There's a little discussion over at the Motley Fool web site about Blue Origin and Jeff Bezos (registration required). I thought that this little bit raised more questions than it answered:

...entrepreneurs such as Bezos, Branson, and Microsoft (Nasdaq: MSFT) co-founder Paul Allen -- who funded the winning SpaceShipOne in the X-Prize competition -- appear ready to provide the capital. That's good news for dozens of companies, from Lockheed Martin (NYSE: LMT) and Ball Aerospace (NYSE: BLL) to Orbital Sciences (NYSE: ORB) and SpaceDev. They're all likely to have a hand in our latest quest for the heavens.

Well, as the old test question goes, one of these things is not like the other three. Why Lockmart, Ball and Orbital? Why not Boeing? Or Northrop-Grumman?

How does the success of low-cost entrants benefit the stock of people operating at high costs, under the old paradigms? Maybe it does, but they certainly don't explain it. Simply saying that "they're all likely to have a hand" hardly makes for a useful (or credible) explanation. This kind of thing makes me question the wisdom of any of their other stock advice.

[Via Clark Lindsey]

I'm also no too fond of the phrase "our latest quest for the heavens". That type of wording carries the connotation that "this quest is the latest of our soon-to-fail endeavours". I'd prefer wording with a more positive connotation, such as "our current push into the heavens".

You have good reason to doubt their wisdom. In the '90s, the Fool pushed their pet theory about taking the lowest ranked Dow stocks and investing in them. They continued to tout this plan until the bubble broke. All of a sudden, they denied that it was their plan at all, just a concept, an idea, something to tinker with.

I had the same reaction of, "Why are they grouping the new guys with the old inefficient dinosaurs?' It seems they can't tell the difference: if it's 'space' it's 'space.' What a bunch of 'Fools'(?!)

I know The Fool doesn’t give an explanation, but I think I can. As it was with the DotCom’s so shall it be with space. Most investors will never take the time to explore the real endeavors a particular company is engaging in they’ll hear from a friend, or a friend of a friend that ABC Aero is going into the space tourism biz as well, and two day later even after the rumor is quashed, the stock will be up two points. Not that this is all bad. Look at Google, with little to show for it they have found themselves sitting on a pile of money. If the rising tide floats all the boats then those with good workable plan will eventually be successful. Working capital will also attract the big boys who have seen their profit margin fall as the military has shrunk. It’s then that the talent wars will begin. You might like that. Even if you are not affected directly it’s nice to see your friends boat float.

IN many industries you will see a "rising tide" lifting all boats type of phenomena. The reasons for this aren't entirely clear, but here's some ideas:

* company A can't fill all the orders, so company B gets some
* company Y doesn't want to source 100% from company A for various reasons
* company B works harder seeing company A being successful
* Company A,C,D need parts so they buy from B

all these ripple effects can drive up stock in the industry. Of course, as an investor it would be most profitable to buy only the best performing company, but that is very hard and risky to predict. Often, it is smart to buy a basket in the industry to cover the risk.

I should add that in this particular case, as in others, it does make sense to identify the dinosaurs that are potential asteriod targets and avoid investing in them.