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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (73936)	8/15/1999 10:55:00 PM
From: Mark Fowler	Read Replies (1) \| Respond to of 164684

Mark: <Did you think the US will support the worlds economic imbalances forever?> Actually, it seems like you believe this will go on forever. The stock market depends on the strong dollar, trade deficit, low interest rate, foreign investment inflow situation to just go on and on -- it can't. The trade deficit and savings rate in the United States are unsustainable -- period. The question is not if this will trigger a reversal -- it is only a question of when. I am not saying it is easy to know if we are at that point -- I devote some effort to that topic. But we are either there or very close. This is the achilles heel of the market -- and heaven help you if you are on the wrong side of the trend. Maybe we have reached a pause in the reversal -- maybe not. But the bull is more than tired -- the bull is wounded and bleeding badly. You say the US will defend its interests -- but what is in the interest of the US? More of the same? Not likely. The imbalances are real enough -- and they have a name -- the stock market. << The bull is wounded and bleeding badly --OK? Today i see Americans in the best shape ever, tired, but not wounded. You think that i think our trade imbalances can go on forever with a low savings rate, no it cannot! ANd hell who wants to save here when yields are so low and US taxes savings accts. i'm for paying off debts so i can spend more at walmart and Amzn etc. --OK? Gst no one knows if this is an inflection point for the US, but i do expect to see it slow down some and rest some, more like a soft landing in the US economy....

To: GST who wrote (73936)	8/16/1999 12:33:00 AM
From: Bilow	Respond to of 164684

Hi GST; Regarding the trade deficit. When this reverses, and I don't think it's that far off, it should be quite good for the prospects of those US companies that manufacture in the US and ship to overseas companies. Also it should be good for US companies that face a lot of foreign competition, due to the current strong dollar. Of course the unwinding will be accompanied by much, much higher interest rates, but some stocks will be hurt more and some less. The strength of the big stocks is no doubt due to their value being less dependent on interest rates, and on their ability to sell more overseas in the face of a declining dollar. AMZN, for instance, is promising earnings far into the future. The earnings in 2001-2004, for instance, are quite small compared to the stock price. It can only be the earnings much farther out that are attracting fundamental investors to this stock. (This assumes that not all AMZN longs are simply figuring on selling to greater fools. For those who do intend to sell to such, I suggest peddling shares to TMF.) When 30 year interest rates changed over the last 8 months from 5.0% to 6.0%, the net present value of $1 in earnings 30 years from now changed from $0.2314 to $0.1741 , a 25% decrease. If 30-year interest rates reach 8.0%, which is the highest they've been in the past two years, the value of that dollar drops to only $0.0994, a 57% drop. (I know that the above assumes that the 30-year rate is suitable as a substitute for the 30-year zero coupon rate, but the correct analysis would give reasonably similar results. Yahoo is kind enough to have a graph of the 30-year bond rate, but not the zero coupon rate.) So in addition to the problem AMZN has had with its revenue increase story cracking up, it has also faced a worse problem than the DJIA stocks with regard to the present value of its expected future (and becoming more and more future with each passing quarter) earnings. -- Carl