategy.
To put these skills to use, we devoted several class sessions to MarkStrat,
a sophisticated simulation wherein teams create marketing plans for competing
products and develop new products based on customer wants. Their respective
companies' share values rise or fall based on how much they can increase sales.
The strategy course taught Michael Porter's Five Forces analysis, which is
a popular tool at consulting firms. The ethics class provided a glimpse into
the difficulties of discerning precisely to whom a company's managers are
most responsible: stockholders, employees or even someone else. The management
communications class helped me learn how to give an effective and convincing
presentation, in body language, speech and PowerPoint.
Even more valuable than the actual coursework was the practice in a team environment.
In school, I always resisted group assignments, preferring to work individually
-- reluctant to have my success or failure depend on others. However, in the
real world, one has to work in a team to get things done and the people skills
learned from working within a team are crucial to negotiating with other people
and firms. At Bridge, though, all the work is done in teams. Everyone is assigned
to a five or six person study group. All your homework assignments and the
final projects are done in these groups. Being forced to work in this context
helped me to develop what had been a personal weakness into a strength. I
better learned how to deal with conflict between group members, such as when
we argued over just how elaborate to make our PowerPoint slides. I figured
out how to play to different people's strengths. I focused on creating pro
forma financial statements for Coach, while another group member, headed for
a marketing job at General Mills, wrote about Coach's product line and brand
image. I also became a more patient teacher, since it fell to me as an economics
major to help explain certain things to the sociology and philosophy majors
on the team. Finally, I learned both how to lead and how to let others lead
In addition to the skills training that Business Bridge provides, it gives
some more direct career help. The CareerBridge day saw several companies come
to recruit and interview and provided a great chance to network. There were
also panels on finance, consulting, non-profits and women in business to give
guidance on what different jobs are actually like. Paul Doscher, one of the
career advisors and head of marketing for the Bridge program helped me to
create a much more polished resume than I previously had. Also, the chance
to sign up for group mock interviews led to some great feedback on interviewing
style, what works and what doesn't.
The program is rigorous. Most days, lectures ran from 8:30am to 4:00pm, with
only an hour and a half break for lunch. Several hours of homework followed
at night. The effort paid off and I highly recommend the program, because
you are bound to find yourself one day either very glad you learned what you
did, or desperately wishing you had. My sister Rachel, a law student, wishes
that she had the business background that the Bridge Program offers. Her fiancée,
Matt Snyder, recently moved up from being a commercial real estate broker
to being vice president of a new real estate development firm. He has stayed
up late after work, studying much of the same material I learned at Bridge
to prepare to succeed in his new job. When he heard about Bridge, he expressed
regret that he never had the chance to do a similar program and asked me to
make sure to save my notes. I did and I plan to keep them close for many years
money, again! Chase
yesterday offered me a 1.99% APR if I transferred my "high-rate balances
to Chase." Amazing!
your own printer. The worst thing about busted computer printers
is finding a local repair place, schlepping them there and then picking them
up. All along you you are nagged with the thought: Shouldn't I just throw the
thing away and buy new one? After all, new ones are so cheap. It's a
nice thought, but there's also the pain of installing the thing. If it's a network
printer, installation can be a real pain to install.
There is a better
Buy spare parts. Install them yourself. I've now used these people twice
-- once to replace a part to prevent paper jamming and once to replace a busted
fuser assembly. Both times they sold me the right parts and sent me clear repair
instructions. Their web site is not user friendly. Send them an email with your
problem. They respond quickly with a solution. And they deliver quickly.
with fake greeting-card messages. I've warned endlessly about viruses.
Don't open email attachments. Don't click on sites you don't recognize. The
sites I put in this column are OK. I check each one personally. Yesterday's
New York Times reiterated.
Spam is not
just about pestering you to buy cheap pharmaceuticals. People also use it
to write and spread malicious software some of it able to harness your
PC to send out even more spam. The messages that you have been seeing that
claim to contain links to online postcards or greetings from a friend,
a worshiper or a schoolmate are actually linking you
to software worms or worse.
When you see
one of these messages, delete it by all means, do not click on the
link in the message. That link connects to a Web site that could install malicious
software on your computer that lets someone else exploit it or control it.
Some greeting-card spam messages carry a variation of the Storm worm, which
can download its own updates once it infests an unprotected system.
All of this
is another reason to have up-to-date antivirus software on your computer and
not to click on random links in generic-looking messages. Legitimate greeting-card
sites advise you to type their Web addresses directly into your browser if
you think you have a card waiting for you. American Greetings, for example,
has helpful information on how to spot fake e-cards at AmericanGreetings.com..
Window Film is fantastic: Don't even ask what
the windows on our new house cost. They're expensive and expansive. That's great.
But the heat is overwhelming. The solution is to affix 3M Window Film.
The film is fantastic. It virtually eliminates ultra-violet rays (99%); reduces
heat gain by something like 55%, significantly reduces glare and doesn't cost
an arm and a leg. I've seen the film installed on a local house. You can't tell
it's on the windows. The film comes in various densities. Chose what you need
based on which direction your windows face. More on them at 3M.
You get $500 of
tax credits if you install them by December 31. Click
here. You don't install the film yourself. A 3M dealer does it. He can
do your entire house in an afternoon. For a list of dealers, click
line problems: Every few hours, the DSL line
at my country house froze. The only "solution" was to reboot the modem.
There were two likely problems: A lousy line or a lousy modem. You can test
a lousy DSL line by listening to it. If it has no crackle, it's clean. Mine
was. Hence it was my modem. I've now replaced my DSL modem three times. This
last one seems to have taken. Cross your fingers.
Wife: "What are you doing?"
Husband : Nothing.
Wife : "What do you mean, nothing.? You've been reading our marriage certificate
for an hour now."
Husband : "I was looking for the expiration date."
Wife : "Do
you want dinner?"
Husband : "Sure! What are my choices?"
Wife : "Yes and no."
always carry my photo in your wallet. Why?"
Hubby: "When there is a problem, no matter how impossible, I look at your
picture and the problem disappears."
Wife: "You see how miraculous and powerful I am for you?"
Hubby: "Yes! I see your picture and ask myself what other problem can there
be greater than this one?"
we get married, I want to share all your worries, troubles and lighten your
Boy: "It's very kind of you, darling, but I don't have any worries or troubles."
Girl: "Well that's because we aren't married yet."
when I was on the bus with Dad this morning, he told me to give up my seat to
Mom: "Well, you have done the right thing."
Son: "But mom, I was sitting on daddy's lap."
A newly married
man asked his wife, "Would you have married me if my father hadn't left
me a fortune?"
"Honey," the woman replied sweetly, "I'd have married you, NO
MATTER WHO LEFT YOU A FORTUNE!"
Girl to her boyfriend:
One kiss and I'll be yours forever.
Guy: "Thanks for the early warning."
A wife asked her
husband: "What do you like most in me, my pretty face or my sexy body?"
He looked at her from head to toe and replied: "I like your sense of humor."
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.