In Search of the Perfect Investment

The perfect investment is your own business. There are benefits:

1. You control it yourself. There will be dumb decisions. But they’ll be your dumb decisions. They feel better than helplessly watching someone else make them.

2. You get a double rewards. You’ll take salaries and bonuses along the way. But when you sell the business, you’ll get a second, much bigger return — 7, 8, 9 or more times the business’s profit.

3. It’s more fun than working for someone else.

That’s all known and predictable. But… and this is the BIG but. What do you do with the money you get from selling the business — when you come to retire?

You cannot start investing at that point because you’ll have “Sucker” emblazoned on your forehead and every Tom, Dick and Harry investment peddler will pursue you. Because you’re naive in investing, you’ll be ripped off right, left and center — as I was.

It’s now 15 years since I sold my business. And the number one lesson I’ve learned — it got driven home this weekend — is that you need to start your search concurrently with starting your business. It’s fun to start and grow a business. Or start and grow a career within someone else’s business. But you need to actively focus on investments outside your own company. And you must begin today. It takes years to learn this stuff. It takes years to learn which of your business acquaintances have the understanding, the honesty and the mojo to work and invest with.

I just spent four days in Portland visiting son Michael, favorite daughter-in-law Anne and friends who are involved in real estate in the west with whom I (and many others) have money with. Portland is not big. That’s a huge charm. Everyone knows everyone. They talk about opportunities. They invest with each other.

There are hundreds of towns like Portland where you can benefit by local opportunities and local knowhow. New York is huge Many of its people have unlimited ambition — but they often see the own opportunities in fees they make on placing investments with their “friends” rather participating with their friends. There are so many “friends,” they can simply move and rip others off. Not so in Portland.

All this is a gross exaggeration. But it reflects my own (admittedly limited) experiences.

All this brings me to the Economist’s briefing this weekend on “A World of Cheap Money” in search of returns. As I studied this piece over the weekend, I  learned:

1. Interest rates are staying low for a long, long time. (I’ve also been saying that for a while.)

2. Low interest rates are having some positive benefits: like new housing and refinancing old housing. But,

3. “Excessively low rates help to create bubbles because they allow investors to ignore the cost of financing and concentrate on the capital gains if their strategy works; they let people forget risk and focus too much on reward. Encouraging the revival of a property market in the doldrums risks creating a boom that will simply lead to another bust,” says the Economist.

4.  A boom of sorts is already occurring in especially risky areas — like subprime car loans, collateralized loan obligations, covenant-lite loans to corporations and commercial mortgage backed securities — areas that helped cause the Great Recession of the last few years.

I’m not being doom and gloom. On the contrary, places like Portland offer manageable investment opportunities that big towns like New York often don’t.

Maybe what I’m really saying is that it’s harder for the crooks and incompetents to get away with ripping you off in smaller towns. Maybe my thoughts are because I had a great time in Portland, meet with some wonderful people and saw some great opportunities.

I’m clearly on a high. Even JetBlue’s red eye didn’t dampen that. It actually arrived 45 minutes early.

Read the Economist’s piece here.

Here’s a business you (and I) should have thought of. It’s a tiny credit card reader, called Square Register. Any business no matter how small can now take credit cards. The reader is free. Each swipe costs you 2.75%. The product is brilliant and works. I bought breakfast at a local cafe who had one.

To get your business a Square, click here.

They’re not public, but these two are. Credit card sales are booming. And the number of people employed processing credit transactions, according to the weekend’s Economist, is the highest for almost four years.

Don’t sign car rental contracts electronically. If you do, you may be hit with the expensive ” “loss damage waiver” charges — e.g. $23.95 a day — which you don’t need to pay since your credit card already covers you. Dollar Rent A Ca seems to be the worse offender. For the full story, click here.

Crowd funding is the newest way to raise money for your favorite new project or business. Learn more:

+ Indiegogo technology. Click here. I like their project called AppFlamingo, though I haven’t used it. Click here.

+ Kickstarter. Probably the leading company of  the 450 web sites that do crowd funding. Click here.

+ Fundable. Click here. I do like this project — turning any 2D TV content into 3D. Click here.

+ Top ten crowd funding sites, click here.

+ For all the gruesome details, laws and history of crowd funding, read Wikipedia. Click here.

Beautiful underwater movie footage from Fiji & Tonga. Gorgeous colorful fish and stunning reefs. Worth watching. Will relax you. And make you want to go. Click here.

Harry Newton who’s back in New York.

Sign of the times. Michael and Anne don’t have a landline. They rely on their cellphones. They don’t own an iron, because nothing they wear needs ironing. They do own a pricey Vitamix, which lets them smash all varieties of vegetables and fruit into a healthy (?) mush.

Japan’s stockmarket is roaring back as its economy benefits from recent ultra-strong government incentives. I do like DXJ (which I’ve mentioned before):