Technology Investor 

Harry Newton's In Search of The Perfect Investment Newton's In Search Of The Perfect Investment. Technology Investor.

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8:30 AM EST Valentines Day, Wednesday, February 14, 2007: Skip the Valentine Day cliches -- flowers, chocolates, champagne, candlelight dinners. If money can buy it, it's a cliché. Your time is the best present. Doing a bunch of long-promised chores is a good beginning. Then move onto paying attention. Then perhaps you've earned the right to go dancing. That's my two-cents.

My wedding anniversary is March 23. One year I ordered a bunch of champagne glasses with our anniversary engraved on them. Great idea. Lousy implementation. I put April 23. Got the day wrong. Happily, I got the year right.

I love great technology. But it's never sufficient. eMagin Corporation has the greatest technology -- and, until recently, the absolute worst CEO, a man called Gary Jones. And it showed.

You read correctly. 64 cents. And this after a November, 2006 reverse 10-1 stock split. That means for every ten old shares you stupidly owned, you got one new one.

I instance eMagin because there's a lesson here. Don't fall in love with technology. What eMagin had in great technology -- OLED imaging -- it more than made up for in a totally awful president, Gary Jones, who knew little about marketing and even less about business. eMagin is the classic lesson in the pitfalls of playing with exciting new technology. And, by the way, it's never earned a penny.

Stay away from structured products. If the index goes up x%, you get half x%. Irrespective, you get 100% of your money back at the end of period -- typically two years. These things are structured by Wall Street to make Wall Street money, not to make its clients (i.e. you and me) money. Stay right away.

The fantasy of lurid projections: A true story. Here are the sales projections for a company seeking investors' money. Why would anyone believe this fantasy? Why would any self-respecting CEO put them out?

2005 -- $2.3 million
2006 -- $2.8 million
2007 -- $5.4 million
2008 – $10.9 million
2009 -- $24.0 million

I don't make this stuff up.

Hedge funds are the next bubble: Daniel Gross writes Slate's "Moneybox" column. He recently wrote:

Because I'm writing a book about booms and busts in American history, I've spent a lot of time thinking about how real and rational economic trends cross over into bubble territory. For the Internet, residential real estate (now officially popped), and alternative energy, there were always telltale signs of bubbleness.

Those same signs suggest that our next bubble is already here, and it's … hedge funds.

Let's review the classic warning signs:

1) Public investors are getting really excited when insiders sell, believing they're being cut in on a great deal. Friday was the IPO of hedge fund Fortress, the first U.S. hedge fund to go public. It was priced at $18.50 and closed the first day at $31, a 67.6 percent increase. The whole idea of hedge funds is that they are exclusive and that the massive rewards—2 percent management fees and 20 percent of the profits—flow to the guys who own it. The advantage of running a hedge fund, as opposed to a mutual fund, is that you don't have to tell the public how much you've made or shed any light on precisely how you did it. So, why are some of the sharpest tacks in the business willing to sell out now and sacrifice all the advantages inherent in the hedge-fund structure? According to the prospectus, the five guys who started the business collectively own shares worth about $9.4 billion based on today's price.

2) Everybody and their mother is getting into the business. In the late stages of most bubbles, people from outside the hot industry—including many who never showed much interest in business at all—plunge headfirst into the boiling waters. You know them. The Fortune 500 corporate warriors who reinvented themselves as dot-com hipsters in the spring of 2000, the accountant who gave it all ! up to flip condos in Naples last year, the oil-company executives who would like you to think they're really interested in carbon capture and cellulosic ethanol. Now, we've got politicians, diplomats, and policy wonks, who are frequently the last to know about any important private-sector trend, starting hedge funds.

3) As the naive newbies are plunging in, the successful early adapters move on to the next big thing. Charles Merrill, the founder of Merrill Lynch, famously sold stocks before the 1929 market crash. AOL founder Steve Case saved his dot-com fortune by acquiring the more-solid assets of Time Warner in 2000. The founders of Fortress aren't the only really rich people who are moving to diversify their holdings away from hedge funds. Spectrem Group, which tracks the spending and investing habits of the very! wealthy, in January reported that truly, filthy rich (those with household net worth of more than $25 million) have recently cut back sharply on their hedge investments. The percentage of such homes with hedge-fund investments fell from 38 percent in 2005 to 27 percent in 2006. Generally speaking, the truly, filthy rich are truly, filthy rich because they know something you and I don't.

4) In the late stages, the investment craze crosses over into the broader consumer culture. In the summer of 1929, stock promoter John J. Raskob's article in Ladies' Home Journal, which urged everyday Americans to build leveraged portfolios, was a clear sign of the top. In the 1990s, the appearance of money maven James Cramer in ads for Rockport shoes proved to be a similar omen. For hedge funds' dangerous spillover into m! ass consumer culture, look no further than your local Kenneth Cole outlet, where you can slip your tired feet into the Hedge Fund, which is … a loafer! And, uh-oh, the $160 shoe is already marked down 25 percent! (Hat tip to Forbes, registration required.)

5) My portfolio is in turnaround. If there's one group of businesspeople that is even slower on the uptake when it comes to hot trends than politicians, it's Hollywood executives. Which is why television shows are often excellent signs that a bubble is popping. In 2000, Darren Star, who had developed the zeitgeist-capturing show Sex and the City for HBO, rolled out The $treet on Fox, a show that chronicled the hot goings-on at a brokerage firm. It was canceled a few months later, when the American public suddenly fell out of love with stocks. In October 2005, the inevitable real-estate sitcom, inevitably titled Hot Properties, and inevitably detailing the escapades of four hot female brokers, debuted on ABC—and was canceled soon after, when the American public began to fall out of love with real estate. Now, Doug Ellin, who developed Entourage for HBO, is making another HBO series based on a hedge fund.

Michael's killer parasite is being killed. The gruesome story. Michael, my son went to India, ate and drank at the wrong place. He picks up nasty parasite, blastocystis hominis. Arrives back in the U.S. sick. Real sick. Visits tropical medicine clinic and $650 later discovers the parasite. They prescribe a strong antibiotic Flagyl, also called Metronidazole. The Internet says "Symptomatic Trichomoniasis: Metronidazole is indicated for the treatment of symptomatic trichomoniasis ... when the presence of the trichomonad has been confirmed by appropriate laboratory procedures."

The good news: Michael is no longer sick. The bad news: Several readers have it. They came back from a trip with upset stomachs, but failed to get tested. The parasite has stayed in their system.

The obvious lesson: Be careful what you eat. When in doubt, don't eat it or drink it. The safest drink is carbonated. The carbonation kills the bugs. Now you've finally learned something from my column.

Home alone safety tip: Put your car keys beside your bed at night. If you hear a noise outside your home or someone trying to get in your house, press the panic button for your car. The alarm will go off and the horn will sound until either you turn it off or the car battery dies. This tip came from a neighborhood watch coordinator.

My friend, Frank Derfler's latest ball: He is homeschooling his 12-year old grandson, Steven, largely over the Internet. The kid lives 300 miles away from Frank. "The Internet is brimming with educational resources -- from resources, to tests, to requirements." says Frank. "Check out and On many sites, the pupil does the test and I get the results by email. We go on field trips to the county courts, to the state legislature, etc."

Frank's biggest challenge?: Learning quadratic equations.

The best thing about home schooling is you go at your pace, not the school's (usually slower) pace. Frank rues when Steven goes back to school this September. He thinks he'll be bored. Frank's fault.

Time to have a boy:
A middle-aged couple had two beautiful daughters but always talked about having a son. They decided to try one last time for the son they always wanted.

The wife got pregnant and delivered a healthy baby boy. The joyful father rushed to the nursery to see his new son.

He was horrified at the ugliest child he had ever seen. He told his wife: "There's no way I can be the father of this baby. Look at the two beautiful daughters I fathered! Have you been fooling around behind my back?"

The wife smiled sweetly and replied: "Not this time!"

The excellent shot.
A 90-year old man said to his doctor, "I've never felt better...I have a 21-year old bride who is pregnant with my child. What do you think of that?"

The doctor replied, "I have an elderly friend who is a hunter and never misses a season.

One day he was in a hurry and picked up his umbrella instead of his gun by mistake.

When he got to the creek, he saw a beaver.

He raised his umbrella and went "bang, bang, bang" and the beaver fell dead.

What do you think of that?"

The 90-year old said, "I'd say somebody else shot the beaver."

The doctor replied, "My point exactly."

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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