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Harry Newton's In Search of The Perfect Investment Newton's In Search Of The Perfect Investment. Technology Investor.

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8:30 AM EST Friday, September 22, 2006: I spent yesterday eyeing some private equity funds, also called leveraged buyout funds (LBOs). They're fashionable and potentially very profitable. They belong in everyone's portfolio. While discussing it, my young-at-heart friend wrote me:

The primary reason I haven’t invested in hedge funds is that not only are they unregulated (they will gradually become regulated) but they developed in an unregulated, free wheeling environment and fostered esoteric investment strategies that often only the specific trader can understand. These strategies are difficult to monitor and control by management. Some traders have made huge bets and many have become extremely wealthy as a result. They are using other peoples' money so their personal risk will never be catastrophic. When they lose, the investor loses big-time. I prefer more mundane investment strategies (more so at this stage of my life) such as LBOs and Real Estate (where our losses may be tolerable).

Clearly, who manages your money is critical. You need to be very knowledgeable and comfortable with what they're doing. I'm still mulling. As I wrote yesterday, "You make money on what you know -- not what's fashionable." On that note, our portfolio of alternative energy stocks from earlier this years has lost 35% of its value.

Don't overpay your speeding fine. It doesn't work. This advice is floating around the Internet. It's urban legend.

Keeping away from tech: I'm pleased I warned everyone to keep away from the likes of Dell and Intel, but not Microsoft, which has inexplicably climbed in recent weeks. I can see Google tumbling. I've always been worried about the extent of Click Fraud. This weekend's BusinessWeek writes, "Determined to prevent a backlash, the Internet ad titans say the extent of click chicanery has been exaggerated, and they stress that they combat the problem vigorously. A BusinessWeek investigation has revealed a thriving click-fraud underground populated by swarms of small-time players, making detection difficult."

This weekend's BusinessWeek.

It burns me when I see charts like this: What brokers sell is what they recommend. But it's not the best for you and me. Some asset classes have done so much better -- like real estate. And tax-free muni bonds make far more sense for investors who live in states with big local city and state taxes.

Delorme's Street Atlas 2007 is out. I like their software. It's much improved over their 2006 edition, which I also have. You can buy it for $40 on CD or DVD.

You can also buy it for $60 and get yourself 120 million U.S. and Canadian phone listings.

The phone listings are not complete. I have five lines at my New York home. It couldn't find one. There is one neat feature: Highlight a stretch of road, Street Atlas will tell you the phone numbers on the road. Sadly, that's also not complete. It may be semi-useful if you need it. Otherwise stick with the $40 version.

The best news is twofold: All the maps will load onto you laptop. You don't need to carry the disks. Also, Street Atlas works with a GPS receiver which you can place on your dashboard. Through your laptop you'll hear blow by blow commands on how to get somewhere.

In many ways this $99.95 software/hardware bundle is a better deal than GPS in your car. For one you can switch it between cars. And you have more options on viewing the maps -- closeup, distant, elsewhere, etc. I use this thing. It's useful.

Anyone, Anything, Anywhere: A friend explained why he was moving his manufacturing to China:

"In the US, it costs me $135 a day for a manufacturing worker. That includes health, benefits, etc. In China it costs me $135 a month. That means two things: First, I save money. Second, I can afford for my workers to spent more time making my thing nice -- more time testing it, polishing it, fitting it, etc."

All this is why I relate to today's article by Thomas Friedman in the New York Times. He wrote the best seller, "The World is Flat," which you must read:

The New Yorker once ran a cartoon by Peter Steiner of two dogs, with one sitting at a computer keyboard saying to the other, “On the Internet, nobody knows you’re a dog.”

Nobody also knows you’re Uruguay.

A tiny country of three million people, wedged between Brazil and Argentina, Uruguay has come from nowhere to partner with India’s biggest technology company, Tata Consultancy Services, to create in just four years one of the largest outsourcing operations in Latin America.

Yes, when Tata’s Indian employees in Mumbai are asleep, its 650 Uruguayan engineers and programmers now pick up the work and help run the computers and backroom operations for the likes of American Express, Procter & Gamble and some major U.S. banks — all from Montevideo.

How did this happen? One of the most interesting features of this era of globalization is how any entrepreneur — with the right imagination, Internet bandwidth and a small amount of capital — can assemble a global company by matching workers and customers from anywhere to do anything for anyone. Maybe the most important rule in today’s increasingly flat world is this: Whatever can be done, will be done — because so many people now have access to the tools of innovation and connectivity. The only question is: Will it be done by you or to you?

Gabriel Rozman decided it was going to be done by him. A retired partner from Ernst & Young who was raised in Uruguay, he hatched the idea of partnering with Tata to make Montevideo a global outsourcing hub. He did not have a single client or employee when he approached Tata. He had just two things: a gut instinct that Uruguay’s quality education system had produced plenty of good, low-cost engineers and a gut desire to do something good for Uruguay — the country that gave his Hungarian parents sanctuary from Hitler.

Four years later, TCS Iberoamerica can’t hire workers fast enough. When I visited its head office, people were working on computers in hallways and stairwells. (Mr. Rozman also oversees 1,300 employees in Brazil and 1,200 in Chile.) It turns out that many multinationals like the idea of spreading out their risks and not having all their outsourcing done from India — especially after one big U.S. bank nearly had to shut down last year when a flood in Mumbai paralyzed its India data center the same day a hurricane paralyzed its Florida operation. And there is no risk of nuclear war with Pakistan here.

“When I first approached this big U.S. bank to outsource some of its services to Montevideo, instead of India,” recalled Mr. Rozman, “the guy I was speaking with said, ‘I don’t even know where Montevideo is.’ So I said to him, ‘That’s the point!’ ”

Another factor, added Mr. Rozman, was that multinationals that were depending on Indian firms alone to run their backrooms 24 hours a day were getting the third team for eight hours, since the best Indian engineers didn’t want to work the late-night shift — the heart of America’s day. By creating an outsourcing center in Montevideo, Tata could offer its clients its best Indian engineers during India’s day (America’s night) and its best Uruguayan engineers during America’s day (India’s night).

Most employees here are Uruguayans, but there are also lots of Indians sent over by Tata. It produces both a culture shock — Montevideo doesn’t even have an Indian restaurant — and a cultural cacophony.

The firm runs on strict Tata principles, as if it were in Mumbai, so to see Uruguayans pretending to be Indians serving Americans is quite a scene. Said Rosina Marmion, 27, an Uruguayan manager, “Our customers expect us to behave like Indians — to react the same way.”

Also, Latin culture, unlike Indian, is very nonhierarchical. “The Indians were not used to someone who says ‘no,’ ” explained Ricardo Zengin, 34, a systems analyst. But eventually, “they understand that you are not saying it to challenge their authority but because you think it can be done better another way. ... In Latin culture, everything involves a discussion.”

Uruguayans tell a joke about themselves that goes: If you get diagnosed with a terminal illness, move to Uruguay immediately because everything happens 20 years later here.

In outsourcing, though, Uruguay has leapt ahead of its neighbors by being the first to understand what could be done — that in today’s world having an Indian company led by a Hungarian-Uruguayan servicing American banks with Montevidean engineers managed by Indian technologists who have learned to eat Uruguayan veggie is just the new normal.

Extreme logic:
A woman finds a skunk in her basement. She calls a radio help line. The show host advises, "Leave a trail of breadcrumbs from your basement to your backyard."

An hour the later the woman calls back, even more upset, "Now I have two skunks in my basement." -- Dave Aston, in Readers Digest.

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. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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