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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: MAELING who wrote (9149)	12/5/1999 5:36:00 PM
From: Madharry	Respond to of 78618

I don't know what sigma 5 or 6 means. Is that the equivalent of hell freezing over? Because that's what I think the likelihood of Amazon ever achieving operating margins of 10% are.

To: MAELING who wrote (9149)	12/5/1999 8:06:00 PM
From: Craig Bartels	Read Replies (1) \| Respond to of 78618

>>What Bartels doesn't understand is that Value Investors >>recognize that the current price of a stock should equal >>the net present value of future free cash flow for that >>company. In Amazon's case, to justify the current stock >>price in 10 years it will need to have $100 billion in >>sales and still be growing at 40% per year with an after >>tax 10% operating profit margin. I guess let me explain more. All I said was they have a viable business model. I didn't say their stock was anything close to something a value investor would buy. What I'm saying is, why short something that could conceivably double again in 3 months? Unless someone has the $$$ to hold a short position when it's 2x out of the money. I would rather short something that isn't so much in favor. How would it have felt to have shorted a couple thousand shares of Redhat at 50, when it was seriously overpriced? Now they are 5x out of the money and still short? I sure don't want to be in that position...I agree they will come back to earth, but it is worth it to have all your money tied up for 3 years to wait for them to come back to earth when the money could be used in other stocks that actually have good fundamentals and are undervalued? Maybe I should change my profile, because I do buy for value, but day trade some stocks as well. As I've said in the past, I have held on to stocks for 4-5 years at a time, as well as held stocks for less than a day. This has worked out great for me, as I have been up over 100% each year over the past 6 years. I don't think protraying me as a "day trader" has anything to do with it. As hard as it is to comprehend, you can day trade a stock as well as hold other stocks long term and be a value investor.