Large businesses on Net are designed to be unprofitable. If principals in a startup Net business must earn US$100,000 to US$400,000 a year, that money must come from investors. Everyone from CEO to janitor must have large blocs of stock in a Net company. When that company goes public, employee stock usually destroys share price. Who takes loss? Investors.

The investors expect a greater fool to absorb insider selling and take share price higher. In a few instances this happens. In most cases, IPO buyers have proven to be greater fool. The mistake has been repeated so often that many investors are wary of Dot Com stocks.

The problem isn't glut of Dot Com IPOs entering Market. Dot Com has become terminal because of permanent non-profitability and insider selling. The evolution of Net won't rescue these failing Dot Com companies.

Few Dot Com technology companies can keep on forefront of technology for very long. They will have a brief period of excellent revenues and then they will fade. Dot Com distributors, particularly niche distributors, can survive and prosper. The secret is to make more money than you spend.

Here are my five rules for making more money than you spend with a Dot Com Distribution Company. 1. Keep your overhead down. This means modest salaries. It means few perks. The company must have a strong controller. 2. If you must give away blocs of stock, require that they be pooled and vaulted along with your insider stock. 3. Incorporate in a tax haven. Operate from a country that doesn't tax foreign-source income. If you are a Canadian citizen, you operate tax free. If you are an American and keep your salary below US$70,000, you operate tax free. 4. Contract reliable overnight shipping services in States, Canada and Western Europe. Keep regional inventories adequate to meet expected demand. 5. Target your buyers on Net. In San Francisco Bay Area, I assume all Dot Com companies advertising on radio are doing it to create demand for their IPOs. It can't be to sell their product.

I think Dot Com IPOs are dying. Dot Com technology companies will find it harder to attract IPO investors. Well-run Dot Com distribution companies will survive and prosper. However, Net investment interest is going into a period of major decline. The Lemmings are looking for a new cliff.

To contact author: Visit Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit Global Village Investment Club Website: [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]

14. The Rockford Short Sale: An investment firm buys shares and takes physical delivery of stock certificates. They replace real share certificates with counterfeit share certificates. Next they sell real shares back into Market and repeat process. This practice does wonders for their balance sheet. The tactic was popularized in Rockford TV Series. It's been done in Asia with NYSE shares.

15. The Tax Haven Bank Short Sale: Small (usually Caribbean) banks act as agents for their clients unwilling to reveal their identity. The client wants to buy stock. The bank doesn't buy stock on behalf of client. They simply show sale within bank's accounting system. This practice extends to gold etc.

16. The Lost Certificate Short Sale: Client requests share certificate. Broker sends it certified to slightly wrong address. It's returned to broker. Using certified receipt broker claims client has share certificate. A year is spent in proving it never arrived. Meanwhile broker has share certificate and can use it to cover other short sales. This happened to me in Vancouver.

17. The Margined Short Sale: Buyer buys stock on margin. They can't take physical delivery of their share certificates. The broker sells margined account non-existent stock (a short sale).

18. The Takeover Short Sale: Brokers add non-existent stock into a takeover with stock transaction. The buyer pays for non-existent shares. The short seller gets cash or stock in buyers company.

19. The Attrition Short Sale: For OTC stocks about 3% of beneficial owners of stock disappear each year. They die, forget they own stock, etc. Brokers can safely sell short 3% of float each year relying on fact that beneficial owners will never claim their stock.

20. Counterfeit Stock: Professionals regularly send counterfeit share certificates to Transfer Agents. A surprising percentage are accepted as real share certificates. The result is professional effectively has sold short shares involved in certificate.

21. Issue Depository Receipts without holding stock and sell Depository Receipts.

22. The Warrant or Option Short Sale. Buyer holds right to exercise warrants or options, but doesn't do so. Instead, they sell short stock and use options or warrants as insurance. This was popular among VSE underwriters in 1980s-1990s

23. Reg S Short Sale. Same format as Warrant or Option Short sale, but using cheap Reg S stock. The short seller is exposed for one year.

24. The Lending Short Sale. This was used by guy who introduced me to business. You offer to lend 90% of face value of stock to borrower for a long period of time. Your interest rate is better than that of a bank. You take in stock and sell it. You lend 90% of proceeds from sale. You are now short stock. You collect your interest payments until borrower defaults on loan.

To contact author: Visit Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit Global Village Investment Club Website: [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]