Apple is going to over $300. That’s the prevailing wisdom. It’s up strongly today. I’m not unhappy.
It’s going up because it makes good products.
Boeing went up 2.5% today because it makes bad products but (the good news) got rid of its moronic CEO.
Go figure.
Feelings of elation
My favorite commercial real estate operator, Matt Felton of Felton Properties, wrote investors last week about one of his properties,
“Over the past several years, we have reported to you with consistent above pro-forma performance.”
Lovely.
Then, to outdo himself, he works major magic, the success of which, he writes, “provokes feelings of elation.”
I don’t make this up. You don’t read words like that in financial docs.
What’s with the elation?
In simple terms — which dummy investors (like me) can understand — he upgrades the building with new elevators, a new AC chiller, a new roof, and lots of pretty cosmetics. He explains the purpose is “All to enhance the tenant experience at the property.”
After the upgrade whirlwind, he gets bigger and happier tenants paying him (and us) more rent… aka real estate operator seduction.
The building flows more cash. That means it’s worth more. He refinances the loan on the property with a cheaper, fixed interest rate loan. And this week he’s giving me back the bulk of my original investment (and eventually all of it). With the lower interest rate on the new loan, he will be able to maintain, or even increase my handsome dividends, notwithstanding the return of my entire original capital.
Nice. It’s his MO. On many of his deals he’s returned entire original investor investments while keeping existing dividends flowing.
All this, however, poses a serious investment challenge. If I now have no investment in the property, how do I measure my return on my non-existent capital? I have no capital invested, but my dividends still flow.
Is my IRR now infinite? Drat. I can’t find a symbol for infinite in Excel.
You can’t have an infinite return. It’s not in the textbooks. Yet it makes sense.
Pondering the question of what is my return will tie the financial analysts up in knots for years. I will assign this project to the geniuses who came up with negative interest rates.
Thank you, Matt.
Meantime, dear reader, don’t even think about becoming an investor with Matt.
If you do, he’ll cut me way back on his next project. I’ll become poor and homeless. And it will all be your fault.
Baiting sucker investors in the holidays
Before I left for America my boss said you’ll love them. They’re just like you.
Just like you, they substitute enthusiasm for intelligence.
As the stockmarket continues to rise, our inboxes overflow with fantastical investments that make zero sense — but read good. (I now it should be well. But I like the sound of good.)
Recent items:.
From my bitcoin maven,
The important thing for you to know right now, of course, is this:
In the near future, Bitcoin will not be worth the $7,000 to $10,000 range it’s trading in today… it will be worth at least 10 times that amount.
As the billionaire venture capitalist Tim Draper says: “Bitcoin is to the dollar as the internet is to paper.” Draper says a single Bitcoin will be worth $250,000, as soon as 2022.
Here’s a a few more that defy logic, but are beautifully written:
Harry: People will buy a 5G phone when they need a new phone. Not because it’s 5G.
I never did find out what the device is. Nothing will go from $0 to $100 billion in one year. Nothing has. Nothing ever will. Not even mechanical Viagra.
The only thing that will cause millions of people to lose their jobs is a whopping big meteor that will hit Washington. I’m not betting on it. But I can hope.
Bitcoin, cannabis, energy etc. all down.
Be ultra-wary in our present silly season. I wrote about “Say NO” investments in my previous column. Click here.
Favorite new technology
Famous comments on sports
+ Don Meredith, Dallas Cowboy Quarterback, once said: “Coach Tom Landry is such a perfectionist that if he was married to Raquel Welch, he would expect her to cook.”
+ Doug Sanders, professional golfer: “I’m working as hard as I can to get my life and my cash to run out at the same time. If I can just die after lunch on Tuesday, everything will be perfect.”
+ Tommy Lasorda , Los Angeles Dodgers manager: “I found out that it’s not good to talk about my troubles. Eighty percent of the people who hear them don’t care and the other twenty percent are glad I’m having them.”
+ E.J. Holub, Kansas City Chiefs linebacker regarding his twelve knee operations: “My knees look like they lost a knife fight with a midget.”
+ Paul Horning, Green Bay Packers running back on why his marriage ceremony was before noon: “Because if it didn’t work out, I didn’t want to blow the whole day.”
+ Knute Rockne, when asked why Notre Dame lost the game: “I won’t know until my barber tells me on Monday.”
In Anguilla for a week with half the family
This is my Zoe in the hotel’s pool with the Caribbean in the distance.
The ginormous pool makes you wonder what God could do if he had the money.
Best: Zoe has it all to herself. You can’t beat that.
— Harry Newton in Anguilla, somewhere in the Caribbean.
Seems to me that you ignore the fact that it is “return of capital” and bookkeep it just like any other stock: how much did I pay and how much have I gotten back. Simple enough