Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Monday, February 28, 2005: I
like listening to money-raising pitches by entrepreneurs. You hear neat ideas
and you meet neat people. I heard two more on the weekend. There were two problems:
+ Neither knew how to sell. Their biggest problem: they talked too much.
They listened too little. Key: By talking, you often talk yourself out of the
+ Neither recognized how much money they really need. They wanted enough
to tide themselves over their latest financial crisis. But someone cynical like
me thinks (to himself): "You're asking for too little. You'll need more
money soon. Then you'll dilute me. I'm better off at the savings bank. At least
my money is protected and I get a small dividend -- now 2.5% and rising."
Software is the easiest industry to get into,
but the hardest to succeed in. There are three types of software companies:
1. There's the sandbox company. The owners have fun writing software, messing
with computers, and doing whatever neat cool things amuse them. They will never
produce a real product for their customers or a profit for their stockholders.
To be a successful investor, you need to identify sandbox companies and avoid
them like the plague. My job, as investor, is to provide the money, not question
the use, or God Forbid, that they might actually focus their endeavors on creating
a commercial product that will sell."
2. The custom software company makes software to solve big companies' problems.
The problem is that the big company pays too little for the work. The custom software
can never save any money and is thus always beholden to the big company, who continues
to take advantage of the little company, who continues to live from hand to mouth.
And endless, unbreakable cycle.
3. The production/off-the-shelf software makes software that sells in thousands
of boxes. Sadly, most software companies are run by techies, who don't understand
marketing. So, few software companies make it as off-the-shelf sellers. Even fewer
make it from custom to off-the-shelf. Microsoft did. I can't think of many others.
In short, before you put money into your favorite, neat software company, ask
yourself where in the continuum they sit?
Hickey's latest newsletter: It seems totally silly for me to pay
real money to subscribe to a monthly newsletter on technology stocks when the
author consistently recommends against buying technology stocks. Anyway,
Hickey presents his usual technology disaster scenario -- which it's hard to
argue with -- and then tells what he owns: Newmont Mining, Pan American Silver
and the new Gold ETF (symbol GLD). He also owns put options on Best Buy,
CDW, Dell, Hewlett-Packard, Lexmark, eBay, Maxim Integrated Products, National
Semiconductor, Flextronics, Applied Materials, KLA-Tencor, Texas Instruments,
Research in Motion, Intel, Countrywide Financial, Capital One, Toll Brothers
and IBM. Put options, he points out, represent about 2% of the total value of
Alerts keep you in touch: Own
a stock? Want to know when news comes, earnings or an analyst report comes out?
Sign up for this free service. When something happens, you receive an email.
your hotel rooms on Internet: Good idea: Book your hotel rooms through
Expedia, Orbitz, Pegasus, Hotels.com, Priceline or a zillion others. Get cheap
prices, instant service. But, you'd better confirm with your hotel directly.
I just learned that when you book with anyone of these Internet services,
they agree to your reservation, take your money and then email or fax
the hotel your reservation. They don't wait for a confirmation from the hotel.
At the other end is some bleary-eyed, underpaid hotel clerk facing a pile of
100 faxes and 50 emails... Yup, you got it. There's virtually no integration
between the web sites' computer systems and the hotels' computer systems. It's
virtually all manual.
(k) disaster. Years ago when I too busy and
not paying attention, my company opened a 401(k) plan for me. Without my knowing
(or thinking), they put me in B shares of a technology mutual fund. Before too
much money was lost, I woke up and was able to transfer the money into a money
market fund run by the same family. So I avoided the hefty exit fees -- which
no one had ever told me about. Now I face three alternatives:
1. Pay the hefty exist fees.
2. Transfer the monies into one or other of the fund family's funds. The clock
will start counting down again -- it stopped when I went into a money market
3. Sue their little tushies.
I prefer the second choice. But I can't a single decent fund in this family's
100+ funds. Want to guess which family it is? Hint, they do a lot of advertising
and have $3 trillion dollars in assets under management. I promise a special
prize to the first person who emails me their correct name.
And you thought our government was bad! As
you read this piece from the Financial Times, keep in mind that France presently
has 10% unemployment; it's illegal to open your office on Sunday and the French
have police who check if you're there and fine you.
Feb. 25 - Finance Minister Hervé Gaymard resigned on Friday after 12
weeks on the job, felled by revelations that he and his family were living in
an $18,470-a-month luxury apartment in Paris paid for by the state [and
on which he doesn't pay tax].
aware of having committed blunders and in the first place a serious error of
judgment concerning the condition of my official residence," Mr. Gaymard
said in a statement, reiterating his pledge to pay the cost of a government
renovation and other expenses. He added that he did not want the office entrusted
to him "to be damaged because of me."
On Friday night,
President Jacques Chirac named Thierry Breton, the chief executive of France
Telecom and one of the country's highest-profile executives, as the new finance
minister. His appointment makes him the fourth finance minister for France
in less than a year.
44, and his wife, Clara, 45, France's ambassador at large to attract foreign
investment, broke no laws in choosing a 6,500-square-foot duplex apartment close
to Élysée Palace that would accommodate them and their eight children.
government traditionally provides free housing for ministers in their ministries
or other state-owned buildings or in rental apartments. The defense, interior
and foreign ministers and their families, for example, live in apartments in
about the cost of the Gaymards' apartment, first disclosed nine days ago in
the investigative weekly newspaper Le Canard Enchaîné, coupled
with Mr. Gaymard's less than truthful explanations, spiraled into a political
scandal that was deeply embarrassing to Mr. Chirac's center-right government.
Gaymard, who was traveling in the United States and could not be reached for
comment, would resign from her job was unclear. Reached by Agence France-Presse
in Los Angeles, Mrs. Gaymard said: "We were wrong. That's sure." She
added that they had chosen the apartment quickly because they were so pressed
for time, but that in retrospect, "we should have asked questions."
Paris is suffering
from a severe housing shortage and skyrocketing prices for both renters and
buyers. The monthly cost of the Gaymards' apartment is the equivalent of the
annual minimum wage for a worker in France. So there was little public sympathy
for what was perceived as extravagance and hypocrisy by the man who is supposed
to be the country's champion of public spending cuts.
In his first
major news conference as finance minister on Feb. 8, Mr. Gaymard said that unless
the government reined in spending, "we're going to hit the wall."
On a talk show a few days later, he said, "We need to detox ourselves from
third-largest economy, is reeling from a public deficit that violates European
Union rules, 10 percent unemployment (a five-year high) and public distrust
of government manifested in street protests over its economic reforms.
It was Mr.
Gaymard's loyalty to Mr. Chirac that catapulted him from agriculture minister
to finance minister after Nicolas Sarkozy, a presidential hopeful, resigned
the post last November. With his smooth, nonconfrontational approach, Mr. Gaymard
had been confident he would survive. He told the newspaper Le Figaro in an interview
published on Thursday that he enjoyed the confidence of Mr. Chirac and his government.
Even in his
brief statement Friday, Mr. Gaymard sought to defend himself. "I have put
an end, without delay, to this situation and will take full responsibility for
the financial consequences," he said. "Despite this, my family has
suffered serious harassment in the past few days."
had said that as someone who worked "120 hours a week," he had not
had the time to check on the amount of the rent for the apartment. Indeed, as
additional details about the cost of the Gaymards' apartment spilled out, the
cries in the press and among the government's political opponents for Mr. Gaymard's
resignation grew louder.
rent, there was $3,300 a month for maintenance and three parking spaces,
$42,000 to renovate the apartment and the parking area, and $16,000
for real estate fees.
unsettling for many of Mr. Gaymard's critics was his contention in a magazine
interview that if he had been the son of rich bourgeois and not of a shoe repairman,
there never would have been a problem because he would own his own apartment.
It turns out that Mr. Gaymard owns a 2,150-square-foot apartment on Boulevard
St.-Michel in the heart of the Latin Quarter that he rents out for $3,000 a
the left-leaning daily Libération reported that the minister's properties
also included two small apartments, a house in the Savoy region that he inherited
and another house in Brittany that he bought last year."
praise of good marketing.
My dental hygenist always asks me to fill in
a postcard, which she mails me in three months time. This is the latest postcard.
It's brilliant marketing:
The dog that snored:
A couple has a dog that snores. Annoyed because she can't sleep,
the wife goes to the vet to see if he can help.
The vet tells the woman to tie a ribbon around the dog's testicles and he will
"Yeah, right!" she says.
A few minutes after going to bed, the dog begins snoring, as usual.
The wife tosses and turns, unable to sleep. Muttering to herself, she goes to
the closet and grabs a piece of red ribbon and ties it carefully around the
Sure enough, the dog stops snoring! The woman is amazed.
Later that night, her husband returns home drunk from being out drinking with
his buddies. He climbs into bed, falls asleep, and begins snoring loudly.
The woman thinks maybe the ribbon might work on him, so she goes to the closet
again, grabs a piece of blue ribbon, and ties it around her husband's testicles.
Amazingly, it also works on him! The woman sleeps soundly.
The husband wakes from his drunken stupor and stumbles into the bathroom. As
he stands in front of the toilet, he glances in the mirror and sees a blue ribbon
attached to his privates. He is very confused and as he walks back into the
bedroom, he sees the red ribbon attached to his dog's testicles.
He shakes his head and looks at the dog and whispers, "I don't know where
we were, or what we did, but, by God, we took first and second place!"
gotta trust your attorney.
Godfather, accompanied by his attorney, walked into a room to meet with his
accountant. The Godfather asked the accountant, "Where's the three million
bucks you embezzled from me?" The accountant didn't answer. The Godfather
demanded again, "Where's the three million bucks you embezzled from me?"
The attorney interrupted, "Sir, the man is a deaf-mute and cannot understand
you, but I can interpret for you."
The Godfather said, "Well, ask him where the !@#$ money is." The attorney,
using sign language, asked the accountant where the three million dollars was.
The accountant signed back, "I don't know what you're talking about."
The attorney interpreted to the Godfather, "He doesn't know what you're
The Godfather pulled out a pistol, put it to the temple of the accountant, cocked
the trigger and said, "Ask him again where the !@#$ money is!"
The attorney signed to the accountant, "He wants to know where the money
The accountant signed back, "Okay! Okay! The money's hidden in a suitcase
behind the shed in my backyard!"
The Godfather said, "Well, what did he say?"
The attorney interpreted to the Godfather, "He says you don't have the
guts to pull the trigger."
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. That money
will help pay Claire's law school tuition. Read more about Google AdSense,
here and here.