Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Monday, January 31, 2005:
I bought a few triple-tax-free muni bonds on Friday -- not because the yields
(3.5%-4.2 %) were brilliant but because they provide a modicum more income and
I have no intention of selling them. Bonds are strange animals. Many more dollars
of them are bought and sold every day than dollars of company shares. Yet the
industry exists largely behind a closed door. You can't find out the commission
you pay your broker to buy bonds -- "it's included in the price,"
he says. And it's hard to find prices for bonds --to figure if you're getting
a good deal or not.
Today there is a Big Bond celebration. The door has creaked open just a tinge.
Writes today's New York Times, "As of Monday (i.e. today), millions
of retail investors will be able to find municipal bond prices that are virtually
current. Just go to www.investinginbonds.com,
the Web site of the Bond Market Association. Click on "municipal bond trade
information." On the next page, you can search for bonds by state and sort
by credit rating, maturity and interest paid. You can also find a bond by using
its identification number. The trade information will be 15 minutes old, not including
a small distribution delay, and it will be free. That is as fast as it gets. Not
even deep pockets can buy faster service.
Securities Rulemaking Board, the self-regulatory agency for the municipal bond
market, and the Bond Market Association have been working for years to make
trading data easily available to individual investors and as current
as possible. Until now, the data has been a day old.
the trade information to the rulemaking board, which then makes it available
to any vendor. The Bond Market Association provides the data free on its Web
site. For people who want to buy or sell their own municipal bonds, this is
the place to go before calling a broker. By seeing recent trades, you will be
better able to decide whether your broker is charging you too much or paying
you too little.
Micah S. Green,
the Bond Market Association president, said "real-time prices will let
somebody compare prices and help them decide if a broker's price is reasonable."
There is no
doubt that some retail investors have been cheated by their brokers. In June,
eight investment firms paid $610,000 in fines and restitution after regulators
determined that investors had received less than market prices for their municipal
bonds, for a loss totaling just over $300,000. At the end of September, about
$2 trillion in municipal bonds was in public hands, of which about $670 billion
was owned directly by individual retail investors. An additional $600 billion
was owned by bond funds. On Monday, February. 7, the Bond Market Association
will begin providing trades for investment grade corporate bonds and most high-yield
bonds with a delay of about 30 minutes. (The delay drops to about 15 minutes
in July.) Corporate bond trade data is now four hours old."
world of AT&T: Telecommunications
was my first love. The entire "industry" was one dumb entity called
AT&T. It was ripe for competing against. I was right. But I never would
have forecast a demise this fast and this insane. In 1969, AT&T employed
more than a million people. It provided local and distance to everywhere. And
it made virtually all its own equipment and the equipment it leased to its customers.
Now it employs 47,000 -- or 95% fewer. That's a remarkable implosion for 36
years. And if SBC succeeds in buying them, AT&T will basically cease to
exist, except in name. This morning a dear friend, who sells phone systems for
a living, emailed me:
"Around 1980, AT&T announced they would start selling (not just renting)
phone systems. I was terrified they would put me out of business. You told me
not to worry, because they were so disorganized. You told me, "it will
take them ten years to find the men's room."
I guess they finally found it, and leaped head-first into the toilet.
AT&T went from being "the biggest company on earth" (the title
of Sonny Kleinfield's book) to irrelevance, and then nonexistence, in 25 years.
In all of those years, scores of inept managers took home huge paychecks, while
stockholders and employees got royally screwed.
Unlike WorldCom or Enron, no one will be fined or go to jail for this; but I've
always thought stupidity is a major crime."
I'm trying to figure the "logic" of why SBC would want to buy AT&T
-- after all AT&T's long distance business is imploding -- or why SBC would
possibly want to employ AT&T's arrogant, not-too-bright boss, Dave Dorman
in a senior management position. I won't be around in another 36 years. But
I'd be surprised if SBC were.
Now to today's
lesson in economics. There are two ways to print money:
1. The government prints dollar bills.
2. Companies print share scrip and offer it as "money" in exchange
for valuable assets. If you're an AT&T shareholder faced with the SBC bid,
you have two choices today: Sell your shares for cash or take SBC scrip. I'm
no psychic. But look at SBC's miserable stock. I'd take the cash asap. Meantime
I have to do something about my AT&T shorts. Do they now become SBC shorts?
I hope so. I clearly overestimated Mr. Whitacre's IQ. He's buying a major bill
Actual dumb conversation:
dumb, I emailed my friend Dan, "I hate you."
back: "What caused this sudden ire?"
hate people who are more intelligent than me."
have I done?"
you. Me. Dumb things Ive done that you would not have done."
trade you my dumb things for your dumb things."
does Love mean?
Researchers posed this question to a group of 4 to 8 year-olds. Answers included:
grandmother got arthritis, she couldn't bend over and paint her toenails anymore.
So my grandfather does it for her all the time, even when his hands got arthritis
too. That's love." -- Rebecca- age 8
loves you, the way they say your name is different. You just know that your
name is safe in their mouth."
Billy - age 4
when a girl puts on perfume and a boy puts on shaving cologne and they go out
and smell each other."
Karl - age 5
when you kiss all the time. Then when you get tired of kissing, you still want
to be together and you talk more. My Mommy and Daddy are like that. They look
gross when they kiss" Emily - age 8
when you tell a guy you like his shirt, then he wears it every day." Noelle
- age 7
piano recital, I was on a stage and I was scared. I looked at all the people
watching me and saw my daddy waving and smiling. He was the only one doing that.
I wasn't scared anymore." Cindy - age 8
when Mommy gives Daddy the best piece of chicken." Elaine-age 5
when Mommy sees Daddy smelly and sweaty and still says he is handsomer than
Robert Redford." Chris - age 7
"I know my
older sister loves me because she gives me all her old clothes and has to go
out and buy new ones." Lauren - age 4
when Mommy sees Daddy on the toilet and she doesn't think it's gross."
Mark - age 6
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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