Jeff Bezos Is The Poster Child For U.S. Systemic Ponzi Scheme

Forbes released its annual list of wealthiest Americans this week.  The data shows that Jeff Bezos, the founder and CEO of Amazon.com, made $16 billion in 2014.  While perhaps admired by the segment of our society that worships the dollar above all else, this is nothing more than the grotesque reminder how just how fraudulent the United States system has become.

Bezos earned in one year more than 8x the amount of net income that he has delivered to AMZN shareholders cumulatively over the 20-year operating history of the Company:

AMZNnetIncThis is well beyond the bounds of obscenity. It’s criminal. The SEC allows Bezos to get away with semi-fraudulent accounting. It lets him get away with misrepresenting the Company’s “free cash flow” when it makes its quarterly “earnings” report to shareholders.

Jeff Bezos represents the most insidious form of fraud of in this country. He’s far worse than Madoff. Madoff just screwed over his wealthy peers. Bezos is sucking wealth from every nook and cranny in the investment fund world, including and especially the the average middle class mutual fund and every single pension fund invested in AMZN stock.

Amazon’s operations burn cash like a Weimar-era furnace.  The company burned over $4 billion dollars between end of its first quarter in 2015 (end of March) and the end of its second quarter in 2015 (end of June).   The Company had almost no debt at the beginning of 2012 and by the end of 2014 it had $9 billion.  Nearly half of the cash was incinerated during the April – June quarterly period this year.

But it’s not entirely Bezos’ fault.  Ultimately the blame falls on the institutional pools of investment capital and the retail investors who trust their “expert” financial advisors with their money.   The idea of value investing and investing based on fundamentals was exterminated from the system a long time ago.  Almost every single pension fund manager and every single investment advisor in this country would  not know how to engage in serious fundamental investing even if it were required to save their lives.

Of course, we know what Jeff Bezos thinks about all of this:

7 thoughts on “Jeff Bezos Is The Poster Child For U.S. Systemic Ponzi Scheme

  1. Part of the problem is the over 2300 funds invested in AMZN, each of which should have staffs analyzing what you analyzed. Then the Advisors that on behalf of clients use funds that apparently do not care what risk they take on for clients.

    I have mentioned that 25 years ago I worked with the Brinson Group which used Marc Faber as an advisor, and back then “risk adjusted return” was a pretty important concept. I actually think it was Tactical Asset Allocation. You look at all the asset classes and sub classes and invest with the combination of lower risk good return characteristics. Missing art now.

    If not a missing art, all these funds would have left the crap selling at infinite multiples of either earnings or revenues and moved to PM which I think given the monetary situation globally, and economic situation, PM have to be dirt cheap using any metric.

    we do have to respect the advisers who knew the Fed would inflate stocks and bonds beyond belief, and then when those advisers get out timely and into metals, a double tip of the hat.

    Bigger tip of the hat if they admit they know they are buying crap but they have to play the absurd monetary policy.

    1. BTW–AMZN market cap today is 236 billion, oops 237 now-increased a billion while I was typing. 20x cumulative earnings (using Dave’s chart). Or 377 times the last 4 years earnings.

      even in its earnings peak year of 1.15 billion, that would be a 200 PE.

      Other than revenue growth, its hard to find a metric that is exciting. Give them props for revenues growth with a bunch of loss leaders, and being able to sell the strategy to the 2300 fund managers.

  2. Most of the retail investors that trust different funds with their hard earned money without doing due diligence are gullible dumbasses.
    “Fool me once shame on you- fool me twice shame on me”

    Dave we have to be grateful to Bezos for creating such a nice bubble for us to short!

  3. Dave,
    A large part of the problem is the whores that pass themselves off as “independent” accounting firms. They are all bought and paid for by the companies they are hired by. I worked for a big eight accounting firm in the 70’s and it was apparent then. I shudder to think what is now. I could tell stories about these currupt asses for hours, but I’m sure you are well aware.

  4. I have some color to add on accounting firms.

    In 2009 when FAS107 changed to allow banks to do whatever they wanted to do it was done thru Congress giving an ultimatum to the accounting board. Not sure what the threat was, but the change came quick.

    Remember Congress is owned by the banks.

  5. Jeff Bezos is just another bozo of The Great Red Dragon. The real title to much of what he pretends to own stays with the Snakes In Suits. It’s been that way for over three hundred years. Remember that these people pay their agents very well, until the time comes they don’t need them anymore. Capital Group (American Funds) is one of these agents, with $17 billion at stake in Amazon alone. If you ever wondered what they spend it own, this will give you some idea why they lie and steal from so many.
    http://www.phoenixnewtimes.com/arts/10-most-expensive-houses-for-sale-in-metro-phoenix-right-now-6574614

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