Recently, I passed on to you news of a stock-picking yucca plant. When it beats the averages, it is rewarded with water and light. When it lags, its owner moves it into the closet.

To which James Schaefer responded: “Yucca? We do it better in Texas. At the start of each year The Fort Worth Star-Telegram newspaper marks a grid on the floor of a cow pen. ‘Rusty’ eats and drinks. The financial editors then keep track of where the chips land and those are that year’s pick for the portfolio. In 1998 the cow beat the market. Here is Rusty’s portfolio of local companies.”

Reason enough to move to Ft. Worth.

Thad Fenton, meanwhile, lives one town over. His comments have nothing that I know of to do with yucca.

“While riding into work this morning in our car pool,” Thad writes, ” . . . probably the only car pool in North Texas, from the looks we get on the North Dallas Tollway . . . we hear a radio ad for a dot-com company that promises to get you four loan commitments within hours. This generates a discussion about the benefit consumers are reaping from the Internet in general, and from all these dot-com companies specifically. We marvel that we can save money by buying from versus the local stores. And that a copy cat dot-com, Booksamillion, sells the same books cheaper than Amazon. And there’s probably a copy-copy cat that’s selling the book even cheaper than BAM. Which is even more amazing considering the fact that Amazon is still losing money on each book it sells. Which means BAM must be losing even MORE money, and the losses must magnify down the line to each copy-copy cat.

“I comment that consumers are really saving money, for free, and the cost is borne by these dot-coms, but at some point we’ll probably have to pay a monthly fee to support these cost comparison and price shopping Internet services. Then Wayne, our driver, makes a comment that hits me like a bolt from the blue. ‘Yeah, as long as investors capitalize these Internet companies, I’ll buy the products they sell at a loss.’

“His comment crystallized for me the zero-sum equation. The dot-com companies aren’t subsidizing the tremendous savings on consumer goods via the Internet; it’s the dot-com ‘investors’ who are. The dot-com investors form the reservoir of money; the dot-com officers/employees drink heavily from the cash stream as it flows out of the reservoir; and the end consumers get sips downstream until the stream eventually dries up. As long as someone props up Amazon’s stock, my book purchase is subsidized. As long as I don’t buy any Amazon stock, yet buy books from that company, I’m ahead of the game.

“It’s so simple, but it never dawned on me until Wayne hit the nail on the head. All the dot-com investors/speculators are transferring their wealth to consumers via Internet companies that have no net profits due to impossible business plans. As long as the dot-com stock speculation continues, consumers will reap extraordinary savings. When the bubble bursts, the subsidies will cease and consumer prices will go up on the Internet, and perhaps in brick and mortar stores too.”

Are Thad and Wayne right? Are investors in Internet stocks suckers? (“Suck-Ah’s!” as W.C. Fields had it.) Only the yuccas know for sure.


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