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8:30 AM EST Wednesday, January 31, 2007: I emailed my favorite hedge fund manager. "What's hot?"

He emailed back, "Me. I'm on the treadmill. Exercise is more important than making money."

He's right. Good health keeps you alive longer so you can make more stupid investment decisions. (Not him, me.) My tennis elbow is 90% better. Benign neglect and changing my backhand have worked. I'm back to playing every day.

Think of investing as a circle. Start with identifying an investment. That's the hard part. Most of us are presented with too few options to choose, so we get to choose from a list of second-bests. Before you choose you have to identify. Yesterday I wrote about my favorite office building real estate syndicator raising another fund. Only two readers emailed to ask "Who's the fund? Can I get in?" One reader will receive the papers today and I bet will subscribe a little. Meantime, he's sending me something he does, which seems interesting. Identifying is often not through the conventional Wall Street sources -- broker, financial adviser, etc. Those guys are always limited to what their boss -- the BIG financial institution employing them -- is pushing. And it's usually something the principals of the firm don't want to buy themselves. (This is cynical, I know.)

Then there's due diligence. Checking on your chosen investment. Most investors are lazy. Cramer figures an hour a week with every stock you own is the minimum attention you should give it. He's right. I'm not sure you can ever do sufficient due diligence. The key seems to be to check in places the company doesn't give you. The management of my favorite real estate fund talks about checking 100 potential properties before bidding on maybe 10, to finally end up with one bought. Most of us are too lazy to follow the 1 in a 100 rule. But we should.

More on the circle tomorrow.

Carl Icahn runs an "activist" hedge fund: He finds companies with lousy management, but great potential. He buys a big chunk of stock, writes a "White Paper" explaining what the management should be doing and then seeks a seat on the board for himself or one of his people. He doesn't own sufficient stock to control the company. He'd need 51%. He may have only 5% or less. But he seeks to make enough noise that he drives management nuts, so they either listen to his ideas or buy his stock back at a handsome profit -- just to get rid of him. This strategy has been so successful that, according to Icahn, his hedge fund has earned an average of 40% a year for eons.

Yesterday Icahn revealed he'd bought 1.4% of Motorola's shares and said he plans to seek a seat on the board. After his announcement, Motorola shares jumped 7%, giving Icahn an instant handsome profit. Motorola shares have not done well recently.



Icahn is bright and articulate. I heard him speak recently. He makes a great standup comedian. He's very funny. He tells great stories about his activist adventures. He also makes no secret of how awful he thinks management is. In a recent interview with Avenue magazine, Icahn said that CEOs are often “absolutely the wrong guys to be running things” and warned that, without greater accountability for corporate executives, “eventually we’ll have morons running everything.” I heard him use the word "moron" several times. He uses the financial press well. I'd hate to be management that he identified publicly as "morons." The intimidation is heavy.

Is Motorola worth buying because of Icahn? Could you think of 20 things Motorola could do to improve its profitability? Simply cutting expenses by 6.8% in the quarter to December 31, 2006 alone would have doubled operating income. He wants Motorola to spend all its $11.2 billion of cash to repurchase its shares (including his, obviously). Motorola's shares have dropped 30% since mid-October. So , the answer is Yes and Yes. And that's why the stock bounced 7% yesterday.

Tony Blair is a hoot: A blog on the New York Times recently carried this note on Blair in Davos, Switzerland::

For Tony Blair, it was a valedictory Davos moment — his final appearance at the World Economic Forum as Britain’s prime minister after almost 10 years in office (but probably not his last time at the conference). Despite his poor ratings and limited political shelf-life at home, Blair still packed the auditorium with listeners Saturday as he addressed three main issues: climate change, trade and Africa.

He seemed to want to go out with a blend of vision and humor. Mr. Blair has said he will hand over political power before September but has not said when. And when he stands down, the betting is that he will seek a big international role, becoming a super-statesman in the manner of former United States President Bill Clinton.

Peppering his address with asides, Mr. Blair seemed to confirm that ambition. “I look forward to coming back in future years and telling other leaders where they went wrong,” he said as he opened his speech.

As Mr. Blair intended, that got a laugh, and it was not his only effort to leaven his mostly earnest, almost evangelical, look at global problems with humor. A questioner remarked that, if he had not been a politician, he would have been a cleric. The remark drew acclaim from the audience. “I know what that generous applause is, because many of you wish I had been a cleric,” Mr. Blair said.

The aw-shucks tone, reminiscent of Mr. Clinton’s delivery, extended to his remark about the travails of making tough decisions. “My ambition now is to please some of the people some of the time,” Mr. Blair said.

In his address, Mr. Blair also ranged over what he described as the need for the reform of global institutions. But he still did not say where, in that world, he saw his own post-prime-ministerial niche.

He was asked, though, about how he perceived his own identity. He replied that he had been born in Scotland of English and Irish parents. “So I have always been confused.”

Giving a further clue as to his innermost self, Mr. Blair said the only leader he had ever met who inspired what he called “body envy” was the California governor, Arnold Schwarzenegger.

The Gotcha Laws

Law of Mechanical Repair
After your hands become coated with grease, your nose will begin to itch.

Law of the Workshop
Any tool, when dropped, will roll to the least accessible corner.

Law of Probability
The probability of being watched is directly proportional to the stupidity of your act.

Law of the Telephone
If you dial a wrong number, you never get a busy signal or voice mail.

Law of the Alibi
If you tell the boss you were late for work because you had a flat tire, the very next morning you will have a flat tire.

Law of Close Encounters
The probability of meeting someone you know increases dramatically when you are with someone you don't want to be seen with.

Law of Logical Argument
Anything is possible if you don't know what you are talking about.

Brown's Law
If the shoe fits, it's ugly and the wife won't like it.

The law of your favorite product
As soon as you find a product that you really like, they will stop making it.

Doctors' Law
If you don't feel well, make an appointment to go to the doctor. By the time you get there you'll feel better.


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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