Make no mistake. I am a believer in Jeff Bezos. I even coined a term in his name:
The Bezos Law: If Jeff Bezos enters an industry, prices will be lower.
But that doesn’t mean I’m a buyer of the stock. Remember the dot-com boom and bust? I do.
I had a front row seat as a college intern with the founding team of a grocery home delivery start-up. It was the Webvan of the east coast, with the same unfortunate result; Bankruptcy.
What went wrong? Turns out, among other things, shoppers like to pick their own produce.
What’s changed? Not much, as far as I can tell. Will FreshDirect be able to scale? We shall see.
In the meantime, my preferred method of making money in stocks is through income.
I don’t put much emphasis on price appreciation.
Much like a rental property, I like cash flow.
I like the fact that management has to think about me. Imagine that empty chair at the board meeting. Now imagine it reserved for “Mr. Dividend,” and you get my point. It’s nice having a seat at the table.
I smile when I hear the dire predictions about retail. Dire predictions pray on investors’ emotions. Perfect. Emotions swing open the doors to better values for income investors.
Greedy Wall Street types have saddled retail with debt. Let this play out a little bit longer.
For Bezos, sending rockets to space and back is hard. Getting groceries into my fridge may prove to be even harder. I believe in the Bezos Law. But for my money, I invest with Mr. Dividend.