Thank you, Harry. Your list on the right has done well for me. And this morning Google will skyrocket, propelled by huge earnings last night.
I can’t find brilliant investments every day. I read and research. But most days I draw a NO. Worse, these days I’m more careful than ever.
My number 1 rule — Preserve Capital.
My number 2 rule — Preserve Capital.
You can figure my number 3 rule.
The most amazing personal gamble: Al Mann has put over $1 billion of his own money into Mannkind Corporation.It has a new inhaler drug delivery system for diabetes sufferers. It promises to revolutionize the entire diabetic treatment industry. It could be worth billions. MNKD is around $6.50. The stock has been up and down like a whore’s drawers.
Google Mannkind Pharma. You’ll find some really interesting stuff. Cramer interviewed Al Mann last night. Fascinating man — Mann, not Cramer. Some interesting stories — The Fate of Mannkind; and Will the FDA approve Mannkind’s Insulian Inhaler.
Why I hate funds. Funds are for dummies. Hand your money over to someone you don’t know, to do whatever they feel like, whenever they feel like.
My experience with funds has been 100% miserable. With many I’ve actually lost 100% of my money. With others, the verdict is still out. Some verdicts have been “out” for so many years, that it would be better if they simply declared “the end” and put me out of my misery.
Funds are founded for the founders to get fees, fees and more fees. The longer the fund drags on, the more the fees. To be totally perverse, fund managers have a real incentive never to do well by their investors.
My biggest bitches with my funds:
1. I go in because of a brilliant manager. He leaves. I’m stuck. Thank you Citigroup.
2. Investors don’t fill the fund. The fund gets “filled” with short-term, hazardous borrowings. Thank you, Broadway Partners.
3. The fund comes with impeccable credentials. But still blows up. Lost 100%. Thank you Jim Wolfensohn.
4. The fund’s investments get screwed by the the next business cycle downturn or the next technology revolution upturn. Think real estate, media, print, etc.
5. You can’t sell them when they go awry — the brains leave or they do something ultra-stupid. There is no realistic secondary market for interests in private funds.
6. They don’t listen. When telecom was hot, one of my leveraged buyout funds decided to invest in telecom. It was an area it knew zero about (and I mean narda, nothing, zero). I rushed in and said “Don’t.” They told me to go fly a kite. Ultimately, they lost every penny of what they invested in telecom. Every penny. Of course, I participated (unwillingly) in that loss.
7. You can’t get out of capital calls. The only pleasure you as an investor get is the pleasure of dumping hundred dollar bills down the nearest toilet.
What got me thinking was last night’s six months report from Goldman Sachs Vintage Fund IV to June 30, 2010. I got sold this fund years ago because of a great sales pitch: It bought “cheap” interests in private equity funds. An investor in a fund needs urgent money to pay his taxes, or his divorce, or whatever. He sells his interest for 50% (or so) of what it’s worth. He got screwed. I get rich. Ha!
Several years later the fund which bought at a 50% discount is showing that my money is worth 0.97x what I put in. In other words, I’m losing 3%. Which is better than losing 100%. I’ve been there, done that.
My favorite part of Goldman’s six month report is the “Condensed Statement of Portfolio Investments.” A whole page showing investments of $2.1 billion. And “detailed” as follows: Project Hopper, Project Jefferson, Project Judson … all the way down to Project Warhol. In other words, Goldman won’t even tells investors in Vintage Fund IV what the fund is actually invested in.
Oh, yes, bonuses are up big on Wall Street. I wonder why.
Latest email scams:
1. Your UPS package wasn’t delivered. Click on this attachment for more.
2. Your bank account is screwed up. Go to this web location.
3. I need to move money out of my garbage country. I’ll give you 30% if you help.
4. Here’s an email link. No explanation. Nothing.
Don’t. Don’t click on the email link. Don’t click on attachments. Don’t go to suspicious web sites. Don’t help anyone move money out of anywhere. The scam here is — send money first and then we’ll send you money. You’ll never see your money or your “commission.”
Latest tax scam. New York State has a new tax. The form which I just signed today says
Metropolitan Commuter Transportation Mobility Tax Return — for self-employed individuals (including partners).
I sent them $206 for the full year 2009. I bet it cost me over $1,000 to have someone to learn it, find the paperwork, fill out the stupid forms.
And this from a State that hasn’t built one bridge or tunnel in my town in perhaps 60 years.
Should I tell them I do most of most of my commuting on a bicycle. I can’t wait for the new bicycle tax. It will give new meaning to “different strokes for different folks.”
Watch this video. Click here.
He got her car, purse and house keys without touching her, and she cannot describe the guy. Be thankful there wasn’t a child in the car.
Solution: Beware of parking garages. Take your keys.
The horror that is drug production. Merck last produced its shingles vaccine (Zostavax) called in June. The next batch will December, maybe. Meantime, if you want to be vaccinated you need to call every pharmacy within 100 miles of where you live and pray. Some states (like New jersey) allow pharmacists to inject you. Some you have to get immunized by your doctor. It’s all a total mess. Do not invest in Merck.
Meantime, this morning my daughter emails me:
For quite some time now, Dave (a childhood friend of our family) has only been receiving about 30% of the dosage of his medications that he needs because Genzyme, which holds the patent on this treatment drugs, has been experiencing servere shortages caused by dumb manufacturing problems.
David and his sister Michelle at her recent marriage.
A petition has been drawn from a law firm that is acting pro bono to support “March-in” rights to secure the release of the patent. It seems to be the only way this situation might be resolved. Please write to the NIH director and your senators and representatives. Dave’s lastest health evaluation indicates that some of the wonderful advances that his treatment engendered are reversing.
Form letters are at the bottom of the page of this web site:
More on back problems. Reader Tom Bodnar writes
I had a back problem of my own in March of this year – triggered by
dragging a small downed oak down a hillside for use as firewood – and
after lots of searching thought this web site had a lot of useful information:
Rule #1: Don’t do stupid things.
Harry Newton who marvels at the Australian dollar. Today it’s worth 99.57 US cents — nearly parity. Unreal. Australia has passed through the last several years without a recession and with virtually no drop in housing prices.
Thank you, Harry, for posting this notice about Dave and the Genzyme situation.
NIH funded the successful research and the treatment works. We were delighted with the results;
we deluded ourselves that the battle was won.
Anne
Harry – I am currently in Australia doing a tour of the east coast (Port Douglas to Sydney at least). I did the same tour 20 years ago when I backpacked as a teenager. The changes has been nothing short of spectacular. The amount of wealth created in Australia, especially over the last ten years, has been unprecedented and it shows. New cars, massive houses, and nearly all restaurants are full. I see very few (if any) closing down sales and everyone seem rosey about the future. The one big point of concern are prices. Nearly everyone I have spoken with has complained about the prices of everything except Alcohol ( Aussies are still big drinkers here). I live in Japan and must say that the prices are getting to a point where within a few years they will match Japan! I get the feeling that I am walking around in a classic bubble, fed by blind confidence, obscene house prices and China's insatiable appetite for commodities. For the time being though, I see a country on a roll. Wow, this is a great place to be right now.
Imagine how $AUD would have fared had Harry never left!
Shouldn't that have been “different spokes for different folks”. I'm surprised you let that on get by.
You're right. Strange things happen at 5:00 AM
Australia didn't have Barney Frank to screw up the mortgage market… Remember, the Australian Dollar's Gain against the US Dollar has as much to do with the fall of the US Dollar as with the rise of the Australian Dollar. Witness the price of an ounce of gold against the US dollar. The Australian dollar has moved into the position of the “least sick” currency while the US Dollar goes from fluttering to free fall.
Ditto the Canadian Dollar (Loonie) which is now on or near par as well.