Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Tuesday, May 3, 2005: The
Fed meets today. It's scheduled for another quarter point hike. That means short-term
rates will rise. Long-term rates won't. They're a function of the supply and demand
for money. And right now there are huge amounts of money sloshing around, looking
for somewhere, anywhere to go.
The Fed will also release a short statement talking about its obsession. Is it
worried about inflation? Is it worried about the economy. This one is hard to
predict. I'm guessing it will play neutral for fear of screwing the stockmarkets
more than they're already screwed up.
to October typically sucks in the stockmarket: Sell
in the summer. Buy in the fall. It's an old adage.
The Stock Trader's Almanac calculates the hypothetical return that would have
been achieved by investing $10,000 on Nov. 1 each year and then selling on the
following April 30, going to cash, and then reinvesting the entire principal
amount on the next Nov. 1. The investment is made in the Dow Jones Industrial
Average and no accounting is made for taxes, dividends or transaction costs.
if followed diligently for the past 54 years, would have turned the initial
$10,000 into $492,060.
if the $10,000 were invested in the same way, but from the May 1 to Oct. 31
time period each year instead, the $10,000 initial investment after the same
54 years would now be worth just $9,682. In other words, the total return
from the May-to-October strategy would be a loss.
According to the
Almanac, there have only been 12 down November-to-April time periods for the
Dow in the past 54 years. Of those 12 down years, 10 of them were followed by
May-to-October returns that failed to make up for the November-to-April declines.
Five of those 10 double-down years had May-to-October declines that were larger
than the November-to-April declines.
have to be in the game: Jobs don't produce
wealth. Ownership does. Once you have ownership, you give luck the opportunity
to play her hand. All the people we all know as "successful" are lucky.
They buy right. They buy logically. They play their cards, but they allow Lady
Luck to play hers. Right now real estate is where Lady Luck is playing her hand.
Item: A dear friend complained last night that her husband wanted to buy yet
another home. They already have four. She complained she didn't want the burden
of taking care of the new home. Yet, she admitted that every time they'd bought
a home, they'd sold it later for far more than they had paid for it.
brings me to the absolute worst investment you can ever make -- buying an RV
(recreational vehicle). These pretend-houses drop in price, in contrast to real
houses, which go up in price. (Most expensive cars follow the same pattern --
down in price.)
we spend our money: I've become fascinated with RVs ever since I
visited an RV park as potential real estate investment. This red Airstream SkyDeck
costs $261,996 new and sells to "Nascar" crowd, who watch the races
from their roof. It doesn't sell to anyone else because the whole left of the
inside of the vehicle is a staircase. A friendly dealer told me there's also
more share under the awning than under the umbrellas on the roof.
The SkyDeck is an RV. This gray thing is called a "bus." It's much
bigger. It sits on the chassis of a Greyhound bus. It also costs more. New,
it costs around $1.1 million, but you can pick this one up for only $488,500.
On the left is
the outside. On the right is the detail on the ceiling. A local Leonardo did
Here's how the seller describes his monstrosity: "Rear bedroom with a Cross
Island queen bed with rear closets, Walk thru bath with private toilet closet,
Galley with side by side Fridge & Dinette table & chairs, Salon with
L shaped 102" Leather Couch, Motosat Satellite with GPS, Stacked W/D (washer/dryer),
Automatic awning, 500 hp Series 60 engine, Travertine Tile flooring in the Galley
& Bath, TWO Vanities, one each in bedroom & Bath, Dishwasher, Fiber
Optic ceiling lighting, Bays 2 & 3 are open pass throughs with slide out
Joey Beds." If you want to buy it, Click
The real Sistine Chapel. You can't afford it. Moreover, it's too big for
Check. Check. After waiting 16 weeks, our carpenter finally showed
yesterday with the shelves and cabinets we'd ordered. We couldn't find a place
for the six inch shelves, until we checked his original specs and found that
they were meant to be six feet. Check. Check. Check. It's a good motto.
is such a great store:
One day in line at the company cafeteria, Ron says to John behind him, "My
elbow hurts like hell. I guess I better see a doctor."
you don't have to spend that kind of money", John replies. "There's
a diagnostic computer down at Wal-Mart. Just
give it a urine sample and the computer will tell you what's wrong and what
to do about it. It
takes ten seconds and costs ten dollars, lot cheaper than a doctor."
So Ron deposits
a urine sample in a small jar and takes it to Wal-Mart. He deposits ten dollars
and the computer lights up and asks for the urine sample. He pours the sample
into the slot and waits.
Ten seconds later,
the computer ejects a printout: "You have tennis elbow. Soak your arm in
warm water and avoid heavy activity. It will improve in two weeks. Thank you
for shopping @Wal-Mart."
while thinking how amazing this new technology was, Ron began wondering if the
computer could be fooled. He mixes some tap water, a stool sample from his dog,
urine samples from his wife and daughter, and his sperm sample for good measure.
back to Wal-Mart, eager to check the results. He
deposits ten dollars, pours in his concoction, and awaits the results.
The computer prints the following:
1. Your tap water is too hard. Get a water softener. (Aisle 9)
2. Your dog has ringworm. Bathe him with anti-fungal shampoo. (Aisle 7)
3. Your daughter has a cocaine habit. Get her into rehab. (Aisle 4)
4. Your wife is pregnant. Twins. They aren't yours! Get a lawyer! (Aisle 8)
5. If you don't stop playing with yourself, your elbow will never get better.
Thank you for
shopping @ Wal-Mart.
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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