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Beware Stocks: Stories from the Dotcom Days…

Wednesday, December 28, 2022

Beware Stocks Stories from the Dotcom Days…

2023 is almost upon us, and with NFTs and Stocks and everything being so speculative, I wanted to review some of the lessons of the 90’s dot-com bubble. See if you find any of the same stories repeating themselves like I am.

In the 90’s it was obvious to me that valuations of the internet business were utter nonsense. Back then, before Amazon.com’s vision was clear, the market tried to tell me that it’s worth 30% of what general motors’ worth - you know, they have just been smoking some funny weed.

The stock market’s dotcom boom happened because of the massive influx of rank amateur investors who have no idea of what they were doing and are easily excited and massive stock manipulation going on because of that. You’d see even ordinary businesses getting huge bumps in their stock if they just announced that they're gonna do anything with the internet.

One blatant manipulation that I thought was very interesting was the Victoria Secret’s “fashion show” on the net. It had 10 million hits or something in one day, and was live, so you went to the Victoria Secret website, which had only been up for a couple months and for 45 minutes or something, they had a live fashion show, which the best description I heard was a picture image that was like rather small and you know, the best description I saw was that the Wall Street Journal said it looked like old bad ‘x’ movie with better looking women.

But here's the point, that thing didn't sell any lingerie and it wasn't intended to sell any. They're not that dumb. What it was intended to do was hike the stock. That's what that was all about, and so there's no value there.

Back in the day, Amazon was good at books and I love Amazon and I hoped “Long live Amazon” because for authors, they're wonderful, but long term play, if they didn’t expand, there's nothing there.

So there was a little player that became a big player in the book business on the net called mystery world or something like that who got every mystery book ever written on demand available at their site. Well, in their category, they got four times the diversity of inventory that Amazon.com did. Now, if somebody starts carving up the business, there's no way even Amazon will keep up with them, and they came outta nowhere. There's no barrier for their entry, but they took part of Amazon's business.

So the value is an illusion. I'm not saying doing business on the internet is an illusion, that's not my position, but what I'm saying is when you look at the equity value in the business, it's not there and I stated that you’d start seeing some adjustments.

Is that true in ads as well? Well back in the day, Budweiser’s bullfrog ads were more useful and less of a ploy than all this, because there's a finite market share there to get, there's a certain amount of beer sold every year, every month where you compete for your share of that revenue. There's a certain amount of shelf space that these companies compete for and their advertising helps them get a store to agree to put cardboard,fogs and the Budweiser logo at the cash register instead of putting the Miller logo there.

Now, that’s not my kind of advertising, but it is rational advertising in a particular environment. This other stuff's completely irrational. And in terms of having any real tangible value, whatever ‘values’ are created today could be gone tomorrow. Choose to invest in value that lasts, especially as we come into 2023 using the proven strategies we reveal inside the NO B.S. Newsletter and the books, courses and more! If you’re looking for a place to invest, invest in yourself as you prepare for the new year!

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