In Search of the Perfect Investment

The sales pitch from my Goldman sales rep was great. “It’s hard to get out f hedge funds. But lots of people have to because of divorces, disasters, etc. We swoop in and buy ‘distress’ hedge fund interests.” The fund is called GS Vintage Fund IV, LP. I committed $1 million. Three things have happened:

1.  The fund has been a disaster. This distress fund is itself in distress. It’s yet to make a nickel for me.

2.  My sales rep got fired.

3.  Goldman’s monthly statements give opacity a whole new meaning. To wit, there’s no information of the hedge funds I’m invested in and the numbers don’t add. But wait, it gets better.

My July statement showed that my June market value  of  $578,492.88 had enjoyed a positive “change in market value” of $246,578.00.. That brought my market value as of July 31 to $825,070.88.

There was big celebration in the Newton household. Finally Vintage was making money.

Comes this week and I get my September statement. It shows a “change in market value” of minus $142,314.00.” There’s no accompanying letter, no explanation, no nothing. I call Goldman, “What happened?”

Answer, “We made a mistake.”

Harry: “Can you be more vague? What sort of mistake?”

Goldman: “We counted your capital contributions twice.”

Harry: “You made an arithmetical error? You added the numbers wrongly?”

Goldman: “Yes.”

Harry: “Will you send Susan and me a letter of apology? I think we already spent the money.”

Goldman: “I’ll have to check with my people about the apology letter. I’ll call you back.”

Of course, they never did yesterday. And I don’t expect them to.

If you’re a client of Goldman Sachs, shits happens and it’s your fault because you were dumb enough to become a client.

My Vintage account is back to being under water  — where it’s always been.

I did some checking around. Apparently all  investment banks make mistakes. A friend who runs a hedge fund tells me his prime broker can’t get his accounting right from one day to the next.

Says my friend, “You’d think it would be easy. I buy shares. I sell shares. The price is there. You do your maths and you get the number. But it doesn’t work that way. There are always mistakes. As a result, I employ three different sets of auditors and accountants to check each day’s transactions.”

If your monthly statements were handwritten, you’d check them. Since they’re printed by a nice computer, you tend to trust them.

Don’t.

That goes for everything from phone bills to cable TV bills. And most especially, your brokerage statements.

Back to Mannkind Corporation and “The Big Gamble.” Readers cautioned me, “Watch out. Harry. Pfizer blew $2.8 billion on its monumental failed Exubera insulin inhaler.” At the time, BusinessWeek wrote:

What went wrong? In short, Pfizer made a massive miscalculation about how patients with diabetes manage their disease. What initially attracted the company to Nektar’s invention was the idea that inhaled insulin would offer an attractive alternative to patients afraid to stick themselves with needles multiple times a day. But the needle sticks really aren’t that much of a hassle, many patients report, and the needles themselves have gotten so thin that they cause virtually no pain.

They also priced Exubera too high. Most insurance companies refused to pay for it.

Mannkind’s management tells me: They have met with insurance companies who say they will pay for it if Mannkind prices it within 5% of injected insulin. Which it will. Secondly, Mannkind’s insulin is a better insulin. I don’t understand the entire science of it all. But Mannkind’s explanation sounds convincing.

The BIG wild card here is the FDA. We’re looking at a December approval, maybe.

Until then stock will bounce around.

Mannkind remains an interesting spec at $6.50 and a meager market cap of $912 million.

Elections approach. What’s the Tea Party all about? Matt Taibbi wrote a long piece on the Tea Party in the latest Rolling Stone magazine. it begins:

It’s taken three trips to Kentucky, but I’m finally getting my Tea Party epiphany exactly where you’d expect: at a Sarah Palin rally. The red-hot mama of American exceptionalism has flown in to speak at something called the National Quartet Convention in Louisville, a gospel-music hoedown in a giant convention center filled with thousands of elderly white Southerners. Palin — who earlier this morning held a closed-door fundraiser for Rand Paul, the Tea Party champion running for the U.S. Senate — is railing against a GOP establishment that has just seen Tea Partiers oust entrenched Republican hacks in Delaware and New York. The dingbat revolution, it seems, is nigh.

“We’re shaking up the good ol’ boys,” Palin chortles, to the best applause her aging crowd can muster. She then issues an oft-repeated warning (her speeches are usually a tired succession of half-coherent one-liners dumped on ravenous audiences like chum to sharks) to Republican insiders who underestimated the power of the Tea Party Death Star. “Buck up,” she says, “or stay in the truck.”

Stay in what truck? I wonder. What the hell does that even mean?

Scanning the thousands of hopped-up faces in the crowd, I am immediately struck by two things. One is that there isn’t a single black person here. The other is the truly awesome quantity of medical hardware: Seemingly every third person in the place is sucking oxygen from a tank or propping their giant atrophied glutes on motorized wheelchair-scooters. As Palin launches into her Ronald Reagan impression — “Government’s not the solution! Government’s the problem!” — the person sitting next to me leans over and explains.

“The scooters are because of Medicare,” he whispers helpfully. “They have these commercials down here: ‘You won’t even have to pay for your scooter! Medicare will pay!’ Practically everyone in Kentucky has one.”

A hall full of elderly white people in Medicare-paid scooters, railing against government spending and imagining themselves revolutionaries as they cheer on the vice-presidential puppet hand-picked by the GOP establishment. If there exists a better snapshot of everything the Tea Party represents, I can’t imagine it. …

So how does a group of billionaire businessmen and corporations get a bunch of broke Middle American white people to lobby for lower taxes for the rich and deregulation of Wall Street? That turns out to be easy. Beneath the surface, the Tea Party is little more than a weird and disorderly mob, a federation of distinct and often competing strains of conservatism that have been unable to coalesce around a leader of their own choosing. Its rallies include not only hardcore libertarians left over from the original Ron Paul “Tea Parties,” but gun-rights advocates, fundamentalist Christians, pseudomilitia types like the Oath Keepers (a group of law- enforcement and military professionals who have vowed to disobey “unconstitutional” orders) and mainstream Republicans who have simply lost faith in their party. It’s a mistake to cast the Tea Party as anything like a unified, cohesive movement — which makes them easy prey for the very people they should be aiming their pitchforks at. A loose definition of the Tea Party might be millions of pissed-off white people sent chasing after Mexicans on Medicaid by the handful of banks and investment firms who advertise on Fox and CNBC.

You can read Taibbi’s wonderful (but not entirely accurate) piece here.

Harry Newton who finally got Susan’s blue-screen-of-death computer working — but only after he’d bought a replacement. The key actually was pretty simple: Take off all her working files using the Coolmax USB gadget I mentioned yesterday. Then use Lenovo’s Rescue and Recovery software to thoroughly clean Susan’s drive and re-install a factory version of Windows. And finally reinstall Microsoft Office and the Merriam Webster dictionary — two programs she uses.

There are rules that govern Global Gotchas, like this one. They include:

+ If I’m late, the plane is on time.  If I’m early, the plane is late.

+ If I like the product and want to buy a second one, the product is manufacturer discontinued.

My friend Patrick flew in from Paris. He commented on how much shopping Americans did and how much junk they bought.

Cheap jewelry on sale in Englewood, NJ where we had our shingles vaccine the other night. Who buys this crap?