Editor's note: This is the second of James J. Cramer's four Take Two columns this weekend. Here's the first one.
Old-timers at run-of-the-mill companies never admit it, but they have to be sick to their stomachs when they read the business pages these days. Can you imagine the raw jealousy and envy of the people who run companies that do auctions or classifieds or books or drugs or CDs?
(I often ask CEOs about this when I am on "Squawk," both on camera and in the green room. Nobody has ever admitted to the slightest pang of jealousy. What are they, crazy? I mean give me a break. Didn't you hate the kid that got the free pass when you were busting your butt at your job? Whom do these people think they are kidding? Of course, the only guy I ever heard admit that he wishes he had some sort of currency like this was Bob Wright from
. Figures, takes a confident kick-butt exec like that to admit what we all know.)
It's bad enough that in less than a year
has a market capitalization that pretty much assumes the doom of both auctioneers and newspaper classifieds. Now
, with the stroke of a pen, has doomed eBay!
(I have to admit that I was pretty worried when I first saw Amazon's site. It interrelates much better. You like
balls? Have you thought about
jerseys? I mean it thinks. But eBay has great customer loyalty, so it won't go away.)
Of course, it really is the strength of Amazon that reignited these stocks Monday. Here you have a company that has continually beaten back its critics and reinvented itself every time the posse caught up. Market cap too big for just books? OK, how about CDs? Market cap too big for books and CDs, how about drugs? Market cap too big for books, CDs and drugs, how about online auctions? And its customer base just keeps growing and growing and growing.
(We all marvel about Amazon right here. What I also marvel about is that you never hear anybody come out and say, "You know, I was dead wrong about these guys. This is a much bigger business than I thought." That's too bad because in private I hear it every day. But you know that you are never supposed to admit that you are wrong in this business, even when most people have been wrong. Amazon's book business simply turned out to be the model that it used to develop other online businesses. Also,
is a great businessman, just a great one.)
Meanwhile, we keep being told that
is going to crush Amazon when it gears up online, but I say, forget about it. Wal-Mart has geared up already. But Wal-Mart doesn't want to be another Amazon online. There are built-in negatives to Wal-Mart's continual embrace of the Web. It detracts from the mission of getting people to go into the stores to make impulse buys. It takes away from the Wal-Mart touch. When you order something from the company's site, you end up dealing with suppliers directly that just don't care as much about you as much as Wal-Mart does. That can leave you with a bad impression of Wal-Mart even when Wal-Mart has nothing to do with it!
(I got a dozen emails saying this ain't so, but I got it right from the company. The company is very concerned that a supplier will send the wrong thing to your house, something that Wal-Mart might not do. Wal-Mart is a massively customer-oriented company, and its suppliers aren't used to dealing with the finicky/mysterious/difficult consumers. Plus they just don't care. It is Wal-Mart that is on the hook, not them. That's a difficult position for a retailer, especially when the retailer has spent billions creating an atmosphere that makes you want to spend when you get in the door, and now you aren't even going into the door.)
More incredible is the market's amazing blind eye toward any execution risk on the part of Amazon. Heck, do we really think that it is so easy to be eBay? Can Bezos just wake up and declare that he owns whatever market he wants? The market seems to say so. (This despite when I go to Amazon these days, it never has any new recommendations of books for me like it used to and lately it hasn't delivered with the speed it once did.)
(Others have since told me that I am the exception and that Amazon continues to refresh its suggestions and remains as dynamic as ever.)
One day the doubters of Amazon may be right. But in the interim, they have lost so much money that their doubts have proven to be colossal investment mistakes. Days like Monday tell us that skepticism when it comes to the Net can only hurt you. How long can that last?
(Many of you were confused by this. I am saying that the doubters are short-sellers who profit when stocks fall -- not sideline players who missed nothing. Short-sellers have been killed by this stock, more than any stock I have ever seen in my trading life. This stock has buried more short-sellers whom I know personally than any stock. This one has done some real damage to smart people.)
Perhaps the question is asked wrong. How long can the doubters stay short before they are put out of business by the Net and all of its successful spawn?
Maybe that's the real investment question.
(That's how I view it. I am long a bunch of Net names and am a believer that it is more than just a crude joke played on unsuspecting stock traders. These businesses are for real, and you ignore this segment at your own financial peril. Subsequent to this piece, eBay went up huge and I sold it. I will get back in if it drops to below 125, where I think I can make money in it again.)
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At the time of publication the fund had no positions in the stocks mentioned, though positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending an email to