Amazon [stock]

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bugaloo
Posts: 62
Joined: Fri Dec 18, 2015 4:34 pm

Amazon [stock]

Post by bugaloo » Fri Jun 16, 2017 6:49 am

When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.

Also, wondering if any of you can explain to me the difference to the individual investor when a company 'splits' stocks vs creates different classes of stocks (like Apple's Class A shares). My understanding is that the higher grade stocks will get you voter rights. Is that the main difference?

rkhusky
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Re: Amazon

Post by rkhusky » Fri Jun 16, 2017 6:52 am

bugaloo wrote:When is a good time to take a position with this stock.
My position is in accordance with the market weight in Total Stock Market.

SimplicityNow
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Re: Amazon

Post by SimplicityNow » Fri Jun 16, 2017 7:08 am

Most of the participants in this forum prefer index funds over mutual funds and adhere to a philosophy of avoiding market timing.

I think there are other places where people could answer your question. I think you'll find plenty of people who will tell you it is overvalued. Others will tell you it is undervalued. Nobody knows nothing.

I prefer to invest my money in total stock market index funds which own Amazon and others according to their representation in the total market.

Silk McCue
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Re: Amazon

Post by Silk McCue » Fri Jun 16, 2017 7:35 am

If you want to own an individual stock and believe it will be a strong producer in the long term then you should buy it today. Buying individual stocks as you know is not how this group rolls so the answer for me personally would be to never buy an individual stock unless I wanted to treat it like play money. I personally don't treat any investment dollars as play money.

bugaloo
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Re: Amazon

Post by bugaloo » Fri Jun 16, 2017 7:56 am

Silk McCue wrote:If you want to own an individual stock and believe it will be a strong producer in the long term then you should buy it today. Buying individual stocks as you know is not how this group rolls so the answer for me personally would be to never buy an individual stock unless I wanted to treat it like play money. I personally don't treat any investment dollars as play money.
Agreed. I am usually in index funds as well but have dabbled in individual stocks here and there (mostly with blue chips when the great recession happened).

bugaloo
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Re: Amazon

Post by bugaloo » Fri Jun 16, 2017 7:57 am

SimplicityNow wrote:Most of the participants in this forum prefer index funds over mutual funds and adhere to a philosophy of avoiding market timing.

I think there are other places where people could answer your question. I think you'll find plenty of people who will tell you it is overvalued. Others will tell you it is undervalued. Nobody knows nothing.

I prefer to invest my money in total stock market index funds which own Amazon and others according to their representation in the total market.
Agreed. I am usually in index funds as well but have dabbled in individual stocks here and there (mostly with blue chips when the great recession happened).

poker27
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Re: Amazon

Post by poker27 » Fri Jun 16, 2017 7:58 am

Years ago in an 8th grade quasi finance class we were tasked with picking a stock, and tracking the weekly gains or loss. Well I picked Amazon (can't remember why or how I even heard of them as computers weren't readily available yet). That would have been a good time

barnaclebob
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Re: Amazon

Post by barnaclebob » Fri Jun 16, 2017 8:14 am

Anybody that knows for sure definitely wouldn't tell you and anyone who tells you doesn't know for sure.

aristotelian
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Re: Amazon

Post by aristotelian » Fri Jun 16, 2017 8:18 am

About 15 years ago.

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TheTimeLord
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Re: Amazon [stock]

Post by TheTimeLord » Fri Jun 16, 2017 8:23 am

bugaloo wrote:When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.

Also, wondering if any of you can explain to me the difference to the individual investor when a company 'splits' stocks vs creates different classes of stocks (like Apple's Class A shares). My understanding is that the higher grade stocks will get you voter rights. Is that the main difference?
Yesterday before they bought Whole Foods today.

http://www.cnbc.com/2017/06/16/amazon-i ... llion.html
Run, You Clever Boy!

arsenalfan
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Re: Amazon [stock]

Post by arsenalfan » Fri Jun 16, 2017 8:40 am

Weird

I was going to post similar to the above - BH are indexers, some do sector tilts and some do play money accounts with individual stocks.

Me, I do buy and hold in my play money account which is 1% of the portfolio, mostly undervalued stuff or impulse stuff like VW when dieselgate broke, and Whole Foods 3 years ago (impulse buy when I realized how much we were spending there)...but I've never bought high flyers like FANG.

Curious to see what happens to WFM now that Amazon buys them!

Valuethinker
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Joined: Fri May 11, 2007 11:07 am

Re: Amazon [stock]

Post by Valuethinker » Fri Jun 16, 2017 9:15 am

TheTimeLord wrote:
bugaloo wrote:When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.

Also, wondering if any of you can explain to me the difference to the individual investor when a company 'splits' stocks vs creates different classes of stocks (like Apple's Class A shares). My understanding is that the higher grade stocks will get you voter rights. Is that the main difference?
Yesterday before they bought Whole Foods today.

http://www.cnbc.com/2017/06/16/amazon-i ... llion.html
Bezos is smarter than I am (no kidding ;-)).

But Amazon must be pricing its capital at zero, to go and buy an expensive bricks and mortar retailer. They must really believe in the online groceries story. UK is (I believe) way ahead of US in online groceries (higher densities plus other factors make it more amenable, a delivery truck can service more homes in one load). Nonetheless AFAIK no one has ever made any money in online food retail (Ocado is the quoted "pure play").

Valuethinker
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Re: Amazon [stock]

Post by Valuethinker » Fri Jun 16, 2017 9:16 am

bugaloo wrote:When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.
What's the price to earnings ratio? 100 times? This is a stock which is priced for perfection in execution. One wobble, and it will sink like the Lusitania (indeed, technically that's called a "torpedo stock").
Also, wondering if any of you can explain to me the difference to the individual investor when a company 'splits' stocks vs creates different classes of stocks (like Apple's Class A shares). My understanding is that the higher grade stocks will get you voter rights. Is that the main difference?
One has to read the SEC filings.

Split you just normally get more shares. A B etc they usually have different rights. From memory, Berkshire Hathaway the Bs (10 Bs worth one A?) are non voting.

Valuethinker
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Re: Amazon [stock]

Post by Valuethinker » Fri Jun 16, 2017 9:19 am

Valuethinker wrote:
TheTimeLord wrote:
bugaloo wrote:When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.

Also, wondering if any of you can explain to me the difference to the individual investor when a company 'splits' stocks vs creates different classes of stocks (like Apple's Class A shares). My understanding is that the higher grade stocks will get you voter rights. Is that the main difference?
Yesterday before they bought Whole Foods today.

http://www.cnbc.com/2017/06/16/amazon-i ... llion.html
Bezos is smarter than I am (no kidding ;-)).

But Amazon must be pricing its capital at zero, to go and buy an expensive bricks and mortar retailer. They must really believe in the online groceries story. UK is (I believe) way ahead of US in online groceries (higher densities plus other factors make it more amenable, a delivery truck can service more homes in one load). Nonetheless AFAIK no one has ever made any money in online food retail (Ocado is the quoted "pure play").
Note with a retailer, acquired, the purchase price is never the purchase price.

When you acquire any business, you have to include the debt acquired in the purchase price (debt net of cash + market capitalization = Enterprise Value).

And with a retailer, the debt may not be on the Balance Sheet. It's in the operating leases on the stores. A $1m pa lease for 10 years is at least $10m added to the debt of the business (could be a lot more depending on average term of the leases).

munemaker
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Re: Amazon

Post by munemaker » Fri Jun 16, 2017 9:21 am

rkhusky wrote:
bugaloo wrote:When is a good time to take a position with this stock.
My position is in accordance with the market weight in Total Stock Market.
Mine too. An index fund is a great way to own Amazon!

PFInterest
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Re: Amazon [stock]

Post by PFInterest » Fri Jun 16, 2017 9:29 am

you already missed it. move on.

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TheTimeLord
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Re: Amazon [stock]

Post by TheTimeLord » Fri Jun 16, 2017 9:31 am

Valuethinker wrote:
bugaloo wrote:When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.
What's the price to earnings ratio? 100 times? This is a stock which is priced for perfection in execution. One wobble, and it will sink like the Lusitania (indeed, technically that's called a "torpedo stock").
Perhaps you short the stock to counter balance the amount held in your index funds?
Run, You Clever Boy!

rkhusky
Posts: 4313
Joined: Thu Aug 18, 2011 8:09 pm

Re: Amazon [stock]

Post by rkhusky » Fri Jun 16, 2017 10:23 am

You need to sell Amazon and buy Costco. viewtopic.php?f=11&t=221266

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David Jay
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Re: Amazon [stock]

Post by David Jay » Fri Jun 16, 2017 10:36 am

Valuethinker wrote:Bezos is smarter than I am (no kidding ;-)).
The humility. It burns!
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Valuethinker
Posts: 32925
Joined: Fri May 11, 2007 11:07 am

Re: Amazon [stock]

Post by Valuethinker » Sat Jun 17, 2017 10:26 am

TheTimeLord wrote:
Valuethinker wrote:
bugaloo wrote:When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.
What's the price to earnings ratio? 100 times? This is a stock which is priced for perfection in execution. One wobble, and it will sink like the Lusitania (indeed, technically that's called a "torpedo stock").
Perhaps you short the stock to counter balance the amount held in your index funds?
I don't have much doubt that, at least with the Unicorns, we are in a bubble.

And that speaks to the quoted sector as well.

It appears the big quoted internet companies are encountering decreasing returns on incremental capital. Thus acquisitions at prices that do not make financial sense. The desperate scramble to deploy capital before the game is up.

This reminds me of the telecoms sector in the late 1990s. Or big pharmacy more recently.

The market knows this too of course. So it's not clear what strategy one follows to profitably exploit publicly available information.

So it's not clear to me how I can evolve a strategy which exploits this observation.

There are a lot of bubbles out there.

Still trying to sort out in my mind what Bezos' strategic rationale is.

Helo80
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Joined: Sat Apr 29, 2017 8:47 pm

Re: Amazon

Post by Helo80 » Sat Jun 17, 2017 10:44 am

rkhusky wrote:
bugaloo wrote:When is a good time to take a position with this stock.
My position is in accordance with the market weight in Total Stock Market.

With the way things are going, Amazon might very well be an Index in itself....lol

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TheTimeLord
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Re: Amazon [stock]

Post by TheTimeLord » Sat Jun 17, 2017 11:37 am

Valuethinker wrote:
TheTimeLord wrote:
Valuethinker wrote:
bugaloo wrote:When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.
What's the price to earnings ratio? 100 times? This is a stock which is priced for perfection in execution. One wobble, and it will sink like the Lusitania (indeed, technically that's called a "torpedo stock").
Perhaps you short the stock to counter balance the amount held in your index funds?
I don't have much doubt that, at least with the Unicorns, we are in a bubble.

And that speaks to the quoted sector as well.

It appears the big quoted internet companies are encountering decreasing returns on incremental capital. Thus acquisitions at prices that do not make financial sense. The desperate scramble to deploy capital before the game is up.

This reminds me of the telecoms sector in the late 1990s. Or big pharmacy more recently.

The market knows this too of course. So it's not clear what strategy one follows to profitably exploit publicly available information.

So it's not clear to me how I can evolve a strategy which exploits this observation.

There are a lot of bubbles out there.

Still trying to sort out in my mind what Bezos' strategic rationale is.
Conflating successful companies with tens of billions on their balance sheets with pre-public unicorns is not a line of rationale I can follow.
Run, You Clever Boy!

johnra
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Re: Amazon [stock]

Post by johnra » Sat Jun 17, 2017 12:48 pm

I did not realize that I could not join this website if I were to buy individual stocks (or active funds, or high yield funds or whole life insurance or a mortgage, or even like my job). I have done all these terrible things. In fact, true confessions, in one of my accounts I have only individual stocks including Amazon and Baba. Here is its performance:

2012: +16%
2013: +33.4%
2014: +25.8%
2015: +26.9%
2016: -6.6%
2017 (ytd): +22%

VaR
Posts: 356
Joined: Sat Dec 05, 2015 11:27 pm

Re: Amazon [stock]

Post by VaR » Sat Jun 17, 2017 4:12 pm

bugaloo wrote:Also, wondering if any of you can explain to me the difference to the individual investor when a company 'splits' stocks vs creates different classes of stocks (like Apple's Class A shares). My understanding is that the higher grade stocks will get you voter rights. Is that the main difference?
I am not aware of Apple having different classes of shares. Are you thinking of Google and Facebook? They have different share classes with different voting rights.

In both these cases, different share classes were created to enable insider founders to retain control of the company despite dilution through the issuance of additional shares. Note that that nothing says that Class A is "better" than Class B or Class C. You have to look at the specific rights granted to each share class. For example, Facebook Class A shares have 1 vote per share, Class B have 10 votes per share, and Class C have no votes per share.

Valuethinker
Posts: 32925
Joined: Fri May 11, 2007 11:07 am

Re: Amazon [stock]

Post by Valuethinker » Sun Jun 18, 2017 4:50 pm

TheTimeLord wrote:
Valuethinker wrote:
TheTimeLord wrote:
Valuethinker wrote:
bugaloo wrote:When is a good time to take a position with this stock. I have clearly missed the boat on this company, but there seems to be a slight pullback this week.
What's the price to earnings ratio? 100 times? This is a stock which is priced for perfection in execution. One wobble, and it will sink like the Lusitania (indeed, technically that's called a "torpedo stock").
Perhaps you short the stock to counter balance the amount held in your index funds?
I don't have much doubt that, at least with the Unicorns, we are in a bubble.

And that speaks to the quoted sector as well.

It appears the big quoted internet companies are encountering decreasing returns on incremental capital. Thus acquisitions at prices that do not make financial sense. The desperate scramble to deploy capital before the game is up.

This reminds me of the telecoms sector in the late 1990s. Or big pharmacy more recently.

The market knows this too of course. So it's not clear what strategy one follows to profitably exploit publicly available information.

So it's not clear to me how I can evolve a strategy which exploits this observation.

There are a lot of bubbles out there.

Still trying to sort out in my mind what Bezos' strategic rationale is.
Conflating successful companies with tens of billions on their balance sheets with pre-public unicorns is not a line of rationale I can follow.
The valuations of the two are related because there is a flow of capital between the two, the companies aim at the same end customer markets, and because of how valuations are done. It's not perfect but the valuation of the VC backed sector is influenced by that of the quoted markets- -prices of the VC deals are in part based on quoted comparables. After all the underlying driver is the same-- market perceptions of the superior growth expectations of technology stocks vs. the market as a whole.

The valuation of Amazon in particular is just out there- the market is pricing for perfect execution. Apple you have that cash balance, and Microsoft is more reasonable. Alphabet is exactly the company I am referring to about declining incremental returns on capital-- brilliant business though it is. Facebook who knows? It looks way way overvalued but feel the eyeballs ...

The tech sector (quoted) was way overvalued in 2000. So was the unquoted tech sector.

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CyclingDuo
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Re: Amazon [stock]

Post by CyclingDuo » Mon Jun 19, 2017 8:35 am

johnra wrote:I did not realize that I could not join this website if I were to buy individual stocks (or active funds, or high yield funds or whole life insurance or a mortgage, or even like my job). I have done all these terrible things. In fact, true confessions, in one of my accounts I have only individual stocks including Amazon and Baba. Here is its performance:

2012: +16%
2013: +33.4%
2014: +25.8%
2015: +26.9%
2016: -6.6%
2017 (ytd): +22%
Yes, Bull Markets are kind to all of us.

There is no requirement for joining BH when it comes to mutual funds/index funds/bond funds/REIT's/ETF's vs. individual stocks, bonds, CD's, etc... .

In fact, a recent survey on one of these threads in which over 325+ Boglehead participants have replied thus far shows that 61% of that representative group also owns individual stocks (in addition to index funds, bond funds, etc...). So it's not like you are out of company, but individual stock picks are seldom discussed unless it is within greater context. More for the reason that many BH's left individual stocks due to not having to worry about following them as the indexing provides the return of whatever index it follows (which is made up of many stocks or bonds).

We all own Amazon via index funds, and Apple, and Google, and Netflix, and Microsoft, and Boeing, and Facebook, and United Health, and Nvidia, and Whole Foods, and Caterpillar, and Chevron, and Phillip Morris International, and SnapOn, and Amgen, and Proctor & Gamble, and Walmart, and American Express, and Johnson and Johnson, and Berkshire Hathaway, and Costco, and Wells Fargo, and Verizon, and Checkpoint Software, and Deutshe Bank, and AT & T, and Chipotle, and on and on.

Total Stock Market, Total International Stock Market, Total Bond Fund covers a lot of territory for all of us. 8-)

We personally own many individual stocks, ETF's, index funds, bond funds, bond ETF's, domestic & international. There are lots of forums on the internet that openly discuss individual stock names, their core business, the fundamentals, the technicals, the sectors and what not. You'll probably get more traction discussing individual stocks in many of those forums. Fool.com, Silicon Investor, Morningstar come to mind - in our opinion as some of the more thoughtful.

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