Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Tuesday, January 4, 2005: The
Week of Portfolio Rebalancing. First, thank everyone for sending me your
favorite mutual funds and ETFs. Keep them coming. I need to research them, including
the ones mentioned yesterday. But.. this legal stuff is still around.
Here are some
of the recommendations I've received so far from readers:
+ First Eagle Global. Review at FirstEaglefunds.com.
+ CVGRX MPGFX UMBIX PDLAX ACSTX PQNAX MVALX TEGAX CAAPX MERDX PRCGX PYLPX SMCEX
ACRNX HRVIX PENNX FPPTX TASVX.
+ ARGFX FSMEX TMVSX FDVLX
+ Harbor International fund.
+ "dunno why u are looking at the mutual fund jungle, ETF's simplified
In short, more work to do.
hot stocks retrench: Hot stocks skyrocket, then often plummet, as
the buyers move on in search of the next hot one. The key is "Jack,
be nimble. Jack, be quick." Get out fast when she turns. Don't even
count to ten. Get out. E.g.
You might love the stock. I love Frontline. But I'm not trying to guess when
it's turned. Or, as they say on Wall Street, "Don't try to catch a falling
knife." Notice how many times during Frontline's plummet, it actually looked
as though it flattened, rallied and turned... before it fell some more.
Fantasy reading: A dear friend gave me this
book and asked me "What I thought about it?" I read it. I think
it's the most preposterous investment book ever written. Dent's conclusion:
We'll see the Dow between 35,000 and 40,000 by late 2009 or early
2010. For that to happen, the Dow would have to grow at 28.3% a year
compounded. Last year (2004) it grew at 3.2%.
Dent's projection is so patently nonsensical that you wonder why I'm even mentioning
it. Fact is my man is a sophisticated real-estate investor and developer, worth
probably $500 million. I think he wants to believe Dent's stuff because
he sees fewer and fewer opportunities in commercial real estate, his lifelong
field. Prices of commercial real estate have simply moved into the ionosphere,
bringing yields so low you're almost as well off (if you factor in risk) buying
treasury bills -- 30-year ones are now yielding 4.8%. And that's free
of state and city tax.
Anyway, now you've asked (and for your amusement) let me give you some of Dent's
+ A second technology boom brings cellular, Internet and broadband connections
to 90% of U.S. households. (I don't disagree with this one.)
+ Inflation falls into early 2006 and rises mildly into 2009; then we see deflation
between 2010 and 2023. (How can anyone project this far out?)
+ Another devastating crash occurs between 2010 and 2012, which ushers in a
13-year bear market to 2022. (Ditto.)
+ Technology, financial services, health care and Asia will be the best sectors
from 2005 to 2009. Long-term bonds, health care and Asia will be the best after
2009. (Now, if only, I could predict that I'll be alive to see all this munificence.)
+ Large cap growth stocks make the best investment.
His main "thesis" is that investing opportunities are directly related
to population growth. My favorite quote from this total waste-of-money book:
"As population trends merely flattened, we saw the Dark Ages, the longest
bear market ... around five hundred years." I've got to send this one
to my high school history teacher. She'll be so pleased to hear someone describing
the Dark Ages as the longest bear market. If nothing, it's cute. Pity they didn't
have a stockmarket then. But, then, why let facts interfere with a good story?
Should you sell your business? Dent, Thomas
Stanley and I agree on one thing: The greatest opportunity to build wealth
comes from starting your own business. Among the top 1% of income households,
the percentage that are self-employed has risen from 37% in 1983 to 70% in 1998.
But thirty years later, comes The BIG Decision... Over the weekend a
dear friend emailed me:
month I had the chance to sell my company.
I was within minutes of signing the deal.
I started to think about what you've gone through, and I didn't sign and grab
I'm 55, not 80.
I'm healthy enough to keep working.
I love my work. I'd probably do it for free if I couldn't get a salary.
I'm happy with my wife, my kids, my house, my books, my toys.
I'm able to help relatives and support charities and political candidates.
I almost never get depressed or frustrated. Despite 25 years in the same business,
every day brings the joys of doing something I love, trying something new, and
learning something new.
Id hate to go through the pressures of finding a "perfect investment"
that someone else conceived and nurtured, only to know that if I ever invest
in it, Ill be eternally frustrated (as you are) since I wont be
able to control its outcome.
I still talk about things I want to do -- not just things I did do.
For the first 20 years I was in business, I was lucky to grab a 3-day weekend.
Now in our 25th year, I have a good staff that can do almost everything I can
do, and some things I can't do, and a lot of things I don't want to do.
I can take as much vacation as I want. Four or five weeks a year is enough.
I don't need 52 weeks to goof off.
I'd hate to sell out and move out, and watch some idiot destroy what I built.
I'd hate to sell out and stay in, and have to work under that idiot.
So, after reading what you've gone through after selling your business in 1997,
I'm still here.
And instead of selling the business, I'm expanding it, vertically and horizontally,
into manufacturing, wholesale distribution, and adding more product lines.
Thanks Harry, and have a happy/healthy/prosperous/intellectually-stimulating
Ken Fisher strikes again: Reader Rick Pennell
writes, "Thank YOU! for your column on Ken Fisher Investments. It was
somewhat difficult to find any articles that reviewed KFI but I finally came
across your column. I previously had some interest before I read your column
and contacted KFI followed by repeated "friendly" sales calls.
I decided to see what the salesman would say if I had decided to approach another
advisor as these calls were getting increasingly demanding. I was told that
I was basically too stupid to make an intelligent decision about which investment
advisor I should choose. Great sales approach!
I ended the call and decided to look for reviews of KFI one more time. Your
article was great and confirmed my suspicions.
Thanks for the advice."
prayer you don't need fulfilled:
A mother was teaching her 3 year old daughter the Lord's prayer.
For several evenings at bedtime she repeated it after her mother.
One night she
said she was ready to solo. The mother listened with pride as she carefully
enunciated each word right up to the end "Lead us not into temptation"
She prayed, "but deliver us some E-mail, Amen."
If you missed
Friday's Predictions for 2005, please read them. Click
here. I'm proud of my work on them.
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.
That money will help pay Claire's law school tuition. Read more about Google
here and here.