Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Scott Bergquist who wrote (82159)	10/27/1999 11:53:00 PM
From: Bilow	Read Replies (1) \| Respond to of 164684

Hi Scott Bergquist; I shorted AMZN at the time I made the prediction on their 3Q99 (& beyond) revenues. I'd love to analyze stocks for a living, it's a wonderfully complex and interesting thing to do. Of course nailing the number precisely took some luck, I'm going to wait for three more quarters to see how the model works out. Re translating into action: Since my prediction is for revenues to show problems around 2Q00, the trade has to take this time frame into account. The trader has to be sure that he isn't going to be stopped out along the way, so he has to make sure that his size is small enough to handle for that many months. The usual rule is to put no more than 2% of your equity at risk on a single trade. So if you decide that you will just have to cut your losses if AMZN triples from where you shorted it, then you must limit the number of shares in your short to 1% of your equity. (If that 1% triples against you, you will then be net 2% of your equity in the hole.) See Mathematics of Money Management, which is available at: shop.barnesandnoble.com What you do with the other 98% of your equity is your business, of course. Some in cash, the rest in other trades, for instance. The problem with options on AMZN is that they come with incredibly huge time premiums. Rather than buying a put, the natural thing to do is to short a call. I am sure that a lot of the big guys do this. I don't trust the earnings numbers quoted by very many companies, AMZN included. There is just too many ways that the accountants and management can fake the numbers. The amount voiced by the official analysts are fed to them by management, as soon as management figures out what they are going to be. So, naturally, analysts get them very close to right. But their estimates for the outlying quarters are constantly being adjusted. I don't think this bull market can be declared to be over until it reaches a point where MSFT is paying a dividend. Until then, no actual reporting. -- Carl