Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
I just don't get AMZN
Old 01-31-2016, 10:01 AM   #1
Thinks s/he gets paid by the post
Htown Harry's Avatar
 
Join Date: May 2007
Posts: 1,516
I just don't get AMZN

Sales and profits are charted below for the 6th largest US company by market cap.

The P/E is positive for a change (hurray!) at about 800 to 1, according to one stock page.

The same page shows a price to book of 25 to 1.

I'm glad AMZN is only about 1.5% of my S&P index fund. At some point, the Bezos mystique will fade and the market will price Amazon more realistically.

__________________

__________________
No doubt a continuous prosperity, though spendthrift, is preferable to an economy thriftily moral, though lean. Nevertheless, that prosperity would seem more soundly shored if, by a saving grace, more of us had the grace to save.

Life Magazine editorial, 1956
Htown Harry is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-31-2016, 10:25 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,260
I agree.... it is always 'the potential'.... but if that potential is never realized then it should not be priced that it will...


The negative effect is that since they are being rewarded for taking the profit motive out of their business, the other business who have to compete with them on price have to cut their profits also, and they do not get a break.. it has a multiplying effect, not just Amazon's sales....


I remember back in 2000 I had a conversation with one of my subordinates.. he had invested a lot of money in EMC.... it has skyrocketed.... he was talking about how great it was etc. etc.... (remember, this was the internet bubble).... so I put the EPS, sales, etc. etc.... the normal easy to get financial ratios and compared that to our mega... we calculated that EMC would have to grow at 10% a year for more than 20 years to just catch up to mega.... I moved back to the states a couple of months later... a few years after that I got an email from him thanking me for that conversation.... he took his profits an invested them in more traditional stocks....


Now, I just looked and if you go from the middle of 2000 to the end of last year, mega is up 18% (but there were dividends over the years) and EMC is down about 75% (just started dividends a few years ago)....


Yes, at SOME point it will have to be priced right.... but for now it is not... kinda like Tesla and many others (Netflix?)
__________________

__________________
Texas Proud is offline   Reply With Quote
Old 01-31-2016, 10:45 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 2,357
I've avoided Amazon for that reason, OTOH "Markets can remain irrational for longer than you can remain solvent."
__________________
GrayHare is online now   Reply With Quote
Old 01-31-2016, 01:12 PM   #4
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 1,714
I am also an index investor and do not worry about these things.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 01-31-2016, 01:17 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,697
Quote:
Originally Posted by Htown Harry View Post
At some point, the Bezos mystique will fade and the market will price Amazon more realistically.
I'd like to agree with you on that --I really would--but I've been hearing that for about 15-20 years now.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 01-31-2016, 04:17 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,688
Quote:
Originally Posted by Htown Harry View Post
Sales and profits are charted below for the 6th largest US company by market cap.

The P/E is positive for a change (hurray!) at about 800 to 1, according to one stock page.

The same page shows a price to book of 25 to 1.

I'm glad AMZN is only about 1.5% of my S&P index fund. At some point, the Bezos mystique will fade and the market will price Amazon more realistically.

I think I know what Jeff Bezos is doing and I think his investors do as well, they are in it for the very long haul and the goal is to bankrupt most competition. By the time they are able to transform shopping so that everyone goes to Amazon for their shopping and viewing needs the prices will be able to escalate as the competition will have closed down as fast as small grocery stores that Walmart put out of business and now Walmart can leave those areas in safety forcing people into longer drives to the larger Walmart. It is the same strategy and I think personally, unless the economy collapses Amazon will continue to grow in market size as it continues to absorb a larger and larger portion of GDP.

Not I am not an investor in Amazon due to their lack of paying a dividend.
__________________
Running_Man is offline   Reply With Quote
Old 01-31-2016, 04:28 PM   #7
Full time employment: Posting here.
Ronnieboy's Avatar
 
Join Date: Feb 2008
Posts: 646
Quote:
Originally Posted by Running_Man View Post
I understand perfectly what Jeff Bezos is doing and I think his investors do as well, they are in it for the very long haul and the goal is to bankrupt most competition. By the time they are able to transform shopping so that everyone goes to Amazon for their shopping and viewing needs the prices will be able to escalate as the competition will have closed down as fast as small grocery stores that Walmart put out of business and now Walmart can leave those areas in safety forcing people into longer drives to the larger Walmart. It is the same strategy and I think personally, unless the economy collapses Amazon will continue to grow in market size as it continues to absorb a larger and larger portion of GDP.

Not I am not an investor in Amazon due to their lack of paying a dividend.
+1

I see this as the strategy too. It also helps that the millennial generation (and TBD generation) has been trained (grew up with) getting things on Amazon or via home delivery and it is the new normal.
I guess the real test (ongoing) will be to see if all the investors are willing to wait it out.
__________________
I don't want to spend my entire life at work. I deserve more. - Want2retire aka W2R
Ronnieboy is offline   Reply With Quote
Old 01-31-2016, 04:29 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,710
In is interesting that in retailing a leader can only last so long before it fails. Growing up in the 1950s Sears was the Walmart of the day, as well as the Amazon. It had big stores as well as a catalog business, and was by far the biggest retailer. in the 1970s their management lost it touch and the store started downhill, continuing until now. Montgomery Wards was also big and folded a number of years ago also both a retail and catalog merchant. (Recall that both started out as catalog merchant to sell to folks on farms using Railway express and later Parcel Post).
Sooner or later Walmart will get a bad CEO who lets chaos reign in the company like sears in the 1970s and it will begin to shrink faster)
Note interestingly back in the 1970s Sears credit cards were supplied regionally, and if you moved between regions.
__________________
meierlde is online now   Reply With Quote
Old 01-31-2016, 04:43 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,260
Quote:
Originally Posted by Running_Man View Post
I understand perfectly what Jeff Bezos is doing and I think his investors do as well, they are in it for the very long haul and the goal is to bankrupt most competition. By the time they are able to transform shopping so that everyone goes to Amazon for their shopping and viewing needs the prices will be able to escalate as the competition will have closed down as fast as small grocery stores that Walmart put out of business and now Walmart can leave those areas in safety forcing people into longer drives to the larger Walmart. It is the same strategy and I think personally, unless the economy collapses Amazon will continue to grow in market size as it continues to absorb a larger and larger portion of GDP.

Not I am not an investor in Amazon due to their lack of paying a dividend.

I agree that what you say appears to be their reasoning.... however, the cost of entry is low and if and when they start to raise prices to get a great profit (why do it if all you want is an ordinary profit) others will come in to take that profit down...

An example is Wal-Mart.... they had on TV where a WM came into a small town and opened one of their small food markets... the only other store closed down... now WM is closing down and the owner of the other store said they will be opening back up....


I think that Amazon is large enough that they should already be monetizing better than they are... heck, just getting an extra 1% return on sales would make a big difference...
__________________
Texas Proud is offline   Reply With Quote
Old 01-31-2016, 06:32 PM   #10
Full time employment: Posting here.
 
Join Date: Mar 2012
Location: seattle
Posts: 643
Anybody have any inside knowledge on the size of the future cloud market? Amazon does that too.

These guys think it will be big soon. "127 billion in the next several years"
Several, an indistinct term for sure.

http://www.bizjournals.com/seattle/b...gest-ever.html
__________________
bld999 is offline   Reply With Quote
Old 01-31-2016, 06:36 PM   #11
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,705
Can AMZN purchase the USPS?
__________________
target2019 is offline   Reply With Quote
Old 01-31-2016, 06:52 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,710
My guess is that Walmart is about where Sears was in the 1950s and 1960s. Interestingly Sears way back when also had a mail order department that was actually what founded the company, sort of an old time non electronic Amazon. But back then even the general big book catalog (about 3 inches or so thick) could not contain as much selection as amazon does today. My guess is we are about at peak WalMart as no one can stay the number 1 retailer for a long time. It is clear that the Super-Center market is about full in the US since towns that are large enough for one have one, but the size of town is important.
__________________
meierlde is online now   Reply With Quote
Old 01-31-2016, 07:07 PM   #13
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 2,257
Quote:
Originally Posted by bld999 View Post
Anybody have any inside knowledge on the size of the future cloud market? Amazon does that too.

These guys think it will be big soon. "127 billion in the next several years"
Several, an indistinct term for sure.

http://www.bizjournals.com/seattle/b...gest-ever.html
You may be right, but I don't know... I probably won't touch AMZN ever again...

I used to be in the "If I like their product, I will buy their stocks" phase, and bought AMZN years ago (2007?) at $70 (Very small amount with my "casino money (kind of cash you take to Las Vegas to have fun with one weekend.). I think P/E was very high then too, but it was definitely below 100. Anyway, I recently sold them for $610. The whole thing is totally absurd, don't you think? I believe stock markets run on not logic, but on sentiments/emotions/speculations. Cool stocks with full of potentials sore like eagles, regardless of their earnings.
__________________
tmm99 is online now   Reply With Quote
Old 01-31-2016, 08:53 PM   #14
Full time employment: Posting here.
 
Join Date: Mar 2012
Location: seattle
Posts: 643
Quote:
Originally Posted by tmm99 View Post
You may be right, but I don't know... I probably won't touch AMZN ever again...

...The whole thing is totally absurd, don't you think? I believe stock markets run on not logic, but on sentiments/emotions/speculations. Cool stocks with full of potentials sore like eagles, regardless of their earnings.
It is absurd, but as you point out, your trade conjured up real money, which is why we do this. How about Freeport McMoran? a big bet on oil nearly torpedoed them, they were a safe bet for years.

Talk about absurd, I considered shorting Krispy Kreme back about 1999 or whenever they ipo'ed. Didn't have the moxie in the end, and it would have been agonizing. A bet against sugar doughnuts? How could I go wrong?

With full conviction and decent timing it could have been a beautiful short, but I can't handle that long term pain, so I likely would have thrown in the towel anyway. [or got bought in] Your comment on sentiments and emotions, they can keep a doughnut aloft for a very long time.
__________________
bld999 is offline   Reply With Quote
Old 01-31-2016, 09:49 PM   #15
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 2,257
I just realized I spelled soar sore. Some kind of Freudian slip or what.


Sent from my iPhone using Early Retirement Forum
__________________
tmm99 is online now   Reply With Quote
Old 01-31-2016, 10:00 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,457
Quote:
Originally Posted by bld999 View Post
It is absurd, but as you point out, your trade conjured up real money, which is why we do this. How about Freeport McMoran? a big bet on oil nearly torpedoed them, they were a safe bet for years.

Talk about absurd, I considered shorting Krispy Kreme back about 1999 or whenever they ipo'ed. Didn't have the moxie in the end, and it would have been agonizing. A bet against sugar doughnuts? How could I go wrong?

With full conviction and decent timing it could have been a beautiful short, but I can't handle that long term pain, so I likely would have thrown in the towel anyway. [or got bought in] Your comment on sentiments and emotions, they can keep a doughnut aloft for a very long time.
KKD IPO was April 5, 2000. I remember it because it didn't get clobbered like most of the dot.com stocks in 2000-2002, and was a real high flier in 2003. It was very much talked about on CNBC because it was really the only hot stock for a while. Tech was being hammered in 2002. I guess all the hot money flowed to this non-tech stock. It seemed so ridiculous.

But by 2005, when the rest of the market recovering and running up fast, it dropped below it's IPO day price and stayed down below for the next 7 years!!!
http://finance.yahoo.com/echarts?s=KKD+Interactive#{"range":"max","allowCha rtStacking":true}
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 01-31-2016, 10:09 PM   #17
Full time employment: Posting here.
gcgang's Avatar
 
Join Date: Sep 2012
Posts: 924
Amazon: Monness Crespi Cuts to Hold; Time to Take a Breather - Tech Trader Daily - Barrons.com

Above from Barron's. Cites two sources that actually downgraded AMZN before this most recent blowoff.

Similar to the Peter Lynch " if you like the product, buy the stock" philosophy, I use myself as a contrary indicator. For AMZN, I had used them for over a decade, for BOOKS! About a year ago, we went Prime and now look to AMZN before buying almost anything. Duh. I finally got it. My contrary indicator says, if even I have figured it out, there isn't much additional growth coming.
__________________
In theory, there's no difference between theory and practice. In practice, there is. YB
gcgang is offline   Reply With Quote
Old 01-31-2016, 10:50 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,400
Quote:
Originally Posted by Htown Harry View Post
Sales and profits are charted below for the 6th largest US company by market cap.

The P/E is positive for a change (hurray!) at about 800 to 1, according to one stock page.

The same page shows a price to book of 25 to 1.

I'm glad AMZN is only about 1.5% of my S&P index fund. At some point, the Bezos mystique will fade and the market will price Amazon more realistically.

I do not dig AMZN either, the same as FB at a P/E of 87. So, I do not buy and let others do. I would not short them now either. Have to wait until they fall off their high horse.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 02-01-2016, 02:10 AM   #19
Recycles dryer sheets
 
Join Date: Sep 2014
Posts: 461
Quote:
Originally Posted by target2019 View Post
Can AMZN purchase the USPS?
The USPS(which loses billions every year) is partially being subsidized by taxpayers and UPS and FDX move much of the USPS volume as it is.

Jeff Bozos complains about his shipping costs and I guess Bozos is expecting the shipping industry to deliver Amazon stuff for free.

I am surprised more people don't realize that Amazons USPS shipping costs are partially taxpayer subsidized. UPS and FDX and mail contractors make big money off the USPS.

But to be fair to Bozos. Corporate socialism and Corporate welfare benefits much of corporate America(I mean multi-nationals)cough cough.
__________________
purplesky is offline   Reply With Quote
Old 02-01-2016, 09:40 AM   #20
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,904
All Amazon has to do is tweak a number here or there and suddenly they are making billions in profit. I would not bet against them but I don't own the stock. Probably the best customer service I have ever experienced though.
__________________

__________________
Fermion is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Why Don't Retirees Buy Annuities? They Get Something Most Economists Don't Tree-dweller FIRE and Money 101 12-05-2013 02:22 PM
Things you just don't get ! Moemg Other topics 279 04-06-2012 11:26 PM

 

 
All times are GMT -6. The time now is 06:00 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.