Cramer at the TheStreet.com is long AMZN because he thought the stock would go up. Quite reasonable logic. Doesn't have the fundamental righteousness of being short, but being long has been more profitable lately (unfortunately).
Wrong! Rear Echelon Revelations: Why
Do I Like Amazon? Simple.
By James J. Cramer
10/30/98 8:06 AM ET
How could I be long Amazon (AMZN:Nasdaq), many of you
have asked in the last 24 hours? How could I be long a
company that is losing millions of dollars, that has no plans
to be profitable in the near future and is wildly overvalued?
I have an answer: I thought it was going higher.
Welcome to the world of opportunistic investing. I am not an
ideologist, at least when it comes to stocks. I buy stocks
because I think they are going up. I sell stocks because I
think they are going down. I do not think: "Long-term that
Amazon is a short, so I better not buy it." I think, you know,
Amazon's having a dynamite quarter, better than expected,
and I should be long it.
Amazon, in many ways, represents what I like about this
medium and investing in general. First of all, I love Amazon
the product. I must have bought a dozen more books this
quarter than I should have just because I love going to that
site after the kids are put to bed. I read reviews, I search, I
buy. One click. No line. In and out of the store in the time it
takes to find a spot in Barnes & Noble's (BKS:NYSE)
Route 22 parking lot.
I was suspicious that the CD thing would be a waste of time
because I have not been impressed with the two companies
that do that business now. But Amazon is a much better
company than those jokers, and I learned that in the last few
months. CDs on the Net is a great business, and Amazon
owns it. Already.
I also found out, and should have known earlier, that
Amazon, like Home Depot (HD:NYSE), can make money
on the float. They get the money from you before they pay
their supplier. That alone, could be worth $100 million in
profits to this company a year beginning in a couple of
years. And they have no theft, pilferage, benefits, rent, etc.
In other words, it's another TheStreet.com versus
entrenched competition. And I love investing in
TheStreet.com, so I love investing in Amazon. Put simply,
this is a better business than I thought, being run better than
I thought it was. That made me think the stock would go
higher.
Pudding, as in proof. |
