6 ms·

Shares already recovering, loss was "better" than expectations, a lot of their spending is on important business stuff (warehouses, kindle, web properties) that

Shares already recovering, loss was "better" than expectations, a lot of their spending is on important business stuff (warehouses, kindle, web properties) that will yield returns later. In other words, revenue is nearly identical and there's no profit, presumably because of these new things. Amazon is one of the few very large companies that has extremely high potential for growth. I made an OK amount of money buying them after post-earnings panic and selling 1 day to 60 days later this year and last. If it ever goes back down to 190 I might throw some % of my long term money their way. (100% of my long term money, which is about $1000 every two weeks, is currently just going to TGT, another long term big company that already has a dividend but still has plenty growth potential) ((90% of my short term money, on the other hand, was buying 10K shares of OCZ at 4.90. Now its at 1.36. Ouch!))

thetabyte 14y ago
Dumb question, as I literally know nothing about stock or savings: isn't it generally a bad idea to put 100% of your long term money in any one place?
- simonsarris 14y ago
  Sorry, I'm only referring to new money: every 2 weeks I put $1000 into my brokerage account to buy whatever long term stocks/funds on my watchlist look good that week. Lately that's been nothing but Target, but it might switch to nothing but Amazon next month, or 50% AMZN 50% something else, and so on. So it's just the new money coming into the account getting divvied up, but doesn't reflect the actual holdings of long term account as a whole (which might only be 20% TGT and 80% other stuff)
  - Retric 14y ago
    You might want to consider buying 2000$ every 4 weeks depending on your transaction fees.
    - MichaelApproved 14y ago
      $2,000 is better but even that's rough. Consider you have $7 commission. With each $1,000 purchase, you have to earn 0.70% just to earn back that $7. If you sell that $1,000 purchase, it'll cost another 0.70%, totaling 1.4% in fees. Based on your strategy you're probably incrementally purchasing and the selling in bulk so the sell commission isn't as damaging but losing 0.70% of an investment right off the bat makes it hard to be profitable. Even half that amount, if you increase your lots to $2,000, is painful.
- gojomo 14y ago
  That's a smart question. I hope simonsarris means 100% of his incremental dollars (new savings), and that he already has other other 'long-term dollars' in a broader range of investments.
- rorrr 14y ago
  Yes, it's a horrible idea. That's basically playing a lottery, since unexpected things happen all the time, successful companies go out of business (Yahoo, and AOL looked pretty damn good 10 years ago).
  - gabemart 14y ago
    It's a good idea if and only if you believe your personal access to information and ability to perform analysis is greater than the aggregate capability of the market as a whole.
  - confluence 14y ago
    Yahoo! and AOL did not look good 10 years ago. They were selling at insane P/E ratios and had absolutely no way of making good on those numbers. If you invested in them - you'd be a moron. Unexpected things really don't happen very often and black swan risk is way overblown. When things blow up - they're a long time coming - you just didn't see the data.
- confluence 14y ago
  Isn't it stupid to just to have one job, one car, be a citizen of one country, have one house and one family. I mean really - one must diversify. What would you do if you lost any one of those? No, it's not stupid to concentrate wealth. Problems only arise when you do it stupidly, like buying too big a house, being part of the wrong family, living in the wrong country or buying an unsafe car. Diversification does not reduce risk but it cuts your returns in half. All correlations go to one in a crisis and you can't hedge the end of the world. Note: To all downvoters - putting all your eggs in multiple baskets does not protect you from an asteroid impact any more than a person with all eggs in one basket. People who think diversification makes them safe are frankly wrong.
  - mylittlepony 14y ago
    Diversification does reduce the risk of losing it all, as it changes the probability distribution (https://en.wikipedia.org/wiki/Probability_distribution https://en.wikipedia.org/wiki/Probability_distribution). It also reduces the probability of winning a lot, but people like stability.
    - confluence 14y ago
      Only if the assets are uncorrelated and independent. Otherwise diversification often gives a false sense of security with higher systemic risk (see GFC).
      - Someone 14y ago
        Not "Only if the assets are uncorrelated and independent", but "As soon as the assets are not 100% correlated". That is a huge difference. The dot com bust affected (almost) all tech stocks, but they didn't all go bankrupt.
  - mikeash 14y ago
    I assume you don't bother to back up your data either.
    - 14y ago
ahi 14y ago
>a lot of their spending is on important business stuff (warehouses, kindle, web properties) that will yield returns later This has been the Amazon story basically since founding. At some point, a company needs to yield real returns on their investments.
- lotsofpulp 14y ago
  Wal Mart's profit margins are only a few percentage points, maybe 5% if they're lucky. That's the nature of retail. There definitely seems to be some utility and efficiency gains being made by Amazon. I doubt investors are seeking the kind of explosive growth or profits seen in tech companies like Apple, but rather a steady gain in market share from companies like Wal Mart, Best Buy, and whatever else you can deliver to a home.
  - icefox 14y ago
    Hmmm I wouldn't normally say a P/E of 272.63 is a bet on slow steady growth.
    - lotsofpulp 14y ago
      I agree, but it seems to be a fundamentally different scenario than other companies with sky high P/Es such as LNKD and FB. While LNKD and FB have yet to figure out how to monetize their product, AMZN has a relatively simple (and demonstrated) growth plan. I think many investors are simply betting that Amazon will be able to capture significantly more of the retail market, and/or new revenue streams from places like cloud services.
      - gsmaverick 14y ago
        Are you writing this comment from 2008? Both LNKD and FB have robust revenue streams that are growing; they have figured out how to monetize their products and they are doing it quite well.
    - codeonfire 14y ago
ChuckMcM 14y ago
Back during the dot.com days Yahoo Finance had a game where you could "play the market." (take note entrepreneurs this could be a lifestyle business :-) For each group you got $100,000 to invest and you were in competition with other people in your group for best return. I lost about $75,000 on Amazon stock :-). However, my actual portfolio has done ok with Amazon so I'm not complaining.
- gareim 14y ago
  I did something similar to this in high school a few years ago. I ended up losing to another team in the class that bought Gamestop and other related stocks. I stuck with stocks like Intel and GE. If the game had ended even a two weeks later, I would have won. These games teach high school students very little about investing, especially long term. The other team's strategy was simply "I play video games and I like Gamestop, so let's buy Gamestop!".
  - pyoung 14y ago
    For non-professional investors, the "so let's buy Gamestop" strategy isn't necessarily a bad strategy. Assuming you are putting the bulk of your investments in low cost index and mutual funds, using a little bit of you savings to play the market by investing in companies that you are familiar with can be productive. I've had some big hits and some big misses, but overall, my picks have matched the pace of my index/mutual funds.
- Bry789123 14y ago
  Our school once had this competition as well. Given the short time period of these competitions, you have to buy high beta stocks in order to do well, or very low beta if the market is falling overall. In order to win this a friend and I decided to team up and split the winnings. Basically what we did was to get one of us to buy the riskiest investments that we could (penny stocks, other low cap stocks, risky derivatives etc.) and the other would short them. This way over the course of the few weeks one of us would be dead last, and the other far ahead. Worked like a charm.
theatraine 14y ago
They're also building up their human capital. They've recently been hiring quite a lot of engineers, which will certainly yield later returns. I'm basing this on my own experience with them, as I got a job offer, spoke with several recruiters, and toured their campus, and now live in Seattle.
ronaldj 14y ago
Oh man! I lost a bunch on OCZ too. :\

thetabyte 14y ago

Dumb question, as I literally know nothing about stock or savings: isn't it generally a bad idea to put 100% of your long term money in any one place?

simonsarris 14y ago
Sorry, I'm only referring to new money: every 2 weeks I put $1000 into my brokerage account to buy whatever long term stocks/funds on my watchlist look good that week. Lately that's been nothing but Target, but it might switch to nothing but Amazon next month, or 50% AMZN 50% something else, and so on. So it's just the new money coming into the account getting divvied up, but doesn't reflect the actual holdings of long term account as a whole (which might only be 20% TGT and 80% other stuff)
- Retric 14y ago
  You might want to consider buying 2000$ every 4 weeks depending on your transaction fees.
  - MichaelApproved 14y ago
    $2,000 is better but even that's rough. Consider you have $7 commission. With each $1,000 purchase, you have to earn 0.70% just to earn back that $7. If you sell that $1,000 purchase, it'll cost another 0.70%, totaling 1.4% in fees. Based on your strategy you're probably incrementally purchasing and the selling in bulk so the sell commission isn't as damaging but losing 0.70% of an investment right off the bat makes it hard to be profitable. Even half that amount, if you increase your lots to $2,000, is painful.
gojomo 14y ago
That's a smart question. I hope simonsarris means 100% of his incremental dollars (new savings), and that he already has other other 'long-term dollars' in a broader range of investments.
rorrr 14y ago
Yes, it's a horrible idea. That's basically playing a lottery, since unexpected things happen all the time, successful companies go out of business (Yahoo, and AOL looked pretty damn good 10 years ago).
- gabemart 14y ago
  It's a good idea if and only if you believe your personal access to information and ability to perform analysis is greater than the aggregate capability of the market as a whole.
- confluence 14y ago
  Yahoo! and AOL did not look good 10 years ago. They were selling at insane P/E ratios and had absolutely no way of making good on those numbers. If you invested in them - you'd be a moron. Unexpected things really don't happen very often and black swan risk is way overblown. When things blow up - they're a long time coming - you just didn't see the data.
confluence 14y ago
Isn't it stupid to just to have one job, one car, be a citizen of one country, have one house and one family. I mean really - one must diversify. What would you do if you lost any one of those? No, it's not stupid to concentrate wealth. Problems only arise when you do it stupidly, like buying too big a house, being part of the wrong family, living in the wrong country or buying an unsafe car. Diversification does not reduce risk but it cuts your returns in half. All correlations go to one in a crisis and you can't hedge the end of the world. Note: To all downvoters - putting all your eggs in multiple baskets does not protect you from an asteroid impact any more than a person with all eggs in one basket. People who think diversification makes them safe are frankly wrong.
- mylittlepony 14y ago
  Diversification does reduce the risk of losing it all, as it changes the probability distribution (https://en.wikipedia.org/wiki/Probability_distribution https://en.wikipedia.org/wiki/Probability_distribution). It also reduces the probability of winning a lot, but people like stability.
  - confluence 14y ago
    Only if the assets are uncorrelated and independent. Otherwise diversification often gives a false sense of security with higher systemic risk (see GFC).
    - Someone 14y ago
      Not "Only if the assets are uncorrelated and independent", but "As soon as the assets are not 100% correlated". That is a huge difference. The dot com bust affected (almost) all tech stocks, but they didn't all go bankrupt.
- mikeash 14y ago
  I assume you don't bother to back up your data either.
  - 14y ago

ahi 14y ago

>a lot of their spending is on important business stuff (warehouses, kindle, web properties) that will yield returns later This has been the Amazon story basically since founding. At some point, a company needs to yield real returns on their investments.

lotsofpulp 14y ago
Wal Mart's profit margins are only a few percentage points, maybe 5% if they're lucky. That's the nature of retail. There definitely seems to be some utility and efficiency gains being made by Amazon. I doubt investors are seeking the kind of explosive growth or profits seen in tech companies like Apple, but rather a steady gain in market share from companies like Wal Mart, Best Buy, and whatever else you can deliver to a home.
- icefox 14y ago
  Hmmm I wouldn't normally say a P/E of 272.63 is a bet on slow steady growth.
  - lotsofpulp 14y ago
    I agree, but it seems to be a fundamentally different scenario than other companies with sky high P/Es such as LNKD and FB. While LNKD and FB have yet to figure out how to monetize their product, AMZN has a relatively simple (and demonstrated) growth plan. I think many investors are simply betting that Amazon will be able to capture significantly more of the retail market, and/or new revenue streams from places like cloud services.
    - gsmaverick 14y ago
      Are you writing this comment from 2008? Both LNKD and FB have robust revenue streams that are growing; they have figured out how to monetize their products and they are doing it quite well.
  - codeonfire 14y ago

ChuckMcM 14y ago

Back during the dot.com days Yahoo Finance had a game where you could "play the market." (take note entrepreneurs this could be a lifestyle business :-) For each group you got $100,000 to invest and you were in competition with other people in your group for best return. I lost about $75,000 on Amazon stock :-). However, my actual portfolio has done ok with Amazon so I'm not complaining.

gareim 14y ago
I did something similar to this in high school a few years ago. I ended up losing to another team in the class that bought Gamestop and other related stocks. I stuck with stocks like Intel and GE. If the game had ended even a two weeks later, I would have won. These games teach high school students very little about investing, especially long term. The other team's strategy was simply "I play video games and I like Gamestop, so let's buy Gamestop!".
- pyoung 14y ago
  For non-professional investors, the "so let's buy Gamestop" strategy isn't necessarily a bad strategy. Assuming you are putting the bulk of your investments in low cost index and mutual funds, using a little bit of you savings to play the market by investing in companies that you are familiar with can be productive. I've had some big hits and some big misses, but overall, my picks have matched the pace of my index/mutual funds.
Bry789123 14y ago
Our school once had this competition as well. Given the short time period of these competitions, you have to buy high beta stocks in order to do well, or very low beta if the market is falling overall. In order to win this a friend and I decided to team up and split the winnings. Basically what we did was to get one of us to buy the riskiest investments that we could (penny stocks, other low cap stocks, risky derivatives etc.) and the other would short them. This way over the course of the few weeks one of us would be dead last, and the other far ahead. Worked like a charm.

theatraine 14y ago

They're also building up their human capital. They've recently been hiring quite a lot of engineers, which will certainly yield later returns. I'm basing this on my own experience with them, as I got a job offer, spoke with several recruiters, and toured their campus, and now live in Seattle.

ronaldj 14y ago

Oh man! I lost a bunch on OCZ too. :\