Betting against Big Bang...
Bob, I am trying to send you an e-mail, but it apparently did not work. Could you kindly send me your e-mail address? Mine is tomd12345@aol.com
By the way, when I delivered that quote about AMZN being promoted as a "staple in every portfolio" (and you scoffed!) my point was that some investors see AMZN as a promising internet investment, whose only possible problem is valuation. This relates to the issue of how much longer can the short squeeze continue? My concern is that it may continue for a long time (maybe another doubling or two?). And that even if the company is overvalued (which I think is probably true, but I don't pretend to know enough to reliably predict) it is hard to know how high AMZN will go because there a lot of people who want to "own a piece of AMZN".
If you have a couple minutes, read below. The article is extremely long (don't bother), so I have a couple excerpts...
nytimes.com
The man is John Doerr, and he is standing in the eye of a storm. Investors in new technology -- the pension funds, the universities, the rich -- plead with Doerr to take their money and invest it in new technology. Engineers and computer scientists, who now more than ever before want to become entrepreneurs, beg Doerr to give them money. Five out of 10 times they take Doerr's money and make it vanish quickly; 4 out of 10, they return it without much interest. But 1
time in 10, they make it do the most extraordinary things that money has ever done. Netscape! America Online! Onsale! Amazon.com! Sun! The greatest legal creation of wealth in the history of the planet! By 1997, the Kleiner Perkins portfolio of technology companies employed 162,000 people, rang up revenues of $61 billion and had a stock-market value of $125 billion. . . .
Anyone who doubted whether this explosion in new technology could continue -- Is it a bubble? What if the stock market crashes? What if people cling irrationally to their old ways? -- needed only to have heard Doerr to have had his doubts allayed. "If you will permit me a little bit of optimism," he said, "I think it is possible that the Internet has been underhyped. It's like Big Bang -- it's like a creation of a whole new universe. It's going to go on a long, long time. And it's going to affect every part of society."
Lets say you are right that it is overvalued at present. When thousands of investors equate AMZN with the internet, it can become a dangerous stock for one to sell short, unless you have deep pockets and a lot of time.
Best Regards,
Tom D |
