CNNfn: Entrepreneurs Only
Investment Strategies
Tony Guida

TONY GUIDA, CNNfn ANCHOR, ENTREPRENEURS ONLY: Your company has finally reached the point where it`s making money. What do you do now? Invest it, buy a boat, leave for Mexico? Here with some advice on what to do with the newly earned income is Greg Warr, CEO of Gregory D. Warr & Company. Nice to have you on the program.

GREG WARR, CEO, GREGORY D. WARR & CO.: Thank you, Tony.

GUIDA: I guess the first thing is it`s great to have excess cash, but if you have it the first question, I guess, comes up is when do you invest?

WARR: Well that’s an interesting question because a lot of people don’t know that, and I feel that one of the best things to do is take the cash that you have, and you want to figure out what your expenses are; your rental expense, your phone, employee bills, anything that you have along those lines, your fixed expenses. Take those for three to six months, and you subtract that, then the rest you take, and take a small percentage of that and put it into liquid asset.

GUIDA: An obvious question; how do you do that? Who do you pick to manage it? Is it, ought it reflect your personal profile? Ought it reflect the business, the kind of business you’re in?

WARR: It really should reflect your own personal nature, and that has to do with the company, what the company does. If you are a very, very aggressive company, you may want to have a very mild kind of investment. You want to kind of offset things a little bit, and if you do invest for yourself, I mean I suggest sticking with what you know. If you’re a doctor, you see pharmaceuticals come and go, and you see medical instruments, you want to stay along those lines.

GUIDA: From your perspective, do CEOs buy in large? I mean this would be a generalization, but nonetheless, buy in large because they are CEOs, and successful in business, think they know how to invest, which may be a completely different thing from what they’re doing as CEOs?

(LAUGHTER)

WARR: You do find that, yes. I mean we all have the sense of ego, I guess, and some people a little bit larger than the rest, and a lot of people do that. That’s fine if you really want to, but one of the things that I suggest for large net worth individual, or a small company, is that you get somebody to do that for you, because you have a specific objective that you are reaching, and that’s your job. If you are a doctor, you’re being a doctor. If you’re a lawyer, you’re a lawyer. When you start taking your mind off that it`s the old saying, you can’t do two things at one time; and as we’ve seen over the last year, the markets can get very tricky. Sometimes you lose sleep, and that detracts from your main part of your business, and that is really the income producing part of you. That’s what going to generate more money to invest.

GUIDA: Shouldn’t be any big mystery about how you go about selecting a money manager, should it?

WARR: It shouldn’t be a big mystery, but there are steps. One of the steps is to see what your criteria are. Are you aggressive, or are you conservative? Are you looking for growth, or are you looking for income. And once you have that aspect, then you go out and you find somebody who matches those needs. You don’t want to be somebody relying on this as more of a growth type of investment, and you know they are really swinging it around the markets, doing some high risk currency trading, right along those lines.

GUIDA: Why is it that it would seem there are a fair number of executives who are sophisticated about business, and the business deal, the art of the deal if you will, and yet susceptible as any grandmother in Kansas, or maybe more, to a great sounding pitch from a stock salesman?

WARR: Well, we all like the old what you call "sizzle" on the steak, right?

(LAUGHTER)

WARR: You get that story, and you get excited about it. I think one of the main things is get excited about something. You want to get excited, you want to learn about it, but really what you need to do is you need to understand your downside. Exactly what you were saying before, you have a very, very successful CEO, and entrepreneur of a company, and when he got into that company one of the things he thought of was; what’s my downside? What am I potentially going to lose on this? In the market you don’t see that that much. A lot of people will go in, they’ll invest in a stock or currency, and not figure out what their downside is. Not wait for the --- not get to a point where they say, OK, if it drops five points I`m out. I’m done, and I’ll move into something else.

GUIDA: Greg Warr, it`s good to have you with us.

WARR: Very good to be here.