Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Thursday, February 22 , 2007: Luck
or intelligence? I'll take luck every day. The key is to be there. My friend
has spent months looking for a ritzy house in the ski fields of Colorado. He's
prepared to spend $5 million. As he drives to eye yet another one, he spies
a sign for an Auction. He goes to the unpublicized auction (heck the house isn't
even on the Internet), buys a bigger, better, fancier house (six bedrooms and
an elevator) for $4 million.
wife argues expensive houses "will hold their own." This prediction
could be designed less for economic than for psychological reasons, i.e. to
make me feel good that the house we're building is way over budget -- like 45%.
I'm learning there are "gotchas" when building a house:
1. Building material
prices continue to soar, despite the housing turndown. I don't know why.
2. There are "levels" of building materials. Home Depot and Lowes
have great fixtures, but sometimes not the precise thing you (or the wife, or
your architect) want. For that, you're into "designer" stuff. Figure
exponential increases in price. Talk to me about door hinges and door handles!
3. Labor prices
are soaring, especially for some specialty contractors, like propane dealers.
I don't know why. No one seems to have figured there's a housing slump. Toll
Brothers today reported a 67% drop in net income in their fiscal first
4. It costs a lot more to heat a bigger house than a smaller house, especially
when you use newer techniques like underfloor radiant heating.
5. Other than insulating your house with foam (not fiberglass), there aren't
any viable "green" money-saving techniques that make sense for a house
in the snow-belt. I've looked at geothermal heat, windmills, photovoltaic cells,
wood burning heat exchangers and sun-heated hot water systems. But the payoffs
are so far away that I'll be dead before I ever get money back -- and that assumes
there'll be someone around to oil the windmill and maintain the motors that
push the water around, as they transfer heat from one place to another.
6. Insurance companies bump their rates up dramatically when you bounce above
the magic $1 million valuation (though we're still looking).
I'll run a picture
of my new house, when it's finished -- if it ever is. Meantime, Forbes Magazine
has a picture series on The World's Most Expensive Places.
Click here. I thought I'd run these to make me feel good. I haven't
spent this much money, yet.
At $138 million, this is the most expensive. Larger
than either Buckingham or Hampton Court palace, this 103-room home has 58 acres
of gardens and woodlands. Can you imagine the cleaning bills?
The triple oceanfront lot along the Pacific Ocean in Southern California is
only part of what makes the Portabello Estate at $75 million so pricey. Try
the kitchen. The design resembles a nautilus shell, with a "dramatic"
grotto surrounded by "chambers." At least that's what the writeup
says. Ordering in pizza is definitely not the way to go with a kitchen
as large as a basketball court -- well, almost.
For $70 million, you can buy the top three floors of one of the poshest hotels
in New York, The Pierre. This apartment comes with spectacular views
of the city and central park. Moreover it's just across the road from the Apple
Store in the GM building. Perhaps Steve Jobs will buy it?
As part of the
apartment, you get the Grand Salon with a 23-foot-high ceiling. Having drinks
here would seriously impress your friends. I tried to visit this apartment,
purely out of curiosity. But to get an appointment, I had to submit a statement
of my net worth and a letter from my bank. Clearly one way to keep the riffraff
(like me) out.
wouldn't want to join a country club that had me as a member:
Schmuel Moskovitz is talking to a friend of his, bemoaning the fact
that he couldn't join the Grosse Point Golf Club.
understand it," he said, "I told them my name is Shmuel Moskovitz
and dat I vanted to join der club."
his friend says, "The club's restricted. They won't let Jews join."
But Sammy really
wants to join. He takes speech lessons, learns about boats, even tries to eat
corned beef on white bread.
A year later,
he appears at the same door wearing a conservative, three-piece suit and a copy
of the Wall Street Journal tucked under his arm. The doorman lets him
see the manager of the club.
The manager says,
"May I help you, sir ?"
Sammy replies in a clipped New England accent, "I am here to inquire about
membership to your esteemed establishment."
your name ?" asks the manager.
"My name is Winthrop van Simpson the Third."
do you live?" asks the manager.
of course," replies Sammy.
your income ?" asks the manager.
is something I never discuss with strangers," replies Sammy, "but
I don't mind telling you that I own three skyscrapers in Manhattan , and several
factories in northern New Jersey ."
more question before you become a member," says the manager.
your religious affiliation?"
swells with pride at the thought of becoming a member as he says, "I am
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 .
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