In Search of the Perfect Investment

Nobody listens.

When you invest in a company, the CEO won’t listen.

When you invest in a country, the President won’t listen.

Case in point: IRAQ. The US and Iran want Iraq’s President to reach out to the Sunnis. But all he wants to do is to wage war. Read today’s New York Times piece, “Sunnis and Kurds on Sidelines of Iraqi Leader’s Military Plans.” Click here.

I hope this ends quickly with a Sunnistan, a Shiistan, a Kurdistan and no bloody civil war. But I suspect we’ll end with a very bloody civil war, an Iraq, a Kurdistan, and a new, far more brutal, Saddam Husssein.

The New York Times has a map showing how five Middle Eastern countries could become 14. Fascinating. Click here.

Want to insider trade and not get caught? Use options, not stocks. The SEC basically ignores options in favor of stocks. Why? Who knows.

Even if you insider trade stock. your chances of getting caught by the SEC appear to be slim to none — unless you’re a big celebrity or work in a firm the SEC is targeting.

Read about it in today’s study of insider trading by two professors. Here’s the lead on Andrew Ross Sorkin’s story:

There is often a tip.

Before many big mergers and acquisitions, word leaks out to select investors who seek to covertly trade on the information. Stocks and options move in unusual ways that aren’t immediately clear. Then news of the deals crosses the ticker, surprising everyone except for those already in the know. Sometimes the investor is found out and is prosecuted, sometimes not.

That’s what everyone suspects, though until now the evidence has been largely anecdotal.

Now, a groundbreaking new study finally puts what we’ve instinctively thought into hard numbers — and the truth is worse than we imagined.

A quarter of all public company deals may involve some kind of insider trading, according to the study by two professors at the Stern School of Business at New York University and one professor from McGill University. The study, perhaps the most detailed and exhaustive of its kind, examined hundreds of transactions from 1996 through the end of 2012.

The professors examined stock option movements — when an investor buys an option to acquire a stock in the future at a set price — as a way of determining whether unusual activity took place in the 30 days before a deal’s announcement.

The results are persuasive and disturbing, suggesting that law enforcement is woefully behind — or perhaps is so overwhelmed that it simply looks for the most egregious examples of insider trading, or for prominent targets who can attract headlines.

To read Sorkin’s full story, click here.

The G0Pro is hot. Seriously hot. Sales in one year are up nearly 90%. The upcoming IPO is already spawning various scams in which suckers can “benefit” from the expected appreciation in the stoc post-IPO. They allegedly have the stock. Your commission is 10%.

Meantime, it’s hard not to love the product:

And all the wonderful ways it’s used:

Shipments are exploding:

The GoPro roadshow video is really impressive. I mean REALLY impressive. The CEO and founder is among the most articulate, persuasive CEOs you’ll ever see. Click here.

I think the GoPro IPO is coming soon, like maybe next week. Pick up some stock if you know someone. Sadly, I don’t, as usual.

One more birthday present:

From Steve:

HE (Hawaiian Electric Industries, Inc.)

Its dividend yield ranges from 4% to 5%.  The past 3 or 4 years I’ve bought it on dips a couple of times a year and have sold it each time after its share price climbed a buck or two.  This gives me a total annual return of 10% to 15%.

I’ll have my full list and my recommendations tomorrow. For what we have so far, click here.

Things I’ve learned.

+ Your pinky finger works better on the iPhone fingerprint reader than your larger index finger or thumb.

+ Housing prices in major cities are now clearly in a major bubble. Now is a good time to sell your apartment in places like New York and London, In New York supply of staggeringly high-priced apartments is multiplying like crazy. They’re building pricey residential skycrapers everywhere.

+ Most long distance planes in the U.S. now have Wi-Fi. The fastest Wi-Fi is on JetBlue. You can actually stream video from Netflix.

This summer.

1. I hear of melanoma deaths among friends, even young 40-year olds. The sun is NOT your friend.

2. Ticks are all over the north-east. Wear long pants. Put them inside your long socks. Don’t go into the woods or long grass. Outside is NOT your friend.

Harry Newton who ponders on no one listens — unless you control the checkbook. Remember the old aphorism: You can lead a horse to water, but you can’t make him drink. My Internet browser problems seem to have stopped. It seems I was being attacked. I didn’t have a virus. The attack has stopped. Norton Internet Security protected me. That software service is the best few bucks I ever spent. Highly recommended. Thank you Norton.