If the Frequently Answered Questions (FAQ) is not available for your board (the link to the FAQ is shown always below each post whilst reading it), send one to Shrewd'm using the contact link
- Manlobbi
Investment Strategies / Falling Knives
No. of Recommendations: 6
Amazon scares me as an investment because I think the retail operation is a permanent money loser. AWS is clearly the gem in the empire, and Prime provides a steady rent on access to the retail delivery and media empire. Seems like Prime price increases are sticky, if my wife is a decent indicator. Despite being a loss leader, the retail business is a gorilla that cannot be ignored. Amazon is shattering the brick and mortar retail industry. I prefer tactile to online shopping, but the lean inventories brick and mortar operations are required to keep in the face of Amazon competition make shopping a painful experience. I'm increasingly convinced that physical stores are for merchandise returns, and to drive costumers to their online platforms. Amazon has won, as far as I'm concerned, and perhaps their retail pricing will start to creep up and make the retail operations profitable.
In any case, the biggest reason for staying away from Amazon has been the impossibility of valuing it. Earnings are unpredictable, and, frankly, open to manipulation given the structure of the behemoth. Ditto cash flows, although they are somewhat steadier than earnings. Ultimately I think P/S is the way to go when valuing Amazon, and it is currently trading on the low end of its historical range at around 1.65 times ttm sales. Purchases in this price range have returned around 20% per year, although this is unlikely given the growth maturity Amazon. Rarely has Amazon gone below 1.5 times sales, which gives a target price of around $77/sh.
Anyone interested in Amazon at $82.50?
PP
No. of Recommendations: 1
Anyone interested in Amazon at $82.50?
I'm *very* interested. But I'm not buying anything until the tax-loss selling and macro/political/viral/meteorological craziness settles down a bit. For now, at my age, it's been pretty much I-bonds, CDs, and 3/6/12-month Treasuries lately.
No. of Recommendations: 12
But I'm not buying anything until the tax-loss selling and macro/political/viral/meteorological craziness settles down a bit.
With my humble encouragement, this is exactly when you should be more interested in buying anything. Settling down comes at a premium.
- Manlobbi
No. of Recommendations: 3
Settling down comes at a premium.
It does, indeed--and one I'm willing to pay with respect to AMZN at the moment (at its current price). I sense little indication of a level of panic/fear/exhaustion commensurate with the degree of risk confronting us in the immediate future. If I'm wrong, that's fine. I already possess something invaluable: enough.
No. of Recommendations: 5
I sense little indication of a level of panic/fear/exhaustion commensurate with the degree of risk confronting us in the immediate future. If I'm wrong, that's fine. I already possess something invaluable: enough.
1. If you are observing the fear in the environment (you are observing the investing community's fear broadly, including belief notions such things getting much worse down the track), then it is by definition already priced in.
2. If you are are fearful yourself markedly more than most investors as far as you can observe, and you have strong arguments for what you are afraid of as being more economically consequential than most others comprehend - then you have a case to be sceptical about buying anything now.
I am not supposing that 2 isn't the case, but it is important to understand the distinction.
- Manlobbi
No. of Recommendations: 0
Manlobbi, as I intimated, I'm in Bin 2: not yet perceiving a prudent level of fear among investors generally, and particularly as regards companies vulnerable to consumer weakness. But that's just my view.
No. of Recommendations: 3
Seems like Prime price increases are sticky, if my wife is a decent indicator.
While I love shopping at Amazon, we recently discontinued our Prime membership when they raised the prices here in the USA. Really ticked me off how much cheaper Prime is in Canada, with seemingly no decrease in benefit. Free shipping already comes for free, (with purchases around $25 IIRC,) and we are already overwhelmed with TV viewing choices, so the streaming service was easy to drop. I way prefer Hulu's format to Prime, which often changed, leaving me frustrated with figuring out how to get to our shows. Note that tech changes frustrate me very easily, so YMMV.
I recently picked up Google, so less tempted to duplicate with AWS, though I am interested in future potential of pharmaceutical distribution. A bit concerned with all the warehouse space they now have, with potential slowdown in retail and real estate values, though those are likely short term issues given how everyone loves to shop on line. Also wonder who sucks up the losses from the Porch Pirates and if there is much on the way for a solution. I recall something about giving Amazon access to your garage, but that would take someone more trusting than I.
IP
No. of Recommendations: 1
I was very interested in picking up some Amazon, but won't for two reasons. First there pe is 75. Also, they are so big, that I don't think they can grow that much more. There is the analogy that if they kept growing at their old rate, they would be bigger than the whole world's economy.
No. of Recommendations: 0
I was very interested in picking up some Amazon, but won't for two reasons. First there pe is 75. Also, they are so big, that I don't think they can grow that much more. There is the analogy that if they kept growing at their old rate, they would be bigger than the whole world's economy.
I think they need to just grow with the economy and margin expansion will do the valuation work.
