The “Bank of Amazon” shouldn’t happen

In 1999, I lived in Great Falls, Virginia, working for Freddie Mac. Many of my neighbors were part of the “dot-com” boom. One night, one of my neighbors (who was then a millionaire on paper from his company that built websites) and I went down to the local pub, where we met one of his “dot-com” friends. From what I could tell, neither of their companies was even close to making money, yet their companies’ stock prices were soaring.

Meanwhile, at Freddie Mac, which had a net profit of billions, my stock had dropped quite a bit. Back then, everyone was using the terms “new economy” and “old economy.” My friends at the pub were in the new economy, while I was in the old one. I listened to both men talk about cash burn rates, using their stock to purchase or fund other companies that also were bleeding red, and other things that just didn’t compute. After a while, I said to them, “It is really amazing that neither of your companies is even close to making a profit and yet, your stock prices are up 60% while my company, Freddie Mac, makes lots of money and my stock is down 20%. How does a guy like me get out of the old economy into the new one?” I seriously meant it. My buddy’s friend asked me what I did, and I told him that I was in finance, specializing in mortgages. The guy nodded his head with the confidence of a man who held the keys to the universe and said to me, “Don’t worry, there will be a place for people like you in the new economy.” I asked him to elaborate. He said, “We still need, you know, people who know stuff.”

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