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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (5726)1/12/1999 8:05:00 AM
From: valueminded  Read Replies (1) of 78702
 
James:

As a value investor, you ought to know better than shorting an internet stock. Internet stocks have long ago separated themselves from valuation models - which is probably why value investors do not understand why they get killed shorting overpriced stocks. I see no rational for Amazon to be where it is - but, it does not fit a valuation model, (no earnings and no near term forseeable earnings) So take sales. Maybe a billion this year, problem is it appears the more they sell, the more they lose. If they try to increase margins (ie prices), I go to barnesandnoble.com or any of a handful of other book retailers. It appears to be a difficult problem. So maybe the model suggests a p/s of 1. Assume they take all of barnes and nobles sales ~ approx 3 billion. Price would be 1/6 of where it is. This is nothing new to Anyone - and that is my point. You are much better buying waaay out of money puts on these things then shorting. Limited downside, and you know where value should be. (imo)
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