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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 234.70-1.2%Nov 14 9:30 AM EST
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To: buckeye3d who wrote (1708)2/26/1998 12:33:00 PM
From: Andreas Helke  Read Replies (1) of 164684
 
A company that is falling apart would be a really nice short if you could identify it with the necessary precision. If you goof with your selection you don't have a chance to get your lost money back.
With a overvalued company like Amazon you have the risk that you come early to the party and have massive paper losses. But you have the chance for a few years to get out with a profit or only a small loss. I have seen only a handful of companies like Microsoft that managed to stay up and grow for ever. Almost all other companies stumble earlier or later and a company like Amazon can go down 80% if that happens.
I should have traded my short position. I sold my shares at $58 and could have covered them for $44 reshorted at $60 and covered at $50 again, provided that I could have borrowed the shares. But I decided to keep the Amazon short as a small hedge for the case that the bull market would suddenly end or have a serious correction.
But I have to admit it is not much fun to be short Amazon during a major tech stock rally. But despite of a unprofitable short position I still outperformed all major indices and the average fund manager in this year. Quite a change compared to last year where I gained nothing if calculating in US dollar.

Andreas
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