Of IPOs, DotComs and other Gigaflop investments

If you're thinking of investing in some sort of new tech IPO, DotCom business or other risky financial transaction, let me offer you a bit of advice first. Don't do it. Save your money. Oh sure, you'll see your friends jump in and blow a wad of cash on some tech thingy or other and they might make a bit of money but the chances of that are pretty slim. Why? They have no hard assets nor do many of them produce anything tangible. You know, the stuff that makes a company real? Real estate, desks, chairs, vehicles, software, hardware or some sort of widgets produced by the company.

Why are hard assets so important to a company and why should you care?

Think about it for a moment without allowing yourself to be caught up in a frenzy of the old "Everyone else is doing it" mentality.

If you look at tech companies like HP, IBM, Dell, VMware, Cisco, Google, Symantec and many others, there's a common thread: Assets. They develop software, operating systems or hardware. They also have distribution channels for those products. They are real companies with real assets behind them.

Now, think about companies that have no such assets, such as certain social networking companies or sites that simply provide information. They have a website. How much are you willing to invest in a website?

It's like taking a government off of the "Gold Standard." It makes your currency weak. You have nothing to back it up.

And, please don't talk to me about potential. You can't predict anything based on potential. You can't invest in potential. And, you sure as heck can't eat potential. Potential is nothing. It is zero. That's what it's worth in money too. Zero.

A lot of people have told me, "Look at Facebook, it's worth billions." Really? How? It's a website where people connect with friends, family and the random hookup. Don't be tricked folks. It's value is only in the eye of the beholder. There's not a penny's worth of actual value.

Remember the DotCom bubble and burst of 1999/2000? Look back at the companies that caused it. No assets. They were websites. But, boy were they hot. IPOs were through the roof and their stocks went nuts. That is until people realized that there were no assets, no products and no value.

Don't let it happen again.

If you want to invest your hard-earned dollars, invest in something with substance such as the aforementioned companies and others with real assets and real products. Let the DotCommers empty their bank accounts. Yes, a few people will make a little money but they'll leave it in too long and lose it.

I hope that the lessons of the last decade will help you keep your money. There will always be the rainbow chasers and the easy money types who try to convince you to part with your dead Presidents. Don't do it. It's a trap.

The bottom line is that if you can't move hundreds of thousands of stock shares, your life's savings of a few thousand dollars will be gobbled up by the machine and you'll be a lot worse off for trying to play the game. Please remember the fine print, when you listen to someone trying to convince you to part with funds becaue they've been so successful: Results not typical. Invest at your own risk.

I'm sorry (not really) to burst your bubble (pun intended) but you have to be smart about your investments and cognizant of the risks. You're probably going to lose your money. It's like gambling at a casino, you have all the risk and the odds are in favor of the house--always.