Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Wednesday, October 31, 2007:
Oil, gold and many commodities are at peak and clearly going higher. After being
basically flat last year, my commodities fund is now up 20% this year. I'm thinking
I'm a genius for sticking with it. (Or just bone lazy.) The big growth in commodities
consumption comes from India and China -- especially China which grew over 11%
in the latest quarter -- if you can believe Chinese government
interesting oil site is McDep.com --which
dubs itself as independent energy valuation. They just released a paper called
Meter Reader -- the Black Swan,
in which they argue "The probability of our vision of $150 oil in 2010
being achieved may be higher than is priced in the market." They take
a bunch of oil stocks and figure what the stocks would be worth (net present
value) if oil were $150 a barrel. Every one is higher -- usually two to two
and a half times. For example, BP would be worth $216 instead of its present
$87, Chevron would be worth $243 versus $105 today. Check it out. It's an interesting
most fascinating presentation I heard in Istanbul was from a company called
ProLogis (PLD), which dubs itself, "The worlds largest
owner, manager and developer of distribution facilities." I hear words
like "unlimited demand" and "unique market niche" -- providing
distribution services to multi-national companies. I need to do more checking.
But the chart looks neat:
your business; Try to avoid escrow: When you
go to sell a business, the potential buyer does (or should do) oodles of due
diligence. When he buys your business, the buyer often puts 10% (or so) of the
purchase price into escrow, only to be released to you a year later. Escrow
is done to protect the buyer against something untoward that you hid. But what
happens if the buyer screws up so fast that the business is now (12 months after
he bought it) effectively valueless? He'll claim it's all your fault.
Then he'll hold up the escrow and demand something for his troubles. The lawyers
will mess around. And finally the judge or the adjudicator will decide (hopefully
in your favor).
This has just
happened to me. One of my private equity funds sold a very successful, growing
online retailer. The new owners anointed young children completely devoid of
either retailing or online experience as the new managers. They lectured the
old management (but didn't listen to the old management), who promptly left
for greener, happier pastures, only to be replaced by inexperienced neophytes.
Now the new managers, looking to cover their asses, are employing at vast expense,
lawyers, who are attempting to blame their mess on us. Ultimately we'll win
and they'll pay all our legal fees. But in the meantime my money sits in escrow,
There are obvious
lessons here. The primary one being to document all the idiocies the new buyer
commits -- so you have the evidence if you do end up before the adjuticator
or the judge. I guess the second one is don't sell businesses to people who
are going to mess them up in less than a year.
is Halloween: Kids will be out. Some tips:
+ Have a safe
+ Avoid toy guns and knives they could be mistaken for the real thing.
+ Wear costumes that are light in color and short enough to avoid tripping.
+ Place reflective material on the costume, so drivers can see the kids. .
+ Avoid masks use face paint instead for better visibility and peripheral
+ Carry a flashlight.
+ Never eat unwrapped candy.
+ Give kids money, not candy. Kids don't need the extra sugar.
My favorite Halloween
movie really was a stinker. Or how technology sometimes smells.
A movie shown in New York City on December 8, 1958, Behind the Great Wall,
was not only a travelogue of China, but also had an "odor track" where
different smells were released into the ventilation system during scenes from
different parts of that country.
The first several
times the odors were released, the audience was pleased. But as each new fragrance
combined with the old it began smelling so badly the audience ran from the theater,
coughing and heaving.
Why am I amused?
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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