Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
AM EST, Wednesday, May 6, 2009. Massive inflation.
Government debt so high it takes all our taxes (and more) just to pay off
the interest due. So the government prints more and more money. And pretty
soon the U.S. dollar looks like this:
That's the fear. It's not the fear of guns and barricade nut crowd.
It's increasingly the fear of rich folk who've listened to Nicholas Taleb
talk about black swans, who have watched the government pour more and more
money into saving institutions too big too fail. But it's also the fear of
normal folk with tens of millions in hard-earned savings asking questions.
Richard Russell of Dow Theory Newsletters is no nutcase. Trust me. But last
night he wrote:
we are entering into the land of unintended consequences. We are now watching
a deadly battle between deflation and over-creation of fiat money, meaning
future inflation or even hyperinflation. Making the picture even more confusing,
there are increasing doubts about the viability of the US dollar and whether
it can keep it reserve status.
What to do?
Russell (and many others) suggest cash for deflation as it continues and physical
gold for insurance against future inflation. Russell is also worried about
this recent stockmarket boomlet which he now sees as "toppy," but
likely to continue for a litttle while. I agree.
Think this through.
Gold is not currency. You can't buy bread with a gold coin. Is Harry Newton,
entrepreneur, shortly going to be selling home furnaces for us all to melt
our gold bullion into coins which Whole Foods and Price Chopper will take?
Should we all borrow like crazy today to acquire hard assets -- like houses
and office buildings? So that when the time comes to pay them off, we'll be
paying our bank with worthless inflated dollars?
There are millions
of us asking these questions. Right now we're like deer stuck in the headlights.
We missed the Mid-March-to-Now BIG Stockmarket boom. We're wondering what
the next shoe to drop will be. The cartoonists are pandering to our fears
We think this stupid cartoon is funny.
What a weird
world. At Berkshire's annual weekend meeting, Buffett showed a sales receipt
for $5 million in U.S. Treasury bonds that Berkshire sold in December, 2008
for $90.07 more than its face value, ensuring a negative return for the buyer.
Buffett said he doesn't think most investors will see negative returns on
U.S. bonds again in their lifetimes. But they are now.
Buffett is moving
ahead as if the hyperinflation won't happen and we'll muddle ourselves out
of it. And maybe we will. The New York Times -- God bless its pinko commie
negative thinking socialist heart -- yesterday ran a very upbeat story on
Spot in Downturn: New Hiring Is Robust
Everyone knows the grim news unemployment in the United States has
jumped to 8.5 percent, a 25-year high, and is racing toward double digits.
Since November, the nation has lost more than three million jobs.
But not everyone
knows the brighter side to the equation: deep in the maw of the deepest
recession since the Great Depression, millions are still being hired.
4.8 million workers were laid off or chose to leave their jobs in February,
employers across the country hired 4.3 million workers that month, according
to the Bureau of Labor Statistics.
best thing you can say about these numbers is it speaks to the dynamism
of the U.S. economy, and the net negative number that we all traffic in
masks that, said Robert J. Barbera, chief economist at ITG, a research
and trading firm. Ninety out of 100 people who know the number
650,000 were lost in February think that means no one was hired and
650,000 were fired.
before the economy started to show the first faint signs of a possible
recovery there were three million job openings nationwide. And despite
large new job losses likely to be announced Friday, there are still millions
of job openings.
Who is hiring?
Hospitals, colleges, discount stores, restaurants and municipal public works
departments. I.B.M. is hiring more than 700 people for its new technical
services center in Dubuque, Iowa, while the Cleveland Clinic has 500 job
openings, not just for nurses but also for pharmacy aides and physical therapists.
And after President Obamas stimulus package kicks into gear, state,
local governments and road-building contractors are expected to hire more.
In the old days
I committed a little money to private equity funds run by Goldman and Citigroup.
I thought they made sense at the time. Now suddenly they're coming to life
with capital calls. Yesterday I received two. The reasons:
the current market environment represents an attractive entry point for
opportunistic investments in stressed and distressed debt instruments. We
have started to prudently build positions in a limited number of credits,
each purchased at a significant discount to par. In addition, we have a
number of prospective investments in the pipeline.
These new positions are confidential as we are primarily investing through
open market purchases. We will provide you with a detailed description of
these investments when our buying programs are complete.
call will be used to fund several follow-on investments in existing portfolio
companies, which have occurred since the Partnership's last capital call
in August, 2008, as well as additional follow-on investment activity anticipated
in the near term.
I'll send them
the money. I don't have a choice. And I'll pray they're finding really cheap
things to buy. Meantime, I'm mulling about gold and other hard assets.
our government competition.
Anne took BoltBus from Boston to New York
yesterday. It cost her $17 and she had free wireless connection to
the Internet the entire way.
Had she taken
our government's Amtrak, she would have paid $62 and not had Internet
connection. Both trips are roughly the same length -- four hours and a bit.
Good news, Saturday is
which "is a coast-to-coast celebration of the way trains connect people
and places," according to Amtrak. I took Amtrak on Monday evening last
government and the businesses it regulates. If
the Bank of America can't raise the $34 billion, the Feds say it needs, --
see today's headlines -- does that mean that Washington will run our largest
bank? How about branch offices on Amtrak, or worse...
A Newfie is
a person from Newfoundland, usually lacking intelligence. So the story goes:
A Newfie was stopped by a game warden recently with two ice chests full of
fish. He was leavin' a cove well-known for its fishing.
The game warden
asked the man, 'Do you have a license to catch those fish?'
replied the Newfie. 'I ain't got none of dem dere Licenses. I don't need one.
You must understand, by, dese here is My pet fish.'
de trut' bye. Every night, I take dese fish down to de Cove and let 'em swim
'round for awhile. Den, when I whistles, dey Jump right back into dese here
ice chests and I takes 'em home.'
'That's a bunch
of hooey! Fish can't do that.'
The Newfie looked
at the warden for a moment and then said, 'It's de Trut Mr. Government Man.
I'll show ya. It really works.'
the warden. 'I've got to see this!'
The Newfie stood
on a rock and poured the fish into the cove. Then He stood and looked out
minutes, the warden says, 'Well?'
says the Newf.
The warden says,
'When are you going to call them back?'
'Call who back?'
replied the warden!
replied the Newfie.
Moral of the
story: We may not be as smart as some city slickers on De mainland but by
the lard tundering jaysus we ain't as dumb as most Government employees.
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 on this site. Thus I cannot endorse, though some
look 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
Michael's business school tuition. Read more about Google AdSense,
here and here.