Has anyone been tempted to buy AMZN?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Seahawk
Posts: 9
Joined: Sat Jun 11, 2016 1:52 am

Has anyone been tempted to buy AMZN?

Post by Seahawk » Wed Sep 28, 2016 4:03 pm

I'm an investor in VTSMX, and do not hold any individual stocks.

But I have to admit, watching AMZN go from 400 to 500 to 600... and now cross 820... I'm tempted!


I don't want to be, I *know* the virtues of index funds and all of that.

That said - and maybe this is what Mr, Bogle means when he says "emotions wreak havoc, and investors buy at exactly the wrong time" - but surely I can't be the only one to have sat there wondering if I'm just making a massive mistake by not jumping on the AMZN bandwagon?


This probably borders on sacrilege for most Bogleheads, but would it really be so bad to buy AMZN? Any thoughts or insights on AMZN?

AMZN doesn't seem like another Enron... so why not?
Last edited by Seahawk on Wed Sep 28, 2016 10:59 pm, edited 1 time in total.
Price is what you pay, Value is what you get.

KyleAAA
Posts: 6371
Joined: Wed Jul 01, 2009 5:35 pm
Contact:

Re: Has anyone been tempted to buy AMZN?

Post by KyleAAA » Wed Sep 28, 2016 4:06 pm

Great business, very expensive. I think there will prove to be a lot more competition for their cloud business than previously anticipated, from Microsoft and Google in particular. It will probably work out over the next 10 years but the current valuation leaves no margin for error.

User avatar
slayed
Posts: 217
Joined: Wed Feb 01, 2012 3:07 pm

Re: Has anyone been tempted to buy AMZN?

Post by slayed » Wed Sep 28, 2016 4:12 pm

Seahawk wrote:
AMZN doesn't seem like another Enron... so why not?


Enron didn't seem like Enron either.

User avatar
dougger5
Posts: 216
Joined: Fri Nov 27, 2015 11:58 am
Location: Not far from Malvern

Re: Has anyone been tempted to buy AMZN?

Post by dougger5 » Wed Sep 28, 2016 4:16 pm

To the extent that they're represented in the index funds we hold, I'm happy to hold AMZN as such.
"I've been ionized, but I'm okay now." -Buckaroo Banzai

Nicolas
Posts: 792
Joined: Wed Aug 22, 2012 7:41 am

Re: Has anyone been tempted to buy AMZN?

Post by Nicolas » Wed Sep 28, 2016 4:17 pm

Yes I was tempted to buy it when it was $185. I resisted the temptation.

BW1985
Posts: 1715
Joined: Tue Mar 23, 2010 6:12 pm

Re: Has anyone been tempted to buy AMZN?

Post by BW1985 » Wed Sep 28, 2016 4:18 pm

Been tempted since 2008 when I became a customer. Hindsight is 20/20.
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

User avatar
DaftInvestor
Posts: 3220
Joined: Wed Feb 19, 2014 10:11 am

Re: Has anyone been tempted to buy AMZN?

Post by DaftInvestor » Wed Sep 28, 2016 4:22 pm

This is one of the stocks I owned back in the 90's I wish I kept. That was back when they just sold books - before they became a full online marketplace and moved into streaming media and now PaaS/IaaS. Of course many of the other individual stocks I sold off are for companies that no longer exist so there was know way to know that AMZN is one I should have kept (I actually originally got out of individual stocks because I became obsessive - not because I became a Boglehead - that came later).

carguyny
Posts: 184
Joined: Mon Aug 08, 2016 4:56 pm

Re: Has anyone been tempted to buy AMZN?

Post by carguyny » Wed Sep 28, 2016 4:24 pm

Purchased 10% of my portfolio worth in Dec 14, got up about 2.5x and sold a few months ago.

I don't see the valuation as justifies yet given the profitability question on their core business and likely shrinking AWS margins.

I buy a lot on Amazon, including Amazon Fresh for groceries, but need to see profitability or a significant pull back to increase above marketweight.

User avatar
DaftInvestor
Posts: 3220
Joined: Wed Feb 19, 2014 10:11 am

Re: Has anyone been tempted to buy AMZN?

Post by DaftInvestor » Wed Sep 28, 2016 4:28 pm

carguyny wrote:Purchased 10% of my portfolio worth in Dec 14, got up about 2.5x and sold a few months ago.

I don't see the valuation as justifies yet given the profitability question on their core business and likely shrinking AWS margins.

I buy a lot on Amazon, including Amazon Fresh for groceries, but need to see profitability or a significant pull back to increase above marketweight.


I haven't done any research but isn't their AWS margin already pretty tight? I believe they compete against folks like Microsoft Azure based upon being cheaper (not based upon other measures). I would think AWS would be their biggest growth area (and assume it is most of the reason why their price is so inflated now).

erik265
Posts: 155
Joined: Sat Dec 05, 2015 8:55 am

Re: Has anyone been tempted to buy AMZN?

Post by erik265 » Wed Sep 28, 2016 4:32 pm

This is a rough site for individual stock investors
AMZN is a great company but when you buy a stock you have to know a lot about it PE ratio vs forward earning
Management etc AMZN has had a great run but is it over valued im not a full time trader working for a large bank with lots of information and a strong team So in general i stay out of trading but if you want to take a small amount of play money that you can afford to lose go for it
I do own a little apple and baba similar to AMZN i have bought on the dips but its a very small amount of money that i can afford to lose
Good luck :sharebeer

TomCat96
Posts: 446
Joined: Sun Oct 18, 2015 12:18 pm

Re: Has anyone been tempted to buy AMZN?

Post by TomCat96 » Wed Sep 28, 2016 4:32 pm

Seahawk wrote:I'm an investor in VTSMX, and do not hold any individual stocks.

But I have to admit, watching AMZN go from 400 to 500 to 600... and now cross 820... I'm tempted!


I don't want to be, I *know* the virtues of index funds and all of that.

That said - and maybe this is what Mr, Bogle means when he says "emotions wreak havoc, and investors buy at exactly the wrong time", but surely I can't be the only one to have sat there wondering if I'm just making a massive mistake by not jumping on the AMZN bandwagon?


This probably borders on sacrilege for most Bogleheads, but would it really be so bad to buy AMZN? Any thoughts or insights on AMZN?

AMZN doesn't seem like another Enron... so why not?




I actually don't understand why other companies don't step up to the plate. From my perspective, Wal-mart and other retailers couldn't design an online shopping experience to save their life. They don't get online interfaces and online shopping in general.

But I don't understand why Google or Apple don't move in, especially Apple.

Apple already has cloud storage, connections with media companies, distribution channels of hardware. It certainly has the know how and capital to design their own amazon site. They could easily incorporate their own version of such a site with Itunes to compete with amazon prime video.

Tim Cook is supposed to be the operations wonk extraordinaire. It seems to me figuring out and securing retail product lines in an efficient manner would be right up his alley.

That being said, I don't see any intention by anyone in silicon valley at the moment to compete with amazon. Amazon in my view will continue to grow, and grow well. That much is obvious. But with a P/E ratio of 206, a large amount of expected growth is already baked into the price.

User avatar
Toons
Posts: 12104
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Has anyone been tempted to buy AMZN?

Post by Toons » Wed Sep 28, 2016 4:34 pm

I remember Bill Miller (Legg Mason Value)
Backing up the truck when Amazon was at 7 per share ,
during the bear market of 2000.
:happy

To answer the question,
no not tempted at all. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

erik265
Posts: 155
Joined: Sat Dec 05, 2015 8:55 am

Re: Has anyone been tempted to buy AMZN?

Post by erik265 » Wed Sep 28, 2016 4:38 pm

actually don't understand why other companies don't step up to the plate. From my perspective, Wal-mart and other retailers couldn't design an online shopping experience to save their life. They don't get online interfaces and online shopping in general.

But I don't understand why Google or Apple don't move in, especially Apple.

Apple already has cloud storage, connections with media companies, distribution channels of hardware. It certainly has the know how and capital to design their own amazon site. They could easily incorporate their own version of such a site with Itunes to compete with amazon prime video.

Tim Cook is supposed to be the operations wonk extraordinaire. It seems to me figuring out and securing retail product lines in an efficient manner would be right up his alley.

That being said, I don't see any intention by anyone in silicon valley at the moment to compete with amazon. Amazon in my view will continue to grow, and grow well. That much is obvious. But with a P/E ratio of 206, a large amount of expected growth is already baked into the price.


I dont agree walmart.com its pretty good actually beats amzn on alot of items and you have in store pickup to save on shipping many times its beaten my amzn prime expecially on small orders
walmart is gonna be a player online watch out amzn
:shock:
Lets be real when your at the top everyone especially walmart is gunning for your online market share

User avatar
DaftInvestor
Posts: 3220
Joined: Wed Feb 19, 2014 10:11 am

Re: Has anyone been tempted to buy AMZN?

Post by DaftInvestor » Wed Sep 28, 2016 4:44 pm

I will never buy an individual stock again but if I did I would certainly look at Amazon. What is amazing about Amazon is their ability to see and move into new markets. First on-line books, then e-books and e-readers, then streaming media. Now they are the top cloud service provider (with AWS - http://www.datacenterknowledge.com/arch ... beginning/) and lots of very large companies are signing up and moving their business critical applications into Amazons cloud - they have blown away big companies like IBM and Microsoft and many others who presumably should have had a leg up in this space (of course they are competing based upon lower prices). What market might they move into next....

Horsefly
Posts: 114
Joined: Sat Oct 24, 2015 8:13 am
Location: Colorado, mostly

Re: Has anyone been tempted to buy AMZN?

Post by Horsefly » Wed Sep 28, 2016 5:00 pm

I bought a pretty sizable chunk of AMZN something over 3 years ago, and I'm certainly glad it has done so well. It's in my IRA, which I don't intend to take any money out of for 10 or more years.

I don't know that I would buy more AMZN now, but I'm also hoping not going to sell it any time soon. I have a "trailing stop loss" order on it (Good 'Til Cancelled), so if it ever drops by 7% I'll take my winnings off the table. At that point I may just watch it for another opportunity to buy. I can see the possibility of owning it for a very long time, with some periodic off ramps.

AMZN is actually the only individual stock I own, and it has mostly been my "play money", although the holding is big enough now I need to pay some attention. :happy

Steve

User avatar
saltycaper
Posts: 2210
Joined: Thu Apr 24, 2014 8:47 pm
Location: The Tower

Re: Has anyone been tempted to buy AMZN?

Post by saltycaper » Wed Sep 28, 2016 5:01 pm

To state the obvious, if you're thinking about buying a stock because the stock has performed amazingly, you're doing it wrong. Amazon could double, triple, quadruple, or more from here over the next several years, but the really big money already has been made. To make the big money--and, IMO, big money is the only reason to attempt investing in individual stocks, as the risk is high--you need to anticipate something happening that most market participants are missing, and you need to see it early on. For those in the tech industry who also were tuned into the business world, AWS was no surprise. Amazon was a technology company first and foremost and a retailer second. "Web services" was key to Amazon's own success before it was sold to others. Now Amazon is getting further into logistics, and if it is able to outsource that service to others, it will change the package delivery industry too. Still, the risk/potential reward here is not appealing any longer.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

User avatar
nisiprius
Advisory Board
Posts: 34361
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Has anyone been tempted to buy AMZN?

Post by nisiprius » Wed Sep 28, 2016 5:09 pm

DaftInvestor wrote:...I will never buy an individual stock again but if I did I would certainly look at Amazon. What is amazing about Amazon is their ability to see and move into new markets...
Yes, and in fact I remember an interview with Jeff Bezos in the not-so-late nineties, in which he explained why they had decided to sell books. It was interesting and thoughtful. One of the reasons he gave at the time is that, more than most other businesses, the total number of titles was huge, so that a physical bookstore couldn't actually stock more than a tiny fraction of them; I think there were several million books listed in Books in Print, and even a bookstore only had shelves for a few thousand of them. At the same time, there was a centralized database (Bowker's Books in Print) and a fairly uniform procedure for ordering any book from any publisher, so it was fairly straightforward to sell any book in print.

The point I'm leading up to is that he gave several reasons why Amazon wasn't, and, he implied, wouldn't be selling other things. The numbers for CDs, for example, were much less compelling, a big record store had substantial percentage of all current CD titles. And it was barely a year later that Amazon started selling other things. Lots of other things.

Amazon and Apple are the two companies I know that are best at keeping the Faustian bargain. Lots of companies play evil lock-in games, but when you sell your soul to them, they don't deliver. Amazon and Apple do. They give you a very smooth, very honest-feeling customer experience.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

User avatar
RyeWhiskey
Posts: 864
Joined: Thu Jan 12, 2012 10:04 pm

Re: Has anyone been tempted to buy AMZN?

Post by RyeWhiskey » Wed Sep 28, 2016 5:11 pm

Buying AMZN now would be the literal definition of buying high (will you sell low?). I would absolutely pass. :sharebeer
This post was brought to you by Vanguard Total World Stock Index (VTWSX/VT).

User avatar
nisiprius
Advisory Board
Posts: 34361
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Has anyone been tempted to buy AMZN?

Post by nisiprius » Wed Sep 28, 2016 5:17 pm

P.S. It's hard to realize it now, and I don't know if Amazon actually invented it, but I remember buying something from Amazon in the late 1990s and, for the first time, seeing the "shopping cart" metaphor, and thinking how really brilliant it was. It's hard to realize that it wasn't obvious and someone needed to think of it. Now it's hard to imagine any other way to do it. In fact I literally can't remember how other companies did it.

The Kindle was amazing, too. I was an early adopter of eBooks: I bought a Nuvomedia Rocket eBook in the year 2000. Over the counter at Barnes & Noble, which eventually left me with a sour taste in my mouth for Barnes and Noble. The actual hardware was fine. It was about the size and weight of a trade paperback, and you could carry about eight full-length books in it. And a charge lasted a good 20 hours. It really felt liberating to me to be able to go on a one-week trip and take eight books along with me.

Unfortunately, all of the commercial aspects of the books themselves were awful. Title availability was awful. They would say "5,000 books to choose from," and if you started from the premise of choosing from those books it wasn't bad, but if you started from the premise "I want to read title X" it was awful. I once did a check and of 26 books on Oprah's Book Club, only about 5 were available for the Rocket eBook. And the pricing was awful. Some idiots at the publishers had made some stupid decisions of not wanting to compete with print books on price, and during the time period when a title was only available in hardbound, most publishers charged the full hardbound price for the eBook, and then dropped it to the trade paperback price when they released it as a trade paperback.

So Kindle comes along, and boom! Suddenly the fraction of books I want to read that are available for the Kindle jumps to "most," and the prices drop to something "reasonable."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

GuitarXM
Posts: 398
Joined: Sat Jun 18, 2016 12:09 am

Re: Has anyone been tempted to buy AMZN?

Post by GuitarXM » Wed Sep 28, 2016 5:34 pm

Amazons balance sheet doesn't look too healthy for me.

Current Assist are about equal with Current Liabilities.
If the company loses its edge and becomes not as profitable due to competition from walmart or some other company its earnings will drop and so will the current assets.

Liabilities don't go away that easy.
Their net income was negative in 2014 and 2012 so as you can see its not impossible for them to lose money
So it is possible for the company to lose value and the shares will follow

Also, a PE of 203?
You are earning 0.5% on the money invested? That's insane when the average for the sp500 is about 5%
Last edited by GuitarXM on Wed Sep 28, 2016 5:47 pm, edited 1 time in total.

User avatar
Tamarind
Posts: 680
Joined: Mon Nov 02, 2015 2:38 pm

Re: Has anyone been tempted to buy AMZN?

Post by Tamarind » Wed Sep 28, 2016 5:42 pm

No, and in fact I have to grit my teeth about the percentage of my index funds that is invested in it.

I love Amazon as a consumer though I'm not a frequent buyer.

But their balance sheet is terrifying. It is a very big bet that they can scale up fast enough. If they get disrupted by a newcomer, or even have a bad year, I suspect it will all come crashing down.

Another example for me of why one should just own the whole market. Without index funds I would miss out on my share of all their growth while the party lasts. :)

User avatar
whodidntante
Posts: 2326
Joined: Thu Jan 21, 2016 11:11 pm

Re: Has anyone been tempted to buy AMZN?

Post by whodidntante » Wed Sep 28, 2016 5:49 pm

I looked at it and I think it's overpriced. You really have to buy into the Bezos growth at all costs, octopus strategy, and believe has a lot of room to run. Then it possibly makes sense.

User avatar
nedsaid
Posts: 8851
Joined: Fri Nov 23, 2012 12:33 pm

Re: Has anyone been tempted to buy AMZN?

Post by nedsaid » Wed Sep 28, 2016 5:53 pm

The Amazon.coms and the Ciscos of the world tempted me during the 1990's during the Tech boom. I was and am Value oriented so I never chased these, but I did own Lucent Technologies and Hewlett Packard during this time. I also bought Oracle in 1999 and sold in 2006. Similar story with Nortel. Turned out I was more adventuresome than I thought.
A fool and his money are good for business.

moshe
Posts: 419
Joined: Thu Dec 12, 2013 1:18 pm
Location: Boston, MA

Re: Has anyone been tempted to buy AMZN?

Post by moshe » Wed Sep 28, 2016 6:18 pm

BusySnevl wrote:... I have a "trailing stop loss" order on it (Good 'Til Cancelled), so if it ever drops by 7% I'll take my winnings off the table. At that point I may just watch it for another opportunity to buy....


Please note that a stop loss offers no real protection in a freefall situation. You still might be stopped out at -7%, -50% or -99% of previous uptick or not be able to get out at all.... Your stop just creates a market sell order...there is no guarantee that someone will be on the buy side at any price.

~Moshe
My money has no emotions. ~Moshe | | I'm the world's greatest expert on my own opinion. ~Bruce Williams

Dottie57
Posts: 2399
Joined: Thu May 19, 2016 5:43 pm

Re: Has anyone been tempted to buy AMZN?

Post by Dottie57 » Wed Sep 28, 2016 7:54 pm

TomCat96 wrote:
Seahawk wrote:I'm an investor in VTSMX, and do not hold any individual stocks.

But I have to admit, watching AMZN go from 400 to 500 to 600... and now cross 820... I'm tempted!


I don't want to be, I *know* the virtues of index funds and all of that.

That said - and maybe this is what Mr, Bogle means when he says "emotions wreak havoc, and investors buy at exactly the wrong time", but surely I can't be the only one to have sat there wondering if I'm just making a massive mistake by not jumping on the AMZN bandwagon?


This probably borders on sacrilege for most Bogleheads, but would it really be so bad to buy AMZN? Any thoughts or insights on AMZN?

AMZN doesn't seem like another Enron... so why not?




I actually don't understand why other companies don't step up to the plate. From my perspective, Wal-mart and other retailers couldn't design an online shopping experience to save their life. They don't get online interfaces and online shopping in general.

But I don't understand why Google or Apple don't move in, especially Apple.

Apple already has cloud storage, connections with media companies, distribution channels of hardware. It certainly has the know how and capital to design their own amazon site. They could easily incorporate their own version of such a site with Itunes to compete with amazon prime video.

Tim Cook is supposed to be the operations wonk extraordinaire. It seems to me figuring out and securing retail product lines in an efficient manner would be right up his alley.

That being said, I don't see any intention by anyone in silicon valley at the moment to compete with amazon. Amazon in my view will continue to grow, and grow well. That much is obvious. But with a P/E ratio of 206, a large amount of expected growth is already baked into the price.


Why would any company want Amazons low profitability? Amazon's PE ratio is outrageous.

User avatar
LadyGeek
Site Admin
Posts: 41651
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Has anyone been tempted to buy AMZN?

Post by LadyGeek » Wed Sep 28, 2016 8:01 pm

This thread is now in the Investing - Theory, News & General forum (general question).
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Nicolas
Posts: 792
Joined: Wed Aug 22, 2012 7:41 am

Re: Has anyone been tempted to buy AMZN?

Post by Nicolas » Wed Sep 28, 2016 8:10 pm

There's a story in today's Wall Street Journal that AMZN is moving heavily into shipping with designs on FedEx's and UPS's markets. They're aiming to deliver everybody's stuff, not just their own.

Google this: "Amazon’s Newest Ambition: Competing Directly With UPS, FedEx"

carguyny
Posts: 184
Joined: Mon Aug 08, 2016 4:56 pm

Re: Has anyone been tempted to buy AMZN?

Post by carguyny » Wed Sep 28, 2016 8:29 pm

DaftInvestor wrote:
I haven't done any research but isn't their AWS margin already pretty tight? I believe they compete against folks like Microsoft Azure based upon being cheaper (not based upon other measures). I would think AWS would be their biggest growth area (and assume it is most of the reason why their price is so inflated now).


Q2 16 AWS was Revenue of 2,886mm, Net Income 718mm
Q2 15 AWS was Revenue of 1,824mm, Net Income 305mm

Full Results
Q2 16 Net Sales of 30,404mm, Net Income of 92mm
Q2 15 Net Sales of 23,185mm, Net Income of 857mm

AWS margins have expanded over the next 12 months, but with so many players are trying to take market share from them as you mention they're just lowering the price to keep/gain share.

The figures were taken from their investor presentation for Q2 2016 and I may have made some typos in transposing them, so please don't rely on them without checking yourself.

GoldenFinch
Posts: 1389
Joined: Mon Nov 10, 2014 11:34 pm

Re: Has anyone been tempted to buy AMZN?

Post by GoldenFinch » Wed Sep 28, 2016 8:30 pm

If I bought AMZN as an individual stock today it would go down. Or maybe it wouldn't. I don't know what it would do. I like holding it within my index funds because I don't have to bother thinking about it too much like I would if I owned it individually.

Bungo
Posts: 848
Joined: Wed Sep 28, 2011 11:28 am

Re: Has anyone been tempted to buy AMZN?

Post by Bungo » Wed Sep 28, 2016 8:31 pm

Seahawk wrote:But I have to admit, watching AMZN go from 400 to 500 to 600... and now cross 820... I'm tempted!

Are you more tempted at 820 than you were at 400? If so, why?

Johnnie
Posts: 438
Joined: Sat May 28, 2016 3:18 pm
Location: Michigan

Re: Has anyone been tempted to buy AMZN?

Post by Johnnie » Wed Sep 28, 2016 9:53 pm

I'm just so glad I don't have to think about things like this anymore since becoming a buy and hold low cost index funds adherent.

Actually, I do own some AMZN, via VFIAX. Probably true for everyone who reads this. :happy
"I know nothing."

Seahawk
Posts: 9
Joined: Sat Jun 11, 2016 1:52 am

Re: Has anyone been tempted to buy AMZN?

Post by Seahawk » Wed Sep 28, 2016 10:49 pm

Bungo wrote:
Seahawk wrote:But I have to admit, watching AMZN go from 400 to 500 to 600... and now cross 820... I'm tempted!

Are you more tempted at 820 than you were at 400? If so, why?


I'm not "more tempted" per se. Amazon, in theory, seems pretty strong in multiple sectors (revenue generation is diversified), and generally seemed like a company that would do well long term. I wondered if I was letting a good thing pass me by, you know? I felt this way because of the sheer amount by which the stock has shot up.

Look, I understand a lot of this is speculation - people have very few avenues for earning interest/returns on their money in such a low interest rate environment. Even bonds don't yield respectable returns like they once did. So very few options to grow money.... And a stock like Amazon is bound to attract a lot of moths to its seemingly everlasting flame.

I don't understand the intricacies of Amazon's business or finances ... And like other people here have said... I dislike having to track and worry about stock prices... Which is why I'm fully invested in VTSMX.

Even if the consensus on this thread turned out to be "Buy", I'd buy at a dip, not at current valuations.

This isn't to say I'm trying to "time the market", but more like I'd have a game plan ready to buy when/if an opportunity presented itself.

I'm wary of another Enron (not old enough to have been bitten by it when it happened, but forewarned is forearmed), and since I lack the knowledge and the perspective, I thought I'd ask you fine people! :happy

All these replies have been extremely helpful, and I appreciate the time everyone has taken to answer! Thank you guys! :sharebeer
Price is what you pay, Value is what you get.

rick2427
Posts: 86
Joined: Sun Jan 25, 2015 11:29 pm
Location: Missouri

Re: Has anyone been tempted to buy AMZN?

Post by rick2427 » Wed Sep 28, 2016 11:06 pm

Bought AMZN in 2013 around $380. It was not cheap at that time and it is still pricey today. Glad to see it has doubled in the past three years but it has been a wild ride for sure.Not sure if I would buy AMZN at these levels- it is priced for perfection now.

65% of my portfolio is still in individual stocks and I'm trying to sell most and buy index funds in preparation for retirement in 2017. Selling stocks creates capital gains so it's a rather slow process to move from individual stocks to index funds. I will continue to hold a few key stocks for a long time AMZN is one of them

TropikThunder
Posts: 647
Joined: Sun Apr 03, 2016 5:41 pm

Re: Has anyone been tempted to buy AMZN?

Post by TropikThunder » Wed Sep 28, 2016 11:23 pm

Seahawk wrote:But I have to admit, watching AMZN go from 400 to 500 to 600... and now cross 820... I'm tempted!


See, that's the great serenity of owning TSM. If you routinely invested in some version of Total Stock Market, then you DID buy some at ~$150 in 2010, and some more at $250 in 2012, and some more at $400 in 2015, with your allocation increasing as AMZN climbed the S&P 500 and increased its market share. But at the same time, you didn't have to do any research or know anything about their business model or online footprint or growth strategy. You just let the market determine winners and losers and go along for the ride.

moshe wrote:Please note that a stop loss offers no real protection in a freefall situation. You still might be stopped out at -7%, -50% or -99% of previous uptick or not be able to get out at all.... Your stop just creates a market sell order...there is no guarantee that someone will be on the buy side at any price.

~Moshe


Correct me if I'm wrong, but there's no way a stock price can go into "freefall" if no one is on the other side buying. Price is set based on the most recent trades, which means no matter what the price is, someone is selling and someone is buying. If there are no trades (like on weekends) the price is unchanged.

User avatar
Kalo
Posts: 432
Joined: Sat May 25, 2013 1:01 pm

Re: Has anyone been tempted to buy AMZN?

Post by Kalo » Thu Sep 29, 2016 12:28 am

Another thing to consider is that as of mid September, there were 4.5 million shares of short interest in the stock. I don't know what that means other than that there are lots of people out there who believe the stock is going to retrace and want to profit on that.

I'm grateful to the Bogleheads for helping me understand just how much risk there is in owning individual shares, and that this risk is uncompensated.

I have no idea whether it would be better to be long AMZN or short AMZN right now. If I did want to gamble, I think I'd rather consider PIR (Pier 1 Imports). It's been down here before and recovered nicely in the past. But this time it may not.

I do not recommend owning any individual shares except for gambling. I don't have any extra money for gambling, so I stick with broad market index funds.

Kalo
"When people say they have a high risk tolerance, what they really mean is that they are willing to make a lot of money." -- Ben Stein/Phil DeMuth - The Little Book of Bullet Proof Investing.

young-ish
Posts: 35
Joined: Fri Apr 15, 2016 12:10 am

Re: Has anyone been tempted to buy AMZN?

Post by young-ish » Thu Sep 29, 2016 1:03 am

rick2427 wrote:65% of my portfolio is still in individual stocks and I'm trying to sell most and buy index funds in preparation for retirement in 2017.


If you don't mind sharing how many individual stocks do you hold?

If any company is greater than 10% of your total equity position you may want to investigate the benefits of diversification. If not then you may be OK holding a few dozen companies operating in various industries all over the globe.

expat
Posts: 735
Joined: Mon Mar 10, 2008 9:07 pm

Re: Has anyone been tempted to buy AMZN?

Post by expat » Thu Sep 29, 2016 1:37 am

You bought AMZN when you bought VTSMX.

And AMZN is currently sixth largest holding in VTSMX.

https://personal.vanguard.com/us/funds/ ... =INT#tab=2

Bungo
Posts: 848
Joined: Wed Sep 28, 2011 11:28 am

Re: Has anyone been tempted to buy AMZN?

Post by Bungo » Thu Sep 29, 2016 2:54 am

Seahawk wrote:I'm not "more tempted" per se. Amazon, in theory, seems pretty strong in multiple sectors (revenue generation is diversified), and generally seemed like a company that would do well long term. I wondered if I was letting a good thing pass me by, you know? I felt this way because of the sheer amount by which the stock has shot up.

It's a great company (speaking as a frequent customer) and seems likely to continue to do well in the future. However, the share price already reflects that assumption, big time. It seems to me that there is a lot of potential downside if anything goes even slightly wrong, and maybe not that much upside left. Then again, I would have said the same thing when it was priced at 400, so what do I know? :D I'm content to own my little slice of Amazon via a total stock market index fund. (And Amazon Prime is a great investment which I'm happy to make every year!)

Valuethinker
Posts: 33416
Joined: Fri May 11, 2007 11:07 am

Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Thu Sep 29, 2016 4:50 am

Bungo wrote:
Seahawk wrote:I'm not "more tempted" per se. Amazon, in theory, seems pretty strong in multiple sectors (revenue generation is diversified), and generally seemed like a company that would do well long term. I wondered if I was letting a good thing pass me by, you know? I felt this way because of the sheer amount by which the stock has shot up.

It's a great company (speaking as a frequent customer) and seems likely to continue to do well in the future. However, the share price already reflects that assumption, big time. It seems to me that there is a lot of potential downside if anything goes even slightly wrong, and maybe not that much upside left. Then again, I would have said the same thing when it was priced at 400, so what do I know? :D I'm content to own my little slice of Amazon via a total stock market index fund. (And Amazon Prime is a great investment which I'm happy to make every year!)


At the PE it is on, the stock is priced for perfect performance. It could plummet if they disappoint.

They have to keep expanding into new areas, and reinvesting. That's only possible because the Founder, Jeff Bezos, is still in control and sees no need to take out a dividend.

The distribution move is brave and counterintuitive, because the big players in that industry have spent decades building up, and don't make a lot of money.

Valuethinker
Posts: 33416
Joined: Fri May 11, 2007 11:07 am

Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Thu Sep 29, 2016 4:52 am

Seahawk wrote:I'm an investor in VTSMX, and do not hold any individual stocks.

But I have to admit, watching AMZN go from 400 to 500 to 600... and now cross 820... I'm tempted!


I don't want to be, I *know* the virtues of index funds and all of that.

That said - and maybe this is what Mr, Bogle means when he says "emotions wreak havoc, and investors buy at exactly the wrong time" - but surely I can't be the only one to have sat there wondering if I'm just making a massive mistake by not jumping on the AMZN bandwagon?


This probably borders on sacrilege for most Bogleheads, but would it really be so bad to buy AMZN? Any thoughts or insights on AMZN?

AMZN doesn't seem like another Enron... so why not?


If AFAIK is not another Enron in terms of accounting fraud (but how would I know?).

However it is investing furiously in physical assets. If those investments go wrong, earnings will disappoint, and at that PE ratio the stock has a lot of room to fall. If the market suddenly decides it should be on 15.0 times rather than 30+ times, say.

User avatar
Bustoff
Posts: 1979
Joined: Sat Mar 03, 2012 6:45 pm

Re: Has anyone been tempted to buy AMZN?

Post by Bustoff » Thu Sep 29, 2016 7:31 am

I would be more inclined to sell AMZN as an individual holding.

n00b_to_investing
Posts: 57
Joined: Mon Feb 11, 2013 1:37 pm

Re: Has anyone been tempted to buy AMZN?

Post by n00b_to_investing » Thu Sep 29, 2016 8:44 am

I am long in AMZN since 2011 in my taxable account. I am tempted to write calls to protect gains but don't know what would be a good trade ... open to suggestions :happy

staybalanced
Posts: 321
Joined: Wed Jan 14, 2015 7:36 am

Re: Has anyone been tempted to buy AMZN?

Post by staybalanced » Thu Sep 29, 2016 9:11 am

n00b_to_investing wrote:I am long in AMZN since 2011 in my taxable account. I am tempted to write calls to protect gains but don't know what would be a good trade ... open to suggestions :happy


You would be better buying puts, writing calls only gives you the option premium, which is not a lot of downside protection. Since you didn't know that I would not recommend using any options.

There are other strategies you could use to protect you downside but you would be limiting you upside at the same time. Google "collar" strategy if you are interested in that. good luck

soboggled
Posts: 901
Joined: Mon Jun 27, 2016 10:26 am

Re: Has anyone been tempted to buy AMZN?

Post by soboggled » Thu Sep 29, 2016 9:43 am

As a sometime buyer/seller on Amazon, it never ceases to astonish me why it is so popular. Probably great marketing and PR, combined with the advantages of a pioneer and the marketing vision of Jeff Bezos. Buyers can usually do better. The company's only real goal is to maximize the power and wealth of Bezos via stock appreciation, so it reinvests all its earnings. That makes the PE hard to evaluate. (He holds about 20% of all Amazon stock and this year alone has already sold over $1.4B worth.) They are coming under increasing competition from others like alibaba (which delivers 4 times as many packages) and Walmart on-line, so need to expand into international markets while constantly diversifying into new businesses.
So no, never tempted at all. But then I keep saying Apple is due for a fall, so what do I know?

michaeljc70
Posts: 1988
Joined: Thu Oct 15, 2015 3:53 pm

Re: Has anyone been tempted to buy AMZN?

Post by michaeljc70 » Thu Sep 29, 2016 10:35 am

If I had access to a time machine....

DetroitRick
Posts: 436
Joined: Wed Mar 23, 2016 9:28 am

Re: Has anyone been tempted to buy AMZN?

Post by DetroitRick » Thu Sep 29, 2016 11:12 am

With about 20% of my investments in individual stocks, and having great respect for many aspects of the company, yes I'm tempted all the time. But so far, I haven't because of price and other competing opportunities. On the other hand, I have no respect for Wall Street's ability to measure forward P/E. So I remain torn.

One of the things I like, as an investor, is their ability to capture market and then maintain incentives to hold customers within their eco-system. Plus, innovation in product and marketing keeps feeding their growth engine.

Right at this point in time, as a stock investor, I find the best bargains in the international arena and that tempers my hesitation too. But the day may yet come where I add some AMZN. It will probably take one of two things to push me - a price dip caused by general market conditions or a new program launch that I feel the market does not recognize adequately.

Forgive me - the other 80% of my holdings are pretty Boglehead-ish. :sharebeer

rick2427
Posts: 86
Joined: Sun Jan 25, 2015 11:29 pm
Location: Missouri

Re: Has anyone been tempted to buy AMZN?

Post by rick2427 » Thu Sep 29, 2016 11:25 am

If you don't mind sharing how many individual stocks do you hold?

If any company is greater than 10% of your total equity position you may want to investigate the benefits of diversification. If not then you may be OK holding a few dozen companies operating in various industries all over the globe.


62 individual stocks (70% Domestic/30% international). 35 of them are dividend paying stocks.
AMZN is the largest position at 6.5% of the portfolio.

Thanks,
Rick

User avatar
bottlecap
Posts: 5066
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: Has anyone been tempted to buy AMZN?

Post by bottlecap » Thu Sep 29, 2016 11:32 am

Every day. Especially with "free" two-day shipping on Prime! :wink:

User avatar
Pajamas
Posts: 2838
Joined: Sun Jun 03, 2012 6:32 pm

Re: Has anyone been tempted to buy AMZN?

Post by Pajamas » Thu Sep 29, 2016 12:01 pm

Yes, I have been holding Amazon since 2006. The company has done very well and should do well in the future. If anything, I think its current prospects are better than they ever have been. It is very expensive by traditional measures but that has been the case all along.

I finally took some off the table last year and sold part of my position, not because my opinion of the company changed but because it had grown to be such a large percentage of my portfolio and the stock is volatile. I took a good profit on the entire position with that sale and will let the rest ride.

staybalanced
Posts: 321
Joined: Wed Jan 14, 2015 7:36 am

Re: Has anyone been tempted to buy AMZN?

Post by staybalanced » Thu Sep 29, 2016 12:26 pm

soboggled wrote:As a sometime buyer/seller on Amazon, it never ceases to astonish me why it is so popular. Probably great marketing and PR, combined with the advantages of a pioneer and the marketing vision of Jeff Bezos. Buyers can usually do better. The company's only real goal is to maximize the power and wealth of Bezos via stock appreciation, so it reinvests all its earnings. That makes the PE hard to evaluate. (He holds about 20% of all Amazon stock and this year alone has already sold over $1.4B worth.) They are coming under increasing competition from others like alibaba (which delivers 4 times as many packages) and Walmart on-line, so need to expand into international markets while constantly diversifying into new businesses.
So no, never tempted at all. But then I keep saying Apple is due for a fall, so what do I know?



I don't think that is accurate about the company's only goal. You should read up on bezos and the amazon story. He is not a guy motivated by money, it is something much different than that.

Post Reply