Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Friday, October 7, 2005:
It's been good -- until lately, when things have broken down. Fears of inflation,
high oil prices hurting corporate earnings, high interest rates hurting housing
and finance companies, the real estate bubble bursting, etc.. As
an indication of where yields are going, today (early this morning) we hit
a six month high in yields on the ten-year treasury. You can see the breakdown
in the stockmarket in these two charts.
not a good time to be in general stockmarket index funds.
The last quarter? Only a fool would try to predict this one. I'm not a fool.
But I'm also not sanguine. The best advice remains fourfold:
1. Stick to our 15% stop loss rule. Get out of anything and everything
when you're down 15%. That applies to stocks, funds, managers, etc.
2. Move to cash and stay in cash. Bonds will lose value as interest rates
3. Don't listen to the nonsense coming out of Wall Street about a "fourth
quarter boom" on the market. Maybe it will happen. Maybe it won't.
Make your own mind up. Stay loose.
4. Stick around. There are some opportunities, some special sectors --
but, right now, they're few and far between. For example, a few nights ago,
Cramer strongly pushed three natural gas stocks. Look what happened to them.
not knocking Cramer nor his picks. I'm simply highlighting how difficult this
stockmarket has suddenly become.
How does Yale do it? For the past ten years,
Yale has averaged 16% a year on its endowment. The driving force between
that remarkable return has been its investments in private equity. That is an
area that is closed off to most of us smaller investors, unless we go into expensive
"fund of funds." Further, I'm not entirely convinced that private
equity will return in the next ten years what it did in the last ten years.
I believe there's far too much money chasing far too few opportunities here
-- with the exception, possibly, of the few huge private equity funds that can
make gigantic purchases -- of public companies, for example. Here
are Yale returns:
1. Since inception, 1973 annualized return 30.7%.
2. Educational institutional mean as of 6/30/2003.
Nice work if you can get it:
Barely two years
after it opened, The Source at White Plains, a gleaming four-story shopping
center that cost $96 million to build and is home to Fortunoff, Whole
Foods Market and Cheesecake Factory, has been sold. The imposing 260,000-square-foot
complex, near Exit 8 of Interstate 287, fetched $153 million for the
seller, R Squared, a three-year-old development partnership in New York City
and Long Island led by members of the family behind the Reckson Associates Realty
Corporation, a real estate investment trust.
that anything was wrong with the property or that it was underperforming,"
said Mitchell Rechler, a principal with R Squared, noting that the complex is
fully leased. "It was about what was so right with the Source."
Mr. Rechler explained, "over the last year, we noticed where prices in
White Plains were going, and we decided that if we could, we'd sell this shopping
center and deploy the proceeds elsewhere."
trick: Put a phone number into Google. You'll see to whom it belongs,
most of the time.
first hand account of a recent visit to New Orleans by a reliable source.
got back from new Orleans. Flew to Texas... drove from Beaumont to retrieve
my mother's car and then drove to New Orleans. It was amazing and horrific to
see. TV does not to justice to the widespread destruction. There is extensive
damage everywhere you look from Beaumont into Mississippi. I stayed in Harahan,
just upriver and west of New Orleans. It was relatively unscathed. Drove through
uptown New Orleans and past the Superdome and downtown. Between St. Charles
and the River looks battered, but not beaten. Trees down, wind damage on homes.
Loyola and Tulane look okay. There are a few grocery stores and drug stores
open. Cooter Browns bar was open and serving (with air conditioning working)
at the corner of St. Charles and Carrolton. That little mom and pop store on
the corner of Magazine & River, on the river side of the street-- was destroyed.
It's rubble. Very little else in uptown looked different.
East New Orleans and St. Bernard are the opposite. They look deserted. Disturbingly
silent. No birds. Millions of tiny black bugs everywhere you walk. There is
a thick layer of black oozing muck on everything--3 to 12 inches in various
spots. Debris is everywhere. EVERY building, EVERY business, EVERY home is damaged.
Many beyond repair.
In Arabi, my
aunt's neighborhood, there are homes that were ripped off their foundations
are crashed down into the street. (This is a few blocks east of the lower
9th ward) I literally had to drive AROUND four houses to get to hers. My aunt's
house is off its foundation. It sits cock-eyed like the house in the wizard
of oz. Many houses are just piles of rubble. A car of hers is upside down
in the backyard. The garage which used to be on the right side of the house,
is now smashed into sticks on the LEFT side of the house.
I went inside (in full hazmat gear) and thought I was going to fall through
the floor. I managed to salvage a handful of pieces of her jewelry. There
were a lot of numbers spray painted on the fronts of these houses off Benjamin
Street in Arabi. Not a lot of zeros. 2s and 3s indicating the number of deaths.
Much of this neighborhood will have to be bulldozed-- no doubt. I only saw
at most a hundred people in an entire day of driving around neighborhoods.
People trying to salvage anything. Looting is not a problem here. There is
nothing to loot.
may have actually rinsed the area off. My mother's house faired a bit better.
But not much. The ceiling had caved in. It took hours to dig a path to get
into her house. 18 inches of heavy, black, wet muck EVERYWHERE. Cabinets fell
from the kitchen walls. Furniture overturned. It looks like a literal garage
heap at a dump. We salvaged VERY little-- one small garbage bag of stuff.
A couple of pieces of china, a half dozen polaroids of me and my brothers
and sisters as kids. Not much else. This house may not have to be bulldozed.
The brick and roof appear to have weathered the storm, okay. The rest is just
a toxic cesspool. The stench slaps you in the face and forces you to re-taste
your last meal. My eyes watered from it at times.
While we were
there salvaging, a team of armed reserves from Belle Chase accompanying several
medical teams (I think from New Jersey) drove up and forced us to move up
the street for awhile. They asked my mother about the property and who lived
there. It's a duplex and I had been taking pictures from the front door of
the tenant's side for insurance purposes. Her tenants were 80-year-old Thelma,
and 65 year old daughter Katherine. They apparently stayed. The medical team
went in and pulled both bodies out while my mother and the rest of us stood
and watched. 33 days after the storm, they are still searching out and finding
bodies. It was very sad, very shocking. We abandoned our salvage mission at
that point. That kind of sealed it; my mother's never going back to live there.
for the wife:
A man was walking down the street when he was accosted by a particularly dirty
and shabby-looking homeless man who asked him for a couple of dollars for dinner.
The man took out
his wallet, extracted ten dollars and asked, "If I give you this money,
will you buy some beer with it instead of dinner?"
"I will not
buy beer. I had to stop drinking years ago," the homeless man replied.
use it to gamble instead of buying food?" the man asked.
No, I don't gamble,"
the homeless man said. "I need everything I can get just to stay alive."
spend this on greens fees at a golf course instead of food?" the man asked.
NUTS!" replied the homeless man. "I haven't played golf in 20 years!"
spend the money on a woman in the red light district instead of buying food?"
the man asked.
would I get for ten lousy bucks?" exclaimed the homeless man.
said the man, "I'm not going to give you the money. Instead, I'm going
to take you home for a terrific dinner cooked by my wife."
The homeless man
was astounded. "Won't your wife be furious with you for doing that? I know
I'm dirty, and I probably smell pretty disgusting."
The man replied,
"That's okay. It's important for her to see what a man looks like after
he has given up beer, gambling, golf, and sex."
+ How my private equity fund is doing. Click
+ Blackstone private equity funds. Click
+ Manhattan Pharmaceuticals: Click
+ NovaDel Biosciences appeals. Click
+ Hana Biosciences appeals. Click
+ All turned on by biotech. Click
+ Steve Jobs Commencement Address. The text is available:
Click here. The full audio is available. Click
+ The March of the Penguins, an exquisite movie. Click
+ When to sell stocks. Click
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
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