Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
AM EST Friday, September 22, 2006: I spent yesterday
eyeing some private equity funds, also called leveraged buyout funds (LBOs).
They're fashionable and potentially very profitable. They belong in everyone's
portfolio. While discussing it, my young-at-heart friend wrote me:
Clearly, who manages
your money is critical. You need to be very knowledgeable and comfortable with
what they're doing. I'm still mulling. As I wrote yesterday, "You make money
on what you know -- not what's fashionable." On that note, our portfolio
of alternative energy stocks from earlier this years has lost 35% of its value.
reason I havent invested in hedge funds is that not only are they unregulated
(they will gradually become regulated) but they developed in an unregulated,
free wheeling environment and fostered esoteric investment strategies that
often only the specific trader can understand. These strategies are difficult
to monitor and control by management. Some traders have made huge bets and
many have become extremely wealthy as a result. They are using other peoples'
money so their personal risk will never be catastrophic. When they lose, the
investor loses big-time. I prefer more mundane investment strategies (more
so at this stage of my life) such as LBOs and Real Estate (where our losses
may be tolerable).
overpay your speeding fine. It doesn't work. This advice is floating
around the Internet. It's urban legend.
Keeping away from tech: I'm pleased I warned
everyone to keep away from the likes of Dell and Intel, but not Microsoft, which
has inexplicably climbed in recent weeks. I can see Google tumbling. I've always
been worried about the extent of Click Fraud. This weekend's BusinessWeek writes,
"Determined to prevent a backlash, the Internet ad titans say the extent
of click chicanery has been exaggerated, and they stress that they combat the
problem vigorously. A BusinessWeek investigation has revealed a thriving click-fraud
underground populated by swarms of small-time players, making detection difficult."
This weekend's BusinessWeek.
burns me when I see charts like this: What brokers sell is what they
recommend. But it's not the best for you and me. Some asset classes have done
so much better -- like real estate. And tax-free muni bonds make far more sense
for investors who live in states with big local city and state taxes.
Delorme's Street Atlas 2007 is out. I like
their software. It's much improved over their 2006 edition, which I also have.
You can buy it for $40 on CD or DVD.
You can also buy it for $60 and get yourself 120 million U.S. and Canadian phone
The phone listings are not complete. I have five lines at my New York
home. It couldn't find one. There is one neat feature: Highlight a stretch of
road, Street Atlas will tell you the phone numbers on the road. Sadly, that's
also not complete. It may be semi-useful if you need it. Otherwise stick with
the $40 version.
The best news
is twofold: All the maps will load onto you laptop. You don't need to carry
the disks. Also, Street Atlas works with a GPS receiver which you can place
on your dashboard. Through your laptop you'll hear blow by blow commands on
how to get somewhere.
In many ways this $99.95 software/hardware bundle is a better deal than GPS
in your car. For one you can switch it between cars. And you have more options
on viewing the maps -- closeup, distant, elsewhere, etc. I use this thing. It's
Anything, Anywhere: A friend explained why
he was moving his manufacturing to China:
the US, it costs me $135 a day for a manufacturing worker. That includes
health, benefits, etc. In China it costs me $135 a month. That means
two things: First, I save money. Second, I can afford for my workers to spent
more time making my thing nice -- more time testing it, polishing it,
fitting it, etc."
All this is why
I relate to today's article by Thomas Friedman in the New York Times.
He wrote the best seller, "The World is Flat," which you must
The New Yorker
once ran a cartoon by Peter Steiner of two dogs, with one sitting at a computer
keyboard saying to the other, On the Internet, nobody knows youre
knows youre Uruguay.
A tiny country
of three million people, wedged between Brazil and Argentina, Uruguay has
come from nowhere to partner with Indias biggest technology company,
Tata Consultancy Services, to create in just four years one of the largest
outsourcing operations in Latin America.
Yes, when Tatas
Indian employees in Mumbai are asleep, its 650 Uruguayan engineers and programmers
now pick up the work and help run the computers and backroom operations for
the likes of American Express, Procter & Gamble and some major U.S. banks
all from Montevideo.
How did this
happen? One of the most interesting features of this era of globalization
is how any entrepreneur with the right imagination, Internet bandwidth
and a small amount of capital can assemble a global company by matching
workers and customers from anywhere to do anything for anyone. Maybe the most
important rule in todays increasingly flat world is this: Whatever can
be done, will be done because so many people now have access to the
tools of innovation and connectivity. The only question is: Will it be done
by you or to you?
decided it was going to be done by him. A retired partner from Ernst &
Young who was raised in Uruguay, he hatched the idea of partnering with Tata
to make Montevideo a global outsourcing hub. He did not have a single client
or employee when he approached Tata. He had just two things: a gut instinct
that Uruguays quality education system had produced plenty of good,
low-cost engineers and a gut desire to do something good for Uruguay
the country that gave his Hungarian parents sanctuary from Hitler.
Four years later,
TCS Iberoamerica cant hire workers fast enough. When I visited its head
office, people were working on computers in hallways and stairwells. (Mr.
Rozman also oversees 1,300 employees in Brazil and 1,200 in Chile.) It turns
out that many multinationals like the idea of spreading out their risks and
not having all their outsourcing done from India especially after one
big U.S. bank nearly had to shut down last year when a flood in Mumbai paralyzed
its India data center the same day a hurricane paralyzed its Florida operation.
And there is no risk of nuclear war with Pakistan here.
first approached this big U.S. bank to outsource some of its services to Montevideo,
instead of India, recalled Mr. Rozman, the guy I was speaking
with said, I dont even know where Montevideo is. So I said
to him, Thats the point!
added Mr. Rozman, was that multinationals that were depending on Indian firms
alone to run their backrooms 24 hours a day were getting the third team for
eight hours, since the best Indian engineers didnt want to work the
late-night shift the heart of Americas day. By creating an outsourcing
center in Montevideo, Tata could offer its clients its best Indian engineers
during Indias day (Americas night) and its best Uruguayan engineers
during Americas day (Indias night).
here are Uruguayans, but there are also lots of Indians sent over by Tata.
It produces both a culture shock Montevideo doesnt even have
an Indian restaurant and a cultural cacophony.
The firm runs
on strict Tata principles, as if it were in Mumbai, so to see Uruguayans pretending
to be Indians serving Americans is quite a scene. Said Rosina Marmion, 27,
an Uruguayan manager, Our customers expect us to behave like Indians
to react the same way.
culture, unlike Indian, is very nonhierarchical. The Indians were not
used to someone who says no, explained Ricardo Zengin,
34, a systems analyst. But eventually, they understand that you are
not saying it to challenge their authority but because you think it can be
done better another way. ... In Latin culture, everything involves a discussion.
a joke about themselves that goes: If you get diagnosed with a terminal illness,
move to Uruguay immediately because everything happens 20 years later here.
though, Uruguay has leapt ahead of its neighbors by being the first to understand
what could be done that in todays world having an Indian company
led by a Hungarian-Uruguayan servicing American banks with Montevidean engineers
managed by Indian technologists who have learned to eat Uruguayan veggie is
just the new normal.
A woman finds a skunk in her basement. She
calls a radio help line. The show host advises, "Leave a trail of breadcrumbs
from your basement to your backyard."
An hour the later the woman calls back, even more upset, "Now I have two
skunks in my basement." -- Dave Aston, in Readers Digest.
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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