Michelle - I'm not really 'perplexed by this phenom'.
A stampede is under way to get into the internet stocks. And it has taken their valuations above and beyond what I believe future cash flows and asset valuations can justify.
Not the first time this has happened in an industry, and it won't be the last time either. Nothing perplexing about that.
Those stocks will eventually be traded in conformity with more traditional techniques, like p/e's and cash flows.
The question now seems to be, where those earnings and cash flows will eventually shake out. And the answer to that question is one that few seem to be able (or even willing) to rationally project at this point.
But in response to your points-
"Amazon spent 40 million/yr on R&D - ok, lets see some other company, brick and mortar, spend 40 million/yr and do the same thing that Amazon has done - I dare ya."
I can't demonstrate this point yet - But only because you won't see a brick and mortar retailer spending any appreciable money on E-tail until it becomes profitable.
And I'll bet the farm that, when it is profitable and more than a niche, I won't be able to demonstrate it either. But only because their investment will dwarf $40 million. The large retailers will spend hundreds of millions - perhaps billions - taking over and exploiting the Etail space.
They have so much going for them - all sorts your "infrastructure". (Egads - even if you only look at their marketing infrastructure and supply chain infrastructure and their software infrastructure for supply chain control and competitive pricing strategy) - and the ability to leverage a huge distribution and local retail presence (don't ask me how, but I just know that people will still get in their cars and go shopping). Thay have spent billions developing that infrastructure. And in the coming competitive Etail marketplace, it will prove to be an enormous advantage.
I don't mean to say that there is not a lot of money to be made in the stampede. Their has been and still will be. But keep your head up and don't 'adopt' the herd mentality. Ride the herd, but don't go over the cliff with the herd.
Your I-pal,
Christopher |
