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

To: Eric Wells who wrote (74884)	8/20/1999 6:08:00 PM
From: Randy Ellingson	Read Replies (3) \| Respond to of 164684

Eric- I ask you - what are your revenue and profit targets for Amazon? As an AMZN stockowner, when do you expect the company to be profitable - and how profitable do you expect the company to be? Are you not concerned about these issues? I believe there is little justification for the current prices of EBAY, AMZN and YHOO - and there's even less justification for other internet stocks (PCLN, UBID, CMGI, RNWK, NSOL, LCOS etc.). Investors keep looking to the future - they keep saying "these companies will generate enough profits in the future to justify their market valuations". But when does the future get here? I'd rather it get here today. Were the future here today, we'd certainly see some adjustment in these stock prices! Which way is the question of course. I don't know when Amazon.com will be profitable; I suspect that within ten years, Amazon will be the largest internet retailer, bar none. And that they can convert their revenues (perhaps by then $500B?) into profits which justify today's valuation. I am frankly not worried about when Amazon becomes profitable; at some point it will become easy for me to decide that they've gone astray from what I see as an intelligent path to grow their business and (potential for) profits. Maybe you'd agree, that competing with them is difficult at best; their competitors are up a creek in some ways. Are you short these stocks? Do you think that perhaps all of the three big ones can justify their market caps within the next five years? I would ask you to go back and read accounts of the gold and silver rushes in California and Nevada during the 19th century (Roughing It by Mark Twain provides an interesting account of the Silver Rush), and you would read about an environment very similar to our current one - where you had hundreds of mines go public, their stock prices soar on speculation of major gold discoveries - but many of the mines turned out to be fraudulent, and most failed with no profit, their stock worthless. Thanks for the suggestion. "Roughing It" is in my shopping cart; I'll be ordering it soon. This is gambling - it's a toss of the dice. Do you disagree? I may be wrong, but most people with this approach quickly lose significant amounts of money, and do not survive financially to try again. When a stock like EBAY nearly doubles in 10 days for no apparent reason other than "well, it's been down lately", I tend to see indications of a bubble. I wouldn't be so confounded by this kind of price behavior. Firstly, future earnings visibility is very low for these companies and that immediately makes them very difficult to value. As you've noted, investor psychology swings these stocks around and around at times. These are big buyers (and sellers), and most of them are trying to figure out what will happen to this stock in the next year or more. They simply can't figure it out. I'm sure traders have their effect too, but the long term behavior will be determined by the # of people owning the stock for the long term. Along with the above, eBay throws the investors the curveball of repeated technical offenses, generating enough fear of their future that the price drops quickly in the first place. People reassess, and voila they want some more at these prices. I agree, some people bought because "well, it's been down lately". Some people who understand the business meant to buy for that reason, but missed the opportunity because they were guessing it could go lower. These effects are background noise for the ten year investor. So too are most (but not all) of the news items associated with the economy. On top of all that, there's the risk that the market will go flat for ten years. Thus the risk in owning stocks; if that's the case, you have to own only the best ones. "Which are they?" is what we each need to answer for ourselves. FWIW, 32% of my IRA is YHOO+EBAY; the rest is in tech stocks plus a little in S&P500. AMZN is 4.5% of my personal investment account (hopefully someday to be rightfully named my Early Retirement Account (ERA);-). Randy

To: Eric Wells who wrote (74884)	8/20/1999 6:34:00 PM
From: trouthead	Read Replies (2) \| Respond to of 164684

Item 1. You have to wait for the future to play itself out. Item 2. I don't know how they measure the savings rate, but if it doesn't take into account 401 k or other monies invested in the market it is a bogus number. Each month I put my savings into the market. That is where I save my money. Item 3. So your reasoning is that too many people made money on net stocks so the end is near? The market has always been a casino. Many people have lost their life savings in the market. It is nothing new. Stocks go up and stocks go down. The tulip mania analogy does not fit the current internet situation. A single tulip bulb will never return more than a single tulip bulb. People are betting that the internet companies will make money. Some will some won't. We will just have to wait to see how it all plays out. Place your bets the come out roll is on the table. jb