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  • Amazon first hit the public markets in June of 1997 as a humble online book retailer,

  • but it didn't stay that way for long.

  • They now control 40% of U.S e-commerce, 40% of the cloud-computing industry and they even

  • operate a major Hollywood production studio,

  • If you had invested just $1,000 dollars in Amazon back in 1997, that investment would

  • have been worth over $1.2 million dollars in August of 2018.

  • That's a whopping 120,000% profit in 21 years!

  • Every investor dreams of getting in on the ground floor on a success story like this.

  • But if buying low and selling high is the touchdown, most of the investment world is filled

  • with people fumbling the ball left and right.

  • Thankfully failure is often the greatest teacher so let's see what lessons we can learn from

  • 5 of the stranger fad investment crazes in recent history!

  • It's 1993, and while I was doing the Running Man toWhoop, There It Is"

  • The Ty Toy Company launched its newest creation: a deliberately under-stuffed toy animal called a beanie baby!

  • Flash the Orca and his 8 original compatriots showed up on shelves and quickly found themselves

  • in the midst of beanie-mania.

  • There were beanie baby magazines and scores of busted counterfeit rings!

  • One couple even had to divvy up their beanie baby stash before a judge as a part of their

  • divorce settlement.

  • This particular craze is unique because it was the result of a carefully crafted strategy

  • by the toy company itself! Ty Warner, the eccentric billionaire owner proved himself

  • a master manipulator of supply and demand.

  • He refused to sell large orders to big box stores, instead only selling small, controlled

  • amounts to independent retailers.

  • New versions would get retired only a few months later, prompting buyers to panic and

  • rush the stores.

  • But Warner knew the bubble wouldn't last and in 1999 the company promptly announced

  • they were discontinuing.

  • And while Ty himself won out out to the tune of a few billion, many adults who bought in

  • lost their heads and their wallets, sometimes spending thousands for a single toy.

  • Bottom line: Collectibles as an investment class are extremely volatile.

  • Only collect stuff you truly love for its own sake.

  • Style guru Tim Gunn once called the Croc shoe a “plastic hoof.”

  • And while your fashionista cousin might have wanted to light them on fire, investors got

  • pretty fired up when they started noticing some massive numbers.

  • In September of 2006 the Crocs company IPO'ed around $17 per share.

  • Just 18 months later, the stock had quadrupled to more than $68 a share.

  • But then came the great recession and share-holders found themselves crying into their clogs as

  • the stock bottomed out at a dismal $1.21 a share.

  • And while it has recovered somewhat since then, thanks to a very important british toddler

  • named George, it's never even come close to its initial heights.

  • So remember, explosive growth, while exciting, is more often than not a major red flag of

  • unsustainability.

  • Speaking of explosive growth, a beloved regional donut chain called Krispy Kreme decided in

  • the late 90s to go public and start expanding across the nation.

  • Under the ambitious CEO Scott Livengood, the company went from just 95 stores in 11 states

  • to 367 stores in 38 states.

  • In just two years their reported net revenue skyrocketed by 442%.

  • At one point, the number of donuts they made per week could stretch from New York to L.A.

  • Krispy Kreme artifacts were even added to the Smithsonian museum!

  • But it wasn't long before cracks started to show up in the icing.

  • It started with some low earnings reports, and in 2004 an SEC audit accused the higher-ups

  • of channel-stuffing.

  • That's when a company forces unneeded product on stores to inflate sales numbers.

  • After it was revealed that their profit reports were off by around $25 million in the wrong

  • direction, the stock lost around 80% of it's value and CEO Livengood was promptly booted.

  • So don't forget, competent leadership really matters!

  • And if the numbers look too good to be true, there might not be any real dough beneath

  • the glaze..

  • Funnily enough, that Krispy Kream CEO famously blamed our next entry for his company's

  • demise.

  • In 1997 Dr. Atkins' New Diet Revolution became a New York Times bestseller and remained there

  • for five years.

  • At the height of it's fame, 1 in 11 american adults reported themselves as following a

  • low-carb diet.

  • So it seemed to make sense that Atkins Nutritionals, was poised to profit big from their proprietary

  • line of low-carb snacks and shakes.

  • But the famous founder died in 2003 following complications from a fall.

  • Probably didn't help when it came out he also had a history of congestive heart failure

  • and hypertension.

  • By the mid two thousands, the diet had run its course and in 2005 they filed for Chapter

  • 11 bankruptcy after reporting a loss of $340 million.

  • Even though the company is still around, it's become something of a hot potato, or sorry...meatball...changing

  • hands numerous times.

  • Apparently it's current owner has been trying to sell it since 2015, with no takers.

  • Even though the low-carb movement is still around, cyclical industries like dieting are

  • notoriously fickle and no place to look for long-term returns.

  • Speaking of carbs, let's look at a “healthieralternative.

  • An apple a day keeps the doctor away, right?

  • And in the 90's investors were hoping the Snapple brand would add a healthy boost to

  • their portfolios.

  • Their wholesome-feeling branding combined with a funny, unorthodox spokeswoman nicknamed

  • The Snapple Ladyled to an all-out takeover of the beverage market.

  • But when the company went public, most of the money raised by the offering wasn't

  • put to work growing the business but rather went to pay off debt and line the pockets

  • of their executives.

  • When the Quaker Oats company purchased Snapple to the tune of $1.7 billion in 1994, a lot

  • of analysts considered it way overpriced.

  • And it turned out they were right.

  • It was re-sold in 1997 for just $300 million.

  • Equating to a loss of roughly $2 million/day.

  • Snapple eventually merged with Dr. Pepper brand and is trying once again to capitalize

  • on their absurdist humor.

  • But people read ingredient labels now and turns outthe best stuff on earthis

  • basically as sugary as its big-soda counterparts.

  • Even the best branding on earth can only float a company for so long.

  • TV and the internet are filled with people trying to convince you to hop on bandwagons

  • left and right.

  • And while investing is a key to growing wealth, hopping from fad to fad is fraught with danger.

  • Even seasoned experts get it wrong more often than not.

  • So if you're really not the buy-and-hold type, don't let FOMO get the best of you!

  • Start small, commit to becoming a ruthless researcher and strap in for a wild but hopefully

  • fun ride.

  • And that's our two cents!

  • America From Scratchis a PBS Digital Studios show that asks "what might the US be like if it was founded today?”

  • It tackles big questions: What if there were no states? Should we lower the voting age?

  • Should we colonize Mars? It's like the best civics class ever.

  • Subscribe to America from Scratch at the link in the description below.

  • Have you ever invested in a fad? Or are there some that we missed? Let us know in the comments!

Amazon first hit the public markets in June of 1997 as a humble online book retailer,

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5種奇怪的投資瘋狂! (5 Strange Investment Crazes!)

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    Capalu Yang 發佈於 2021 年 01 月 14 日
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