Why spend so much time trying to determine when a good company is overvalued and short it?
Alex, a valid question. Not to toot my own horn, but the reason is that I make a lot of money doing it. My recent shorts included BOST, Boston Chicken, which fell from 40 to 6. I started a thread on the overvalued forum over a year ago. RAIN, Rainforest cafe, also fell from about 40 to 18....I started a thread in the overvalued forum there also. GUC, Gucci inc, fell from 80+ to 30ish, there I also started a thread in the overvalued forum, so you can see I am not just making these up.....I also shorted DJT, Trump enterprises which fell from 30 to 10, FGCI, Family Golf , when it fell from 34 to 18, PETS, Petsmart, from high 20's into the teens etc. etc. There are a few more. (by the way, all those companies were considered "good" )
Mind you, these stocks were all collapsing during a raging bull market. I made all these plays in the last 1 1/2 years or so. This is not to say that I have never lost. The only one that beat me good, though, was DELL, and on that I got out fast with a small loss and it continued dramatically higher. That was an isolated case and an error in my thinking, and I was quick to recognize it and learn from the error.
AMZN, I feel very strong about on the short side. I have spent a lot of time going over the financials and the book selling market place as a whole, as I did with all the other grossly overvalued companies I have shorted. I believe I will make at least 50% return on my money before the year is out , and perhaps as much as 80%....its happened before, and this I see as the same game just a new name, AMZN......time will tell.
But I have been a lot more right than wrong. Best of luck to you, you may well see 72-75 area. I am prepared for such a scenario. But in the end I will cover at 20-30, IMHO.........;^) |
