Comment by bergerjac | Hacker News Reader

Comment by bergerjac | Hacker News Reader

I plan to start slowly getting out of tech stocks.

Since 2012, I've held stocks in Apple, Amazon, Google, and Tesla (also, Microsoft and Intel, but sold those). I was skeptical about Facebook, so didn't purchase.

I attribute my buying decisions to my knowledge gained from Hacker News. Thank you everybody:)

Back then, the everyday person didn't have a clue what these companies were doing. (My dad's friend was still betting on HP, and no one knew about AWS.)

Oil companies fail because they think they're in the oil business. When in fact, they're in the energy business.

Toys "R" Us went bankrupt because they thought they were a toy-selling company, instead of a child entertainment company. These companies fail to innovate.

The great thing about tech companies... innovation is in their blood. The problem is when that blood gets diluted and their purpose gets lost in "making toys" instead of "entertaining children".

As I said above, I'm looking to get out of tech stocks. Looking for multi-family property real estate options. Years ago I purchased and lived in a duplex, then sold.

Looking for opportunities providing cash flow, and a proven product that's been around for 1000's of years. If you know of anything, please see my bio.

> Toys "R" Us went bankrupt because they thought they were a toy-selling company, instead of a child entertainment company. These companies fail to innovate.

Not exactly [1]

"Toys "R" Us' debt problems date back to well before Amazon (AMZN) was a major threat. Its debt was downgraded to junk bond status in January of 2005, at a time when Amazon's sales were just 4% of their current level. [...] A year later the company was taken private by KKR, Bain Capital and real estate firm Vornado. The $6.6 billion purchase left it with $5.3 billion in debt secured by its assets and it never really recovered.

But much of the chain's resources were devoted to paying off that massive debt load rather than staying competitive.

When Toys "R" Us filed for bankruptcy in September 2017, it disclosed it had about $5 billion in debt and was spending about $400 million a year just to service that debt."

[1] https://money.cnn.com/2018/03/15/news/companies/toys-r-us-cl...

[edit: formatting]

> Oil companies fail because they think they're in the oil business. When in fact, they're in the energy business.

Correction, successful oil companies realize that they are in the financing business. Exxon Mobil has the uncanny ability to earn billions of dollars without selling a drop of their own reserves.

In this sense, the successful technology companies have realized that they are also in the financing business. This is why I think Apple and Microsoft will outlive Intel -- Intel innovates in their own market while Microsoft buys into any profitable market and can capitalize on the arbitrage the comes from being an established player.

I think we can take this principle more meta. Once every business gets big enough it should go in the finance business.

There is simply no easier way to make money than charging interest on something.

> Toys "R" Us went bankrupt because they thought they were a toy-selling company, instead of a child entertainment company.

Well said.

There's a reason why the Lego store always is full of kids PLAYING, and Toys R Us felt like a Walmart that happened to stock toys instead of groceries.

See also the re-branding of FAO Schwarz: https://www.businessinsider.com/fao-schwarz-reopening-after-...

Actually, Toys R Us went bankrupt through a buyout: https://www.bloomberg.com/view/articles/2018-03-27/toys-r-us... Basically, they were forced to take on a lot of debt to go private at a critical inflection point where competition was starting to undercut their pricing. Then they couldn't invest in anything else to fight their competition because they already had far, far, too much debt.

So I'd be skeptical to say there's something inherently wrong with non-tech stocks. You may have just lucked out and invested in tech stocks during one of the worlds largest bubbles (or just bull runs? Hard to say!)

Facebook IPO’ed in 2012. It was huge among investors especially retail. Meanwhile places like Reddit and Hacker News were the ones saying how bad the stock and company was.

Can you explain what you mean by the tech companies purpose got lost?

>Back then, the everyday person didn't have a clue what these companies were doing.

I don't think so. Groupon IPO'd in 2011, and it was definitely big with casual investors. I knew a lot of people who were looking at facebook when it IPO'd. Coincidentally, tech people seemed to be the biggest doom-and-gloomers for facebook. All I ever heard was how they were fudging their advertising numbers and how they would get exposed any day now.

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