Harry Newton's In Search of The Perfect Investment
9:00 AM EST, Friday, September 12, 2008: Cash
is King has been our mantra. Cash lets you buy cheaply. Cash allows you be opportunistic,
i.e. it lets you invest quickly in handsome fleeting opportunities. Finally
some great opportunities are emerging.
1: And I have to be careful. My friend is bidding 40% of the asking price
of some super-great Caribbean real estate. As one argument for bidding so low,
"I can buy some phenomenal real estate in Florida at 30 cents on the dollar."
This is no done deal. But the fact that the seller's broker is still talking
is a good sign.
I've said, the major key to making money in real estate is the price you pay.
You can fix a property up nicely. You can layer it in gold leaf. But the price
you get on exit will be determined by Mr. Market. You can't influence him, except
with prayers. And they don't work. Trust me.
2: Time to form your own bank.
What the world needs is a new bank. One that started post-2008 Credit
Crunch. One that is squeaky clean, free from the doubts that it might fail (11
have already in 2008) and free from doubts that FDIC will run out of money to
repay the depositors -- I've heard that fear several times in the last few days.
Think about this
opportunity: A bank thrives by attracting deposits and lending to sound borrowers.
There is no shortage of money. Everyone and their uncle (including me) want
out of their existing toxic bank. They'll give you their money. All you need
do is to offer a modicum more interest than the utterly miserable 1.17%
I am currently receiving with ModernBank -- my latest brilliant idea to spread
my money around in chunks of $95,000. There's no shortage of borrowers. I can
name a dozen people who would happily borrow money from you, pay you more interest
than you ever imagined and give you collateral up and personal
guarantees the whazoo.
If you do form
your own bank, I want to be given the opportunity of investing. OK, deal?
By the way, I
bitched at ModernBank. Their reply:
In other words, give
us more money and guarantee to leave it with us longer, and we'll throw you a
few crumbs. By way of comparison, I recently bought some New York City general
obligation bonds paying 4.5% triple tax free. That's equivalent to around 7.9%
pre-tax, a lot higher than ModernBank's 1.17%. You could run a handsome-profitable
bank, taking in money at 1.17% and investing it in 10-year U.S. government treasuries
As we discussed
at our initial meeting, the higher rates start at $1,000,000. The rate would
jump to 2.75% at that level and possible more if the term is longer.
We also offer negotiated rates for CDARs at higher amounts. Please give me
a call if I may be of assistance.
on listening to Harry: I have pounded the table
for Washington Mutual this week. The stock cratered. A reader bitched at me.
How could I be so irresponsible? I emailed him back yesterday:
Look. It's very
simple. I recommended the stock. Then it cratered. It's reasonable to assume
that my readers are intelligent and they don't rush in and buy instantly
I did buy WaMu this morning at $1.99.
It closed last
night at $2.83 but is down to $2.69 in early morning trading. Timing is everything.
If it gets below $2.50, I'll be out and buy back in later. Unpredictable volatility
is not my shtick.
Nikon D700 is a professional SLR (single lens reflex) that is getting rave reviews.
I'm not buying
one because I already have the D100 and actually use my pocket size Canon 850
IS more. But, if I were in need of a professional grade SLR, this is the camera
friend brought in an Apple MacBook Air notebook. It weighed 3.21 lbs. By comparison
my Lenovo X61 weighed 3.34 lbs, just slightly more.
The big differences:
One's a Mac. One runs Windows. The Mac has a touchpad. The ThinkPad has a
red pointing stick. I find the stick faster, but it's personal choice. I prefer
Windows because I'm used to it. I can swap out hard disks more easily on my
ThinkPad. The MacBook Air costs a lot more than my ThinkPad.
I read the Economist: My friend, the editor
at the Economist, explained to me the difference between his magazine and other
"business" magazines. He said all his competitors think they can write
about business in a vacuum. He told me, you can't. Business is intimately involved
with politics. You can't write about one without discussing the other. And the
classic case? Zimbabwe. Latest news is:
official inflation rate is 11.2 million per cent. A third of its 12 million
citizens have fled. Most of those who remain survive on barely a bowl of sadza
mealie-meal porridge a day. Services such as health, education
and transport have all but collapsed, Aids is rampant and Zimbabwe now has
the worlds lowest life expectancy.
Fashion Week in New York City. The world's
most most beautiful girls are strutting their thing. This is one of them. Every
good column should have a little sex. It gets readers...
I'm guessing someone
asked her about her Lehman stock.
world's worst puns. Share them with your kids.
+ I thought I
saw an eye doctor on an Alaskan Island, but it turned out to be an optical Aleutian.
+ A rubber band
pistol was confiscated from algebra class because it was a weapon of math disruption.
+ The butcher
backed into the meat grinder and got a little behind in his work.
+ No matter how
much you push the envelope, it'll still be stationery.
+ A dog gave birth
to puppies near the road and was cited for littering.
+ A grenade thrown
into a kitchen in France would result in Linoleum Blownapart.
+ A hole has been
found in the nudist camp wall. The police are looking into it.
+ Atheism is a non-prophet business.
+ A chicken crossing
the road is poultry in motion.
+ The soldier who survived mustard gas and pepper spray is now a seasoned veteran.
+ When the cannibals ate the missionary, they got a taste for religion.
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, click
here and here.