Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Friday, October 28, 2005: "Buy
and Hold" or "Flip and Switch?." My dear friend, Dan
Good, rebukes me,
You morph from
one strategy to another faster than your renowned lightning-like sexual behavior.
Espousing manager selection one day and heavy concentration in few stocks
the next. You dont have the discipline to invest in only three stocks.
You are a born dabbler and need the next best thing (idea) to keep your interest
My dream life would be: Give all my money to half a dozen money managers, take
a laptop and go on the tennis circuit.
It's not going to happen because some of the managers I choose -- with such
extensive research and great due diligence -- have turned out, so far, to be
just goddammed awful. Most are under water for this year. Most don't follow
my philosophy of finite stop losses. Most have bought stocks that I wouldn't
go near with a 10-foot barge pool. One manager bought me stock in the New
York Times, which has fallen 41% since he bought it for me and whose
chart looks like shit and he still holds it (despite my exhortations). Said
I, "I've been in publishing for 30 years. I know how bad it is out there
in print media and how the Times has miserably mismanaged its miserable adventures
Am I a better
manager? Categorically, yes. But the measure of my success is not my sterling
growth rate. It's not great. But it's at least above water, hence better than
most of my managers. My success also stemps from the fact that I've missed investing
in disasters, like the New York Times or Gannett (another newspaper
company which he bought me). I've missed BIG disasters. I've also diversified
into real estate and commodities and stayed heavily in cash -- virtually all
in triple-taxfree municipal floaters -- and only played a few opportunities.
I've stayed in my biotechs. I've stayed with Whole Foods (WFMI) and I've
flitted quickly in and out of special situations as they came along. I closed
my Research in Motion (RIMM) short after I'd reached a $6,000 profit.
And I sold my Novavax (NVAX) after it started falling, but I still made
a $2,500 profit.
The only recommendations I'd make comfortably today would be InSite Vision
(ISV) and VioQuest (VQPH) -- cheap biotech stocks that should double
within the next year. But I wouldn't bet the farm on them, or even back the
truck up. They're worth a shot.
managers get paid when they're invested -- not when they're in cash.
Where now? I'm not optimistic about the overall stockmarket. All the indices
-- the S&P 500, Dow Jones, and NASDAQ -- are down this year. They all look
headed for a substantial loss this year.
Some readers have accused me of being unduly pessimistic. Believe me, I'm not.
I wouldn't be out there, searching, attending conferences, reading, talking,
and investing IF I didn't feel confident. I'd had all my money in my
mattress, like my grandfather did. But I recognize the name of this game is
not buy and hold, or flip and switch... it's Preservation of Capital.
Right now, the bulk of my managers are doing Buy and Hold, which translates
to loss of capital. And that's DUMB.
The housing boom continues to ebb: Sales
of new homes rose 2.1% in September from August, but prices dropped and
the number of homes for sale increased. It's also taking longer to sell homes.
Rising interest rates are taking their toll. Housing has been a mainstay of
the economy, keeping it from falling into recession. But inflation has reared
its ugly head and the Feds are clobbering it with hefty interest rate hikes.
Making money in this environment is "opportunistic" -- Wall Street's
new word for ultra short-term moves -- like my NVAX rise and my RIMM fall.
Banks are sometimes Bancs?:
My friend, the talented hedge fund manager, Dennis Mykytyn of Modern
Capital Management explains:
a law. You cannot use the word "Bank" unless you are a registered
Bank. So you cannot set up a company and call it Bank of Newton.
Securities firms are not Banks, so when they start a broker, they
spell Bank as Banc to get around the law.
It is bizarre.
an flat-screen LCD monitor: This is my desk
at my country house. I'm a multiple screen junkie. It's enormously productive.
The laptop on the left drives the three top screens. The right hand screen is
driven directly by the laptop. The two left ones are driven by the laptop via
a $250 VillageTronic PC Card. (Click
What I've learned:
1. Only buy a digital monitor with a DVI input. These ones each cost around
2. 19" monitors are perfect.
3. Don't put yourself in a corner and circle the screens around you, as I have
here. Better to have the screens in a straight line.
4. The ideal height for the wooden stand is 9 1/2 inches. It should be 10 inches
deep and at least 80 inches wide.
5. The best monitors are those with short stands. These ones are ViewSonic Their
stands were far too high. I had to remove them and attach them to a triple monitor
stand, which was a pain. Waste of time and money.
6. A cheap 13" TV screen works just fine. Be best if you can get one with
built-in DVD and VCR drives, or at least one DVD drive.
Imagine when LEDs replace incandescents: One
third of the electricity produced on Earth is used to power electric light bulbs.
well threats work: With the threat of economic sanctions
looming over Syria, officials said this week they would reconsider a decision
that stripped Kurds of their citizenship. Ask yourself one question: Why would
any country strip citizenship rights from their hardest-working, most successful,
brightest group of people? Go figure!
How Wall Street "humor" works. On
October 19, John Harris, managing director of the enormously successful Carlyle
Group of private equity funds, gave a PowerPoint presentation. Remember the
best humor is based on truth. Among his first few slides were these:
FYI: John F. Harris
is a Managing Director and Carlyle's Chief Financial Officer. Mr. Harris has
overall responsibility for the firm's investor reporting, internal controls
and financial management. He is based in Washington, DC. As Chief
Financial Officer, Mr. Harris has been instrumental in structuring Carlyle's
private equity funds and negotiating terms with limited partners. In addition,
Mr. Harris has coordinated the development of Carlyle's global compensation
Now go back and read his slides. They're brilliant.
How Marketing Works
You're a lady and you see a handsome guy at a party. You go up to
him and say, "I'm fantastic in bed."
That's Direct Marketing.
You're at a party
with a bunch of friends and see a handsome guy. One of your friends goes up
to him and, pointing at you, says, "She's fantastic in bed."
You see a handsome
guy at a party. You go up to him and get his telephone number. The next day
you call him and say, "Hi, I'm fantastic in bed."
You see a guy
at a party, you straighten your dress. You walk up to him and pour him a drink.
You say, "May I," and reach up to straighten his tie, brushing your
breast lightly against his arm, and then say, "By the way, I'm fantastic
That's Public Relations.
You're at a party
and see a handsome guy. He walks up to you and says, "I hear you're fantastic
That's Brand Recognition.
You're at a party
and see a handsome guy. He fancies you, but you talk him into going home with
Your friend can't
satisfy him so she calls you.
That's Tech Support.
You're on your
way to a party when you realize that there could be handsome men in all these
houses you're passing. So you climb onto the roof of one situated near the center
of the block and shout at the top of your lungs, "I'm fantastic in bed!"
That's Junk Mail.
You are at a party
when a well-built man walks up to you and gropes your breast and grabs your
That's the Governor of California.
You like it, but
twenty years later your attorney decides you were offended and he files a lawsuit
on your behalf.
A woman was having a passionate affair with an inspector from a pest-control
company. One afternoon they were carrying on in the bedroom when her husband
arrived home unexpectedly. "Quick," said the woman to her lover,"
into the closet!" and she pushed him in the,closet, stark naked.
The husband, however, became suspicious and after a search of the bedroom discovered
the man in the closet. "Who are you?" he asked.
"I'm an inspector from Bugs-B-Gone," said the exterminator.
"What are you doing in there?" the husband asked.
a complaint about an infestation of moths," the man replied. "And
where are your clothes?" asked the husband.
The man looked
down at himself and said, "Those sneaky little bastards."
+ Dumb reasons we hold losing stocks. Click
+ How my private equity fund is doing. Click
+ Blackstone private equity funds. Click
+ Manhattan Pharmaceuticals: Click
+ NovaDel Biosciences appeals. Click
+ Hana Biosciences appeals. Click
+ All turned on by biotech. Click
+ Steve Jobs Commencement Address. The text is available:
Click here. The full audio is available. Click
+ The March of the Penguins, an exquisite movie. Click
+ When to sell stocks. Click
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.
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