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Strategies & Market Trends : Roger's 1998 Short Picks
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To: Roger A. Babb who wrote (16553)1/5/1999 6:21:00 PM
From: Don Westermeyer  Read Replies (1) of 18691
 
Roger, You are probably wise to stay away from AMZN for a couple of more weeks. Reasons:

1. Still being hyped by the internut investment conferences going on this month.

2. Bezos is till manipulating the stock higher. Notice the stock split came just before the annual expected cash influx from retirement plans, etc. More people are willing to buy a $100 stock vs. a $300 stock. I doubt most investors in AMZN even know what a market cap is. The split also makes the loss 'appear' (to ignorant investors) smaller than it really is.

3. No doubt Meeker and company are now adjusting there earnings estimates lower based on sales data. They love to play the 'beat the earnings number' with the tulip stocks. Given the sales data and gross margins, it isn't that hard for analysts to figure out earnings, yet they always significantly underestimate them.

I saw in the recent report on Amazon's sales that their gross margins are slipping lower (big surprise). Amazon will probably loose more money than ever this next quarter, but evidently that is progress for an internet stock. Not only lower margins, but they didn't even make the sales number most people were expecting. And of course the stock goes up - go figure.

Still, if one can live with the 30 point spikes in the stock a short position will eventually be rewarded. I doubt anyone will closely pick the time when tulipmania will end.

NSOL, VRSN, and EBAY should have a flood of new stock coming into the market soon and might be good shorts also. A lot of success is built into their stock prices (especially E*Bay's). As more and more companies go the internet route (IPOs and companies declaring that their true niche as internet based) should drain liquidity from the existing i-net stocks.
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