It's getting on towards November — election time! And it's Class Clown vs. Mechanized Altar Boy. The Ultimate Fight.

Back in the summer of 1998, the Taipan team sat together, Nostradamus-fashion, to assess what the future had in store for us. One of the predictions we published in the Special Fall "Profit from the Future" issue was:

Bush Returns to the White House. Only this time it'll be George W. Bush, Jr. — the tax-cutting governor of Texas. An unexpected by-product of Asia's economic woes will be a lack of foreign funding for Al Gore's campaign to succeed Clinton. Able to outspend Al by a huge margin, Bush will coast into the White House. But like Dad, he'll be a one-term president — for exactly the same reason. For it'll be George Jr.'s misfortune to preside over the first recession in ten years — one so deep that it'll make voters yearn for the good ol' Clinton years and, in 2004, return to office none other than Al 'Show Me the Money, Especially If It's Foreign' Gore.

The jury — that's you, the American voter — is still out on the first part of our prediction. I hope it comes true, not just because I'd like to see "my guys" be right and Dick Cheney as VP. (I'm really just praying for someone to shut off the mantra of "my wife Tipper, who's here today"...)

But I do think there's reason to believe that the second part of our prediction — the one prognosticating a recession — might come true sooner rather than later.

The main role in that recession will be played by yesterday's Internet wunderkinder. Because like prodigies everywhere, they'll have to face the real world sooner or later. And let's face it: there's nothing more pathetic than a 35-year-old wunderkind. (Even Doogie Hauser, M.D., at some point is just another middle-aged doctor playing golf on Wednesday afternoons and stewing over his malpractice insurance premiums...)

For the Internet companies, the process of maturation has already started. One after the other, it's becoming clear that being a middleman or advertising carrier can only get you so much. The brick-and-mortar businesses that've added e-commerce to their infrastructure are nipping at the heels of the Internet Babies.

Amazon.com, still one of the most compelling business models on the Net, paid US$1.775 billion dollars for US$1.15 billion in revenues in the first two quarters of 2000. (In other words, they lost US$625 million!) The reason: not having a real-world storefront means you don't have to pay for dressing the windows. True. But you're still in for real-world warehouses; shipment facilities; buyers; marketers; customer service reps; marketing. In short, each and every cost item that has always stood between you and making a profit in business.

And since Amazon is really just a discount retailer, there's only so much they can make on products they don't manufacture. Let's take an example. My own book, The Secret History of the Sword (forgive the shameless plug), normally retails for US$20. A retailer pays the publisher, CFW Enterprises, about US$8 per copy. At the suggested retail price, the seller would make US$12.

But Amazon's pitch is to give discounts on the retail price. So the book sells for US$18 on their site. Amazon's margin just went down to US$10 per book. But part of their strategy is to reward affinity programs with a premium — 15% of the sales price. So if you log on to www.swordhistory.com and follow the link to Amazon, Amazon will have to pay another US$3 to the affinity partner. Which in turn reduces the margin to US$7... which then has to pay for the programmer, the techno geeks, the customer service rep, warehouse space, staff and everything else.

(Meanwhile, if you buy the book directly from CFW, the publisher's margin is about US$15 per volume sold...)

But crisis spells opportunity.

And we at Taipan have been translating crisis into profits for over 12 years now.

So check your cellular phone's batteries, set your broker on speed dial, put up your feet and get ready for another issue full of moneymaking opportunities.

Cordially yours,

J. Christoph Amberger
Publisher, Taipan

P.S.: We're currently preparing the 2001 Forecast Issue, a 100+ page affair you can expect in late December. We've called on all the resources in our vast network. This, despite its US$49 cover price, is a free benefit of your Taipan membership. Check your address label to make sure your subscription status is still current. It would be a shame to miss this one!