Technology Investor || Harry Newton's In Search of the Perfect Investment

Previous Columns
9:00 AM Wednesday, November 16, 2005: Yesterday's perfect investment was the Treasury's I Bond which is presently paying 6.73% -- subject to federal taxes, but not state or local. There are rules and limitations, but fortunately, workarounds:

1. You must hold them for one year. If you redeem them within the first five years, you'll forfeit the three months most recent interest. That's not onerous.

2. Theoretically you're only allowed to buy $30,000 each year. But reader Josh Cohen points out:

Another reader writes, the pricing is 6.73% annualized for 6-months from the first date of the month you purchase them in, as I understand it. Buy toward the end of the month and the interest is still calculated from the first of the month, I believe.

Buy it before the May 1 re-pricing, and you get the current base rate of 1.0%, which is locked for the life of the 30-year bond. Add the inflation factor (that's why they're called an I Bond) and the total is 6.73%, even if bought and settled/issued by April 30. And the 6 month clock starts. After that period, the next 6 months is 1.0% base plus the new May 1st inflation factor.

A great occupation for your kids: Become an accountant/auditor. Sarbanes Sarbanes-Oxley, the law Congress passed in 2002 to rein in corporate-accounting abuses, has become The Auditors' Get Rich Quick Act. Auditing bills are skyrocketing. It's gets even better. In the old days, you could ask your auditors for advice and get it. No more.

He had a contract for $13 million for the office building. That was a bargain at under $25 a square foot. Then he did extensive due diligence. He didn't like what he found. He offered $8 million. They countered with $9 1/2 million -- a 27% reduction. They're still negotiating. There are five lessons here:

1. The asking price is always negotiable, even in a "hot" real estate market.
2. Don't fall in love with the property. Be prepared to walk.
3. When God closes a door, She opens a window. There'll always be a better deal.
4. Cash is far better than saving an awful deal.
5. Keep looking.

Advice to would-be private equity investors: Bob Metcalfe invented Ethernet, the legend goes. He also built a successful company called 3Com. . He's now a venture capitalist.

Bob Metcalfe

An interview in this week's Electronic Engineering Times contains:
EET: How do you see the role of the VC?
Metcalfe: I began with a conceit that I have since tempered. VCs split their time between choosing companies and helping companies, and my conceit was that since I had built a successful company [3Com], I was going to be helpful. What I've learned over the past five years is that it's much more important to choose, rather than to be helpful. You have to do both, obviously, but if you're going to generate a big return for your investors, which is our job, then you have to be sure that you choose very carefully, as there's a limit to just how much help you can give a company.

EET: Did you expect rapid turnaround, and has that happened?
Metcalfe: There was a period during the bubble when rapid turnaround was the rule. Now it's the exception. We plan on five to seven years between initial investment and liquidity.

TiVO deleting all your programs? I can't live without my TiVo. But I wouldn't touch its stock with a 20 foot barge pole. My biggest issue with my TiVo is that it prematurely deletes programs I asked it to record. According to TiVo management, the reason is that my TiVo hard disk is "too full." OK. I've cut my "default" recording quality to "basic." And I'm making sure everything I record is in "basic quality." We'll see.

A Touch of the Poet now playing at Studio 54: We saw it last night. It's a great play by perhaps the greatest American playwright, Eugene O'Neill who won the Pulitzer Prize a record four times and is the only American dramatist ever awarded the Nobel Prize in Literature. The play addresses the problem we all will face -- What happens when one shining moment of glory -- our "15 minutes of fame" -- is over? How do we live a life outside "the spotlight"? The answer is not easy. I remember Johnny Carson saying that the first thing he learned about happy retirement was not to stay in his robe all day. Get up. Have a shower. Get dressed. Pretend you're going to work. The play deals with more weighty issues. It's wonderful. Highly recommended. Click here.

Remember yesterday's photo? I wrote every child who's visited Central Park has posed with, or on this statue, "dedicated to the indomitable spirit of the sled dogs that relayed Dan Titoxin 600 miles over ice, across treacherous waters through Arctic blizzards from Nenana to the relief of stricken Nome in the winter of 1925. Endurance. Fidelity. Intelligence."

Many readers wrote and told me the dog was called Balto. Here's his story, courtesy PBS.

BALTO

In 1925, a life-or-death race to rescue the children of Nome, AK, from disease made an international hero of one sled dog -- and eventually led to the creation of Alaska's Iditarod sled dog race, the subject of NATURE's SLED DOGS: AN ALASKAN EPIC.

Nome Rescue

In 1925, sled dogs helped stem a diphtheria outbreak.

In January 1925, doctors realized that a potentially deadly diphtheria epidemic was poised to sweep through Nome's young people. The only serum that could stop the outbreak was in Anchorage, nearly a thousand miles away. But the lone aircraft that could quickly deliver the medicine had been dismantled for the winter. In desperation, officials turned to a much lower-tech solution: moving the medicine by sled dog.

Soon, a musher embarked from Anchorage on the first leg of a remarkable dog-sled relay aimed at delivering the needed serum to Nome. More than 20 mushers took part, battling temperatures that rarely rose above 40 degrees below zero Fahrenheit and winds that sometimes blew strong enough to knock over sleds and dogs. Reporters brought news of the race to a world suddenly transfixed by the drama in the far north.

Incredibly, just six days later, on February 2, 1925, Gunner Kaassen drove his heroic dog team into the streets of Nome. In the lead of his team was a husky named Balto, whose furry face soon became known around the world. A year later, in honor of the epic trek, admirers erected a statue of Balto in New York City's Central Park.

Balto

Balto became known around the world.

Balto was suddenly a world-famous celebrity; for two years after the serum run, the dog and some of his teammates traversed the continental United States as part of a traveling show. After Balto died in 1933, his body was preserved and displayed at Cleveland's Natural History Museum. In 1995, a popular animated movie about Balto was released, adding to his fame.

Long after his death, Balto's popularity lives on. Today, some Alaskan schoolchildren are campaigning to bring Balto back to his home state. The students want his body moved to the Iditarod Trail Sled Dog Race museum in Wasilla. But Cleveland officials aren't ready to give Balto back, noting he spent more than half his life in their city. There are plans in the works, however, for Balto to return to Alaska as part of a temporary exhibit at the Anchorage Museum of History and Art -- a testament to the strength of Balto's memory and a fitting memorial to his indomitable spirit.

The coming hard winter:
It was autumn, and the Indians on the remote reservation asked their new Chief if the winter was going to be cold or mild.

Since he was an Indian Chief in a modern society, he had never been taught the old secrets, and when he looked at the sky, he couldn't tell what the weather was going to be.

Nevertheless, to be on the safe side, he replied to his tribe that the winter was indeed going to be cold and that the members of the village should collect wood to be prepared. But also being a practical leader, after several days he got an idea. He went to the phone booth, called the National Weather Service and asked, "Is the coming winter going to be cold?"

"It looks like this winter is going to be quite cold indeed," the meteorologist at the weather service responded.

So the Chief went back to his people and told them to collect even more wood in order to be prepared.

A week later, he called the National Weather Service again. "Is it going to be a very cold winter?"

"Yes," the man at National Weather Service again replied, "it's definitely going to be a very cold winter."

The Chief again went back to his people and ordered them to collect every scrap of wood they could find.

Two weeks later, he called the National Weather Service again. "Are you absolutely sure that the winter is going to be very cold?"

"Absolutely," the man replied. "It's going to be one of the coldest winters ever."

"How can you be so sure?" the Chief asked.

The weatherman replied, "The Indians are collecting wood like crazy."

The Tennis Masters in Shanghai: ESPN has it every morning. It ends on Sunday. Federer is playing and winning, as usual.

Posting this column at 9:00 AM, not 8:30 AM: I rarely made my 8:30 AM deadline. Instead of getting more disciplined, I've inched the deadline forward to 9:00 AM every day.

Recent column highlights:
+ Dumb reasons we hold losing stocks. Click here.
+ How my private equity fund is doing. Click here.
+ Blackstone private equity funds. Click here.
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell stocks. Click here.

Harry Newton

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. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
Go back.


	Incorporating Technology Investor