I’m on Fox today (Your World with Neil Cavuto @ 4pm EST) discussing something unusual: Space travel, the Markets & Investing (really).
This should be an interesting discussion . . .
UPDATE June 21, 2004 6.28pm
As happens all too often, time was short and I didn’t get to say some of what I wanted to. I failed to mention this “venture capital investment” by Microsoft co-founder and billionaire Paul Allen is actually more of a vanity project than a true investment for returns. Yes, its a fun idea, but I doubt Allen is expecting much in the way of monetary gains from this “investment.”
When you are a billionaire, you can blow 20 large on a flight of fancy like this. Most people cannot.
If you want a good parallel, consider the airline industry: One of the lowest returns on capital of any financial venture known to mankind. Commerical aviation has been losing money since Kitty Hawk. If Spaceship One or Space Dev is anything like the airline sector, it will be a black hole for investors for the next century or so.
Think Euro-Disney lost money? Wait til Sub-Orbital Disney One comes out . . .
The airline industry has been losing money for so long for the same reason the Record industry is still *claiming* that sales are declining. The government. They’ve been regulated to death, then subsidized back into zombie-hood. Like Reagan said (aside from the whole “do as I say, not as I do” thing he *must* have said one of those days): “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
So, per Mr. Chamberlain, airlines continue to be heavily subsidized. If they’re getting handouts, why change? Lucky for everyone, low-cost competitors are beating them on price, sans subsidies. Hopefully the government will let go and keep it’s hands off for once, then creative destruction can clear the government-inflicted wound and allow for profitable airlines.
Ben,
I’m not sure I agree:
1) Airlines have been a bad investment because they are a commodity, expensive to build and maintain. There is little upside to GreyHound Buses with Wings; Its simply a bad business regardless of government Subsidies / Regulations.
2) What government regulations are handicapping the Record Industry? (None I see) “Music” has been failing to compete with other, more advantageously priced forms of entertainment — DVDs, Video Games, Interent, etc.
3) Lets see what happens to the airline industry when everyone else decides to start competing with Jet Blue and SW . . . That’s already begun. While a price war is great for consumers — its awful for investors.