Internet firms are dead investments

I agree:

Time Warner would rather keep their legacy old-media businesses like People magazine than hold onto one of the biggest Internet companies out there, AOL. And News Corp. is shaking up its MySpace business as it figures out its next steps. (News Corp. owns Dow Jones, publisher of this newswire.) Microsoft has spent billions on Internet strategy without a dime of profit. And even Google can’t seem to find any other business model other than the one they stumbled into when they bought Applied Semantics in 2001 that had a little piece of software called AdSense. And the new guys: Twitter and Facebook are still scrambling for profits despite blistering usage growth.

What about the nuts-and-bolts guys? Cisco, at 15 times earnings, trades in line with the S&P 500. Buy them when they start giving a steady dividend.

Let’s face it. Electricity greatly improved our quality of life. But I’m not going to get excited about buying a basket of utility companies. Same for the Internet. Can’t live without it, but can’t live with it (in my portfolio).

So what do we do?

In this economy, it’s back to the basics. Regardless of how you feel about $1 trillion in stimulus (with more probably on the way), the best growth is going to come from the companies that help us spend that stimulus.

There are no game changing Internet plays in the near future. There may in the energy sector. And even the auto sector.