Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST Wednesday, May 3, 2006: Visited
a couple of my money managers yesterday -- "hedgies" as my friend
Ed calls them. Both are young -- in their thirties. Both are hungry, which means
their returns are big, most of the time, and volatile, all the time. But if
you want BIG returns, you have to have some money with young managers. You also
need to understand that these guys don't understand many of the market's nuances.
For example,as your reputation grows and your fund gets larger, taking large
positions in small issues gets increasingly dangerous. You can't get
out quickly. Your getting out will hurt the stock and you'll suffer. One of
my hedgies had a large short position in a small cap stock. When he wanted out,
he had to chase the stock up to cover. And the stock rose and rose. He got seriously
lesson here is obvious. Choosing a manager is far more than eyeing his stellar
track record. It's also understanding his style, his propensity to gamble and
his understanding of stockmarket nuances. I'm beginning to favor smart managers
who have stumbled. Gives them precious, expensive experience -- hopefully on
someone else's watch.
friend lost $2 million on Rochelle Communications: I lost about $10,000.
Most startups don't make it. Most entrepreneurs don't know how to "entrepreneur."
The failures are pigheaded and don't listen. The failures lack marketing and
sales skills. They honestly believe that customers will flock to their door
because they have a better product. My fiend made the fatal mistake of becoming
chairman and continuing to dribble his own money into Rochelle over the years.
Good money after bad. Stupid!
The worst position you can have is a minority position in a private company.
You lack all rights -- even the right to receive financial reports. Entrepreneurs
hate dealing with venture capitalists, because VCs negotiate serious rights
for themselves -- like the right to fire the founder and get the company some
"still" owes me $237,000+. The
background: On Monday Canadian Oil Sands Trust split five to one. Citigroup
"forgot" to credit me my 8,000 additional shares, but showed that
the price had fallen $151.78 to
$32.98. Hence the "loss." Several developments since then:
First, a bunch of readers said missing splits was common in online accounts.
Eventually, things got righted. I gather the key is both patience
(there's often a delay of several days) and screaming. I don't know of cases
where the extra shares failed to be credited. But I bet, given the absolutely
abysmal state of Wall Street computer systems, there have been cases -- and
the poor investor simply got screwed. The obvious answer is to set your online
account up to send you alerts every time one of your stocks falls more than
15% overnight. Surprise. Surprise. I can't do blanket alerts with Citigroup.
I have to do them stock by stock. Which is a gigantic pain.
Second, Citigroup so far hasn't righted my loss. And no one seems to care about
my plight. There is talk about the extra shares will land in my account on May
7 when the news shares are "paid,", though why the delay escapes me.
to a presentation by ROO On Line Broadcast Network (RGRP): Tiny company
trying to be the Google of the Internet video space and the TV network of the
Internet video space. Good trends:
1. Video is moving to the Internet.
2. Video is popular with web sites.
3. Video is popular with viewers.
4. Advertisers love targeted commercials, which the Internet can provide better
(and cheaper) than TV networks.
5. ROO has neat technology that allows it to show decent quality videos. For
an example, click here.
RGRP is an interesting speculation, if only because of the attention it is getting
from Wall Street types. Yesterday's meeting had over 80 people. A year at a
similar luncheon it got but a handful.
solution to the gas crisis?
I hope this photo is real. It's just too
One Sunday morning, the pastor noticed little Alex standing in the
foyer of the church staring up at a large plaque. It was covered with names
with small American flags mounted on either side of it.
The seven year
old had been staring at the plaque for some time, so the pastor walked up, stood
beside the little boy, and said quietly, "Good morning Alex.""Good
morning Pastor," he replied, still focused on the plaque.
what is this?" he asked the pastor.
The pastor said,
"Well, son, it's a memorial to all the young men and women who died in
just stood together, staring at the large plaque.
Alex's voice, barely audible and trembling with fear, asked, "Which service,
the 9:45 or the 11:15?"
Dedicated to Todd, who broke his ankle yesterday.
Poor clumsy man:
An elderly couple,
Ray and Bessie, are "seniors" in Texas. Ray always wanted a pair of
authentic cowboy boots. Seeing some on sale one day, he buys them, wears them
home, walking proudly.
He walks into
the house and says to his wife: "Notice anything different about me?"
Bessie looks him
storms off into the bathroom, undresses, and walks back into the room completely
naked except for the boots.
Again, he asks,
a little louder this time, "Notice anything DIFFERENT NOW?"
Bessie looks up
and says: "Ray, what's different?! It's hanging down today, it was hanging
down yesterday, and it'll be hanging down again tomorrow."
Furious, Ray yells:
"AND DO YOU KNOW WHY IT IS HANGING DOWN, BESSIE? IT'S HANGING DOWN BECAUSE
IT'S LOOKING AT MY NEW BOOTS!!!!!!!!!"
To which Bessie
replies: "Shoulda bought a hat, Ray. Shoulda bought a hat."
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
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