Super Money

A few decades ago, a book called “Super Money” (by George Goodman, aka “Adam Smith”) described how American entrepreneurship was creating super money every time their start-up companies issued initial public offerings (IPOs) and then the prices of these new stocks went up ... manufacturing enormous wealth out of thin air. New products and services are imagined, created and marketed to people to propel these new companies to success. This is the power of our free-market economic system in a nutshell.

Dear reader, this is a magical way that the “invisible hand” of capitalism creates wealth ... lots and lots of wealth. Jeff Bazos has, by himself created almost a trillion dollars of super money. And he and his ex-wife have been rewarded with about 10% of this super wealth. This is not accidental. It has happened over and over to American go-getters to create our “golden city on the hill.” And yes this wealth that capitalism creates does get re-distributed to others as it is spent ... and these new companies hire people ... and their taxes pay for our government and to build infrastructure. (Hear that Elizabeth Warren and BHO?)

But there is always a problem wrapped up in capitalism. That is that the dispersion of this super money doesn’t happen fast enough and to the taste of many proto-Socialists. Jealousy, dear reader jealousy, rears it’s ugly head ... fanned by the likes of Bernie Sanders and his fellow travelers. (Funny though how Bernie seems to be enjoying his entry into the cult of millionaires.) But this super money does get spread around ... which is why America is so wealthy and can afford our social programs ... and so is where many of the worls’s needy want to live ... and some even want to be given the opportunity to prosper like Bezos, the son of Cuban immigrants.

But when these social programs become more important than capitalism and its super money ... that is when the golden goose is strangled. Funny how so few people ... even many recipients of super money ... understand this simple truth.

A Dark Cloud

Billionaire liberal Jeff Bezos not only runs Amazon, personally owns the Washington Post, but, since 2013, also has had a $600 million contract with the CIA to run a huge server farm (also known as the "cloud") for it ... see: The Nation Article. Can we call this a "dark cloud"?

Bezos has an instinct for the levers of power ... the dominant Internet retailer threatening the entire brick-and-mortar retail world, running the major inside-the-beltway media outlet, and a cyber connection to our intelligence community. President Trump also has an instinctual understanding of this potential threat not just to him ... but to our country. Basically, Bezos is as great a tyrannical threat from the left as the left imagines that Trump is from the right.

There is another epic battle of the ideological Titans brewing here which, I predict, will break out before Trump leaves office.

Victory Lap

The headline reads "Amazon takes victory lap for its role in halting Trump's travel ban" ... see: NY Post Article. Jeff Bezos, a descendent of immigrants, obviously has emotional reasons for lending Amazon's corporate resources to help Washington state in fighting Trump's temporary immigration ban from seven terrorist-prone countries. But he also has a pragmatic rationale ... in that his company hires oodles of H1-b immigrants ... a popular cost-saving strategy in the high-tech industry ... and a win-win since these execs are also viewed as being full of good intentions.

But it is not just salary cost savings that Bezos is seeking ... it's the warm bodies themselves. For, you see dear reader, Amazon has annual employee turnover of about 40%, an unsustainable number from a static population of workers ... see:  Vanity Fair Article. He also gets tax breaks for hiring these foreign job seekers. So obviously many of these poor H1-b souls, who are being used as Amazon kindling wood, may not find the golden future that they had sought when they immigrated here.

Isn't it funny? There is always more to the story than first reported.

I wonder what happens to all those immigrants who Amazon hires and spits out?

Implied Threat

Donald Trump has no love for Jeff Bezos and his on-line retailing behemoth, Amazon. Since Bezos personally bought the Washington Post, this newspaper has been going after Trump tooth and nail. And Trump, in return, has implied that Amazon is too big for its britches and is an antitrust threat to much of American retailing. Enter Jack Ma and his Ali Baba corporation which is in roughly the same business in China that Amazon is in in the United States ... and has had designs on expanding it's empire here. So Trump invites Ma to Trump tower where he poses with Ma who pledges to create 1 million jobs in America ... see: CNBC Story.

Although Ali Baba moves more on-line merchandise, Amazon, because of its different business model, has higher revenue. Here is a comparison of the financial performance of these two companies: NASDAQ Article.

This meeting suggest that Trump is once again picking winners and losers in American business ... something I was very critical of Obummer for doing. And even though Amazon probably does need to be reined in somewhat, I am I little chary of Trump playing Teddy Roosevelt and going after this particular corporate excess. But I also feel that Amazon does pose a systemic threat to American industry. (I need to be more decisive.)

Visionaries

Nikola Tesla

It must be in the California water ... the little of which is still around, that is ... but the Golden State seems to breed Golden Boys, such as Elon Musk and Steve Jobs ... visionaries who grab technology by the throat and make it bend to their will. Add the Evergreen State's Jeff Bezos to this cadre and you have the Three Musketeers who are changing our lives ... much faster than many of us can cotton to.

Of these three, the one who seems the most outré to me is Musk. Some of his pronouncements sound a lot like those kooks who used to be pushing cold fusion ... only he delivers often enough to keep us skeptics from saying "ah ha" ! (Example ... recently landing his returning spent SpaceX rocket on a barge.) And Musk just predicted to an enthralled audience that humans would start populating Mars in nine years (shades of JFK) ... see: CNN Article. A little nutty, no? But this guru has been saying and doing nutty things for a number of years now and ... delivering! This keeps us skeptics back on our heels.

Will Musk's auto company, Tesla, manufacture one million electric cars by 2019? Many skeptics, like myself, believe that this is a pipe dream ... particularly if our federal government doesn't keep the subsidy tax rebate tap wide open. And, I suspect that, if the Republicans win the presidency in November, some fiscal sanity might interject itself into this "evil carbon" debate ... after all, as a few sane heads recognize, it is burning carbon that produces most of the electricity that recharges Tesla's sexy status-provoking cars.

Of the other two visionaries, Jobs and Bezos, I think Bezos might have the largest long-term effect on our lives ... if, of course he can keep getting the financial markets to supply the funds to keep his Amazon enterprise going ... and he avoids having a cage match with Trump were he to become president. If Steve Jobs were still alive, I think that he might have used Apple's huge cash reserves to pull another rabbit out of his hat ... something that I doubt that the current CEO, Tim Cook, will be able to do.

Loose Lips

I have been verklempt at President Obummer for his frequent swipes at American exceptionalism... most recently at Howard University when he told the wide-eyed graduates there that a person's success is only due to luck ... see: Breitbart Article. Shades of "you didn't build that." What an absolute boob! Now we have Donald Trump taking a swipe at Jeffery Bezos for his remarkable success at building Amazon.com into a retailing giant that is now threatening the entire "bricks and mortar" U.S. retail industry. However, Trump's motivation may not be as a trust-buster, but rather to get back at Bezos for how his personally-owned newspaper, the Washington Post, has been mistreating Trump in his bid for the presidency.

Donald Trump needs to quickly learn the lesson that Obummer never has ... that shooting from the lip,  as a person of such great consequence, is just that ... consequential. Is Amazon's success to be praised or condemned? That is a tough question because, like many things in life, it is relative. Walmart was the last great retail juggernaut ... condemned by liberals as the destroyer of many Mom and Pop operations. And it was, but look what then happened. The Internet allowed this upstart visionary, Bezos, in twenty-two short years, to begin turning Walmart into the next Montgomery Ward.

To completely answer this question requires a look at how Amazon has won the strategic high ground in retailing. Has Bezos used collusion, subterfuge or corruption? Likely not. He has used vision, innovative automation, superior organization and imaginative marketing. And, sorry Obummer, not a lot of luck ... other than that which was achieved through hard work and good decisions. Does this make Bezos into a beloved figure to anyone but his stockholders? Probably not, but then few of the transformational American entrepreneurs of the last two centuries have been known as pussy cats.

They, like Jobs, Edison, Ford, Watson, Carnegie, Rockefeller and many others were tough cookies ... and some did cut too many corners. But eventually, most of those that did paid a price. Trump is attacking Amazon for not paying sufficient taxes. This may be the case. But this is an issue for the IRS and, if this government agency has (once against) been corrupted by political influence or bribes, then this is very serious. But if Trump is making such a charge, he should supply some fiscal details. Otherwise, he should take the advice I am continually giving Obummer ... and zip his lip.

Bald Blog

Jeff Bezos

It seems that being a multi-billionaire, mega movie star or chick magnet is not enough these days ... you must also have a chrome dome ... long before your time.

LL Cool J

What is this about, as a young male, having a fully-shaved head and lack of body hair? Is appearing like a newborn baby sexy? Or is it a matter of hygiene? Lice?

Bruce Willis

Perhaps it is to hide the fact that one only has a monk's fringe of real hair and is chagrined by it?

Charles Barkley

Shaving one's head every day must be a real pain in the toucas ... but it has now become de rigueur to show that one is super hip.

Mr. Clean

I shake my hirsute head at this modern mores mania.

Amazon.com

Many people believe that CEO Jeff Bezos has created a monster ... while others feel that Amazon's dog-eat-dog culture is just what was needed to propel a small on-line bookseller into the most valuable retailer in the United States ... having just recently surpassed Walmart in its stock-market valuation.

Clearly, Amazon.com has taken the Darwinian corporate culling culture developed at General Electric a number of steps further ... to the point where it's high turnover rates (half of its employees last just one year and only 15% of its employees last five years) might eventually be its undoing. The New York Times has done a very long, fascinating and in-depth article on Amazon which exposes not just its many maniacal successes but also its disturbing ugly warts ... see: New York Times Story.

The older I get, the more I believe that capitalistic success is very often predicated on a Messianic vision on the part of corporate founders ... from John D. Rockefeller to Henry Ford to Thomas Watson to Steve Jobs to Jeff Bezos. And although there might be much personal employee suffering along the way, the end result is, for a time, an "insanely" transformative company. After you have digested the above article, see if you can't somehow forgive the tyranny that many of these corporate founders have engaged in to birth their visions. I may not like it, but I can forgive it ... such is "invisible hand" of capitalism.

Abandoned

There is now a recognition that boys who have been abandoned by their fathers very early in life can grow into extremely successful adults.  The examples currently being bandied about are former President, Bill Clinton; Jeff Bezos of Amazon.com; President Barack Obama; Steve Jobs of Apple Computer; and Larry Ellison of Oracle Corp.  … and I’m sure that there are probably many others.  Whatever the underlying psychology of this phenomenon turns out to be, it does seem to suggest a possible interesting future potential.

Considering the degree of fatherly desertion that is now occurring pell mell in the United States among the black and Hispanic communities … and also growing among Caucasians … it would seem to me that America should expect a barrage of hard-driving prosperous males ... maybe females too … in the not too distant future.

Shorts

I strongly recommend NOT shorting common stocks.  That is a game for the well-connected in the canyons of Wall Street.  Rather, if one is convinced about the poor prospects for a company, buy “puts” on its stock.  The only problem here is that the longer-out are the terms for such puts  … the more expensive they become.  So benefiting from the poor outlook for a company becomes a very tricky game of timing.  However, there are some stocks that I am convinced whose longer-term prospects are quite dim and would short them if I had unlimited risk capital and unlimited time.

They are:

Amazon – With a capitalization of $133.1 billion, Amazon is deemed to be worth more than FedEx plus United Parcel or the combination of both General Motors and Ford.  The bald-headed Jeff Bezos has mesmerized Wall Street investors for over fifteen years even though he has yet to bring any significant profits to the bottom line of this Internet giant. He has done this with a stream-lined order-processing and shipping operation which is the envy of most. However, he has also benefited greatly from the lax sales-tax rules in the many states in which he has no bricks-and-mortar operations.  This advantage is disappearing with recent legislative proposals … and so will some of the panache that this company has enjoyed.  To counter this revenue and profit impact, Amazon has instituted a $79 annual membership fee in exchange for free shipping and some other media perks.  My wife refuses to participate in this semi-scam and so, to follow Peter Lynch’s advice, listen carefully to your wife when making investment decisions.

Also Bezos’s personal purchase of the Washington Post for $250 million suggests to me that he is losing his mojo.  Such a sidebar is bound to reduce his focus on improving Amazon’s prospects ... and so, I suspect that the apogee of this company has indeed occurred.  But be careful … it may take some time for investors to realize this.

Afterward: See: Wall Street Journal Article

Tesla. – With a capitalization of $16.9 billion, Tesla, as a company, is worth more than Harley Davidson or the combination of both Jetblue and Southwest Airlines.  CEO, Elon Musk has done a crackerjack job of creating a great-looking and well-engineered all-electric auto … which was named 2013’s Car of the Year by Motor Trend magazine. As such, he has captured the imagination of wealthy greenies who are looking for eco-bragging rights. However excellent this auto is, it still suffers from a driver’s anxiety about running out of power … say in the middle of the Holland Tunnel.  Supposedly this car has a range, when fully recharged, of 250 miles, but speed, ambient temperature, traffic density, and darkness can adversely affect this number.  And, if a recharging station is not handy, things can get quite dicey.  Even, if such a station is available, waiting up to an hour for some more electrons to get one to one’s destination might be a real downer.  I suspect getting around these engineering and physics limitations will eventually become a serious gating factor for this company’s longer-term outlook.

Also, I think Elon Musk’s recent touting of the pie-in-the-sky Hyperloop technology is an unnecessary distraction for this visionary … see: Spacex Story.

Afterward: See: CNBC Story and for another option in a fancy golf carts see: BMW i3.

Facebook   -- currently enjoys an unrealistic market valuation of $89.3 billion (in my opinion) … more than three times the market value of the CBS television network (another big advertising platform).  This is marginally near the value Facebook was awarded at its initial public offering last fall ($104.2 billion).  This is because investors now believe that the company may have solved the problem of monetizing its huge installed user base (possible close to a billion users)… particularly on cell phones.  This may or may not be the case but there is no question that the user-hype surrounding social networking is the reason for the high price on this stock … more than doubled from its low of $17.55 last fall to $36.88 currently.  One can reasonably assume that the analytic sophistication of this type of investor lemming is not the greatest.

Facebook founder and CEO, Mark Zuckerberg, has recently been immersing himself in the immigration reform brouhaha … see: Daily Mail Story.  This, to me, can be nothing but a distraction for this 29-year old entrepreneur ... and I doubt that too many of Facebook's H1B visa recipients are coming from Mexico.  I am also sure that the challenges facing Facebook’s establishing the kind of revenue and profitability that would justify its current market value will be huge and not-easily solved.  The smirking Zuckerberg might well be advised to give these challenges his full-time attention.