>>during the six or so months I have been reading and participating on the SI AMZN thread I don't think I have ever read a post of your's that includes an expression of risk or caution - you certainly may have made such posts, but perhaps, I have missed them.
I think that has more to do with your timing. The group bottomed this summer.
They exist:
Message 7236717
That particular decision cost me so much in taxes, even though the timing was great, that I decided to change my strategy later in the winter to buy and hold.
Buy and hold requires a different mentality and a different set of stock-selection criteria. It requires that one invest principally in "big ideas" and de-emphasize market timing, a theme I learned from meeting and following the career of a great young San Francisco fund manager Phil Treick. It is, of course, the way Warren Buffett thinks, but Buffett's big ideas don't include high technology.
So what are great ideas? The Internet is certainly the biggest of my generation. We have never had a global interactive medium that not only subsumes all other media but shifts time, too. That combination of richness and reach changes everything, and because of the speed of the transformation we already know who some of the likely biggest winners are. Of course there's risk investing in stratospherically priced stocks, but the bids are there for a reason. No one will ever sell you Yahoo on the cheap, but the fact is it was far more expensive two years ago even though its dominance was still open to some question then.
Amazon is a different animal, of course. Bezos and Covey are far out ahead someplace, and owning Amazon is literally an act of faith. They are both very smart, disciplined people, and Covey was schooled by the legendary CFO at Dell, Thomas Meredith. Amazon's get-big-fast strategy is very-high-risk - very-high-reward. They're swinging for the fences.
This historic gain in the NASDAQ that the press is trumpeting is not the NASDAQ. Because the NASDAQ is cap-weighted it's a handful of mega-cap communications and client-server technology stocks prospering anew because of the Internet: Microsoft, MCI Worldcom, Oracle, Cisco, Sun, and others. We've been a bear market for most stocks since March of 1998. The record rise in the NASDAQ makes great press, but I don't think it spells the end to anything.
So to sum it up, sure there's risk. With or without the market there's the huge risk if being old and poor, or at least stuck without choices. There's risk to being out of the market, too. What if you need long-term care someday that aggressive investing might have financed?
Would I invest in Yahoo and Amazon at these prices? Certainly. Yahoo has just broken through a long-term triple top on a closing basis (then, interestingly, gained the imprimatur of S&P), which is the most powerful technical move in the book. Amazon is more controversial, but believe it or not it has slightly outperformed Yahoo over the long term. |
