Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Tuesday, May 17, 2005: As
assets like real estate skyrocket in price, the question is "When to sell?"
A friend owns a fish farm he bought several years ago. He's been offered many
times what he paid. The fish farm has now become a hot real estate development
property, not a fish farm. My friend knows little about developing real estate
for houses and shopping centers. He knows a lot about fish farms. My advice: Sell
IF you can invest your profits in another fish farm -- perhaps one
further away at lower prices.
In short, The
question of selling becomes less and less the price (though it's important to
get the price up) and more and more on how well you can invest the proceeds.
don't make this stuff up:
+ Paul Allen invested
$8 billion in Charter Communications. It's now worth $423 million, about 95%
less. Paul got his money from co-founding Microsoft. Obviously Mr. Allen never
heard of our 15% Stop Loss Rule.
+ May 16 (Bloomberg) -- Deutsche Bank AG, Europe's third- largest lender, plans
to start its first hedge fund for Muslim investors, shunning investments in
alcohol, tobacco and securities that pay interest. (I love the last one.)
+ UPS buys Overnite
Corp. for $1.25 billion in cash. Overnite who? Overnite calls itself
"the leading provider of less than truckload transportation services."
Overnite reported net income of $63.3 million in 2004 on revenue of $1.65 billion.
That means UPS paid a multiple of 19.8 times for the company. Sounds
like a good deal to me.
+ So far this
year, the biggest U.S. airlines have reported losses totaling $3.1 billion.
But, some airline CEOs say this may actually be a peak in the economic cycle
for them -- meaning there's nowhere to go but down, writes Scott McCartney in
today's Wall Street Journal.
+ Morticians who
book corpses on JetBlue are entitled to a free round-trip ticket after about
15 "ship-outs." According to today's Wall Street Journal, "The
yield on transporting human remains -- I want to be sensitive when I say this
-- is definitely worth our while," says Dale Anderson, director of
mail and cargo for JetBlue. "I have to move close to 1,000 pounds of
general cargo to equal the revenue of one human remain."
+ When she first became an AT&T saleswoman in the early 1970s, Carly Fiorina
was labeled the "token bimbo."
+ Newsweek retracted its story that someone in the U.S. military had
flushed a copy of the Koran down a toilet. As a result of Newsweek's story,
16 people have been killed and more than 100 injured. The Newton family motto
is CHECK, CHECK, CHECK. In its quest for "scoops," the nation's press
has become very hurried and lax. The takeaway lesson: Read the press with a
jaundiced eye. Not everything you read is true. But also be aware that "breaking"
stories evolve in ways reporters and editors never imagined. Remember how snippets
of Watergate eventually lead to a president resigning?
reason NOT to keep your money with Morgan Stanley: In
a lawsuit arising from the 1998 merger of Sunbeam and Coleman, a Florida jury
unanimously decided that Morgan should pay Revlon Chairman Ron Perelman $604.3
million. Mr. Perelman claimed that Morgan tricked him into selling his 82%
stake in Coleman in exchange for Sunbeam stock that crumbled to dust after the
discovery of massive accounting fraud. Morgan is subject to paying punitive
damages, too, which will be set in the next phase of the trial. Morgan's total
liability could rise to $2.7 billion. Couldn't happen to a nicer firm.
news for wine drinkers: The
Supreme Court struck down state laws that restricted direct sales across state
lines by wineries to consumers. The ruling ultimately means that you and I will
be able to order our wine from wherever we please and have it delivered to wherever
we want. Long term, the price of wine should fall as new competition explodes.
don't. More and more
Americans are turning to debt to pay for lifestyles their current incomes can't
support, according to today's Wall Street Journal. "Financial
firms have turned credit for the masses into a huge business, as workers use
borrowing to boost sluggish wages." Borrowing to buy appreciating assets
-- like homes -- makes sense to me. Borrowing to finance lifestyle makes zero
sense to me.
In 1757, Benjamin Franklin wrote, "Better to go to bed supperless, than
wake up in debt."
of the week: A lady friend
actually said this to a dear friend's wife. "I don't think Dan knows
how lucky he is to be married to a woman who spends no money on clothes."
obsesses with security: If
you use Microsoft's Outlook, be aware that it blocks 71 types
of files. It does this by looking at the file's extension -- the three or four
letters after the dot. What's worse is that the ONLY way you can receive
files with extensions such as exe, com and vbs, is to ask the person sending
you the file to name to something else -- like myfile.exe_extra -- and
then send it. Microsoft allows you send standard Office files like doc and xls,
but not pst, which is the name of the file which Outlook itself stores all contacts,
emails and calendar in. (Go figure.)
to understand women:
A man walking along a California beach was deep in prayer. Suddenly
the sky clouded above his head and, in a booming voice, the Lord said, "Because
you have TRIED to be faithful to me in all ways, I will grant you one wish."
The man said,
"Build a bridge to Hawaii so I can drive over anytime I want.
said, "Your request is very materialistic. Think of the enormous challenges
for that kind of undertaking. The supports required to reach the bottom of the
Pacific! The concrete and steel it would take! I can do it, but it is hard for
me to justify your desire for worldly things. Take a little more time and think
of something that would honor and glorify me."
The man thought
about it for a long time. Finally he said, "Lord, I wish that I could understand
my wife. I want to know how she feels inside, what she's thinking when she gives
me the silent treatment, why she cries, what she means when she says nothing's
wrong, and how I can make a woman truly happy."
The Lord replied,
"You want two lanes or four on that bridge?"
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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