Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Wednesday, March 16, 2005: I
agreed to put a little money into an apartment building syndication. IRR over
the forecast seven-year life of the deal (i.e. then it's sold) is a tinge over
15%. That's with a conservative 3% per year rent growth assumption and an 8% capitalization
when we come to sell it. I can do better than 15% in my own business. But I don't
own my own business at present. And my life is changing. Instead of working my
tushy off (as I used to do), yesterday I played tennis in the morning and in the
afternoon went to the Pacific Life Tennis Open in Indian Wells. Me and
all the other geriatrics. But, heck, the temperature was 75. There wasn't a cloud
in the sky. There was no humidity. And all the greats were playing. Nice to see
Federer and Sharapova up close.
a funny thing with oil: Half the world thinks we have plenty of it.
The other half thinks we don't. They each have their own "bibles"
which they swear by. If you happen to disagree with one person's oil religion,
you are bad.
One bible is:
"The Party is over: War and the fate of industrial societies,"
by Richard Heinberg. The other bible is "The Bottomless Well: The Twilight
of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy"
by Peter W. Huber and Mark P. Mills. Ironically, Amazon bundles the Huber/Mills
book with "The End of Oil: On the Edge of a Perilous New World"
by Paul Roberts.
I think all of us should read more on oil. It's the single biggest item
which determines the quality of the lives we lead. Imagine if oil were $5 (or
even $10) a gallon. How would you and I run our lives differently? Answer: Very
differently. Think of what $10 a gallon would do to the value of real estate
John Whittle, a smart investor in Australia emailed me "A few leads
on oil you may find of interest.
James A Baker
III, the former Secretary of State (and, whether or not you agree with his policies,
a very smart man) has founded the James A Baker III Institute for Public Policy
at Rice University. It conducts the Baker Institute Energy Forum which looks
at energy needs and particularly at policy and production issues concerning
oil. The web address is www.rice.edu/energy/about/index.html.
There is a large number of very informative papers in the various files contained
in the publications section e.g. Baker Institute Study #14 "Running on
Empty? Prospects for Future World Oil Supplies". I found that the papers
give a measured and informed perspective on energy questions.
gave an interesting speech on oil on 15 October 2004. It's at www.federalreserve.gov/boarddocs/speeches/2004/200410152/default.htm
I read somewhere that, prior to his appointment to the Fed, Greenspan was a
director of Exxon.
book I am reading at the moment on the whole question of energy is Huber and
Mills: The Bottomless Well - The Twilight of Fuel, the Virtue of Waste, and
Why We Will Never Run Out of Energy. I can not recommend it highly enough, even
if you don't agree with all the authors say.
far as individual stocks are concerned, there is an excellent free site run
by Kurt Wulff, a long time oil analyst, who puts out regular commentaries on
about 40 companies. The site is at www.mcdep.com.
There is also a link to a recent interview he gave to Barron's which is at www.mcdep.com/barrons41227.htm."
have happened to a nicer (or dumber) guy: Bernard Ebbers, the former
chief executive of WorldCom, was found guilty Tuesday of orchestrating an $11
billion accounting fraud that set off the largest bankruptcy in U.S. corporate
history. Ebbers, 63, was convicted on all nine charges against him: securities
fraud, conspiracy and seven counts of filing false reports with regulators.
Sentencing was set for June 13, and Ebbers remained free on bail. He faces up
to life in prison.
Whole Foods (WFMI) is clean. I tried to
convince my friend at Whole Foods to carry Dole raisins, which are the best.
The box says they're "plumper and moister" and they are. My friend
wrote me back:
for the raisins. I showed them to the head of our grocery team. The reason we
don't carry them is sulphur is introduced during
the drying process. That violates our core values. Thank you for your interest.
As you have probably learned at the store I am now at the
Union Square Whole Foods Market which will open March. 16. Be sure to visit
us. Be well."
I went back and
did some more pleading. (It's hard to buy Dole raisins in New York City.) My
friend wrote back:
there are items customers ask us to carry. We work very hard to try to accommodate
them. It took us a while but we
found "clean" tonic water. "Clean" is the word used for
products sold in Whole Foods Markets. Nothing artificial added, no chemicals
processing, no artificial coloring. That is just one of the requirements vendors
have to live with to do business with Whole Foods. If the chemical involved
is not naturally occurring in the product it cannot be introduced in any subsequent
processing. Our creed at Whole Foods Markets is not to condemn brands in regular
grocery stores. We just offer an alternative to those who wish to eat all natural
foods. Our efforts are paying off with an admiring customer base which is growing
daily. When the warm breezes blow across Manhattan I hope you'll visit our new
store at 14th & Broadway. Be well."
Now you know why
I own shares in Whole Foods (WFMI). By the way, Bill Jones is not a senior employee
of the company. Most days you'll find him at the store's front entrance greeting
Should children witness child birth?
Due to a power outage, only one paramedic responded to the call.
The house was very, very dark, so the paramedic asked Kathleen, a 3-year-old
girl, to hold a flashlight high over her Mommy so he could see while he helped
deliver the baby. Very diligently, Kathleen did as she was asked. Heidi pushed
and pushed, and after a little while Connor was born. The paramedic lifted him
by his little feet and spanked him on his bottom. Connor began to cry. The paramedic
then thanked Kathleen for her help and asked the wide-eyed 3-year old what she
thought about what she had just witnessed. Kathleen quickly responded, "He
shouldn't have crawled in there in the first place."
long can you celebrate?
The married couple was sitting in a fine restaurant when the wife
looks over at a nearby table and sees a man in a drunken stupor.
The husband asks
"I notice you've been watching that man for some time now. Do you know
she replies, "He's my ex-husband, and has been drinking like that since
I left him seven years ago."
the husband replies, "I wouldn't think anybody could celebrate that long."
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
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