Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Friday, July 20: Secret
revealed. The perfect investment is your own business. Now is the perfect time
to start your own business. Of course, any time is a good time to start your
own business. Now is the perfect time to start one. The reasons? Two of them.
First, there is a huge demand around for your services or products. Just try
buying anything today. Second, all your competitors are screwing up royally.
My book printer decided not to send out two cartons of my dictionaries because
I owed them $900. Yet they failed to call me for the money, or to tell me they
weren't sending the books out. I was in Croatia. And I had just paid them $50,000
for printing them.
All our building subcontractors are so busy they take days to return a phone
call or an email -- if they ever do. Most don't.
Virtually all the suppliers we've bought things from recently -- from skylights
to lighting fixtures, from stone to glass -- have screwed up, either delivering
late or wrong. Or, often, both.
are Newton's Rules on running a business today:
Call your customer. Tell him or her the truth, no matter how painful. Customers
can deal with the truth. They can't deal with lies or ignorance.
2. Answer your customer's emails, faxes, phone calls and letters promptly.
3. Tell your people the customer is always right -- even if he's not.
4. Practice "Newton's Escalating Apology Gifts Program." If
something goes wrong, say "Sorry" and send a small gift. Flowers are
a good start. Keep sending apology gifts until your customer calls says and
says, "Enough already. You have my business for life."
5. Ask your customer for suggestions on how better to improve. Listen to what
6. Put your company's
name, phone number and web site on everything you send out. Often I wish I could
buy more. But I can't find where I got it..
ETFs are doing well. I recommended OIH and IYE. The
first tracks companies that provide drilling, well-site management and related
products and services for the oil service industry. These companies are the
largest and most liquid companies with U.S.-traded securities involved in the
oil service industry. The second (IYE) tracks the price and yield performance,
before fees and expenses, of the Dow Jones US Energy Sector Index. Component
companies include oil companies and services, oil-major, oil-secondary and pipelines.
Since oil is going
to $100, you can't go wrong with OIH and IYE. (Famous last words.)
click on attachments: The inviolate rule with emails
is don't open attachments. Lately, some moron has been sending emails
with attached "PDF" files, i.e. Adobe Acrobat files. Don't open them.
I smell a rat.
equity and other things: The best investment
you don't control is an asset that rises in value and you sell after holding
it for 12 months and a day. That way you pay much less to Uncle Sam -- 15% of
your gains, instead of 35% (or so). Before you make an investment you need to
think of the tax consequences. Of course, the really BEST deal is investment
real estate. Buy something. Sell it. Buy something bigger. Do a 1031 exchange
and you'll never pay taxes on the gains. I know someone who's sold 47 properties,
has done 47 1031 exchanges and has never paid Uncle Sam a nickel on the profits
from selling the buildings. He's now very rich and incredulous of this gigantic
email: Reader Andrew Whitten writes:
I just unsubscribed
I feel liberated
..it's like a drug for workaholics.
He's right. Try
it yourself. My incoming emails have dropped dramatically. Now I have time.
I'm also being liberated.
is rife with fraud: Especially with high priced
items, like laptops. It's gotten so bad, I'd be very dubious about buying anything
of value on eBay today. I've tried to alert eBay management to frauds. They
seem to have zero interest in tracking frauds. Customer beware.
Watch also for
emails from "PayPal." The emails say someone has obtained "unauthorized
access to your PayPal account." The email is not from PayPal. It's from
a crook phishing (that's the term) for your financial information, like your
PayPal ID and password.
will tell you which seat has a laptop outlet. Before
you book an airline seat, check SeatGuru.com.
It will tell you which seat on your airline ride is miserable and which one
is truly miserable. Or which one has a laptop outlet and which doesn't.
role should government play? My rich friends
say "keep the government out. Way out." I've always felt we
need the government for safety -- for my safety and for the country's safety.
This piece by James Surowiecki in
the July 23, 2007 New Yorker is called "Fuel for thought."
Read on. It's engrossing:
In the auto
industry, theres one thing you can always count on: if a new environmental
or safety rule is proposed, executives will prophesy disaster. In the nineteen-twenties,
Alfred Sloan, the president of General Motors, insisted that the company could
not make windshields with safety glass because doing so would harm the bottom
line. In the fifties, auto executives told Congress that making seat belts
compulsory would slash industry profits. When air bags came along, Lee Iacocca
told Richard Nixon that safety has really killed all our business.
A few years later, when Congress was thinking about requiring fuel-economy
standards, auto executives warned that instituting such standards would create
massive financial and unemployment problems. And now, with Congress
debating a bill to raise fuel-economy standards, for the first time in almost
twenty years, the Chicken Littles are squawking again, forecasting doom for
Detroit and asserting that making higher-mileage vehicles is technologically
unfeasible and economically suicidal.
Of course, much
of this is simply stonewalling by executives determined to keep meddlesome
politicians out of their business. But sometimes the industrys fears
have been founded on real market research. In the case of safety glass, G.M.
believed that consumers werent prepared to pay more for cars with safety
glass, so Sloan worried that it would be hard to recoup the cost of installing
it. Similarly, when, in the mid-nineteen-seventies, G.M. offered front-seat
air bags as an option on Cadillacs, Buicks, and Oldsmobiles, they didnt
sell. Fuel-economy standards present the same difficulty: although there are
plenty of affordable models that get good gas mileage, over the past two decades
some of the most powerful and least fuel-efficient vehicles on the marketS.U.V.s
and pickup truckshave also been among the best-selling. Thirty years
ago, so-called light trucks accounted for about a fifth of all
auto sales. Today, even with a recent slowdown, they account for more than
want to buy the biggest and most environmentally damaging vehicles available,
but polls show that, given an option, some three-quarters of them vote for
dramatic increases in fuel-economy standardsincreases that may well
force automakers to sell fewer (or at least smaller) S.U.V.s. We buy gas guzzlers
but vote for gas sipping. This isnt because people are ignorant about
how higher fuel-economy standards would affect them personally; polls that
explicitly lay out the potential trade-offs involved still find support for
tougher standards. And it isnt as if voters and car buyers belong to
two different groups; one recent survey of pickup owners found that seventy
per cent strongly favored tougher requirements. The curious fact is that many
people buying three-ton Suburbans for that arduous two-mile trip to the supermarket
also want Congress to pass laws making it harder to buy Suburbans at all.
happening here? Back in the nineteen-seventies, an economist named Thomas
Schelling, who later won the Nobel Prize, noticed something peculiar about
the N.H.L. At the time, players were allowed, but not required, to wear helmets,
and most players chose to go helmet-less, despite the risk of severe head
trauma. But when they were asked in secret ballots most players also said
that the league should require them to wear helmets. The reason for this conflict,
Schelling explained, was that not wearing a helmet conferred a slight advantage
on the ice; crucially, it gave the player better peripheral vision, and it
also made him look fearless. The players wanted to have their heads protected,
but as individuals they couldnt afford to jeopardize their effectiveness
on the ice. Making helmets compulsory eliminated the dilemma: the players
could protect their heads without suffering a competitive disadvantage. Without
the rule, the players individually rational decisions added up to a
collectively irrational result. With the rule, the outcome was closer to what
players really wanted.
The same phenomenon
is, to some extent, at work in the fuel-economy debate. People believe that
bigger and heavier cars are safer in a crash (forgetting that, often, bigger
cars are also more likely to crash). And people like the fact that driving
a higher-horsepower car makes you look better at the stoplight. So our desires
as individuals to protect ourselves and to outclass our neighbors encourage
us to buy bigger and bigger vehicles with more and more horsepower. And the
market doesnt create counter-incentives that would push us in a responsible
direction, since someone who drives a Hummer doesnt suffer the effects
of pollution and global warming any more than someone driving a Prius does,
and isnt charged more for the extra environmental damage.
of this size-and-power arms race are easy to see: between 1984 and 2002, the
average vehicle got twenty per cent heavier and its zero-to-sixty acceleration
improved by twenty-five per cent, while fuel efficiency stagnated. (By contrast,
between 1975, when fuel-economy standards were first introduced, and 1984,
average fuel economy improved by sixty-two per cent, without any decline in
performance.) This is not because of technological difficulties or a conspiracy
on the part of the auto industry. Its because automakers have listened
to car buyers, and put their energy into making vehicles bigger and faster,
rather than more efficient. In calling for a law requiring better gas mileage
in our cars, then, voters are really saying that theyre unhappy with
the collective result of the choices they make as buyers. Sometimes, they
know, we need to save ourselves from ourselves.
health insurance: My
concept: I pay for everything until I get hit by a bus, or like. I asked readers
for advice. Sample responses. (This is an ongoing research project). Email me
if you can help. .
Consider a Health Savings Account, which can accompany high-deductible health
plans. This is very similar to an IRA - you own it, you can leave it to your
children, contributions are tax-deductible ("above the line"), income
in the account accumulates tax-free - and you can use the funds to pay medical
This is not a
"flex spending account" - HSAs were created in 2003 and are designed
to help individuals save for future qualified medical and retiree health expenses
on a tax-free basis.
New York tax law
supports these - making it possible for you to pay medical bills with fully
pretax dollars. Unfortunately, Alabama, California, New Jersey, and Wisconsin
I got a policy
with a deductible of $4000/person $8000/family, and saved $4000/year in premiums
compared to my old full-coverage plan. I got discounts (but not reimbursement)
when I used preferred providers.
The biggest obstacles
to high deductible plans are state legislatures, which ban out-of-state policies,
and which mandate coverage (like chiropractic, mental health, bone marrow transplants
for breast cancer, and on and on). You are not allowed to forgo these mandates
in exchange for a lower premium. Isn't it great to know that someone's looking
out for your interests?
type of individual is a perfect candidate for a Health Savings Account (HSA).
He will choose a high deductible, get the insurance company discounts and pay
the expenses prior to the deductible with tax deductible dollars. Aetna and
Golden Rule plus others offer the product. There are both group and individual
others rain on your parade:
was at her hairdresser's getting her hair styled for a trip to Rome with her
husband. She mentioned the trip to the hairdresser, who responded: " Rome
? Why would anyone want to go there? It's crowded and dirty. You're crazy to
go to Rome . So, how are you getting there?"
Continental," was the reply. "We got a great rate!"
exclaimed the hairdresser. "That's a terrible airline. Their planes are
old, their flight attendants are ugly, and they're always late. So, where are
you staying in Rome ?"
at this exclusive little place over on Rome 's Tiber River called Teste."
any further. I know that place. Everybody thinks it's gonna be something special
and exclusive, but it's really a dump, the worst hotel in the city! The rooms
are small, the service is surly, and they are overpriced. So, whatcha' doing
when you get there?"
to go to see the Vatican and we hope to see the Pope."
laughed the hairdresser. "You and a million other people are trying to
see him. He'll look the size of an ant. Boy, good luck on this lousy trip of
yours. You're going to need it."
A month later,
the woman again came in for a hairdo. The hairdresser asked her about her trip
to Rome .
It was wonderful,"
explained the woman," Not only were we on time in one of Continental's
brand new planes, but it was over booked and they bumped us up to first class.
The food and wine were wonderful, and I had a handsome 28-year-old steward who
waited on me hand and foot. And the hotel was great! They'd just finished a
$50 million remodeling job. Now it's a jewel, the finest hotel in the city.
They, too were over booked, so they apologized and gave us their owner's suite
at no extra charge!"
muttered the hairdresser, "that's all well and good, but I know you didn't
get to see the Pope."
we were lucky. As toured the Vatican , a Swiss Guard tapped me on the shoulder,
and explained that the Pope likes to meet some of the visitors, and if I'd be
so kind as to step into his private room and wait, the Pope would personally
greet me. Sure enough, five minutes later, the Pope walked through the door
and shook my hand, I knelt down, and he spoke a few words to me."
What'd he say?"
you get that shitty hairdo?"
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
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note I'm not suggesting you do. That money, if there is any, may help pay Claire's
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