Subject: AMZN (and AOL)
First, regarding AOL, I don't know if it's correct to say that they virtually have no competitors. I guess it depends if you view them as selling content, or merely access. I do use some of the content they offer (such as historical stock information), but for those who only use AOL for access to e-mail and the Internet, the IPO's provide plenty of competition.
As far as AMZN, part of the problem is that the less-sophisticated investors (the ones who have generally been beating the pants off us smart shorts), don't distinguish between a company and its products or services. Most people like drinking Coca Cola, and thus think the company is a good buy, ignoring its high valuation and slow growth. Likewise, people appreciate AMZN, and don't consider that the company's valuation is insanely high. I used AMZN once, to send a book to a friend, and my only complaint was that their location in the Pacific Northwest meant that it took forever to deliver a book to my friend in Maine. They could have benefitted from a more centralized location, or a number of distribution sites.
We have identified dozens of incredibly overpriced stocks, but the real issue is timing: How do we predict a top? How do we know when momentum has stopped, or merely taken a breather? |
