Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
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.
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.
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.
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.
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.
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.
funds are the next bubble: Daniel Gross writes
Slate's "Moneybox" column. He recently wrote:
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
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 rewards2 percent management fees
and 20 percent of the profitsflow 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.
and their mother is getting into the business. In the late stages of most
bubbles, people from outside the hot industryincluding many who never
showed much interest in business at allplunge 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
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 theStreet.com
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 ABCand 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.
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
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.
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
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 Brainpop.com
and PurpleMath.com. 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,
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
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!"
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
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.