Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
9:00 AM EST, Tuesday, February 17, 2009. This
is the best time ever to start your own business NOW. Here are ten
A whole new set of opportunities has emerged as a result of the recession.
My favorite remains starting your own bank. See below. But there zillions
of others. Workout consulting is booming. Retraining is hot. Signage must
be exploding, as old banks rework their new acquisitions (i.e. the failed
banks) with new logos, color schemes, etc.
The most talented people in the world will work for you. They'll be happy
to. Some will work for free, if only for the thrill of curing their cabin
3. There is
tons of money looking for a home. Treasuries? Banks CDs? The stockmarket?
The returns all suck. Investors need to earn back their losses.
4. People need
the excitement of a new venture -- especially if they can get involved in
the management. Or stand behind the counter and be nice to customers.
5. There's plenty
of cheap retail space available. There isn't a landlord that wouldn't rent
you his empty retail store for a month or two. Try out your idea. If it works,
stay. If it doesn't, leave. Or start something different. The clothing
consignment store is the perfect recession business. People bring you great
clothing they haven't worn in a while. You sell it and split the returns.
Cost of inventory: zip.
6, There's zero
reason to work for someone else. This recession has finally nailed shut the
coffin of large company security. Talk to Detroit autoworkers about security.
They worked for some of the largest companies in the world.
7. Every lawyer,
accountant, advertising agency, consultant will be ecstatic to see you and
give you oodles of free advice. They have plenty of time. They'll see you
because you may become their next big client. I hear many patent attorneys
are idle. Think new ideas you can patent. I hear you can get in to see big-name
venture capitalists. Two years ago their secretaries wouldn't have taken your
8. It is cheaper.
Fantastic furniture from failed firms is on eBay for a song. Computers cost
nothing. You can rent a web site for $6 a month. You can get superb custom
software from talented programmers at $20 an hour. Check out Rent-a-Coder.
Everyone will lower their price today. Just ask.
9. You won't
fail because you're managing it. You're acting intelligently. You won't do
all the dumb things your boss does.
The new business model today is small and profitable. Growth fueled by borrowing
is dead. Cash as dividends is good.
reason: You can't get a job today. So, don't bother trying.
message is getting through. Last year, the Harvard Business School attracted
70 team entries to their "Start a New Business" business
plan contest. This year they have 140 teams working feverishly on the next
Google, eBay or Microsoft. Click
not risky. Risky is when you have no control. Risky is putting
your money in someone else's disaster. Harken back to the recent congressional
hearings. Lined up were the world's leading bankers and the world's most talented
automobile execs. Would you give any one of them your money to invest? Their
companies' stocks have imploded perhaps faster than any other in the history
of the world.
A start up is
less risky than working for a big company, a medium company or even a little
You cannot even
reduce your risk by going with "winners" -- people who've successfully
started businesses. I've started about 10 magazines. The majority succeeded.
But there were some disasters. And the last one was a doozie, losing $8 million
before I mercifully shot it. I have a short attention span. If it doesn't
work quickly, I'm out of there fast. I never chase sunk costs.
reasons now is the right time to form a local bank.
1. The FDIC has done all your marketing.
Stick this in your window.
And the public
brings you bags of money.
2. A new bank
is clean. No sub-prime. No bad loans. clean is good.
3. You don't
have to act like a bank. You can be nice to your customers. You can have fun
things in your branches. Check out TD Bank (the new Commerce Bank). They have
children's stations and machines for counting coins. They're friendly, too.
They held the door for me as I left their bank with my bicycle, which had
been parked next to their ATM machines.
4. I'm guessing
there's big margins in banking. If you're paying less than 1% on savings accounts,
lending at 5% gives you a huge margin.
is being bought. Remember that Australian
medical device company I recommended? I still own shares. Well, it's being
bought for nearly three times what most of us paid. I think management sold
out too cheaply. But no one ever went broke taking a profit. Where did I read
that? For more on HeartWare.
bailout. The economic stimulus package. Imagine a swimming pool.
At one end we have a bunch of government bureaurcrats furiously filling buckets
with water. They carry the buckets to the other end of the pool and empty
them into the pool. The pool is the economy. The buckets are the stimulus.
They expect their efforts will lift the water in the pool.
you still think the stimulus program will work?
and doom revisited. My remaining money is
in cash and FDIC insured CDs. I think things will get worse. But I oon't know
what it means for investing my cash. Should I buy gold? (Yes, a little.) Should
I buy some foreign currency? I watch the swings in the Euro and the pound
sterling. I see the yen rising and I wonder why?
Diary: Why China Needs U.S. Debt
China does not see any choice but to keep buying U.S. government debt,
Luo Ping, a director-general at the China Banking Regulatory Commission
(CBRC), told a New York risk-managers conference on Thursday. The Financial
Times quoted him as saying: Except for U.S. Treasuries, what can you
hold? Gold? You dont hold Japanese government bonds or U.K. bonds.
U.S. Treasuries are the safe-haven. For everyone, including China, it is
the only option. Even if the dollar depreciates because of Washingtons
financial bailouts, he added, China has no other options.
Luo is acknowledging
something of an open secret. Despite occasional hints (or threats) that
China might attempt to bankrupt the United States by suddenly selling all
of the U.S. debt it holds, that really is not an option. China would be
economically destroyed in the process, unless there was some alternative
place for Beijing to invest. For a number of reasons, there is none. ...
best investment recommendation:
you miss yesterday's column? Michael and
Anne came to visit. I chronicle their visit. Click on the picture.
going to classes with my son today. My logic is simple. His two year stint
at buisness school has cost $150,000. I have only attended two classes. That
was $75,000 per class. Today's three will bring my classes up to five -- or
only $30,000 a class. This is the only investment where averaging down makes
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
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note I'm not suggesting you do. That money, if there is any, may help pay
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here and here.