Mamas Don't Let Your Babies Grow Up to Be Bankers

NEW YORK (TheStreet) -- Near the peak of the dot-com bubble I did a piece for Salon on daytraders.

I focused on the difference between those who were disciplined about taking nickels-and-dimes from price movements, against those who fell in love with their holdings and lost money.

In fact it was a classic John Henry story. The history of American business is a John Henry story. Progress lies in replacing people with machines. Those who do this pocket the profits. The rest of us pocket the value.

Today that daytrading floor is as dead as John Henry's job of driving spikes on a railroad. Software rules. Those nickels-and-dimes go to algorithms, from high-frequency trading outfits like Getco, which now wants to take out the rest of market maker Knight Capital (KCG) for what I think is a dirt-cheap price.

If you want to know how the business world works, look at who is buying the sports teams. Joe Ricketts automated stock trading at what's now TD Ameritrade (AMTD), turning thousands of brokers out of work, and then bought the Chicago Cubs, as Bloomberg reported. Dan Gilbert automated mortgage lending with Quicken Loans, turning thousands of mortgage brokers out of work, then bought the Cleveland Cavaliers, according to Quicken PR.

Arthur Blank automated home improvement logistics at Home Depot (HD), putting thousands of middlemen out of work, and now, as my Atlanta Business Chronicle reported a decade ago, he owns the Atlanta Falcons.

What all these stories have in common is that they put office workers out of work. Middlemen everywhere are being replaced with scaled computing. Outer-ring suburbs, from which these people long commuted to work at downtown offices, are becoming the new Rust Belt.

Factories came back, of course. But people had been replaced by robots on those lines, putting big profits into the hands of factory owners, while creating enormous new value for consumers. It's in spending this value that we've created armies of dog walkers, yoga instructors and artisanal cupcake bakers.

What should investors take away from all this? Put your money into companies creating this new value, companies like Stratasys (SSYS) and 3D Systems (DDD) that are turning hand-work into printing.

Look for the next hot IPO, to a company like Makerbot, which is bringing this revolution to small businesses and consumers much as kids like Steve Jobs of Apple (AAPL) and Bill Gates of Microsoft (MSFT) automated office work when I was going to college.

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