I read little from The Motley Fool these days. For many reasons. Yet an article today did catch my eye just now and I have stolen much from it to make a point. And it's fair to say, that in any marketplace being the biggest doesn't necessarily mean, that it'll be the best. Far from it.
Building a 'niche' business to operate within a proven market (I'm sure), can often be shown to be more profitable than that of the biggest operator, within that very same marketplace. - And efficiencies are so measurable (in both examples), with the clear leader standing out like the proverbial DB's, fully exposed to all other players, to then, come along and take their own (specific) share of the spoils to be had.
(Some points taken from the article, follow. .....Full story below.)
< ....The Internet may prove to be the greatest human invention of all time. Investing in Internet companies in 2000, however, may prove to have been one of history's greatest follies.
Yet 2000 was a heady year for Internet investment. Guides such as Greg Kyle's 100 Best Internet Stocks to Own showed you "how to get in on this once-in-a-lifetime opportunity." Kyle predicted that there would be 430 million Internet users by 2003, and that by 2005, "consumers will spend $150 billion shopping online."
In fact, those estimates proved conservative. By 2003, nearly 600 million people were online. In 2005, shoppers spent more than $175 billion on the World Wide Web.
Time to cash in
But even though Internet usage blew away expectations, you would have been a big loser if you'd invested in Kyle's 100 best Internet stocks. How much of a loser?
In the fall of 2007, we spent hours computing the returns figures. Spoiler alert: The results are painful.
Had you invested $1,000 in each of Kyle's 100 Internet names back on April 20, 2000, and held them through September 2007, your $100,000 investment would have turned into -- drum roll, please -- $37,814. That's a total return of negative 62%, and again, that return is through the fall of '07 -- before the current bear market.
You were more likely to pick a company that would go bankrupt (18) as you were to pick a company that simply increased in price (13)! >
I'm probably saying that I feel, that with Looksmart (and it's "new found" niche in a growing marketplace), may well qualify my own predicting, that...........
This Stock's a No-Brainer
By Brian Richards and Tim Hanson
September 25, 2009
Then again (like The Motley Fool, at times), I may well be a little biased.
LOOK: On Sep 25: 1.15 0.04 (3.36%)
Disclosure: Holding shares in Looksmart.