We’ve all had an extraordinary change happen during our lives. If you’re reading this, you remember life before the internet. I think it’s kind of like life before and after the invention of the radio. Fast adoption and big changes to everyone. But with the internet, more so. It’s hard to think of an industry that has not undergone tremendous change because of the web. Entire business models (Google, Amazon.com) have been created and other ones have been all but destroyed (daily papers, electronic retailers).
The crazy thing is, the change seems to be speeding up. It’s sobering to realize that ubiquitous Facebook and Twitter are both (effectively) less than five years old. The political change sweeping through the Middle East was heavily aided by organizing and reporting over the internet. The Tea Party movement is less than two years old, and started with bloggers on the web.
I have said before, and I continue to say, we are not smart enough to know what the internet will mean. It can bring change for good or ill at lightning speed. For investors it’s of course changed many companies and industries. And it’s brought about an important question to ask. If you’re looking at a stock and asking the important questions like “How high is the price compared to earnings?” and “How strong is the balance sheet?” you must also at least ask the question “How might the internet affect this stock in the next few years?”. Possibly in ways we wouldn’t suspect. But it’s an important question to ask about each stock we own. As Bob Dylan told us (before there was an internet) “The times they are a changing” and changing fast..