Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
9:00 AM EST, Thursday, February 12, 2009. Wall
Street worships growth. The higher your growth, the higher your stock price.
Analysts used to look at corporate growth -- say 30% a year and conclude P/E
should be 30. If the P/E was lower than the growth rate, buy the stock. Growth
of 50% meant a 50 P/E ratio. And so on.
fastest way to grow is to do it on someone else's money. The more you borrowed,
the faster your grew, the more profitable you were.
every dollar of capital, Lehman Brothers borrowed 35 times. With a leverage
of 35 times, if your investments rise by only 1%, you've made 35% on your
money. Two percent and you're up to 70%. The numbers are compelling.
Street encouraged growth. It corralled money from investors (individuals and
institutions) and gave the money to every company that would take it. "Take
our money. Buy your biggest competitor. Expand overseas. Grow faster. Your
shares and options will skyrocket." Management found the logic compelling.
Few said "No."
today, 2009, we have too many Starbucks. We have too many semiconductor factories.
We have too many shopping centers. We have too many houses. We have too many
shops selling the same thing. We have too many the same things.
aren't enough people and they don't have enough money to buy everything. Wall
Street's longtime model is broken.
We will eventually
find new uses for some the useless buildings and factories. The rest we'll
bulldoze many, turning them into dog parks, or whatever the Stimulus Program
back to simpler, smaller, more personal times. More of us will be standing
behind counters helping our customers with personalized service. We're all
desperate for personalized services.
walked the neighborhood looking for bank CDs. TD Bank was offering 2.25% on
a 6 month CD. Right across the road, WaMu was offering much less. Why? Would
they bargain? Did they care? No. WaMu is owned by Chase. There was a Chase
branch 50 feet away. Does a bank really need two branches within 50 feet?
we really need a Starbucks on every corner? Do we really need all that food?
Photo shows woman eaten by a leopard.
Do we really
need to compare ourselves to people who have more money? Is that what happiness
is really about?
deliciously simple bailout plan. From my friend and reader, Dana
Barfield, who writes a blog called RetirementWhys:
Plan That Will Work.
If Obama really wants to do a stimulus package that will work, simply
return all taxes paid by taxpayers in 2008. It will cost about the same
amount as his proposed stimulus and it puts funds back in the
hands of productive people with no overhead, startup or administrative costs.
of doing this would be immediate as people would reduce debt (pay back banks),
save/invest (open investment and credit markets) and spend (create demand
for products and therefore jobs) all things presently lacking in
and needed by the economy. Further, individuals and corporations who paid
taxes in 2008 were obviously profitable and productive these folks
can clearly make better decisions about using funds that the government
And this can
be done quicker.
one to swing?
Ruth Madoff, the wife of Bernard Madoff, withdrew $15.5 million from a Madoff-related
brokerage firm in the weeks before Mr. Madoff's arrest, according to the Massachusetts
Secretary of State.
Ruth Madoff, pretty lady.
filed Wednesday by Secretary William Galvin's office said Ruth Madoff withdrew
$5.5 million on Nov. 25 and $10 million on Dec. 10, according to documents
from Cohmad Securities, which was co-owned by Mr. Madoff and which the Massachusetts
office is investigating. Mr. Madoff was arrested Dec. 11 on allegations of
perpetrating a massive Ponzi scheme.
is especially diligent chasing naughty people and institutions. He did a great
job with Auction Rate Preferreds.
not because I schlump. Or because my posture is all screwed up.
(It is.) My friend Matt Snyder is the best tennis player I've ever played.
your posture," he said last night, "that's what your physio told
you. I bet she needs lots of visits to fix your miserable schlump?"
I nodded sheepishly.
you're using Luxilon strings? I bet you're stringing them tightly."
Yes, at 72 lbs.
is stiff. That stiffness is causing the problems in your arm. Re-string with
a softer string at a lower tension. Try 68 lbs. Your problems will disappear."
How do you I
know, I asked.
it happened to me and many other pros on the circuit."
posture has improved. Susan has stopped nagging me to "stand straight."
My tennis stringer is about to get lots of business. And I've resisted the
obvious "I should not get strung out over this."
words from Lincoln and Darwin: Today, Feb.
12 is the birthday of Charles Darwin and Abraham Lincoln. Both loved English
and used it with great ability. Do yourself a favor and read
Happy Lincoln/Darwin Day.
your friends how filthy rich You are. Isn't it time you got yourself
a beautiful (fake) designer watch?"
That was my
favorite junk email this morning.
Barclays Bank might handle today's tough times. From England:
English royalty has fallen on hard times. Was she a Madoff investor?
I hate housework! You make the beds, you do the dishes - and six months later
you have to start all over again. -Joan Rivers
Yes, I repeat jokes. My criterion is simple. Do I still get a chuckle? If
yes, I figure you will too.
The best comedians
always repeated their best stuff, "Take my wife ... please."
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
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