Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Tuesday, January 18, 2005:
My weekend accomplishment was filling garbage cans. I read, circled, tore and
junked newspapers and magazines. I'm sure I got more intelligent. Things I learned:
1. Health is still number one. I also exercised, played tennis and rested.
I feel better exercising than reading.
2. Family is still number two. I got to spend time with Michael. He's
more interesting than most magazines, certainly more opinionated than all of
them -- in an endearing, kind way, of course.
3. There's a huge amount of great new technology around. But finding
investment opportunities is almost impossible. I'm the world's leading technologist
maven -- self-proclaimed, of course. I love the new technology to use -- but
not to invest in. For a quick hit, look below at the story on Microsoft
(MSFT). Look at the mess Intel (INTC) is in, reorganizing once again.
4. Real estate keeps growing because, while short-term interest rates
are rising quickly, long-term ones (those in mortgages) aren't rising as quickly.
That will keep real estate prices up. There are still sound real estate opportunities
around -- but they're harder and harder to find.
Believe it or not, according to a report released by New York City's Department
of Finance, the market value of New York City real estate rose 14% in 2004.
The report found the increases were broadly based throughout the city, as property
values rose in every borough, with Staten Island rising almost as much in percentage
terms as Manhattan, which put the total value of property in the city at $616
billion (more than twice Microsoft's market cap.) In one stark indication
of the strength of real estate in the city, the Time Warner building in Columbus
Circle rose in value over the last year by more than $200 million to $1.2
billion. That's a 20% rise. Fortunately, the Time Warner building is
fewer than 500 yards from my apartment and less than 300 yards from my son's new
apartment. A developer is ripping down a hotel between my son's apartment and
Time Warner and building condominium apartments, none of which will sell for less
than $3,000 a square foot. I don't make this stuff up.
off your mortgage. When I was young, stupid and starting new businesses,
I was always afraid that one day one would fail, I'd lose everything and I'd
end up on the street, homeless. As a result I never took out mortgages on the
homes I bought for the family and I never gave a personal guarantee on anything.
I always paid off my debts and never stuck anyone for money. But my philosophy
was ingrained. Looking back, there were years when borrowing money and investing
it in the stockmarket or in real estate would have made me more money than the
costs of a mortgage.
I've had several emails from readers. They write they have cash. They have mortgages.
Which investments should they make? I ask "What are they earning?"
They write, they earn 2% on cash and pay 6.25% on their mortgage.
I reply, "Pay off the mortgage." They say "But surely, we can
do better than 6.25%?" I answer. You probably can. Maybe you will. But
6.25% is a sure thing... Am I wrong?
is all that works today: Eye a "cheap" stock. Buy it. If
it rises, sell it. I bought TiVo last week on a dip to $4. It rose to $4.50
by the end of the week. I sold it. I was afraid of the weekend. I'm always afraid
of weekends. You never know what stuff the financial journalists will concoct.
And concoct they did with TiVo. Monday's New York Times wrote a devastating
piece called "TiVo Struggles to Find Its Niche After Quitting a Deal
With Cable" By Monday night, I'd been email a piece that read, "If
you wanted to read the obit of one of the most beloved companies in Silicon
Valley, I urge you to read todays New York Times. Saul Hansell, does a
fantastic job of profiling a company in turmoil, and grasping for strategy.
Any strategy. Blowing a deal with Comcast might have cost CEO Michael Ramsey
his job, and TiVo its future. The fate of TiVo also highlights the dilemma facing
a lot of exploding TV start-ups. The technology does not necessarily
translate into profits and a business. Here is my breakdown of TiVos miserable
as a public company, $260 million. Total devices sold, about 2 million or roughly
$130 a device. Total (net) losses by TiVo as a public company - $514 million.
Thats half-a-billion smackers! Loss per device, about $257.
Here are some
selected reactions from around the web.
* Jonathan Greene: By ignoring the inevitable future, that DVR functionality
was more commodity than secret sauce, they allowed anyone interested in entering
the market to cruise past them with ease.
* Thomas Hawk: TiVo has always been a concept stock rather than an earnings
story and I sure bet they would love to have a Comcast deal now. Instead Microsoft
has partnered with Comcast with the Foundation HDTV Box and is the one that
ended up getting a deal done.
* PVRBlog: When the story of TiVo is written, this Comcast negotiation could
be the point when the companys outcome was decided.
* Engadget: TiVo is sort of in a life-or-death situation right now and might
have to take what it can get if it wants to stick around. The company is still
not turning a profit, theyre facing increased competition from all sides.
* PaidContent: The bigger picture is much the same as it is within the mobile
content industry: if you decide to bypass the operators, then you are truly
on your own, and that brings with it the benefits and burdens."
Here are two TiVo
charts -- one showing the bounce last week. And the second one showing the precipitous
drop since early 2004. The lesson here is simple: Don't fall in love with technology
stocks because you love their technology. And I do. Where would I be without
TiVo's the Australian Tennis Open, now beginning?
your stock. A man is buying an expensive condominium in New York.
His income is low. His assets are low, except he has $45 million of Google stock.
What would you advise him? Take some money home? Sell some of the Google stock.
Or hold all the Google stock, thinking it will go higher?
What happens if he can't sell his Google stock? Then he ought to "collar"
some of it. That's like selling it now at today's prices for delivery later.
Many executives who were awarded high-flying stock during the late 1990s forgot
the great maxim -- take some home. Then their stocks crashed and they had nothing.
Will Google crash? Who knows? Personally I think it's among the more overpriced
Bank of America has flipped its lid: The
Bank of America Corp.'s securities unit fired Andrew Susser, a top-ranked analyst
and head of its high-yield bond research group, after his face appeared superimposed
on a woman's body on the cover of a serious report he wrote on the prospects
for hotels and which he sent to clients. Here's the photo.
The Bank paid
Andrew Susser, 39, a highly rated gaming and lodging analyst, around $4 million
a year. The cover picture shows a man about to carry a woman wearing a black
dress and high heels over the threshold of a hotel room. But instead of a woman's
face, Mr Susser's bespectacled mug peers over the man's shoulder. The picture
is clearly designed to amuse clients who otherwise rely on Mr Susser, who is
noted for his sense of humor, his off-beat research report covers, and his sound
Institutional Investor magazine's ranking of high-yield analysts for
lodging and gaming the past three years. Banc of America Securities (spelled
with a "c") was the fourth-biggest U.S. underwriter of high-yield
debt last year, up from sixth in 2003 and eighth in 2000, data compiled by Bloomberg
show. The firm's share of the $136 billion market for high-yield sales doubled
to 11 percent last year from 5.4 percent in 2000.
to wonder about Wall Street.
Gates gives the demo from Hell at CES. The Consumer Electronics Show
is the largest tech event in America. The buzz wasn't about the latest widescreen
TV. It was about Bill Gates' keynote speech, during which several Microsoft
technologies crashed or utterly fell apart. One demo failed not once but during
three separate segments of the speech, as Gates (photo, left) helplessly pressed
buttons on his remote control.
stage had been set up to match the set from NBC's "Late Night,"
complete with Conan O'Brien and the comedian didn't disappoint. Addressing
the audience, he said after several failures, "Have we mentioned there's
gambling in this town? Feel free to hit the tables, you can come back when
we get this thing working." Click
here for the 2-minute video.
next for the gondoliers of Venice? They are about to face spot checks
on their sobriety after a spate of accidents thought to have been caused by
operators plying the citys famous canals while under the influence.
New regulations permit the city police to conduct breathalyzer tests on gondoliers
suspected of oaring while intoxicated. This is only the latest of a series of
assaults on this ancient and noble profession, beginning six years ago with
the introduction of police speed traps, then proceeding, last year, to a ban
on gondoliers forming up in fleets to perform choral serenades. Next year:
mandatory seat belts for New York's taxidrivers?
what to spend your money on? A dear friend
just bought a house. Here's the view up the hill and here's the view down the
hill. I'm not telling exactly where it is, except it's west and north. I'm beetling
out there soon to find my own place in Heaven. Only negative: no broadband Internet
Next invasion: Iran. Coming soon. Seymour
Hersh writes in a recent issue of The New Yorker magazine. Click
The talking dog:
A guy is driving around and he sees a sign in front of a house:
"Talking Dog For Sale."
He rings the bell, and the owner tells him the dog is in the backyard.
The guy goes into the backyard and sees a Labrador Retriever sitting there.
"You talk?" he asks.
"Yep," the Lab replies.
"So, what's your story?"
The Lab looks up and says, "Well, I discovered that I could talk when I
was pretty young, and I wanted to help the government; so I told the CIA about
my gift, and in no time at all they had me jetting from country to country,
sitting in rooms with spies and world leaders, because no one figured a dog
would be eavesdropping. I was one of their most valuable spies for eight years
"But the jetting around really tired me out, and I knew I wasn't getting
any younger so I wanted to settle down. I signed up for a job at the airport
to do some undercover security work, mostly wandering near suspicious characters
and listening in. I uncovered some incredible dealings and was awarded a batch
of medals. I got married, had a mess of puppies, and now I'm just retired."
The guy is amazed He goes back in and asks the owner what he wants for the dog.
The guy says, "This dog is amazing. Why on earth are you selling him so
"Because he's a liar. He didn't do any of that shit."