You Asked For It: My Worst Calls

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Long-Term Horizon, Macro, Tech, Research Analyst

Contributor Since 2018

Confirmation Bias Is Your Enemy.

Tech and macro. Deep analysis of long term sectoral trends, and the opportunities arising from them. I promise not to bore you. Author of Long View Capital, a Marketplace service for long-term investors. Risk Factors: I am also wrong sometimes.


  • I get mail.
  • People accuse me of only highlighting my good calls.
  • They are right.
  • Here they are, for posterity: my two worst calls.

Risk Factors: I Am Also Wrong Sometimes

My Contributor Bio here at Seeking Alpha warns that the primary risk factor in following me is that “I am also wrong sometimes.” Like all jokes, it’s funny because it’s true.

I like to brag about my very early calls on Apple (AAPL), ARM Holdings, Netflix (NFLX), Nvidea (NVDA) and Google (GOOG). But there is a dark side.

From inception, and up until this day, I continue to dislike Facebook (FB) and Amazon (AMZN). I never encouraged anyone to short them, thank god, but I wrote item after item over the years about how I hated their businesses. I know, right? What a moron!

In the long run, I will be right. But as Keynes once said, “In the long run, we are all dead.” Still.


I’ll start with Amazon, because I dislike it much less than Facebook, and I’ve come around a tiny bit. Here was the first thing I wrote about Amazon, shortly before the IPO in February of 1997:

I love Amazon. They have free shipping for orders over $25 [pre-Prime]. Returns are a breeze. Their prices are usually the lowest, with no tax here in California [neither are true anymore]. They have the best retail website [not anymore], that actually works well, unlike most. They seem to think One-Click is a huge advantage (and Steve Jobs agrees with them), though I don’t use it myself. Why would anyone want to not review their purchase before they buy?

As a customer, my satisfaction is very high. I’m pretty big on customer satisfaction as a key corporate metric, but Amazon has a bigger problem. They are not a tech company; they are a retail company, in the same crappy, low-margin, race-to-the-bottom business as Sears and JC Penny.

What is the plan here? To corner all US retail and then raise prices? That’s a terrible plan. One day, everyone is going to wake up from this Dot Com fantasy and realize these companies are doing nothing new, and are mostly overvalued by many, many times. Then we will separate the wheat from the chaff, and I believe Amazon will be an also-ran once the next recession comes. Eventually, this company will have to show some earnings, not just revenue, and I’m not sure how this business plan allows that.

Until then, it will remain a charitable trust run by certain portions of the investment community to provide middle-class Americans like me low prices with no tax and free shipping. I need a new computer, so the timing couldn’t be better!

Oh my god. Did I just put Amazon and in the same category? What a moron.

What Did I Get Wrong About Amazon?

Where to begin.

  1. The power of customer satisfaction. I always viewed it as an important metric that was too often ignored, but Amazon made me realize the full power of it. It is my number one metric for all companies now.
  2. I underestimated Bezos by a lot. “Genius” founders seemed like a dime-a-dozen back then and I was skeptical.
  3. They are a tech company. Duh.
  4. I never anticipated Prime, and most importantly, the Prime services. Free shipping is still a loss to Amazon for Prime members.
  5. I never anticipated how much better they would be than everyone else at logistics and last-mile delivery.
  6. Most importantly, I never saw AWS coming. To me, that is the only compelling part of Amazon, and if they spun it off, I’d buy it in a heartbeat.

But I still don’t like that their core-revenue comes from retail, which I consider a low margin, race-to-the bottom, undifferentiated mess. People pick a product, then purchase almost exclusively on price, and it is easier than ever to find the lowest price, including shipping and tax. I just bought a TV on Black Friday, and once everything was factored in, Amazon’s price was several hundred dollars higher than what we paid.

In a totally ironic twist, I used Amazon to “showroom” the TV: read the reviews, compare with other TVs, and then I went and bought it somewhere else. Brick-and-mortar stores used to have the same complaint about Amazon.

But, AWS. I love AWS. Too bad it’s tied to the anchor that is the rest of Amazon. There’s really no reason not to spin it off, Jeff. Jeff?


This one is both more embarrassing, but also weirdly prophetic. This is what I wrote on Feb 8, 2012, only a week after they announced the IPO, because I guess I couldn’t wait to trash Facebook. What a moron.

I’ll say this for Zuck: he is smarter than the average bear. I underestimated him a bit. The move to third party site integrations and apps, even before the iPhone had native apps, shows a depth of understanding that I didn’t give him credit for.

But he is still in the same social media business that sunk MySpace and Friendster. There is a central flaw to the whole model: once your mother is on Facebook, you will no longer want to be on Facebook. This will be true for every social media platform; as soon as it gets popular, young people will move on to the next VC-funded funhouse, and I do not believe that anyone will be able to gain dominance for an extended period. There is too low a barrier to entry, and Facebook doesn’t have a moat. There will be no GM of the 1930s-1970s in social media.

On top of this, everything has already moved to mobile, and the Facebook app is a disgrace, even after multiple retakes on the project. They are finally giving in and moving to native apps, but are way behind everyone else.

I also question their ability to compete with Google in advertising long-term, but we will see...

The final thing here is that Facebook, the website, scares the crap out of me. I had a Facebook account for about a month back in 2008. A friend had a novel published, and he needed all the Likes he could get, so I set up an account with the bare minimum info, Liked his book, and moved on with my life.

Then the Friend-requests from our mutual friends and acquaintances came pouring in. At first, I would beg off, saying, “You know, we are friends in real life, we don’t need Facebook’s affirmation,” but people got insulted, so I Friended them. Eventually, I had over 100 Friends, most of whom weren’t real friends, but still Friends. What a crock.

Then came the moment that I realized that Facebook did not care one bit about my privacy, and were going to push the envelope as far as law and society would allow. Even more explicitly than Google, I was the product.

I clicked on a link from outside Facebook for an article on Yahoo News. In a sidebar was a Facebook frame that loudly declared, “Check out what your Friends are reading on Yahoo!” I didn’t check out the articles, but did check with the people whose accounts were in the frame.

None of them had any idea what it was about. They had read the articles, but had not shared them to Facebook. Facebook was experimenting with “Automatic Sharing,” where they would post to your wall without, you know, any permission from you. What?

Deleted my account right then. But the four people whose privacy was, in my book, violated, kept their accounts and just shrugged it off. I believe that Zuck has repeatedly expressed a view of privacy which is at odds with American norms, and this will eventually come to bite them in the ass. I’m betting it happens sooner rather than later, but if my Friends are any indication, maybe not.

What Did I Get Wong About Facebook?

[chokes on chicken bone and dies]


  1. Zuck is way smarter than I gave him credit for, so I underestimated him twice. Doh!
  2. One manifestation of this is the purchases of Instagram and WhatsApp. In terms of what they got for the money they spent, I still believe they overpaid for both. Unless you view them as defensive moves. Basically, it seems to me the strategy is to try and take out anything with a ton of users, and make sure that if there is a “Next Facebook,” Facebook will already own them. Cramer’s repeated joke about changing the company name to Instagram only underlines this. It’s funny, because it’s true. Anyway, this blunts my criticism in those first two paragraphs, though not entirely. They can’t buy everything.
  3. Obviously I was wrong about competing with Google in online advertising. If fact, I view Facebook ads as far more effective now and a better value overall.
  4. After huge investment and multiple missteps, they finally got mobile right.

But still. I continue believe privacy concerns will be the torpedo that sinks Facebook eventually. I mean how many times can Zuck pretend to be sorry before everyone leaves the platform en masse? I thought the 2016 election might have been a turning point, but it wasn’t, so maybe both Keynes and I will both be dead when it happens.

The problem they face is that their advertising is so effective because of all the data collection and privacy violations, and if they had to reduce it either to avoid regulation, or via regulation, it would naturally be a blow to their bottom line.

Finally, on the subject of privacy, anyone who lets Amazon, Google or Facebook have an always-on networked microphone in their house, should think about why those products are so inexpensive. Maybe you are the product.

Lessons Learned?

If 2018 didn’t teach us all a little humility, we’re all in trouble, so I thought I’d make my last article of the year an exercise in humility (or humiliation). The important thing is to always question yourself rigorously, revisit your assumptions frequently, and always be open to the possibility that you are totally, horribly and irredeemably wrong.

And always remember, confirmation bias is your enemy.

Thanks for reading. Comments? Questions? Insults? Have at it.

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