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:
This 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: