Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EST, Friday, May 8, 2009. It's
appropriate that just as Harry warms up to the market, it cools off to him.
It wasn't a big cool-off, just 102 points down on the Dow yesterday. But now
some of my favorite gurus are calling Mr. Market "tired."
It's a stupid game trying to predict Mr. Market from one day to the next or
even one month to the next -- though there are arguments (see below). Suffice
there are relative bargains in the oil service companies -- if measured by
their high dividend yields and the rising price of oil. In the search for
things to buy that will hold their value in the upcomking inflationary world,
oil appeals. Maybe so. Maybe not. Emails my favorite oil investment guru,
oil is rising now is pure speculation. There's no cost pressure, no other
reason beyond speculation. Huge amounts of $5 cost oil is being moth-balled
by OPEC. There won't be cost pressure for another year or two even if the
economy starts growing rapidly. But there will be and now is a huge amount
of speculative pressure on futures prices. Partly its speculation on a future
supply problem and partly its asset class investors who believe it's good
to own oil in a potentially inflationary and weak-dollar environment.
You can read
more Kingsdale intelligence (and I mean that seriously) at his site Energy
big unknown with Mr. Market. It's the money
on the sidelines. My friend Dan Critchett, emails:
Been reading your column carefully the last few weeks. How come nobody seems
to consider what will happen to the stock market if we all start buying
STOCKS next couple of years with all the money that's being printed (and
eventually making its way into pension funds, insurance pools and our savings
accounts)? I'd be interested to see an economist calculate what a mere 30%
of all that new money might do to if spent on stocks assuming that its deployment
actually does turn the GDP flat or positive again so we're not going backwards.
BOOM... Dow at 14,000 again? Why does everybody assume we'll be spending
all this inflationary cash on goods and services? Isn't it already kind
of obvious that somebody or, more accurately, a bunch of somebody's running
pension funds and insurance companies with the investment horizons everybody
says is the "solution", have already figured this out and bought
stocks back from the abyss already? A little inflation is GOOD for companies,
entrepreneurs, and banks alike. It widens their profit margins without reducing
demand because the demand is largely invisible. Cash may be inflationary,
but it's also what you buy stocks with.
is the top. We shall shortly see Dow at 7,000." Todd
calls this morning. . This is his Market Call. He says the runup from
mid-March was "irrational exuberance." And it's going down from
here," he says. "The market has moved way too far too fast. Things
in the economy are still awful and not getting much better. What's happened
is that we've just become inured to the agony. The worsening may be slowing.
But it's still pretty awful. The rally has come at the time of Spring Fever.
The sun came out. Everybody felt better. And bingo the market went higher.
Now what? Higher? No way. I don't see it. Cap One was $10. It's now $26. Deutsche
Bank was $19 . It's now $56. Citigroup was 98 cents. It's now $3.81. ... Look
at all the low priced stocks. They've all had fourtold rises in a matter of
weeks. This is insanity."
The Dow closed last night at 8409. The March low was 6470.
just don't listen. And then there's the $106
million that was blown on a viable web marketing company. The bottom line
of the failure. No one listened. My favorite story: The VCs took over. They
called an all-day meeting of manager. They told all the managers to prepare
a report on what's wrong and what should be done. The day of the meeting comes.
The managers arrive with their reports, their PowerPoints and their handouts.
The VCs choose to skip the presentations and lecture each of the mangers on
what they -- the VCs -- think should be done. It gets better. The VCs rebuke
the company's best salesman because she spends too much time on the phone
with customers, and hence handles the fewest calls per day.
Once I put money
into an LBO fund that was to invest in media -- magazines, trade shows, databases,
etc. One day they announced they were investing in a local phone company called
a CLEC. I beatled over to their boardroom. "Please," I begged, "sell
that CLEC investment. This is something I actually know something about. Don't
invest any more money." They dismissed my concerns as those of a nutcase.
Nine months later after they had invested about $30 million plus, they wrote
off their entire investment in telecommunications -- about $72 million.
No one listens.
This is a good rule to work with. If you invest in a startup, make sure you
have control or they respect you enough to listen to you. Most don't and won't.
Which is another reason not to invest. As if you need another. Which
brings me to...
successful businesses are partnerships. Think
Microsoft, Apple, Intel and Hewlett-Packard. They all started as partnerships.
I started my own business. But it only grew and really prospered when Gerry
Friesen came in as 50-50 partner. Gerry recently celebrated his 60th birthday.
This is the
talk I gave at his birthday party. If you're forming your own new business
-- and this is the perfect time -- think about your future partner in these
have a friend, partner, teacher and mentor like Gerry Friesen.
successfully together for 20-plus years. It was a wonderful, wonderful time.
I could bore you with innumerable stories. We're here to celebrate Gerry.
the stories, I want to focus on why our partnership succeeded so spectacularly.
And why 30 years later I'm so pleased to be standing in Beaver Creek thousands
of miles from where I live.
-- whether marriages or businesses -- are based on four human characteristics.
one is honesty. Gerry is the most honest person I've ever met. And
probably ever will meet. The dictionary defines honest as trustworthy. Money
is a good measure of honesty. For years -- for decades -- Gerry and I had
one bank account with two people who could write and sign checks -- Gerry
and Harry. And never once in all those years did one of us ever ask the
other, "Why did you write that check? Why did you spend that money?"
characteristic is respect. Gerry has awesome skils and great judgement.
But it isn't the skills or the judgement that are key. It's the fact that
you, the partner, believe his skills and judgement are awesome and you respect
them. It doesn't mean that you don't disagree with Gerry, but if you have
the respect for him, (for example, which I have) that elevates the whole
discussion to a higher and more productive level. And the end result is
the decision -- the new business, the new magazine, the new trade show,
whatever, etc. -- turns out to be so much better.
characteristic is complementary skills. Gerry can do many things
better than I can. And I can do some things better than he can. Gerry is
a better salesman. But I'm a better writer. The funny thing was because
we respected each other we taught each other. Of course, I'm still a lousy
salesman, but Gerry turned out to a really good writer.
is commonsense. Gerry has more commonsense than I do. When you're
running a very public business like we were -- a magazine publishing and
trade show company -- then it really helps to have someone whose feet are
on the ground -- and can reign in the other partner's madness craziness.
Over the past
25 years, Gerry spent a lot of time apologizing for me and my lack of commonsense.
I now formally apologize to you Gerry for all the times you fell on a sword
for me. I'm no longer an asshole.
So there you
have it -- four human traits -- total honesty, mutual respect. awesome skills
and great commonsense -- which I love about Gerry.
I would not be where I am today. Gerry is "a once in a lifetime"
person. I pray that all of you meet "Your Own Gerry." For all
I know, maybe some of you have already. Treasure them.
Madoff's Secretary Spills His Secrets. From the latest Vanity Fair:
+ Bernie Madoff
was a sexist, egomaniacal, short-tempered control freakyet everybody
you know what happens is," said Madoff, "it starts out with you
taking a little bit, maybe a few hundred, a few thousand. You get comfortable
with that, and before you know it, it snowballs into something big.
was irresistible to women and had a roving eye. He frequently
visited massage parlors.
was flirtatious and had a habit of making sexually suggestive remarks: Oh,
you know youre crazy about me, he would say to me (his secretary).
Sometimes when he came out of his bathroom, which was diagonal to my desk,
he would still be zipping up his pants. If he saw me shaking my head disapprovingly,
he would say, Oh, you know it excites you. If a pretty young woman
came in, hed say, Do you remember when you used to look like that?
Id tell him, Knock it off, Bernie, and hed go, Ah,
you still look good. Then hed try to pat me on the ass.
All this according
to his secretary of more than 20 years, Eleanor Squillari, who co-authored
the 9,000-word article in the June issue ofVanity Fair.
a charming story:
(Reuters) - Afghanistan's only known pig has been locked in a room, away from
visitors to Kabul zoo where it normally grazes beside deer and goats, because
people are worried it could infect them with the virus popularly known as
The pig is
a curiosity in Muslim Afghanistan, where pork and pig products are illegal
because they are considered irreligious, and has been in quarantine since
Sunday after visitors expressed alarm it could spread the new flu strain.
now the pig is under quarantine, we built it a room because of swine influenza,"
Aziz Gul Saqib, director of Kabul Zoo, told Reuters. "We've done this
because people are worried about getting the flu."
more than 1,000 people have been infected with the virus, according to the
World Health Organization, which also says 26 people have so far died from
the strain. All but one of the deaths were in Mexico, the epicenter of the
no pig farms in Afghanistan and no direct civilian flights between Kabul
that, but most people don't have enough knowledge. When they see the pig
in the cage they get worried and think that they could get ill," Saqib
The pig was
a gift to the zoo from China, which itself quarantined some 70 Mexicans,
26 Canadians and four Americans in the past week, but later released them.
rundown, Kabul Zoo is a far cry from zoos in the developed world, but has
nevertheless come a long way since it suffered on the front line of Afghanistan's
1992-4 civil war. Mujahideen fighters then ate the deer and rabbits and
shot dead the zoo's sole elephant. Shells shattered the aquarium.
climbed into the lion enclosure but was immediately killed by Marjan, the
zoo's most famous inhabitant. The man's brother returned the next day and
lobbed a hand grenade at the lion leaving him toothless and blind.
The zoo now
holds two lions who replaced Marjan who died of old age in 2002 as well
as endangered local leopards. In all, it houses 42 species of birds and
mammals and 36 types of fish and attracts up to 10,000 visitors on weekends.
yourself for ticks. I just spent the last hour digging a deer tick
out of the back of Susan's leg. These things are dangerous. Please check yourself
and your spouse after you've been anywhere near the woods. I thought it was
too early for Deer Tick Season. But it isn't.
This is a deer tick. Critters like this give you Lyme Disease. A friend has
had it for over 10 years and still suffers attacks and excruitiating pain.
Remove them instantly if not sooner. They're seriously dangerous.
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
click on my email address. You have to re-type it . This protects me from
software scanning the Internet for email addresses to spam. I have no role
in choosing the Google ads on this site. Thus I cannot endorse, though some
look interesting. If you click on a link, Google may send me money. Please
note I'm not suggesting you do. That money, if there is any, may help pay
Michael's business school tuition. Read more about Google AdSense,
here and here.