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Strategies & Market Trends : Value Investing
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To: Craig Bartels who wrote (9148)12/5/1999 2:16:00 PM
From: MAELING  Read Replies (2) of 78618
 
Craig Bartels's post is one of the more useful that I've seen on this thread.

Using his personal experience as a 'value detection device' he describes Amazon as follows: <<I think they have a viable business model for future earnings, unlike what many on this thread think. I buy a lot from Amazon.com, and I can guarantee you, even if they did up the prices, I would still buy from them. They are a trusted name, get orders processed quickly, and make me a happy customer. I would gladly pay a little more for the convenience. >>

What Bartels doesn't understand is that Value Investors recognize that the current price of a stock should equal the net present value of future free cash flow for that company. In Amazon's case, to justify the current stock price in 10 years it will need to have $100 billion in sales and still be growing at 40% per year with an after tax 10% operating profit margin.

Since this result would be a 5 or 6 sigma event, investors on this thread are betting against it. They hope that they can hold that short until facts align with reason. Bartels as a daytrader can only hold until the end of a session.

Sort of a match of attrition between rational capital allocators and the go-with-the-glands crowd. Can reason outlast hormones?

Bartels presents daytraders notions well.
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