Several of my friends are critical of ongoing love for real estate. Hence, I repeat and amplify my warnings from yesterday:

1. Don't be stupid -- like borrowing 100% of an overpriced property or investing in a deal that assumes that high-priced multimillion dollar homes will continue to skyrocket. They will be the first to tumble in price.
2. Assume prices will fall 10% and 15%. Make sure your cash can take it. Only a fool is 110% invested.
3. The price you buy it at is your only chance. It's legitimate (and expected) to haggle. It's also legitimate to walk. Remember, when God closes a door, she always opens a window. Lose a deal today. Find a better one tomorrow. It always happens.
4. Don't buy the first "bargain" you see. Keep looking. My friends look at 100 before buying one. You should too. Learn to walk. Learn to say NO.

Real estate is an imperfect market. There are always deals. All it takes to find one is hard work.

Why I dislike venture capital: Rochelle's management was stupid and, worse, didn't listen. I received this letter yesterday. No phone call. No apologies. No explanation. No nothing. Just a bland letter. "We just lost all your money. Tough."



Why my friend got out of venture capital: Howard Anderson founded the Yankee Group, a research company, and did well with it. He cofounded Battery Ventures, a venture firm that invested in technology startups and whose last fund lost around 50% of its investors' money. He wrote this article for the latest issue of Technology Review magazine.

Good-bye! We venture capitalists like to think of ourselves as giants striding across the technology landscape, showering money on terrific young entrepreneurs, adding value, creating jobs, nurturing real companies. We are financial samurai. But I am giving it up. Why?

First, technology supply is bloated. Innovation is not dead, but demand for new technologies is moribund and will continue to be weak for at least the next five years. During the boom times, VCs financed more than 5,000 new companies a year in information technology, communications, biotechnology, and the Internet. The problem is that the buyers of new technology cannot possibly utilize all this stuff. There is a very real limit to what can usefully be deployed. IT and communications spending is no longer growing at 15 percent per year; growth will be in the middle single digits for at least the next five years. Therefore, few software and communications companies will enjoy the double-digit growth that inflames company valuations and makes VCs rich.

Second, there's a good reason why technology spending is stagnant. The hype machine is broken. For years, technologists told the world that "information is strategic"; we said that if companies didn't overspend to protect against Y2K they were committing corporate hara-kiri. Executives spent like crazy people. No longer. Their new mantra: spend no more than last year.

Third, the financial markets for technology companies are no longer exuberantly irrational. VCs hate rational markets: rational markets value companies at two and a half times their sales at an initial public offering or one and a half times their sales at a merger. We need a little irrationality to earn a living -- but the total capitalization for the leading technology companies is now one-sixth of what it was five years ago.

Fourth, these changes in venture funding are structural, not cyclical. VCs actually like cyclical markets; we can buy in cheaply and wait for exuberance to bail us out. Traditionally, we knew that if we picked the right sector we could make 10 times our money. In fact, we knew if we picked the best two or three companies in that sector, we could make 50 times our money -- but you get my point. But those days are, regrettably, over.

Here's why: it takes about $30 million to get a startup software company to break even -- and even great software companies rarely grow more than 100 percent a year. In irrational times, a software company with $30 million in sales would have been worth $180 million, or 600 percent of a VC's investment. Which is good, but not great. Unfortunately, in rational times, the company would be worth $47 million to the investors, or only 157 percent of their investment. But that's over five years! Per year, it's a return of only 11 percent -- and that's for a winner. Remember: in venture funds, only 20 percent of investments are winners. Forty percent are in the middle, 20 percent are losers, and another 20 percent are write-offs.

Venture funds all strive to rank in the top quartile. But the returns of the top-quartile funds depend on when they were launched. Take a look at these numbers for venture capital returns from Cambridge Associates:

1984	12.9%
1988	22.7%
1994	49.6%
1997	67.5%
1999	-8.7%
2000	-8.3%

If you were a VC between 1994 and 1997, you couldn't help but make money. But by 2000, you were underwater.

Finally, it's not just supply of new technology that is too abundant. Ten years ago there were 240 member firms in the National Venture Capital Association. Today, that membership has nearly doubled, and our fund size under management has increased eightfold. There's too much venture money pursuing too many deals. There's nowhere for all that money to go: we can't spend the money we've raised.

Venture capitalists view themselves as pragmatists, but if they think the dynamics of the business haven't changed, they're as self-deluding as the next person.

Ever wonder what we did for a living in early-stage venture funding? I bet you think we spent the day searching for the next insanely great company. But we spent most of our lives in endless meetings with people who were lying to us: scientists who swore that their patents were solid and entrepreneurs who insisted that they had no competition. We lied right back at them: said our money was different.

That was the old way, and it was tons of fun, and we all made too much money. I'll miss it. But now the markets are too rational, and the returns are too small and uncertain. So, time to leave.

It's a seriously tough world out there. My friend called yesterday. After several years of losses, he's closing his retail computer operation, another victim of Dell's successful direct-sales model. What now? It's a question Andre Agassi, 35, also faces after losing in the first round of the French Open as a result of a recurring sciatica nerve problem. "What now," the press asked Andre?

Answered Andre, "I'm a professional athlete. It's what I do. I put my head down and work at it every day. ... What will I do when I can't do it any more? I don't know. I need to think."

Life changes. I formed my beloved publishing business in 1969 and sold it in 1997. Seven years later, I'm learning about investing. It doesn't provide the joy that publishing and writing did. But, heh, I'm getting better at it.

Agassi is one of the most intelligent and thoughtful tennis players of all time. Please indulge me. Here's yesterday's New York Times story, entitled, "Agassi Not Loving Springtime in Paris" by Christopher Clarey.

PARIS, May 24 - When his latest and quite possibly last French Open began Tuesday, the aging but still eager Andre Agassi was playing too quickly, rushing his serves and his shots. By the end, he was moving too slowly, the inflamed sciatic nerve in his lower back sounding alarms in his right hip and down his right leg.

It has been quite some time since Agassi had the right balance here, on the world's most famous clay court, and his 7-5, 4-6, 6-7 (8), 6-1, 6-0 loss to the Finnish qualifier Jarkko Nieminen did nothing to restore his equilibrium.

The left-handed Nieminen, whose ranking has slipped in the last two years to 95 from 27, took full advantage of Agassi's physical breakdown to win a match that was entirely lacking in suspense.

But not all the United States men had a rotten day. Second-seeded Andy Roddick, unseeded Vince Spadea and the qualifier James Blake all won their first-round matches, but Agassi, seeded sixth, was unable to chase down wide shots or serve convincingly in the final two sets.

"I mean if I feel this way, it's impossible," Agassi said after stumbling in the first round at the French Open for the second consecutive year.

Last spring, he fell victim to a lack of preparation on the game's toughest surface and to Jérôme Haehnel, a Frenchman ranked 271st who was little known even in France. This year, Agassi took the challenge more seriously, grinding his way through preparatory tournaments in an earnest attempt to rid himself of the bitter aftertaste of last year's loss in straight sets.

As it turned out, though, the ending would be no happier on this cool, windy day. Even in the early going, Agassi had too many tight strokes and unforced errors, but he had plenty of conviction and energy. When he guessed correctly on a second serve and smacked a forehand return to win the tie breaker in the third set, he had a two-sets-to-one lead and appeared as if he might be on his way to the second round.

But Agassi, who had been feeling sharp pain for several games at that point, was already considering walking to the net and retiring. "To serve was painful; to move, to stand, then even to sit," he said. "It gets more irritated, more inflamed, more stiff. So it was getting worse and worse for sure, and I knew it. It was hard to stay out there."

It was hard to watch for those who have seen him at his best. At age 35, Agassi has experienced the range of emotions here. He has been playing here so long that center court is now named for Philippe Chatrier, a former president of the French Tennis Federation who died in 2000. Agassi once called him "a bozo" in his less-diplomatic youth.

Agassi made his breakthrough in a Grand Slam event at the French Open, reaching the semifinals at age 18. He also developed a reputation here as an underachiever in big matches by losing finals in 1990 and 1991. And he cemented his place in the game's history when he won here in 1999; it was the last Grand Slam title missing from his résumé.

The mixture of joy and shock on Agassi's face when he finally won at Roland Garros is hard to forget, but it will also be hard to shake the memories of the last two years.

"It's not something where we're figuring that it's time to stop," said Gil Reyes, Agassi's longtime conditioning coach and close friend. "We just know that we have to make some adjustments maybe to make sure that he goes out in the manner he deserves."

He added, "I hope it's not a doctor who decides it's time for him to finish."

For the last two seasons, Agassi has been bothered by recurring pain in his right hip, a problem he said had recently been traced to his sciatic nerve. The condition has forced him to limit his play and practice at times, keeping him out of Wimbledon last season and nearly keeping him out of the Australian Open this year.

He had a cortisone injection in the nerve in February, and it reduced his discomfort. Although the affected area has become sore in recent weeks, he said, his run to the semifinals in Rome this month convinced him that he could make it through the French Open without another shot.

Instead, he had to settle for making it through one match.

"I couldn't walk off the court," he said. "Just didn't want to leave that way."

He added: "When I go home in the evening, and I'm walking three blocks from the restaurant, you wouldn't guess I'm a professional athlete, you really wouldn't. Because when it cools down, it's a problem. Usually, it's not a problem when I'm active and moving. But when there's temperature issues and the wind's blowing and I'm getting a little stiff, and it starts, there's nothing to turn it around."

With Wimbledon looming next month, Agassi said it was time for another injection. He has been told he can have as many as three in a year.

"If I'm getting a few months out of it, it's fair enough for me," he said. "The injection only takes about 10 minutes, so if I can give up 10 minutes for a few months, I'll probably still choose that."

But the prospect of regular painkillers also raises the question of whether it is time to start thinking about life after competitive tennis. Agassi, like his former rival Pete Sampras, is clearly weary of discussing the topic of retirement. At this stage of his career, he must deal with it in every tournament and interview. He refuses to set a date, but he came closer to a timetable Tuesday.

"I'll assess the necessary components at the end of the year," he said. "But I can't afford to pollute the potential of my winning matches or tournaments with sitting on the fence, with where I am, what I'm doing, why I'm doing it."

When Agassi stepped onto the court Tuesday, he set a men's record for the Open era by playing in his 58th major. That is one more than Michael Chang, Jimmy Connors, Ivan Lendl and Wayne Ferreira. But that will not be why this year's French Open will stick in his memory.

I don't make this stuff up:
+ RazorGator Inc., a four-year-old online company that sells tickets for sold-out sports and entertainment events, said it has closed a $26 million Series A round of funding. "Sold-out" events?
+ Warning on a box of nail-in hollow wall anchors I just bought: "Use common sense when hanging your pictures. Avoid hanging objects over TV sets, stereos, beds, sofas or any other expensive furniture." OOPS!
+ A software and IT services specialist in Armenia earns $2,400 to $6,000 a year -- a quarter of the average salary such a worker receives in India.
+ Tim Pruitt has caught a 124-pound blue catfish, a new world record. The fish has been kept alive and will be on display in a tank at the Cabela's Outfitter store in Kansas City, Kansas. Pruitt, 33, of Godfrey, Mississippi, told the press he considered releasing the fish in the river but decided to donate it to Cabela's "because I thought it might be neat to give people a chance to see a fish that massive."



How to recognize the rich guy:

Another good, but old lawyer joke
A very successful lawyer parked his brand-new Lexus in front of his office, ready to show it off to his colleagues. As he got out, a truck passed too close and tore off the door on the driver's side. The lawyer immediately grabbed his cell phone, dialed 911, and within minutes a policeman pulled up.

Before the officer had a chance to ask any questions, the lawyer started screaming hysterically. His Lexus, which he had just picked up the day before, was now completely ruined no matter what the body shop did to it. When the lawyer finally wound down from his ranting and raving, the officer shook his head in disgust and disbelief. "I can not believe how materialistic you lawyers are," the cop said. "You are so focused on your possessions that you don't notice anything else."

"How can you say such a thing?" asked the lawyer.

The cop replied, "Don't you know that your left arm is missing from the elbow down? It must have been torn off when the truck hit you."

"My God!" screamed the lawyer. "My Rolex!"

Another dumb me, smart blonde joke
Two bored casino dealers are waiting at the crap table. A very attractive blonde woman arrived and bet twenty thousand dollars ($20,000) on a single roll of the dice.

She said, "I hope you don't mind, but I feel much luckier when I'm completely nude."

With that, she stripped from the neck down, rolled the dice and yelled, "Come on, baby, Mama needs new clothes!"

As the dice came to a stop she jumped up and down and squealed... "YES! YES! I WON, I WON!"

She hugged each of the dealers and then picked up her winnings and her clothes and quickly departed. The dealers stared at each other dumbfounded.

Finally, one of them asked, "What did she roll?"

The other answered, "I don't know. I thought you were watching."

Moral - Not all blondes are dumb, but all men are men.

Harry Newton

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 AdSense, click here and here.
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