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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (876)	12/30/1998 7:12:00 PM
From: James Clarke	Read Replies (4) \| Respond to of 4691

Is there a Buffetology stock in the internet field, or rather a potential one - none of them have the track record and the valuations are not even close. Right now the best Buffetology play I can find is to short Amazon - MINIMAL barriers to entry, NO historical track record of profitability, and a stratospheric valuation on top of that. I'll take those odds, now that the Christmas hype is over and people start to realize that bookselling is an even lousier business for the rest of the year than it is in December. (Barnes & Noble has historically made ALL its profits in the fourth quarter). But in the future, where might you look for a Buffetology play when the collapse happens? You'd want to focus on where barriers to entry are likely to be. I don't think they're retailers. I don't understand the search engine business, but something tells me that Buffett would not gravitate toward somebody who gives their product away for free. Though the economics might end up like newspaper economics, where the product is given away virtually for free compared to the cost of production. Advertising. I'd be looking at AOL. I missed probably the one shot I will ever get to buy it at a reasonable price two years ago when they were having problems. I was a loyal customer and knew the competitive advantage they had, I saw the turn the day I stopped getting busy signals, but I missed the best investment opportunity that was ever served to me on a plate. AOL is a real company, with an excellent business model and a product I have rarely been disatisfied with for $20 bucks a month. That would be the one I would be looking to buy out of the dregs, if we ever get there. When these break down, they are going to drop a lot, but I don't know if they will drop enough to ever satisfy the requirements of a conservative investor in this round. When they are mature businesses in 5 years and the speculators are focused on whatever the latest gizmo at 500 times earnings is then, maybe we'll get our shot. For now, I agree with Mike and others, our game is defense. Consider the internet a real threat to any business's historical track record unless you can be confident it is not. If you're not going to buy it or short it, stay as far away from it as you can. Jim