Don't Monkey Around With an Unevolving Portfolio

It was 86 years ago today that Tennessee made a monkey of itself, arresting biology teacher John Scopes for violating the Butler Act by teaching the theory of evolution in a classroom. The trial, which drew attention to the line between scientific and superstitious thinking in many parts of the United States, featured a pair of American history's most famous lawyers. William Jennings Bryan, three times a candidate for President, represented the state of Tennessee, while Clarence Darrow, one of the all-time great civil liberty attorneys, represented John Scopes. The trial, which ended with a conviction for Scopes, earned the young teacher a $100 fine. The conviction was later overturned by the state's supreme court on procedural, and not constitutional, grounds. Scopes went on to be a geologist. Tennessee stayed Tennessee. In the modern world, several sectors of the economy have come under pressure to, essentially, evolve or die off, much like Darwin's theory would predict. With that in mind, here are four industries that Scopes might have suggested need to evolve or lose their place in the natural economy. Newspapers are dying off faster than Middle Eastern terrorists. Even before you factor in Gaddafi's kids and Osama Bin Laden, the newsprint industry was in a rapid death spiral. (If it were still Star Wars Day, one might say the entire industry was rapidly approaching the event horizon of a black hole.) The New York Times NYT is one media organization that is not going to take the decline of newsprint media sitting down. As Benzinga , the company saw its earnings cut in half last quarter, from $0.08 down to $0.04 per share. While the numbers are trending south, at least the company is trying. The NYT recently launched several digital-only subscriptions; a plan which, if it works, could bring the company a new revenue stream into the next decade. If not, NYT will need to regroup and change, or go the way of the old, gray dinosaur. Bankers are probably not far behind the aforementioned terrorists on the “to-guillotine” list being drawn up by some of the more radical elements in American politics. The industry has been under fire for managing to break the unbreakable American economy, resulting in a giant industry bailout — a balance sheet deficit that didn't keep bankers from demanding giant personal bonuses despite tremendous losses. After all, any time you can mess up that badly, you almost have to be rewarded for your creativity, financially, by the people whose lives you destroyed. It's the new karma, baby! So which banks need to evolve or die? How about the country starts with Bank of America BAC, Goldman Sachs GS, JP Morgan JPM, and Citigroup C. Even though all four banks paid back the entirety of their TARP funds, the entire industry ought to change their practices so they're never in a position to NEED a government bailout, ever again...or find themselves replaced by a national, government-run bank. The way things look now for the federal government's budget, there might not be a backstop, should the industry need one again. Another industry that is facing a change-or-die mandate is the book publishing industry. Writing and selling books has never been a terribly profitable enterprise, save for the few companies who could afford to stock shelves and wring profits out of sheer volume. Now that everyone and their mother has an E-reader, how long will it be before books as a print medium are completely replaced by books as an electronic medium? When that happens, will bookstores such as Borders BGP go out of business? Borders filed for bankruptcy protection in February. Will they evolve their business and stick around? Amazon AMZN even launched its own line of romance novels — basically, Twilight for 30-something women — and with its Kindle flying off the virtual shelf, the online giant is poised to move in to the book market like a Corleone in a casino. For years, smart folks have warned that the world was rapidly approaching “peak oil”. Peak Oil is, essentially, the point in time when the world maxes out its ability to extract fossil fuels from the Earth, and the production curve starts to trend south. Combine that decreasing supply with a rapidly growing developing world, and you have a recipe for high oil prices. Eventually, the theory posits, the demand so dwarfs the supply as to make oil a non-profitable form of energy. The International Energy Agency believes the world hit peak oil in 2006, which is precisely the last time most of us could afford to fill our gas tanks. If peak oil is indeed upon us, it would behoove the oil companies to find another way to produce energy for transportation, or they, too, will go the way of the dodo bird. Wouldn't it drive environmentalists insane to see BP BP and other oil companies swap over and become green, solar-based producers of energy?