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9:00 AM EST, Monday, August 17, 2009. Dummy money. That's how we used to refer to dumb investments by doctors and dentists. But there's another side to dummy money. It's all about entrepreneur and their personality. All successful entrepreneurs are pig-headed. They know the solution. In fact, they know everything. You'll rarely find an entrepreneur who listens -- no matter how intelligent or successful his investors.

I was thinking this way over the weekend as I was eying investment in some startup and advanced startup situations. The entrepreneurs typically want money for marketing (their marketing) or buildout (their buidout). Or whatever. But it's their priorities. Not yours. You can spit blood, jump up and down. But once you've given them your money, it's gone. They now have the checkbook. They're convinced they now know what's right for you.

For a select few brilliant entrepreneurs, they're right. They don't need your brains. But the rest do. How to convince them? After all these years, I'm convinced that you basically can't -- unless:

1. You're in at the very beginning.

2. You define the rules and they agree.

The rules would include a board of directors, a finance committee, rules about spending money, rules about the company's immediate direction (board agreed) and constant communications.

How much an entrepreneur will listen depends on the respect he has for you. And that's not easy to prove. Only time produces respect.

On the weekend I started fiddling around with structuring a deal with a company that wants $1.5 million or so so for marketing. I thought the deal should be::

+ Ten people each put in $200,000.

+ The company guarantee an 8% annual cash return on the money. This money is paid before executive salaries are raised and bonuses paid.

+ The investors are entitled to participate in profits. Definitions needed.

+ There needs to be financial rules – including no borrowing without investor approval.

+ Outside investors should control the board of directors.

+ There should be a finance committee.

No entrepreneur worth his salt would agree to these.

The public stockmarket has a major joy. It's liquid. If you suddenly don't like the CEO and the color he has chosen for your checkbook, you can sell.

Some businesses are booming. All kinds of repair -- like shoe repair, car repair. Few new sales. Lots of repairs. Second-hand consignment clothing stores. And now I hear the locksmith business is booming in Australia. Burglaries are on the rise, as the economy has fallen.

This is very sweet of Deutsche Bank this morning:

STEC (STEC.OQ),USD34.98 Buy Price Target USD45.00
Sherri Scribner: Initiate with Buy, tgt $45. STEC is currently the sole provider of enterprise storage SSDs in a market that has the potential to grow significantly over the next few years. In the FC market, STEC has no competition and we do not see a competitive entry until mid-2010 at the earliest. We see further growth opportunities in servers, a larger market than storage. Over time, we do expect STEC to face competition in the server market, but we believe that the company's lead and experience will give it an edge in a market that could equate to $2B by 2012.

Of course, what they forgot to tell you was that Deutsche Bank was one of the underwriters on STEC's recent secondary -- at $31. And the way Wall Street "works" is their analysts are expected to release a positive recommendation a short while after the secondary. This helps the clients who bought STEC shares in the secondary.

My daughter is the best. She negotiated hard with her cable TV provider and got a huge bargain on her new installation in her new, old house. Her technique was twofold:

First, to highlight all the companies she could buy from, including Verizon FiOS, Time Warner, DirecTV, Comcast, Dish, the local phone company, etc. She had a much longer list.

Second, to stand firm, to nudge and to nudge some more.

I can't say that Claire is a chip off the old block when it comes to negotiating. She's a whole other animal. I'm on the phone this morning using Claire Newton techniques. They kick serious ass. Yet, you wouldn't know the animal that lurks below this charming, beautiful smile.

My baby Claire has become an animal.

Netbooks are not notebooks. Netbooks are slow. They have cramped keyboards. They won't run several programs simultaneously. And Microsoft is playing loosey, goosey with how it licenses Windows to the manufacturers. In short, netbooks are meant for checking email and surfing. They're not meant for running Microsoft Office, checking your stocks, doing your email, listening to an Internet radio station, Photoshopping your kids' photos, and watching porn -- and all simultaneously.

And soon, the next boom:

There can be few fields of human endeavor in which history counts for so little as in the world of finance. Past experience, to the extent that it is a part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present. —John Kenneth Galbraith

Buffett makes changes in his portfolio: From someone called "Ray" on Seeking Alpha

If you follow Mr. Buffet (BRK.A) then you already know that he made some significant portfolio changes in his recent SEC filings. Now, I do not recommend following him since he has billions and ‘he’ can afford to hold stocks forever because it is in his corporate account, which means he really isn’t risking his own money. However, his recent moves are very telling, in my opinion.

He sold Carmax (KMX), Home Depot (HD), ConocoPhillips (COP), Eaton (ETN) and other health care stocks. First and foremost it tells me that he expects health care reform, which is not really reform it is a public option, to pass otherwise he would not have sold those health insurers. He sees through the whole cash for clunkers nonsense as it is not a long-term solution for auto sales and it also makes a statement that he feels the consumer is not coming back anytime soon.

His reduction of Home Depot is another vote for the consumer to not return in the near-term and that housing will more than likely stay stagnant for a while. By selling COP he was simply undoing a bad decision for which he took a lot of criticism for to begin with. However, if you want to read into it further, I think this means he thinks the energy trade is dead at the moment and prices are going to be flat for sometime into the future which is good news for consumers as fuel costs should remain ‘low’ in the near-term.

His addition of Becton Dickerson (BDX) and Johnson & Johnson (JNJ) indicates two things to me. First, it means that he thinks BDX will benefit from the public option or, in the event it does not pass, that while health insurers are dangerous to own, health care stocks are not, which he is right on about. Second, JNJ is a good company that is well diversified and a defensive play, which, again, is right on for this market.

In short, I see this report as bearish as he did far more selling than buying and his buys were defensive stocks. He is buying classic defensive stocks and stocks that would clearly benefit if the healthcare reform actually passes. While I do not mimic his moves, and have no positions in any of those holdings, I think he made some pretty good calls.

New bicycle is theft-proof, solar powered and very slick. From Fast Company:

An Olympic cyclist puts together some of the coolest bike-tech out there to create a vision for the next-generation urban two-wheeler.

Bicycles aren't known for being high-tech when compared with other forms of transportation. But cyclist Chris Boardman's new bike design prototype takes bikes well beyond advances in carbon-fiber frames and electric assist technology.


The bike, which relies on existing technology, has a mini-computer attached to the handlebars to count calories; a purportedly unbreakable locking device that uses fingerprint identification; and a battery-assisted motor powered by solar panels. Boardman's design also features a lightweight carbon-fiber frame, spoke-less wheels that improve aerodynamics, and self inflating, puncture-proof tires.

All told, the contraption could remove many of the barriers that prevent citygoers from using bikes as their main source of transportation, including concerns about theft, maintenance, and too much physical exertion.

The one hurdle Boardman's advanced design still needs to work on? Cost. The Olympic cyclist estimates that it will take 20 years before the bike is cheap enough for mass-market adoption. But look on the bright side: If you start riding your current bike instead of driving, you'll save enough money to be able to afford this thing when Boardman gets it made.

1. Wear your glasses. This is make sure your partner is actually in the bed.

2. Set your timer for three minutes, in case you doze off in the middle.

3. Set the mood with lighting, i.e. turn them ALL OFF!

4. Make sure you put 911 on your speed dial before you begin.

5. Write your partner's name on your hand in case you can't remember.

6. Keep the polygrip close by so your teeth don't end up under the bed.

7. Have Advil ready in case you actually complete the act.

8. Make all the noise you want. The neighbors are deaf, too.

9. If it works, call everyone you know with the good news.

10. Don't even think about trying it twice.

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.