Clap For Service

Joe Doakes from Como Park emails:

Told my wife we should get The Clapper so she doesn’t have to get out of bed to shut off the lights when I’m done reading. She scoffed – do they even make those anymore?
Yes.  Amazon.  $17.  Order by 6:00 on Friday, guaranteed delivery on Sunday.  Seriously?  How is that possible? 
Yes, I understand they have a 850,000 square foot warehouse in Shakopee, a building as big as my entire city block. But surely they must prioritize inventory?  Amazon updates its list of “Most Popular Items on Amazon” hourly, so I can keep up with the Jones.  Obviously, they’d have a huge inventory of in-demand items.
But how much demand can there possibly be for The Clapper?  And yet they have them in stock locally for two day delivery?  Unbelievable.  There’s a reason Amazon is kicking every other retailer’s a**.  It’s called “Customer Service.”
Joe Doakes

And yet, someday, just like Microsoft, Time/Warner/AOL, IBM, AOL, General Motors and US Steel, something will come along to knock it off the top of the heap.

36 thoughts on “Clap For Service

  1. Hang on there, Mitch, you’re claiming that Microsoft et al ever understood or practiced Customer Service?

  2. There is a business theory that Growth is King. You trade profits for growth. Not sure if this really valid — Wall Street has bought into the theory, so investors see their share prices soar with a company’s growth, not with its net profits. Amazon is a case in point. Amazon also engages in some flim-flammery to keep its cash flow high — Amazon sells an item & in many cases delivers it to you before it has paid the supplier for that item. Not sure that is sustainable.
    We are a long way from the free market model of “build something for ninety-seven cents, sell it for a dollar.” There is a theory that, in a market economy, all mature industries become oligopolies, mostly due to economies of scale. Not sure this is true with industries that are based on intellectual property. All the value of Microsoft lies in its monopoly on selling a combination of ones and zeroes. The economic rules that govern pricing and selling IP are monopoly rules, not free market rules.

  3. This seems like a post where Emery/EI would weigh in. Did he give up on commenting or did Mitch ban him? He hasnt been this silent in months.

  4. like Microsoft in the 90’s only the feds will be able to bust up Amazon. They are the closest thing weve had to a true monopoly since Standard Oil was was sliced up nearly a century ago.

  5. Emery is probably waiting for the latest issue of The Economist to hit the news stands so he can parrot its poorly-reasoned economic forecasts.

  6. Told my wife we should get The Clapper

    That’s the kind of talk that has ended many marriages.

  7. I dislike it when people talk about economics, or make economic predictions, in absolute terms. It’s the mark of a dilettante (ditto climate predictions).
    Real economists make predictions that are couched in qualifications.
    But I’ve noticed something — the more an economic prediction is stated using vague or meaningless terms, the more confident the economist is about his prediction (there is enough math in economics that it is still a field over represented by men). Or (like a certain NY Times columnist) he revises his prediction after the fact to add qualifications or change the meaning of the terms he has used.
    If you have the heart for it, check out some of Hillary Economic Adviser Joseph Stiglitz’ predictions on Youtube, for example, https://www.youtube.com/watch?v=lyzS7Vp5vaY. It’s gobbledygook. It says nothing actionable. He makes no statements that can be proven to have been wrong empirically. Liberals love Stiglitz.

  8. Bought Microsoft shares 16 years ago @$25 with auto dividend reinvested and haven’t looked back.

    To all the IBM investors still backing Ginni Rometty – Satya Nadella is what a great CEO looks like.

  9. My advice to any young person entering the job market are low cost/fee Vanguard Funds.

    As an example:
    Vanguard 500 Index Fund (VFIAX)
    Vanguard Total Stock Market (VTSMX)
    Vanguard Star Fund (VGSTX)

    Good luck PoD

  10. I learned that on CNBC and from books over a decade ago. I plan on learning how to pick individual stocks but I will put some in a index fund, oh and my 401k is all Vanguard. Just because Im young doesnt mean Im a idiot about the economy. I mean its not like I’m a Bernie or fauxohauyntas supporter with 50k in student loan debt.

  11. Forget picking individual stocks, POD. You can go broke, fast, trying to time the market.
    Whatever investment system you have, you are competing with people who have been obsessed with the stock market and making money since they were children. They had wealthy parents who sent them to the best schools & gave them a leg up in the finance business. They have more and better information on the market than you have. They have big brains and put them to work all day, every day, trying to make money off of people who think they have a better understanding of the market than they do.
    If Emery really bought M$ at its record low in 2003, it was pure luck. He did not know more about what direction M$ share price was going than the people who sold him M$ at $25.

  12. Nassim Taleb, author of The Black Swan: The Impact of the Highly Improbable, suggests putting most of your investments in low return, low risk securities, and putting what remains in funding startups. That way, you have protected your downside while leaving your upside unlimited.
    Taleb’s “big idea” is that people are very bad at correctly gauging risk. They always underestimate risk, because, by definition, you can’t know every risk that is out there. He named his book The Black Swan because the black swan is native to Australia and was not known to Europeans until 1790. Before 1790, if you were a European, there would be no way that you could correctly determine the “risk” that the statement “there are no black swans” was false; the information needed to correctly assess that risk did not exist.

  13. MP, thanks for the concern but that is a pre-1995 mindset. I follow and take notes on Youtubers who have done what you say is impossible. We live in a new age where information once only available to a select few is now available to anyone who wants it.

  14. Also I have no plans on getting rich quick or becoming a day trader, those things are insane and for suckers. Getting wealthy is a slow builed 7-10 years minimum.

  15. Taleb would say that the people who followed the same rules as the Youtube stock pickers & lost money did not make Youtube videos showing how they failed, so there is a selection bias.
    You might ask yourself why the big investment houses failed & left all that money on the table where the Youtube guys succeeded.
    But suit yourself, it is your money.

  16. Thats why one of the guys I follow even says do your own research. He doesnt recommend anyone picks the stocks he does he always tells people to do your own research. Its also why I am spending the better part of 3 years finding the best ways to pick stocks. I am in no rush and Im still probably another year away before I buy my first stock. I still have a lot to learn, and that will literally never end. Once I have some money I will then go into rental properties and possibly doing some small investing in start up companies but that is at minimum a decade away.

  17. I have met a few millionaires. None of them became millionaires by picking stocks or starting a business; they all became millionaires by buying and selling real estate. If you buy a house and sell it, and buy another house within a year, any money you made on the sale is tax free. You can staircase your way up to a million dollar house in a decade or two, then you downsize to a nice (but cheaper) house while strategically shielding your profit from the tax man.
    I’ve actually seen people do this.
    Why didn’t I do it? Your investment isn’t liquid. You have to live in the house & you may not be able to move when you would like to (i.e., to move for a better job). It is not a convenient way to get rich, but as long as housing values go up, interest rates stay low, and you keep the tax exemption, it works.
    Oh, and you can’t get divorced. This may force the sale of your house at a bad time.

  18. I don’t think its correct that a non-market pro shouldn’t pick stocks.  A non market-pro will eventually have some guardrail principles that stick.  Such as:

    … Don’t buy crap stocks, don’t buy speculative small caps that aren’t profitable
    …. Don’t buy penny stocks.  End story.
    … Low PEs and dividends are pretty good preventers of a sell off
    …. Don’t play the dead cat bounce game
    …. Stay away of trendy high PE tech things unless you’re truly in a surging market.

  19. JK, you can find a low-cost mutual fund that chooses investments using the formula you describe. Why not buy shares of it & spend the time you would have devoted to researching stocks to either make money or have fun?
    I would love to see the research that shows individual stock pickers can beat the market long term. If a person really has a “secret sauce” why doesn’t he sell his skills to a finance house? They have economy of scale so he would make more money.
    There is a joke that goes like this: Two economists are out walking. One of them grabs the other by the arm & says “Look! There’s a twenty dollar bill laying on the sidewalk! The other economist doesn’t even lift his head. He says “No there isn’t. If there was a twenty dollar bill laying there, someone would have picked it up already.”

  20. I genuinelly do apprecoiate all the feedback and I know I would never get rich buying stocks the goal would just be to get enough money to buy my first house for cash and then get into real estate.

  21. MP – What I sense from your tone is you speak with some accumulated wisdom, maybe vocational, and at that point I think you’re probably a more well versed man than me in some of these things.  But still I don’t know if I accept the notion literally that ‘the research’ concludes an individual stock picker cant beat ‘the market’, such that a basket market equity return in buoyant years is say 20%.  

    That’s not an absurdly high bar, not for a good, thought out equity position.

  22. I have met a few millionaires. None of them became millionaires by picking stocks

    You have met at least one more millionaire than you know, MP – albeit online and in the comments of a blog. And it was done picking stocks.

  23. Aren’t investors assuming the stock market is an honest market, run by honest brokers, who are honestly working in their clients’ best interest, relying on honest numbers reported by honest corporate officers?

    If not, how do you make intelligent decisions? How do you – an outsider – determine which lies should you be ignoring? The insiders know; but how do you know?

  24. jdm-
    Congrats! But was your return higher than an index fund or a growth fund? And can your success be repeated using the same rule set?

  25. This is getting really interesting like a heated Facebook thread ut without the heat and everyone respects each other. I miss when a good chunk of the net weas like this.

  26. MP, I’m not sure I feel like writing about what I did or how I did it, I was simply informing you that your data set of millionaires is incomplete.

  27. Investopedia on stock pickers vs index funds: https://www.investopedia.com/articles/financial-theory/09/can-fund-managers-pick-stocks.asp

    This article manages to put into words my thinking on the topic: An efficient market would see a consistently superior stock picking strategy as an inefficiency to be eliminated. But we don’t necessarily have an efficient market, at least not at all times and for all stocks, so the magic eight ball says “Reply hazy, try again.”

  28. Sure, jdm, understood.
    I am a chicken. I contributed 20% of my income to my company’s 403B for almost 30 years. I’m not a millionaire, but I can retire (modestly) at age 60, Yay, me!

  29. Perhaps later sometime… I will say this tho’. HRL. Man, that company has made an awful lot of people an awful lot of money.

  30. It strikes my mind that perhaps local real estate investors tend to do better than corporate stocks and mutual funds because they realize, unlike too many executives, that customers/partners who have a bad experience can go elsewhere. Those “burned” by consignment (or other ways of pushing out paying for supplies) tend to go elsewhere. Entrepreneurs know that they don’t have an infinite pool of customers who can be used and abused.

    For what it’s worth, I lived what MP was talking about with pushing out payment, abusing vendors, and the like in a former job, and what I noticed was that the vendors quietly pushed back. Products being sent halfway around the world were put in a box so bad that it hardly held together. Products came late, or flawed, if at all. Vendors, as soon as they could get better customers, departed for greener pastures.

    The key to what Amazon does is not pushing out terms to consignment from the net 30 that was common a generation ago. It is that they manage their supply chain so that items are generally in stock. There are great models which do well at this, if only they’re used.

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