{"id":30313,"date":"2015-04-13T09:21:55","date_gmt":"2015-04-13T13:21:55","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=30313"},"modified":"2015-04-13T09:21:55","modified_gmt":"2015-04-13T13:21:55","slug":"flukes-and-the-investment-theory-of-benign-neglect","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=30313","title":{"rendered":"Flukes and The Investment Theory of Benign Neglect"},"content":{"rendered":"

It’s Fluke Time<\/strong>. My friends (and I) are flukeing huge returns on investments we thought boring, mundane and, often, dead.<\/p>\n

Typically flukes happen with real estate. Someone wants the property so badly they’ll up for it. But there are a million other reasons. The first quarter was my most profitable in eons. Yet I was away for most of it playing tennis and relaxing in California and not paying much attention to investing.<\/p>\n

Long live benign neglect works! Good new investment theory: The Theory of Benign Neglect.<\/strong><\/p>\n

There are lessons here:<\/p>\n

+ You need to be in it. Encourage your kids to invest NOW.<\/p>\n

+ You need to be diversified — especially for investments you don’t control.<\/p>\n

+ You need not to be greedy. When someone offers you a handsome return, take the cash and say “Thank you.” No one ever went broke taking a profit.<\/p>\n

That’s it.<\/p>\n

Oh, did I tell you about my friends who bought a junk $5 million building in New York City and sold the air rights years later for $28 million? Never in his wildest dreams did he imagine he’d get $28 million in air rights. Total fluke.<\/p>\n

Losing your hard-earned money will soon be a lot easier.\u00a0<\/strong><\/span> Washington is making it a lot easier to invest in drek.<\/p>\n

There are three ways startups raise money:<\/p>\n

1. Friends and family.<\/p>\n

2. Silicon Valley.<\/p>\n

3. You and I.<\/p>\n

The first get the best deals. The second get the big ones. The third (you and I) get the drek.<\/p>\n

My friends and I have sworn off investing in private companies. There are a thousand reasons, including management incompetence, management madness and management’s obsession with not listening. Most small startups never report their progress (or lack thereof) to their investors. That’s about to change… Which is a positive step for mankind. This weekend’s Economist spells out the changes:<\/p>\n

\u00a0Financing American firms<\/strong>
\nOpen the floodgates<\/strong>
\nNew rules on raising equity make life easier for firms and riskier for investors<\/p>\n

IN 1980, Massachusetts banned a new technology company from selling shares to the public there, worried that gullible residents would get swept up by the hype surrounding the venture. In retrospect, that proved a regrettable decision for Bay Staters: the firm in question, Apple, is now the single most valuable public company in the world. Future generations of startups seeking to raise money by selling equity should be given a smoother ride under new rules soon to come into force.<\/p>\n

For all of America’s perceived openness to innovation and finance, regulators have energetically restricted the ways corporate tiddlers can raise money. The general public has been banned from risky, early-stage investment opportunities, all in the name of consumer protection. That will largely be reversed from May when rules approved by the Securities and Exchange Commission (SEC) on March 25th come into force. These will overhaul the process of raising equity in ways that will make it far easier for firms to finance themselves, even if consumers will have to keep their wits about them.<\/p>\n

Under one of the (long-delayed) provisions of the JOBS Act, a compendium of enterprise-boosting laws passed in 2012, companies will be able to raise up to $50m in what is commonly referred to as a “Mini IPO”, or initial public offering. Although SEC agreement will still be required, many of the intrusive constraints found in garden-variety IPOs will be waived.<\/p>\n

The most controversial aspect of the rules is tied to who may invest in such offerings. Typically access to anything out of the ordinary requires an investor to be “qualified”, meaning those with a net worth of $1m or an annual income in excess of $200,000. Now anyone will be able to invest up to 10% of their income in early-stage ventures, a type of investment that makes stockmarket gyrations look dull.<\/p>\n

The new rules will galvanise crowdfunding, websites that allow the general public to invest in promising companies. The likes of Kickstarter and Indiegogo already allow people to back small firms, but punters typically get rewarded with early-release versions of their products. Now they could get shares, too.<\/p>\n

Plenty of other barriers will be lifted for small firms. Pernickety state watchdogs of the sort that kept Apple out of Massachusetts will lose their say. Companies will no longer have to list on an SEC-accredited exchange, which often comes with onerous disclosure standards. Financial results will have to be filed twice a year, rather than quarterly. And firms can forgo an “independent” audit committee of board members, a costly requirement under the Sarbanes-Oxley Act, which was passed in the wake of Enron’s implosion in 2001.<\/p>\n

Taken together, observes Sam Guzik, an attorney who represents companies going public, the reforms will make it cheaper for firms to raise money. That should enable faster growth and an easier path to a conventional stockmarket listing.<\/p>\n

Sceptics worry that crowdfunding venues will become a playpen for fraudsters targeting the poor and credulous. Much the bigger worry is that startups have a tendency to go bust. In Britain, where equity crowdfunding is already thriving, regulators have warned investors it is “very likely” they will get wiped out. For every Apple, in other words, there will be many, many more lemons. That will still sound like a reasonable trade-off to lots of American investors.<\/p>\n

Things I’ve learned in recent days:<\/strong><\/span><\/p>\n

+ Auto-pay works<\/strong>. You get miles for your paying your monthly electricity bills by credit card. But there are two disadvantages:<\/p>\n

1. You don’t check the bills as carefully as you should. Vendors mess up. NYSEG is the worst. Time Warner the second worst.<\/p>\n

2. Someone hacks your credit card. You have to spend hours telling your vendors you have a new credit card.<\/p>\n

My Visa got hacked on the weekend. A happy fellow took his girlfriend to Dominoes Pizza, to two movies and bought her $500 of Nike sneakers on my hacked Visa. Citibank caught the Nike buy, but not the others. I did. And I won’t pay for them. Meantime, I have to tell everyone from FedEx to EasyPass that I have a new credit card (Tuesday). Yuch.<\/p>\n

+ There are instructions for everything on YouTube. <\/strong>Installing stuff. Fixing stuff. You name it. YouTube has it.<\/p>\n

+ Write it down. If you get a flat in New York City, y<\/strong>ou’ll need Carlos’ Flat Fix Shop. 503 West 45 Street. 212-765-1280. Don’t try changing your flat tire. You can’t loosen the nuts. Pump it up with a can of gunk (they sell the stuff at highway rest stops) and get yourself to Carlos.<\/p>\n

+ Your Internet connection is too slow. <\/strong>Call your provider today and complain. They’ll double it\u00a0 for free, or for very little money. Speed makes a huge difference.<\/p>\n

+ I like my new iPhone 6. <\/strong>It’s faster, bigger and easier to type on. Battery life is better with the iPhone 6 plus. But that thing is too big to carry around. There are two solutions to battery life — the Mophie and the UNU. They fit around your iPhone, making it bigger and heavier. They look like this:<\/p>\n

\"Mophie6\"<\/a><\/p>\n

Personally, I love the bigness and the weight. I once lost an iPhone 5 because it slipped off my lap when I got out of the car and it fell on the ground. These extra battery things — which more than double your battery life — have heft. You won’t lose them. I love them. Personally, I prefer the design and feel of the Mophie, though it’s a little more expensive. The UNU is here<\/strong><\/a>. The Mophie is here. <\/strong><\/a><\/p>\n

If you buy one, get the red. <\/span><\/strong>It’s ugly, but you’ll always find it on your pigsty desk.<\/span><\/p>\n

Apple sold $482 million of Apple Watches in the U.S. on the first day it took orders. That’s a whole lot better than a slap in the belly with a cold fish. Most popular color is Space Grey, which is also my favorite.<\/p>\n

+ Scuff marks on your walls?<\/strong> This stuff really works.<\/p>\n

\"Mr.CleanMagicEraser\"<\/a>
\nFrom Amazon, click here.<\/strong><\/a><\/p>\n

Wednesday is tax-day.<\/strong><\/span> Here’s one solution.<\/p>\n

\"DearIRS\"\"DearIRS2\"<\/a><\/p>\n

Two stories on the meaning of Passover (which just ended). <\/strong><\/span>Passover celebrates Moses taking the Israelites out of Egypt.<\/p>\n

+ Moses and the Israelites hit the Red Sea.<\/p>\n

Moses calls for his VP Engineering. “Build me a bridge.”<\/p>\n

“No bridge. We’re in the desert. No wood. No steel.”<\/p>\n

Moses calls for his VP Sales. “Go back. Work a deal with the Egyptians.”<\/p>\n

“Sorry, boss. No deal. They want us dead.”<\/p>\n

In desperation, Moses calls for his VP Public Relations. “Yankele, so what do we do?”<\/p>\n

Yankele: “See that rock, Moses. Stand on it. Lift your arms. Ask God to open the Red Sea. He will. Take your Israelites through the gap. When you get to the other side you’ll notice another rock. Stand on it. Wait for the Egyptians and their chariots and war machinery to fill the gap. Raise your hands. Ask God to close the gap. Make the waters to flow. He will. Your enemies will be destroyed and you can pass on safely to The Promised Land.”<\/p>\n

Moses, skeptically: “This stuff gonna work?”<\/p>\n

Yankele, “I don’t know. But if it does, I’ll get you three pages in the Old Testament.”<\/p>\n

+ Nine-year-old Joey was asked by his mother what he had learned in Sunday School.<\/p>\n

“Well, Mom, our teacher told us how God sent Moses behind enemy lines on a rescue mission to lead the Israelites out of Egypt . When He got to the Red Sea , he had his army build a pontoon bridge and all the people walked across safely. Then, he radioed headquarters for reinforcements.<\/p>\n

They sent bombers to blow up the bridge and all the Israelites were saved.”<\/p>\n

“Now, Joey, is that really what your teacher taught you?” his mother asked.<\/p>\n

“Well, no, Mom. But, if I told it the way the teacher did, you’d never believe it!”<\/p>\n

\"HarryNewton\"<\/a>
\nHarry Newton whose excuse for missing columns recently can be seen in one photo. This is second granddaughter Sophie.<\/p>\n

\"A\"<\/a><\/p>\n