The pile on my desk is smaller. The catalogs are gone. Some of the magazines are gone. The bills are paid. The biggest remaining pile is the K1s (pronounce Kay ones). They’re paperwork the IRS requires from your various partnerships in real estate, hedge funds, etc.
All these are reflections of an older now bygone, time. When I (and Harvard and Yale) actually thought that private equity funds, real estate syndications, etc. would actually make money. To their credit, some actually have. But if I do the math, and look at the paperwork, the aggravation, and, most horrible of all, the ongoing capital calls, the whole mess is a black hole I’d like to climb out of . Some of the losses have been horrendous.
The stockmarket and the bond market may have their share of disasters — e.g. the Tech Wreck of 1999-2000. But they have one major feature — when in doubt (when things go awry), get out. You can sell from one day to another and go back to cash. No one ever lost money by being in cash. ( I know the argument about inflation. But it’s bogus. I’d rather lose 3% to inflation than 100% to a stalled, dividend-less, real estate syndication or private equity fund.
We will all emerge from the last ten years with several sobering lessons:
1. Cash is king.
2. Long-term deals rarely work.
3. Control matters. My best investments remain the ones I made (or helped) make the key decisions.
4. No management listens to its shareholders, fundholders, syndicate members.
5. Few people believe in stop losses. My inviolate rule is 15% for stocks. You can apply it to real estate and other assets. But most managers don’t.
6. If I give my money to others to manage, it’s a rare manager who (a) knows what he’s doing, (b) cares about making me a profit and (c) isn’t in it solely for the management fees.
7. Learning to say NO may be your most important skill going forward for the next ten years.
So, this morning, I’m cynical.
Every new book out there — from Too Big to Fail to The Big Short — shows Wall Street money managers to be both incompetent and uncaring. Read them and be depressed.
That’s it for today. It’s 9:00 AM.
I’ll come roaring back tomorrow. Fortunately, Apple continues to climb.
Harry Newton, who played tennis very well yesterday and is proud of that.
Jim Rogers “the 19th century was the century of the UK , the 20th century was the century of the US , the 21 st century is going to be the century of China ”
http://jimrogers1.blogspot.com
Wow, Harry, you are in quite a funk upon your return. One would have thought you might be refreshed, although I do understand how the tax thing can get you down. But let's examine this: you are a mega-millionaire, you have a lovely wife and great kids, now a fine country home, you can take any vacation you want whenever you want…. on and on. So what do you do with your online friends who look to you to maybe brighten their day with at least a joke? Kvetch. And then kvetch some more.
You need to listen for the popping sound, Harry. Go volunteer. Quit thinking about Harry, and feed some hungry people, read to some really really old folks, work for Habitat for Humanity one day a month. Speaking from experience, it works. I only wish I had started that 20 years ago, instead of waiting until my mid-50's. I promise you, you will relish the experience, come away more grateful than ever about how brilliant your life is, and have some new material to share with us. Oh, and that popping sound? That would be the sound of you pulling your head out of your ass. (p.s. I read your column every day and look forward to it; you are quite entertaining. I am also a self-made multi-millionaire, and totally disagree that there are not great investment opportunities all around us now. I have shared some of those ideas with you before. You just have to stay away from those idiots on Wall Street.)
Call it “The Luck of Harry.” You write “Fortunately, Apple continues to climb”, so I look to the upper right side of your web page and you KNOW what I will see… Apple DECLINING. Sure enough.
There must be some way to make money off of this phenomenon. Call it “the Harry Trade” (you know, like “the carry trade”), but I'm not enough of a math guy (or short-term trader) to be able to figure it out.
You haven't offered any insight on Google lately. The stock seems to be on a roll… downhill. Maybe people are worried that the iPad is serious competition for Google's Android efforts?
Maybe rather than chasing after Wall Street, maybe we should be trying to figure out how to realistically value stocks so that we can get out before they start doing stupid and crazy things rather than trying so hard to keep riding them until the 15% stop-loss signals “end of party.” Besides, isn't partying more of a kids' game rather than something for us old farts to be lusting after?
— Jack Krupansky