STORIES ABOUT CLEVER INVESTMENT   
Soros   Bezos   SEALAND    Harvard
 

People are, often, too quick to say that an individual can never make a difference in this society (whether the difference made is good or bad is usually not even discussed). Nonetheless George Soros, an individual, has been known to instill a great deal of fear in many countries, for he had the potential to shatter economies, he had the potential to make a difference. In 1992 George Soros predicted that the British Pound would loose its value. He borrowed billions of pounds and converted them into German marks. Sure enough, the pound collapsed, Soros sold the Marks and bought cheaper Pounds and made a $1 billion dollar profit in the  transaction.

This was not an isolated event. Soros is renowned for these types of activities. The man makes billions speculating on currencies. In 1997, Malaysian Prime Minister Mahathir Mohamad accused him of being a criminal because he had speculated on the South East Asian countries currencies. Prime Minister Mohamed claimed that Soros' intentions were no longer in the name of business, but in protest to the fact that these countries had accepted the Burmese military regime. But how is it that this man can have so much influence in world economic affairs that then have an indirect consequence on political and social affairs as well? Financial markets are all about speculation, and if there is a man with the ability to accurately predict the future of the market, then this man will have a huge following and his actions will be mimicked by millions, thus increasing the consequences of his actions dramatically.

I can vividly remember the first time I heard his name. It was in 1994 when Mexico had just been hit by a huge financial crisis. Mexicans were at a loss for words. Nobody was sure how or why the peso had been hurt so much. A rumor spread that George Soros had a some point hinted at the fact that the peso would collapse, and therefore it had become a self fulfilling prophecy; where Soros followers took the lead, lost confidence in the currency and sold all of their holdings in Mexico. In the end, this was not the case, but nonetheless the point was well made: George Soros, who has publicly defended his actions by stating that he thrives in a market that isn't zero-sum, makes billions speculating on the strength and the weakness of different currencies. His investment fund, the Quantum Fund, is generally recognized as the most successful investment fund ever, returning an average 31% annually.

http://www.time.com/time/magazine/1997/int/970922/box1.html http://www.time.com/time/magazine/1997/int/970922/cover1.html
 http://www.osi.hu/index_files/soros.htm

Jeff Bezos and Amazon.com

Jeff Bezos is a graduate of Princeton University. Once graduated, he went to work for Bankers Trust Company and became the youngest vice president ever. Later, he moved to DE Shaw & Company, a high-end company specialising in arcane financial transactions, where he specialised in spotting new business opportunities and became the youngest-ever senior vice-president at age 28. At this time, the internet had just started and he looked into selling books online, one of his new business opportunites. He soon moved away from his job at DE Shaw & Company and focused entirely on Amazon.com. He had borrowed $300,000 from his parents to start his new business. Luckily, the internet had caught onto the dot.com boom and five years later, Amazon.com was worth $79,800,000. The stocks started at a value of $1.50 per share; but 19 months after that it was wroth $242.75. Then weeks after that $400 per share. Eventually, it split three times and each stock is now worth $107 (before September 11, 2001). Not only has the worth of his company, Amazon.com, sky-rocketed, but according to Fortune Magazine, Jeff Bezos is personally worth $10 billion dollars. It is wondered how one man and his one idea could grow into such a big company. Some say it was genius, others question his luck during the dot.com growth. However, no one can doubt his $10 billion dollar worth. What one does wonder about his company and his success, is that why hasn't Amazon.com acually reported a profit? In fact, Amazon.com has never reported a profit, only losses. Even when the stocks and the company itself has grown tremendously, Amazon.com still reports losses. How can one always report losses and still be worth more? The question of what is real money is asked. Obvisouly, Jeff Bezos' and Amazon.com's worth is not in currency (bills and/or coins) but instead, their worth is determined by stock quotes and investments. By having people constantly investing in the company's stock, Amazon.com and Jeff Bezos can still boast about their portfolio. Although September 11 has posed as one of the biggest starting points of an economic recession, Amazon.com and Jeff Bezos have predicted an actual profit gain for the first time. Even though their stock has dropped significantly (even down to $6 per share), Amazon.com predicts the profits due to large cuts in spending and it's labor force (about 15%). But how long will this survival last? Jeff Bezos describes his internet company, Amazon.com, as similar to Sony in Japan after WWII. He spoke about how both companies focused on customer satisfaction and quality, instead of lowering it into a lower level just to obtain more profits. Therefore, Amazon.com will survive with profits just as Sony has. With such confidence and innovative power, it is no wonder that Jeff Bezos is a rare self-made multi-billionaire with a company (Amazon.com) that started at $300,000 but ended with over $80,000,000 in less than 7 years.
 www.fastcompany.com/Online/43/bezos.html - 41k www.oreilly.com/ask_tim/bezos_0300.html http://www.businessweek.com/bwdaily/
dnflash/jul2002/nf20020715_5066.htm www.thebee.com/bweb/iinfo167.htm www.cio.com/archive/080100_bezos.html

SEALAND
 

In 1967, an Englishmen by the name of Patty Roy Bates occupied a small man-made territory seven miles of the coast of England. The territory, formerly a British Military base built for the purpose of shooting down Nazi airplanes and rockets, was abandoned after Germany’s defeat in WWII. Because the territory was beyond Britain’s coastal waters (which extended 3 miles at the time), it became an extra-national region free for occupation. Herein Sealand was born. Roy Bates took his family and moved to the territory in October of 1967. After some skillful legal maneuvering, he declared the man- made island The Principality of Sealand and by the same statute himself its rightful King. In 1968, the British Navy, realizing its blunder, attempted to rid Patty Bates of his rights to the territory. After going back to England to press his rights in court, Patty Bates was upheld on his claims. Sealand had thus gained the De Facto recognition of its own sovereignty by England. In 1978, Sealand fought its first war with hostile occupants. A German group of business men kidnapped Mr. Bates son Michel and took the island by force.

Mr. Bates came back to the island and took it back, taking the hostile men prisoner. Germany was  then forced to send a diplomat to negotiate the man’s release. In such a manner, Sealand received recognition from Germany as well. Today, Sealand has its own national anthem, money (equated 1to1 to the dollar), passports, and constitution. In 1999, Sealand allowed HavenCo to center its collocation services on its territory. Collocation services are required by many companies for both practical and insurance reasons. In case of local disasters, the global networks of many companies are secured up by a collocation backbone which allows for uninterrupted service. Sealand was an ideal place for such a service because of its secure location. In addition, local law doesn’t restrict the company’s activities which allow the company to reach into other markets. A good example is Internet Casinos. Because of local law, internet casinos cannot be hosted in US states banning gambling. Thus, a location like HavenCo is ideal for just such a service. The arrival of HavenCo has made Mr. Bates a very wealthy man and added another chapter to the amazing story that is Sealand.

Source:
http://www.havenco.com/products_and_services/index.html
http://www.sealandgov.com/history.html

HARVARD UNIVERSITY ENDOWMENT

Harvard University holds, by far, the largest endowment of any educational institute in the world. It comes from investing income as well as donations. The investments are run by Harvard Management Company, which oversees the university’s endowment, pension and trust funds as well as other investments. The market value of Harvard’s endowment, in 1999, was approximately $19.2 billion and growing. Aided by a climbing stock market, Harvard was able to increase its endowment 5 fold in 15 years and doubled in the last five years. In 1999 the school’s endowment increased from $14.4 billion to $19.2 billion, expanding its wealth nearly one third. Such an increase in wealth is larger than most endowments of the countries major universities. In comparison to the Standard & Poor 500 index, which rose 7.3 percent in the same year, Harvard had a 32 percent return on over 8600 investments. One of the main reasons for this was a 155 percent return in private equity investments, including venture capital. Also, donations, in an endowment operation, are tax deductible so earnings can be compounded free of taxes over years amassing wealth. To avoid purchasing power erosion, Harvard University practices investment policies that maintain the value of existing funds and provide sustainable flows of money to support their operations. In 2001, the overall value of the endowment fell due to market declines. While funds invested in bonds, real estate and commodities made money, investments in equities declined during the year. Examples of investments that increased in fiscal 2001 are real estate, domestic bonds and foreign bonds which are sold in another country in that country’s denomination. There was also an increase in the investment of inflation-indexed bonds, which are adjusted for changes in the price level. Such an amazing accumulation of wealth over the short period of time from 1999 to 2000 is due mostly to Harvard’s ability to get donations and convert that into investment income. The university dedicates an extremely small portion of its earnings to fund education. Its profits are then reinvested tax-free. This shows that the goal of Harvard Management Company is to ensure financially, future generations at the university. In the United States, small private investment groups who operate similarly to Harvard Management company by investing, profiting and then reinvesting for their own benefit are taxed. Since Harvard is an educational institution, its investments are rolled over tax free. This way, they can expect much higher returns on investments.
References:
http://vpf-web.harvard.edu/factbook/00-01/ http://www.dailyfreepress.com/main.cfm?include=detail&storyid=150923
Powell, Alvin. "Harvard Endowment Beats Benchmarks, Value Declines."
 Harvard University Gazette, Sept. 27, 2001.