Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Thursday, May 10: OOPS. That's
the title for today's column. We used to call it CHECK. And our corporate motto
was CHECK. CHECK. CHECK. The idea came because IBM had THINK.
But I always that THINK was too non-specific. It didn't cause you to do anything.
But CHECK. That was something you could sink your teeth into. Like checking
why I was losing tens of thousands of dollars on my Kagara Zinc. ... at least
according to Smith Barney's online brokerage account, which had "forgotten"
to update its system since March 22. Or the contractor whose spreadsheet software
was automatically bumping his fee, when he had agreed to a flat fee. Or the
telephone bill that was billing us for lines and equipment we no longer had.
I could go on
and on. The grossest mistakes come in accounts which look pretty, organized
and have authority, i.e. they were printed by a computer. Many accounts look
like they draw from a real "database." But I've learned otherwise.
Many companies simply allow their employees to add any old crap into their monthly
billing system, with no checks and balances. And it's worse when the salesman
sells you a deal, but the invoice doesn't reflect the plan. And the reason?
The company's accounting system database of "plans" doesn't include
the "plan" which you agree to. (The phone company -- any phone company
-- is especially egregious on this.
What's most amazing
-- maybe not -- is how all the "mistakes" are in their favor, never
in my favor.
Wizard Drops the Curtain.
This came from yesterday's New York Times Op Ed page. It's a fascinating
piece on Mr. Buffett. Richard Dooling wrote it:
Berkshire Hathaway Corporation held its annual shareholders meeting here last
weekend, drawing a record 27,000 capitalist faithful from all over the world
to worship at the Qwest Center in downtown Omaha. Onstage, the chairman and
investor in chief Warren Buffett and his partner and vice chairman, Charles
Munger, once again entertained the well-washed and well-heeled masses and
educated them in the doctrine of value investing.
not to worship? Berkshire shareholders gained $16.9 billion in net worth last
year alone, an 18.4 percent increase in per share book value. Even more fun,
the guy in charge, despite being the second-wealthiest man in the world, is
a prize ham who loves to play his ukulele, show a video of himself winning
a rigged one-on-one game against LeBron James of the Cleveland Cavaliers,
and then kick off the shareholder meeting by sending the singer Jimmy Buffett
onstage to pretend he is a distant cousin who believes that blood is
thicker than water and therefore he the Margaritaville Man
should be Mr. Buffetts successor.
much discussed at both Saturdays shareholder Q. and A. session and at
the Sunday press conference that was sandwiched between the shareholder-only
shopping day at Borsheims Fine Jewelry and the annual dinner at Gorats
Steak House. Warren Buffett is 76 years old, and Mr. Munger is 83. Nobody
sitting with me in that audience wanted to think about anybody but Mr. Buffett
in charge; his talk of stepping down is as if the Wizard himself, in an unwelcome
inversion of Oz protocol, keeps calling attention to his own mortality.
On the operations
side of Berkshire Hathaway, Mr. Buffett tells the crowd, he has three outstanding
candidates who could replace him as chief executive, and that Berkshires
board of directors knows exactly how to proceed and who should take over if
he should die tonight. On the investment side, Berkshire is not
as well prepared. In the short term, Mr. Buffett says that he would rely on
Lou Simpson, the portfolio manager of Geico insurance (a Berkshire subsidiary),
to fill in for him if the need arose. But Mr. Simpson is only six years younger
than Mr. Buffett, and Berkshire is looking for a candidate who could stay
in charge for the long haul.
and Mr. Munger, therefore, propose to find a person or persons with a proven
ability to invest large sums and to whom they could entrust a chunk of cash
say, just a few billion or so in a portfolio of
investments that could quickly be enlarged, if performance warranted, to the
near-hundred-billion dollars managed by the Wizard himself.
the talk about a viable successor, Mr. Buffet looked to be in good health
and has no plans to retire. He merrily fielded questions about his diet while
washing down Sees chocolates with regular Coke (I hate diet anything).
He attributes his continuing vigor to never smoking or drinking alcohol, to
calories (I like lots of calories), to the longevity of his ancestors,
and to the lack of job stress.
He was his usual
self at the microphone, making impromptu riffs laced with wisecracks, concrete
investment wisdom, jokes and an encyclopedic recall of the history of investing,
with special attention to debacles brought on by the hubris of anybody who
tried to get rich quick. If a reverie takes him off into a flight of high-level
financial jargon on how executives are compensated, he immediately catches
himself and abruptly summarizes with homespun wisdom like, Compensation
committees are cocker spaniels when they should be Dobermans.
werent all merrymaking. Environmentalists and members of Indian tribes
begged Mr. Buffett to have the Berkshire subsidiary PacifiCorp remove hydroelectric
dams from the Klamath River in northern California. And after the Q. and A.
session, Mr. Buffett allotted half an hour for shareholders to enter pleas
for Berkshire to reconsider its investment in PetroChina, a subsidiary of
China National Petroleum, on the theory that the parent company does business
in Sudan and therefore theoretically contributes to the genocide there. Mr.
Buffett was respectful and politic, even visibly moved, but also of the opinion
that he could not influence either matter. All in all, the faithful seem unenthusiastic
about the search for a successor. Perhaps Berkshire could invest in anti-aging
technologies, or maybe a biotech outfit that could clone the man whom Charles
Munger referred to at one point as a ferocious learning machine.
As Mr. Buffet
answered questions over the weekend, the list of his successors essential
qualifications seemed to grow. Any candidate, or candidates, should be able
to see around corners and be wired to detect risks
including new and unforeseen investment hazards for which the past offers
no guidance. In line with Mr. Buffett and Mr. Mungers antipathy for
lavish executive compensation, Berkshires new stock picker in chief
would be expected to remain at the helm for the long term, even though he
or she could make more elsewhere.
A few times
Mr. Buffett expressed the fear that his successor would be the type of investor
who would make 99 intelligent decisions and then one fatal blunder. Both he
and Mr. Munger characteristically played down expectations, proclaiming that
managing $100 billion in assets is like steering an ocean liner and that no
one managing such a vast enterprise could hope to beat the Standard &
Poors 500 by more than 10 percent per year. Instead theyd be more
than pleased to find an investor who could outperform major stock indexes
by several points and not make any huge blunders.
Mr. Buffett says that he personally thinks better and more clearly in Omaha
than he does in New York (less chatter), his successor will not
be required to live here. His replacement could live anywhere, because all
that is really required is the same information everybody else has and
a quiet room to think in.
a tough one for us Omahans to take. Still, we might be appeased if this successor
met a few other qualifications. First, any new chairman or investor in chief
of Berkshire Hathaway should be able to play the board to finesse the king-jack
of trump at bridge when the bid is seven spades. The candidate should also
be able to strum the ukulele; live in a house in central Omaha that he purchased
in 1958 for $31,500; and be willing to appear with Regis Philbin on a mock
game show, Who Wants to Be a Jillionaire?, and then leave in disgust
when told the prize is only a billion.
should also have read every book on investments in the Omaha Public Library
(some of them twice) before age 10, should be a disciple of the economist
Benjamin Graham; should be in love with investing and returns but care little
for spending the money; should be able to donate more than $30 billion to
the Bill and Melinda Gates foundation; should be above all else funny and
... well, there may be more.
perfect Mother's Day present: This is the $204
8-Inch Digital Picture Frame.
Grab a memory card. Load it with pictures of the family. The thing
will cycle through hundreds of photos -- as many as your memory card
will hold. Memory cards it supports are: CompactFlash Card type I, Memory Stick,
Memory Stick PRO, MultiMediaCard and SD Memory Card. I saw a one gigabyte SD
card on sale today for $18.97 from Cyberguys.
That gig will easily hold 670 digital photos from my favorite point and
shoot camera, the Canon SD800.
clarity on this thing is so incredible, it's distracting.
Sarah walked into a pharmacy and told the pharmacist that she needed
asked, "Why in the world do you need cyanide?"
she needed it to poison her husband.
eyes got big and he said, "Lord, have mercy. I can't give you cyanide to
kill your husband! That's against the law! I'll lose my license; they'll throw
both of us in jail. Absolutely not, you can NOT have any cyanide!"
into her purse and pulled out a picture of her husband in bed... with the pharmacist's
looked at the picture and replied, "Well, now. You didn't tell me you had
Kosher computers now available. differ from non-kosher computer:
+ The "Start"
button has been replaced with the "Let's go. I'm not getting any younger!"
+ You hear "Hava
Nagila" on startup.
+ The cursor moves
from right to left.
+ When Spell-checker
finds an error it prompts, "Is this the best you can do?"
+ When you look
at erotic images, your computer intones, "If your mother knew you did this,
she would die."
+ It comes with
disk cleaning software from Manischewitz that advertises it gets rid of all
the "schmutz und drek."
+ When running
"Scan Disk" it prompts you with a "You want I should fix this?"
+ The PC shuts
down automatically at sundown on Friday evenings.
+ It comes with
two hard drives - one for fleyshedik (business) and one for milchedik (games).
+ Best of all,
if you have a kosher computer, you can't get SPAM.
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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