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

To: Ken Pomaranski who wrote (1964)	3/4/1998 10:03:00 PM
From: the Druid	Respond to of 164684

Wrong! Ken, Wrong! We are not fighting with the longs about the merit of Amazon in selling books and other stuff over the web. It is the valuation. If I price my Honda at $100,000.0, will you buy it? It is in tip-top shape, you know.

To: Ken Pomaranski who wrote (1964)	3/4/1998 11:16:00 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 164684

That means that there are VERY, VERY few longs controlling the move upwards in this stock. Good point. That's how we got here - a relative few people controlling the vast majority of the stock and squeezing shorts. The flip side of that is that small shareholders take the hit when the bubble bursts. You do realize that the entire float turned over in two days last week, right? How would you know if the big institutional holders are even around any more? Perhaps they dumped their shares into the short squeeze, leaving much fewer shorts to create short covering rallies on the way down BTW, and are having a good laugh at the expense of the small investors who fell for the hype. Toss in the increased supply from insider selling and then some unexpected market event to revive some fear and what is going to support the stock? Nobody here said that there wasn't room in Internet commerce for AMZN to sell a lot of books (and other stuff) or that only one player would survive. We are only arguing that the future of Internet commerce is far from clear, that book selling is not exactly a high margin, rapid growth industry, that AMZN's ability to turn a profit at any volume is not proven, and that it is foolishness to pay this kind of valuation for the possibility that everything will go exactly right and sometime in the next millenium AMZN might actually be worth what you would pay for it today. Peter Lynch may be right that you should "buy what you like", but I don't think he ever argued that you should do so at any price. Regards, Bob PS: Do you have something against Germans or do you think that typing a random string of letters rather than Bertelsmann is an amusing way of dismissing the competitive threat?

To: Ken Pomaranski who wrote (1964)	3/4/1998 11:25:00 PM
From: Bilow	Read Replies (1) \| Respond to of 164684

re People trying to tie traditional valuations to buying early growth stocks are living in the past! I picked up a copy of "The Art of Speculation", which was written in 1930. It was fascinating. I noticed a passage about what happens at the ends of bull markets. (And they knew what they were talking about, cause they were just sobering up from a doozy.) He said that traditional valuations of companies are ignored and stocks are bought on the basis of possible earnings many years in the future. The other scary thing about the book was the author's assumption that the market decline in late 29 and early 30 had brought the market back to a rational level. Actually it continued to decline for several years more, and finally bottomed in '32 or '33, at 10 cents on the '29 peak dollar. It's almost like the author was writing in mid '98 or '99 and saying, "Gosh it's good we got that correction behind us!" As far as contrarian investing, pick up any book. Short sellers are generally thought to be more astute than the general public. The reason that this thread is dominated by negative comments is that (sad to say) the average poster to SI is more astute than the average individual stock buyer. There are about twice as many shares "owned" as short in AMZN, (i.e. 6MM and 3MM), so that means that there are plenty of shorters out there. But most people who think AMZN is a bad deal aren't short it. For instance, I don't have a position right now. It's a fact that bad publicity increases the interest in a stock, and this has a certain amount of a positive effect on the stock price. In other words, I believe that if really bad news came out about a stock one week, and then a week later it turned out that the really bad news had to be retracted, the overall effect of the cancelling news reports would be to leave the stock higher. The reason is that bulls always, always, always vastly outnumber bears. Every bear has to have a bull to sell short to, but not vice-versa. Consequently, neutral news is bullish for stocks. It brings it to the attention of an investing community (amatuer and professional) that is almost entirely long. (Short interest in '29 during the crash was .12%, i.e. 800 times smaller than the long interest.) Therefore, when you find a stock with a huge short interest, it means that it is one that a whole lot of very astute people are certain is going to the toilet, and are willing to bet hard money on it. But shorters are not the herd. They are less than one percent of the investing community. If you define less than 1% of the investing community as the herd for the purpose of investing contrary to them, then you are in for a nasty surprise. The annals of investing are filled with stocks like AMZN that the shorters shorted, got squeezed badly in, and eventually were proved right on. The question is how long it takes. I don't think the time has come yet, but I will keep an eye on this dog, cause it doesn't appear to hunt. Any fool can lose money in a business, and gain market share by selling under his costs. No, the miracle growth would have been AMZN able to fund its growth from its cash flow. Look at return on equity in order to determine if a company can grow at a decent rate without returning to the market for more money. -- Carl