The Rise and Fall of Amazon.com

Amazon-WalmartI focus on the incentives that cause numbers to go up or down. Incentives are simple to see. Describing them with equations is very complex and of questionable value. I don’t know when it will happen but AMZN (amazon.com) will trade for under $5.00 per share, stay between $2.00 and $5.00 then finally go out of business. Their innovations will survive but AMZN will be gone.

How do I know such a thing? This is a common fate of companies which come up with great ideas but are very late in making profits. It is somewhat common to all innovative companies. There is a process I call the second rat gets the cheese scenario.

During the 1980’s a corporation called U.S Surgical developed the non invasive system of surgery that is commonly used today. They sold the products used in using this surgical technique. Once the system was perfected, Johnson and Johnson started doing basically the same thing. U.S. Surgical like Amazon.com never earned a meaningful profit. Everything was for the future. With only expenditures and no profit, U.S. Surgical could not compete with a large company that actually did make a profit.

All of Amazon’s brilliant ideas and innovations are available to be used by any retail outfit in the world. Amazon.com has spent countless dollars developing its ideas. Everyone else gets them for nothing. It is like the second rat gets the cheese analogy.

Who will end up burying Amazon.com?I am thinking it will be Walmart. At the opportune moment, Walmart, will just take what Amazon.com has built and go with it.

Amazon has an upper hand as long as its stock price stays at astronomical levels. When that changes, and it will, Walmart will make its move.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

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About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.
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