About Me: I am a practicing architect and principal in a Southern California design firm. Our projects relate to art and technology and many unsual projects . We have been in business since 1981. I also am the CEO of Capital Innovations, Inc. a small private investment company started in 1994. It is a diversified holding company owning real estate with diverified assets in stocks, mutual funds, and real estate partnerships. We invest only in equities. I have been married for 27 years to the same wonderful woman and have three kids that are all smarter than me ... just ask them.
Investment Start: I consider my first investment to be my passbook savings account that my mother opened for me when I was five years old. I think I still have the passbook in my files. The importance of saving and investing was instilled early and I have done the same with my children which has given them a big head start. The first serious savings started in my teens. Adding to "my portfolio" with Savings Bonds I received as gifts until college when I opened a checking account, bought some gold and silver and my first stocks. My First Investment Mistake: Selling AMGEN around 1984 after owning it for just over a year and making a few bucks..............Oh my, if I only kept it over the last 22 years!
Best Investment Ever: No. 1: My wife. The value of a good partner has exponential value! No. 2: My House. Having a roof over our heads, the tax breaks, and equity build-up on Southern California real estate has given us some basic stable security. No. 3: Intuitive Surgical (ISRG): I bought Computer Motion (RBOT) for all the right reasons plus it was local and if I was investing in a very small cap stock I wanted something local so I could go to the meetings and visit the company. RBOT & ISRG were in litigation over patents. They solved their differences by merging. I bought in at the very bottom $7.70 per share and it has reached as high as $139.50 in the past few months.
My Worst Investments: Enron (but they cheated) and CMGI.
My Favorite Stock: Not hard to figure it's ISRG...and I will not be selling in the forseeable future. This one still has room to run and has barely reached mid-cap status. My next favorite is Berkshire Hathaway (BRK.B) which is the one to hold if you only have one.
My 5 Largest Stock Holdings: Intuitive Surgical (ISRG), Huaneng Power (HNP), Berkshire Hathaway (BRK.B) Anadarko Petroleum (APC), and Duke Energy (DUK).
Investment Philosophy: As a student of Benjamin Graham and Warren Buffett I believe strictly in value investing. While I do invest in individual stocks I hold an equal amount in three Vanguard Mutual Funds. That said, 80% of my assets are in real estate which has greater tax beneifits, more leverage, steady appreciation, and gives me more control of my own destiny. You often hear people chattering about growth verses value investing. On a stock by stock basis there might be something to talk about but in a more global sense there is only value investing. If you see no value on the buy then you should not buy. Sometimes I think there is no such thing as a growth stock. In real estate there is an expression that "you make your money on the buy". No amount of hoping and praying will increase your return on invested capital. My stock screens focus on 1) Cash Flow with high Return on Invested Capital (ROIC), 2) Price to sales P/S (not P/E), 3) Dividends and 4) Price to Book Value. Good honest management should not have to be said but is an imperative. While Berkshire Hathaway does not pay a dividend it is important to note that almost everything Warren Buffett chooses to invest in does! Investment data over the last 70 years supports this approach further revealing that a basket of dividend paying stocks has appreciated more than non-dividend paying stocks.
Comfort Zone Investing: One thriving area of real estate: Apartments
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Reader Comments (Page 1 of 1)
5-26-2006 @ 7:58AM
Jay Allen said...
Aloha ... I imagine this is not the way to have gone about this - but I am very inexperienced. Two years ago I had the web site of an easy-to-use chart of shorts for any given stock. I lost that sadly. I have tried the Yahoo site, but find it too difficult to navigate. Could someone please email me a free website or two so I can check shorts. Thank you ...or, as we say here...mahalo nui loa ! Jay ( Rajojo6@aol.com)
8-28-2006 @ 5:00PM
Steven said...
VoIP, Inc. is providing the technology behind this product, VoIP, Inc (VOII.OB)
12-07-2006 @ 10:25PM
Jennifer W. said...
Major equity indexes have outperformed California real estate over the last 30 years. Following the last 5 years of R/E outperformance, do you think it's wise to keep 80% of your assets in R/E?
12-26-2006 @ 3:54PM
Sheldon L said...
Jen:
1) Real Estate at times might be outperformed by certain equities but not over all.
2) Real Estate can be depreciated for a tremendous tax benefit, when it is actually appreciating.
3) My largest asset was purchased as an REO from the bank in 1994 when things were dismal. We are up 1400% in 12 years not counting the tax benefits and income. And it is actually infinite because we refinanced and pulled all of the original money out many years ago. Cannot do that with stock.
4) On another property we just sold we are doing something called a 1031 exchange which allows to acquire something larger and pay no capital gains on something we have owned for three decades, which is almost all of it. This exchange process allows us to increase our holdings without paying capital gains and can be done over and over...that is how empires are built.
5) If need be we can leverage 80% of the value. Stocks can only be leveraged 35% typically.
6) There are more benefits but that should be enough to demonstrate the superiority of real estate.
1-03-2007 @ 2:50PM
Gloria Gomez said...
Hello: My name is Gloria, my question is; how does one know how or when is a good time to buy some stocks. And also how fast can one make money of the stocks. How do I know what stock to buy and how much for me to put on the stock. Can I started with a maybe a $1.00 or how high do I have to go to make quick money. HOw does one know which stock is a good one to buy. I have always been interating in buying some stock, but always been scared to do so. I do not know anything about buying stock. My reason for this comment is because I want to buy stocks but not sure how, can you help me with this question.
Thank you
Gloria
of Texas City, Tx.
1-09-2007 @ 3:10PM
Lisa B in Denver said...
I think isrg has great potential. What are the merits of the lawsuit with CA Institute of Technology? How do you think this will play out and what will the timeframe be?
3-19-2007 @ 7:52AM
Toby said...
I am lost in my windows....was reading about Duke (the basketball team and DUK the energy company) sorry for the basketball team but as for the DUK energy , which I own, the best thing that could happen to them is to sell out to Dominion (D) and go forward.....help me...
tobby
5-21-2007 @ 2:35AM
krdalal said...
HI SHELDON: ARE YOU STILL HOLDING ON TO iSRG and if so , DO YOU HAVE AN UPDATE ON THE STOCH..THANKS..K R DALAL
10-24-2007 @ 3:01PM
Myles Miho said...
Regarding your comments on AMZN......all I can say is watch this stock after the holidays are over and reports its next quarterly earnings.You might be surprised on the outcome and wish you bought ir at 85.Short term investments are a good way to play this game.
3-05-2008 @ 5:05PM
Stocker said...
I bought NCT at $11 mainly for the dividend. Now it's trading below $10 and the Dividend is around 30%. Since they recently reported some substantial losses, do you think they can sustain their dividend?
3-06-2008 @ 6:08AM
Michael Schneider said...
Sheldon, Thank you for your kind comments about my posting on your item about the views of Warren Buffett and George Bush on recession! Michael
3-13-2008 @ 3:33PM
Khaleel said...
Hi Sheldon,
Really enjoyed reading your blog about HOG and I also agree a significant other is a very good investment with exponential returns!
If you open up a 7 year chart you can see that there is 'long term' support for Harley at around $35 which is where the stock closed on Fri 7 March 2008.
Would you consider this as a good entry point given that is a multi year low. IMHO when the US economy revives the stock should start climbing and given its div yield one essentially is getting paid for waiting?
3-22-2008 @ 8:06AM
Opsimath said...
800 pound gorilla? You're mixing metaphors. It's the elephant in the room that everyone is aware of but no one talks about.
The AXA commercial isn't helping with this misconception.
4-24-2008 @ 9:51PM
greg keer said...
You said the magic word "architect." Iwas in a high priced assisted living facility and there was no central over head light.The place looked like. I knew why I was depressed and knew why my client is depressed. As a lawyer I shall not mention the creative theories of liabiltiy for the layout. But my Irish temper too off that over lighting existed.