Hi KeepItSimple; As a mutual fund, AMZN would easily be the most over priced in the industry, and also the one with the worst liquidity problems regarding its investments. In addition, a mutual fund isn't allowed to have debt...
Brings to mind the "mutual funds" of the late 20s. Modern mutual funds are at least partly a consequence of the disastrous ending to the 20s. People wanting a little diversity bought the stocks of companies that invested in other companies. Such companies could, and did, borrow money (like AMZN). The shares sold at prices far different, but generally higher, than the value of their assets (like AMZN). In essence, people were speculating in the speculators...
When it all came to a bad end, the prices of these companies dropped rapidly. One of their responses was to begin buying up their own shares... Of course, since their stocks were trading at a huge multiple to book value, this merely caused the bottom to be that much lower (due to the lower real asset value at the bottom).
AMZN is not a mutual fund, and hopefully there aren't a lot of people out there who think it is.
As I write this, AMZN is hovering at a price just over the previous day's close.
-- Carl |
