Technology Investor 

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

Previous Columns
8:30 AM Thursday, September 29, 2005: Attended a dinner speech last night by Robert D. Hormats, vice chairman of Goldman Sachs. He believes:

+ Federal spending on Katrina relief will keep us out of a recession.
+ The Fed Reserve Bank believes inflation is the problem, not recession. The Fed will keep raising interest rates to fight inflation.
+ The Fed budget deficit next year will be a huge $400 billion.
+ The average American has alternatives to driving -- like car pooling, buses, etc. -- and will employ them to save on energy spending.
is Google's goal: The more I think about and research Google, the most impressed I am. I figure it's tapped only 2% to 3% of its Internet advertising potential -- its primary business. On that alone it has enormous potential.

Google may be the world's ultimate scalable business. Invest $x in developing a problem and sell it to everyone in the world, with no effective variable cost -- although it does have over a million computers serving information to you and I and keeps buying computers daily. What's really neat about Google is that it has the employee enthusiasm and the management will to start new services -- not knowing where they'll lead or how Google will ultimately make a nickel on them. Google is far faster and far more nimble than Yahoo and Microsoft, its two main competitors.

Latest neat Google "business" is Google SMS (which you use from your cell phone, not your computer). Google's explanation:

Google SMS (Short Message Service) enables you to send queries as text messages over your mobile phone or device and easily get precise answers to your questions. No links. No web pages. Just text — and the information you're looking for:

* Get local business listings when you're on the road and want to find a place to eat.
* Obtain driving directions to get from point A to point B without having to ask for directions.
* Find movie showtimes and theater locations of movies currently playing near you.
* Check weather conditions and 4-day forecasts to plan your day.
* Study the latest stock quotes and stay on top of the market.
* Get quick answers to straightforward questions.
* Compare online product prices with ones you find in retail stores.
* Look up dictionary definitions to expand your vocabulary or prove a point.

Try it. You'll be amazed how good it is. Click here. Google SMS doesn't send you ads, yet.

Hybrids cannot save on gas what they cost more: None of my readers believes you can save sufficiently on gas what it will cost them extra to buy a hybrid. Many people are also worried about the untested long-term reliability of hybrids. In short, few seem interested in buying them.

Fortune Mag's Yale versus Harvard: I read all the business magazines. The one I find most useless is Fortune. Remember the piece I did on the investing styles of Yale versus Harvard? Click here. Fortune tried the same and omitted all the specifics. Made me feel good for doing a better job. The BIG thing you learn from Harvard and Yale -- the top two performers in the management of college endowments -- is that allocation makes the difference. The second thing you learn is finding allocation choice is hard work. No one -- no broker, no financial adviser

Target Asset Allocations
Harvard goal
Yale goal
Harry actual
Domestic Equity
Foreign Equity
Private Equity
Fixed Income
Real Assets
Absolute Return (hedge funds)
Real Estate Loans -- Trust Deed backed

Yale defines real assets as real estate, oil and gas, and timberland. Yale says these "share common characteristics: sensitivity to inflationary forces, high and visible current cash flow and opportunity to exploit inefficiencies."

Harvard's numbers add up to 105%
"because of leverage," according to Fortune.

My allocations are different because:
1. I don't believe in such a heavy allocation to equities, especially foreign ones. I don't have any skills there.
2. I have fewer hedge funds. I'd like more but haven't found a lot of good ones. I have one now and will give it more money as I feel more positive about the stockmarket.
3. I have money in trust deed-backed loans to real estate developers. These pay 13% on first trust deeds and 17% on second trust deeds. Harvard and Yale don't seem to have discovered this asset class. Or maybe they include it in "fixed income."
4. The definition of what's exactly what is difficult.
5. Advice that Yale's David Swensen gives to private investors (according to Fortune) is:
  + Diversify. Hold U.S. and foreign stocks, inflation-indexed and other government bonds and real estate.
  + Avoid actively managed mutual funds, most of which "put profits before fiduciary duty."
  + Buy low-cost index funds and exchange-traded funds.
  + Rebalance your portfolio at least once a year.
  + Don't try to time the market or chase performance.
Don't automatically send your friends emails stuff you get sent:
Yesterday a dear friend sent me a letter from a Dr. Richard L. Johnston of the University of Mississippi Medical Center purporting to talk about his horrible experiences trying to help Katrina victims. Upshot: all the helped victims were ungrateful. I called Johnston's office yesterday. Turns out he's never been to Houston, never been to the Brown Convention Center. According to the, Johnston was stupid enough to forward the email he received to his friends who assumed that he wrote the letter. He's now in hot water for his ugly racist remarks. In short, don't forward stuff without checking its accuracy. Much of what floats on the Internet is propaganda, not fact. It turns out the letter was by a Syrian named Maher on his personal blog. Click here.

TriPath is now a "buy." I'm not going to tell you to buy TriPath Imaging (TPTH), because it's now cheaper. But a couple of analysts put out "buys" on the stock in the last couple of days. I'm hanging in. But I've been bitten a few times too often with TriPath, so I'm not pounding the table for the stock.

The Mugger and his money
"Give me your money," he demanded.

Indignant, the affluent man replied, "You can't do this - I'm a US Congressman!"

"In that case," replied the robber, "give me MY money!"

What do you want out of life?
A teacher asked her class, "What do you want out of life?" A little girl in the back row raised her hand and said, "All I want out of life is four little animals, just like my Mom always says."

The teacher asked, "Really and what four little animals would that be?"

The little girl replied, "A mink on my back, a jaguar in the garage, a tiger in the bed and a jackass to pay for all of it."

The teacher fainted.

Recent column highlights:
+ Blackstone private equity funds. Click here.
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell stocks. Click here.

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.
Go back.