Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST Friday, February 8, 2008: Some
of us are about to lose 100% of our entire investments in various things. Losing
all your money hurts. You can "justify" it in many ways. You earned
it; it's yours to lose. It's an inevitable consequence of capitalism and a broad
diversification program -- you didn't lose all of it.
The first "blame"
is a lousy due diligence. Checking can protect you against obvious disasters.
I'd be a billionaire today if I had $100 for each investment I didn't make.
Due diligence doesn't protect you against a sound track record. The motto is
"When in doubt, stay out." But what happens when you're not
in doubt? Suddenly the sound long-term track record goes awry.
now become super important:
1. How quickly
can you sell? The stockmarket is more liquid than a commercial building.
You can't apply an Inviolate Stop Loss Rule to a building. You can to stocks.
2. What's the
worst that can happen? Item: A man guaranteed the mortgage on a property.
His net worth at the time was $100 million. By the time his guarantee was needed
-- two years later -- his net worth was zero. He had invested in too
much of the wrong thing. True story.
2. What does
the chart look like? Here are two charts that Blind Freddie couldn't misread.
You can smell the disaster coming. Were we all morons to miss the sharp move
above the trendline?
It is your money and so what if the wife said "No more than $35 million!"
which she did to Mitt.
$50 million personal money: Trying to buy the presidency.
Intolerable Fraud: From today's New
York Times editorial:
arrived in our office the other day. It had the bulky, tawdry look of junk
mail: pink and lavender Easter eggs, a plastic address window and a photo
of a young man in fatigue shorts using crutches to stand on his only leg.
Thousands of severely wounded troops are suffering, it read. Will
you help them this Easter?
It was a plea
for money from the Coalition to Salute Americas Heroes, one of the worst
private charities but hardly the only that have been shamefully
milking easy cash from the suffering and heartache caused by the wars in Afghanistan
and its sister organization, Help Hospitalized Veterans, were among a dozen
military-related charities given a grade of F in a study last December by
the American Institute of Philanthropy, a nonprofit watchdog group. These
and other charities have collected hundreds of millions of dollars from kind-hearted
Americans and squandered an unconscionable amount of it on overhead and expenses
70 percent or 80 percent, or more. The usual administrative outlay
for a reputable charity is about 30 percent. Money that donors surely assumed
was going to ease the pain and speed the healing of injured soldiers went
instead to junk-mail barrages, inflated executive salaries and other forms
of corporate-style bloat.
legal. There is very little regulation in the charity game, and if someone
like Roger Chapin, the nonprofit entrepreneur who founded the
Coalition to Salute Americas Heroes and Help Hospitalized Veterans,
wants to mismanage your money, he has great leeway in doing so. His veterans
charities raised more than $168 million from 2004 to 2006, but spent only
a pittance about 25 percent to help veterans. The rest, nearly
$125 million, went to fund-raising, administrative expenses, fat salaries
and perks. Mr. Chapin gave himself and his wife $1.5 million in salary, bonuses
and pension contributions over those three years, including more than $560,000
in 2006. The charities also reimbursed the Chapins more than $340,000 for
meals, hotels, entertainment and other expenses, and paid for a $440,000 condominium
and a $17,000 golf-club membership.
And what did
the soldiers get? Try almost $18.8 million in charitable phone
cards sent to troops overseas in 2006 not to let them call their families,
but rather to call up a stateside business that sells sports scores.
Henry Waxman, Democrat of California, whose Committee on Oversight and Government
Reform has held hearings on the issue and documented the above abuses, has
rightly called the conduct of charities like Mr. Chapins an intolerable
Mr. Waxman deserves
credit for exposing it, but Congress should follow through with stricter oversight
and disclosure rules so Americans dont have to rely on House committee
hearings to know where their money is being misspent.
you happen to get a mailing from the Coalition to Salute Americas Heroes,
by all means open it. Look the contents over the glossy bunny greeting
card, the earnest letter from the retired Brig. Gen. Chip Diehl then
shred or recycle it or both. And think of what Mr. Chapin told the House committee
when asked what would happen if his charities ever told donors where their
disclose, which Im more than happy to do, he said, wed
all be out of business. Nobody would donate. It would dry up.
Justice for dumb bankers:
The woes in
the United States financial sector are poetic justice for bankers
who designed and sold complex investments that have since gone sour, Mr. Buffett
said on Wednesday.
the head of Berkshire Hathaway and one of the worlds wealthiest people,
appeared to see irony in the fallout hitting many of the banks who marketed
complex investments that have now crashed.
sort of a little poetic justice, in that the people that brewed this toxic
Kool-Aid found themselves drinking a lot of it in the end, Mr. Buffett
said during a question and answer session at a business event in Toronto.
also played down worries about a credit crunch by saying that recent interest
rate cuts mean low-cost funds are readily available.
said, the turmoil that has rocked the nations economy in recent months
has imbued the markets with a healthy degree of caution, while the rate-cutting
response from central bankers has ensured that cheap money remains available
quite call it a credit crunch. Funds are available, Mr. Buffett said.
Money is available, and its really quite cheap because of the
lowering of rates that has taken place.
He added: What
has happened is a repricing of risk and an unavailability of what I might
call dumb money, of which there was plenty around a year ago.
border agents are searching and detaining laptops and cellphones.
One border agent found a laptop with child pornography. The U.S. government
has argued in a pending court case that its authority to protect the country's
border extends to looking at information stored in electronic devices such
as laptops without any suspicion of a crime. In border searches, it regards
a laptop the same as a suitcase.
a software engineer with Cisco Systems, has had his laptop and cellphone searched
three times in the past year. Once, in San Francisco, an officer "went
through every number and text message on my cellphone and took out my SIM card
in the back," said Habib, a permanent U.S. resident. "So now, every
time I travel, I basically clean out my phone. It's better for me to keep my
colleagues and friends safe than to get them on the list as well."
An article in
yesterday's Washington Post instanced others who had their laptops and
cellphones searched and seized. Please be careful. Click
has its rewards -- in England: From the Sunday Telegraph:
multiple wives have been given the go-ahead to claim extra welfare benefits
following a year-long Government review. Even though bigamy is a crime in
Britain, the decision by ministers means that polygamous marriages can now
be recognised formally by the state, so long as the weddings took place in
countries where the arrangement is legal.
will chiefly benefit Muslim men with more than one wife, as is permitted under
Islamic law. Ministers estimate that up to a thousand polygamous partnerships
exist in Britain, although they admit there is no exact record. ...
on income support from the Department for Work and Pensions (DWP) state: "Where
there is a valid polygamous marriage the claimant and one spouse will be paid
the couple rate ... The amount payable for each additional spouse is presently
for all of the wives may be paid directly into the husband's bank account,
if the family so choose. Under the deal agreed by ministers, a husband with
multiple wives may also be eligible for additional housing benefit and council
tax benefit to reflect the larger property needed for his family.
The ruling could
cost taxpayers millions of pounds. ...
permits men to have up to four wives at any one time -- known as a harem --
provided the husband spends equal amounts of time and money on each of them.
went to the dentist on Monday. It was awful. For two hours of pain,
I paid $1,700. It could have been worse:
He ordered one hamburger, one order of French fries and one drink. The old man
unwrapped the plain hamburger and carefully cut it in half. He placed one half
in front of his wife. He then carefully counted out the French fries, dividing
them into two piles and neatly placed one pile in front of his wife.
He took a sip
of the drink, his wife took a sip and then set the cup down between them. As
he began to eat his few bites of hamburger, the people around them kept looking
over and whispering. You could tell they were thinking, "That poor old
couple - all they can afford is one meal for the two of them."
As the man began
to eat his fries a young man came to the table. He politely offered to buy another
meal for the old couple. The old man said they were just fine - They were used
to sharing everything.
people noticed the little old lady hadn't eaten a bite. She sat there watching
her husband eat and occasionally taking turns sipping the drink.
Again the young
man came over and begged them to let him buy another meal for them. This time
the old woman said "No, thank you, we are used to sharing everything."
As the old man
finished and was wiping his face neatly with the napkin, the young man again
came over to the little old lady who had yet to eat a single bite of food and
asked "What is it you are waiting for?"
week's columns have been among the best I've ever written. If you
didn't read them all, please
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
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