Harry Newton's In Search of The Perfect Investment, Technology Investor. Harry Newton
November 20, 2009: Day one. Your hedge fund
manager fires you because he wants a vacation.
two. Everyone and their uncle is selling you their favorite investment. One
biotech hedge fund is up 82% this year. An energy fund is up 21% since June,
when it started. A bond fund returns much higher interest rates than the miserable
numbers I'm eking out on bank CDs.
could be stinking rich if I were intelligent.
grateful for the New Yorker for this full-page drawing.
Say NO. Mull.
Mull a bit more.
Soon my hedgie will return a big wad of cash that he was doing nicely with.
What will I do with it?
this book. It's a fun,
and Noble and
are having a price
war on books. This morning, Walmart is cheapest at $10.
weekend financial reading:
were always expected of Marc Dreier, and he expected them for himself. He
needed the hotshot litigating career and a life stuffed with rich mens
toys. He needed a Hamptons beachfront house. Thus began a four-year Ponzi
schemeinvolving audacious impersonations and $380 million stolen from
13 hedge fundswhich all unraveled just days before the Madoff scandal
broke, bringing the 59-year-old attorney a 20-year prison sentence. In conjunction
with CBSs 60 Minutes, the author gets Dreiers blow-by-blow account
of what its like to turn bad.
Read the full
March 11th, 2008, somebody nobody knows who made one of the
craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million
on a series of options, gambling that shares in the venerable investment bank
Bear Stearns would lose more than half their value in nine days or less. It
was madness "like buying 1.7 million lottery tickets," according
to one financial analyst.
But what's even
crazier is that the bet paid.
At the close
of business that afternoon, Bear Stearns was trading at $62.97. At that point,
whoever made the gamble owned the right to sell huge bundles of Bear stock,
at $30 and $25, on or before March 20th. In order for the bet to pay, Bear
would have to fall harder and faster than any Wall Street brokerage in history.
The very next
day, March 12th, Bear went into free fall. By the end of the week, the firm
had lost virtually all of its cash and was clinging to promises of state aid;
by the weekend, it was being knocked to its knees by the Fed and the Treasury,
and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which
had been given $29 billion in public money to marry its hunchbacked new bride)
at the humiliating price of
$2 a share. Whoever bought those options
on March 11th woke up on the morning of March 17th having made 159 times his
money, or roughly $270 million. This trader was either the luckiest guy in
the world, the smartest son of a bitch ever or
Read the full
Matt Taibbi Rolling Stone piece.
Galbraith wrote that all financial crises are the result of debt that,
in one fashion or another, has become dangerously out of scale. The
recent financial crisis was no exception, with everyonehomeowners, private-equity
investors, our biggest bankstaking on enormous amounts of debt. If its
frustrating that the government is footing the bill to clean up the mess,
its even worse that the government helped pay for the debt binge that
created the mess in the first place, thanks to a tax system that actually
subsidizes borrowing. Debt didnt get dangerously out of scale because
the system was broken. It got out of scale, in part, because the system worked
doesnt make people go into debt, of course. It just nudges them in that
direction. Individuals are able to write off all their mortgage interest,
up to a million dollars, and companies can write off all the interest on their
debt, but not things like dividend payments. This gives the system what economists
call a debt bias. It encourages people to make smaller down payments
and to borrow more money than they otherwise would, and to tie up more of
their wealth in housing than in other investments.
Read the full
Surowiecki New Yorker "The Debt Economy" piece.
use Skype on your corporate PC. Yesterday I
recommended Skype as the best way to stay in touch with the family. Skype video
is superb, and free. One reader asked his IT manager for his opinion and predictably
got the "Stay Away" memo:
Skype is a desktop
collaboration tool that allows voice calls, instant messaging, file transfers
and video conferencing over the Internet. Calls to other users of the service
are free, while calls to other devices can be made for a fee. Running Skype
leads to an unacceptable security risk since it has the ability to deliver
malicious code without detection. Given this and other compliance challenges,
Skype should never be used on C******'s desktops or network to conduct C******
still stands. Skype video and voice is the best way to stay in touch.
Office 2010. I tried Office 2007. I hated it. I don't
use it. One day, Microsoft will debut Office 2010. For now, if you're curious
and have time to kill, you can download a beta of "Office Professional Plus
2010." Click here.
hotel room in Poland.
The beds were
concave. The pillows were one inch thick. The room gave spartan a whole new
meaning. But the Wi-Fi was free, fast and superb. Go figure.
key to traveling is to always ask questions. Sample "What's
the dumbest question you've been asked?"
I asked that of
the passport-stamper Immigration official on leaving London. He said his dumbest
was "Where do I go now?"
He answered, "You
have an airline ticket. Maybe that's where you're going?"
Europe got shafted: Places
like Hungary, Poland, Czechoslovakia, Romania, Ukraine were joyous at the end
of Second World War. The Germans left. But then the Russians came and, in many
respects, they were worse off than under the Germans.
years ago, Russia fell apart, the Russian troops went home and the Berlin Wall
hard to grasp that capitalism came to these places only 20 years ago. The progress
in this short time has been nothing short of awesome.
recent New Yorker cartoons
Easy does it.
Remember the old adage. A fool and his money are easily parted.
Been there. Done
Smell the roses.
Play tennis. Hug the family.
We live in interesting
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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