.. I cant think why other than it is quite overbought.. but amzn is owned by many institutions and .. oh well.. Im freaked. Help?
As someone who has believed for quite some time that this stock is so grossly overvalued as to defy description, I read the above with a mixture of both sympathy and (I regret this) some gratification.
Why am I sadly gratified to hear from one of the unfortunate individuals who bought this stock at yesterday's high? Because it provides evidence that this mania has now reached a stage where inexperienced investors will buy on speculation without considering much beyond the fact that the price keeps going up and up and up.
Contrary to your belief, AMZN has negligible institutional sponsorship (as of 12/31, about 5%). In the early stages of a company's growth, this could actually be read as a positive. But not here, not when the stock price is at such ridiculous levels that no fund manager with an ounce of brains would consider making an investment.
At what point, it must be asked, will this insanity come to a close? The bubble burst? When AMZN's market cap reaches the total value of all books sold in the world each year (and it's not too far off)? When inexperienced investors realize what a market cap actually is? Or a price to sales ratio? Unfortunately, no one really knows.
Next week, for example, AMZN could continue riding up higher and higher (greater fools may come along to rescue those such as yourself who, it seems, are relying on momentum and good luck to compensate for sound research and good sense). Indeed, this may prove a buying opportunity as the stock goes on to triple or quadruple -- once AMZN reaches the milestone of achieving a cap surpassing the total of all book sales worldwide, the next step might be a value equal to the total sales of everything in the world (Mr. Blodgett may very well be preparing such a rationalization for release shortly after Amazon reports yet another quarter of record losses).
As has been said many times before by many others on this thread, this stock is not for investors, but gamblers. I truly wish those who got stung Friday may get out with a minimal amount of financial pain and that they learn something from the example AMZN is providing us -- that outrageous speculative profits can just as easily become disasterous losses, that money is more often than not made in the stock market over the long haul, that those looking for a quick buck usually end up going broke. That this is gambling, not investing.
Sorry for the sanctimony. I guess I've earned it after being so wrong about this stock for so long (but, as Glenn has pointed out time and again, not wrong about the company).
- Peter B |
